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Vol. 19, No. 4 Week of January 26, 2014
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Could Alaska host rare critical metal?

USGS presentation at recent meeting cites high concentrations of scandium in offshore Arctic deposits, raises intriguing question

Curt Freeman

For Mining News

If you believe what you see in the press, Alaska’s mineral industry was recently given a Christmas gift that trumps even the high-grade anthracite coal that most Alaskans were dreaming of during the last 40-below cold snap.

The Alaska Dispatch reported on a recent presentation at the fall 2013 meeting of the American Geophysical Union titled, “Critical Metals in Western Arctic Ocean Ferromanganese Mineral Deposits,” by James Hein, a senior scientist at the U.S. Geological Survey and adjunct professor of ocean sciences at the University of California-Santa Cruz. The talk outlined the findings from 2008, 2009 and 2012 on the Arctic continental shelf where scientists collected and analyzed the chemical contents of ferromanganese crusts and nodules. The results show that samples from the Arctic Ocean differed in chemical composition from other oceans. In particular, these surveys found that western Arctic Ocean continental shelf ferromanganese crusts and nodules were the only ones from the global oceans enriched in scandium, a mysterious silvery-white metal that is sometimes classified as a rare earth element, and often found in elevated amounts in rare earth element and uranium deposits. There are currently no primary scandium mines on earth, but this highly heat resistant and tough metal is even lighter than titanium; so it is in high demand in the aerospace and defense industries. So what, you say? How about this: While trade in scandium is extremely small in volume, at only about 12,500 pounds per year, scandium sold for $15 million per ton in 2013! Impressive as that may seem, submarine mining of ferromanganese crusts and nodules is a costly and technically challenging endeavor. So the question must be asked: is scandium in commercially attractive concentrations present on the Alaska mainland? While I don’t know of any primary scandium prospects in the state, is it because they don’t exist or because we have not looked for them? While I am skeptical that Alaska will become home to a primary scandium mine, stranger ideas have borne fruit before in this never-dull industry!

Western Alaska

Graphite One Resources Inc. announced final 2013 drilling results from its 1,023-meter, 10-hole drilling program at its Graphite Creek property north of Nome. The drilling program doubled the total strike length of the current resources to 4.8 kilometers Significant results include 15.35 meters grading 4.04 percent graphitic carbon in hole 13GCH014B, 29.55 meters grading 5.01 percent graphitic carbon including 14.0 meters grading 7.15 percent graphitic carbon in hole 13GCH017 and 52.0 meters grading 6.02 percent graphitic carbon in hole 13GCH08, a 2012 drill hole that will now be included in a revised resource estimate, expected out shortly.

Northern Dynasty Minerals Ltd. provided an initial response to the U.S. Environmental Protection Agency’s final version of its Bristol Bay Watershed Assessment, an initiative launched by the EPA in February 2011 to assess the effects of current and potential future development on the natural resources of Bristol Bay. EPA released drafts of the watershed assessment in May 2012 and April 2013 to widespread criticism about the report’s flawed methodology and findings, including from the State of Alaska, Alaska Native groups and expert Peer Reviewers commissioned by the federal agency. The company indicated that it believed the EPA set out to do a flawed analysis of the Pebble project. It further indicated that the EPA did not consider the critical environmental safeguards and modern mitigation methods that state and federal permitting will require for Pebble. Even then, the EPA has grossly over-estimated the effects of its under-engineered project. The Alaska Miners Association also panned the study, indicating that the EPA uses hypothetical and unrealistic mining scenarios drawn from an outdated economic report, not the data included in a real submitted or completed mine plan. EPA also omitted current state and federal regulations that would be applied to any such project, and ignored modern mining practices. We have definitely not heard the last on this report.

Interior Alaska

On a much brighter note, and one felt by every Fairbanks-area resident, Kinross Gold Corp. announced the pouring of the 6 millionth ounce of gold on Dec. 18, 2013 at its Fort Knox mine! When the mine poured its first ounce of gold, in late 1996, the deposit had a little over 4 million ounces of gold in its total resource. Of that, a little less than 3.5 million ounces was expected to be recoverable into bar form over its 10-year mine life. So here we are, 17 years down the road, pouring ounce No. 6 million. That is how you spell success! Congratulations to all the employees and contractors that made it happen!

Freegold Ventures Ltd. announced the signing of a memorandum of understanding with the Alaska Department of Natural Resources, Office of Project Management and Permitting for engagement with the state’s large mine permitting team to assist in planning and conducting the company’s preliminary economic assessment on its Golden Summit project. The large mine permitting team offers multi-disciplinary expertise and is involved from pre-permitting to post-closure of mines in Alaska. The company expects to award the PEA contract in the near term, with the aim of having the study completed during 2014. Since drilling began on the Dolphin/Cleary resource area of the Golden Summit Project in 2011, the company has successfully increased the resource by 867 percent in the indicated category and 820 percent in the inferred category. Currently, the industry-compliant indicated resource is 79.8 million metric tons averaging 0.66 grams per metric ton gold for 1,683,000 ounces, and an inferred resource of 248.06 million metric tons averaging 0.61 g/t gold for 4.84 million ounces using 0.3 g/t gold per metric ton as a possible open pit cut-off.

Hunt Mining Corp. announced that it has elected not to proceed with the proposed Amanita gold project in the Fairbanks District as it had announced in September 2013. The company will be focusing its efforts on its extensive holdings in Argentina.

Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. announced a study outlining the socioeconomic impact of its Pogo gold mine. The report, conducted by the McDowell Group, covers a wide array of social and economic benefits that occur because of the mine’s presence in the region. The report indicated that the mine employed 329 workers in 2012, of whom 70 percent were residents of the Fairbanks North Star Borough. Average salary of these workers was US$116,916, more than twice the state-wide average salary. Another 335 induced and indirect jobs were generated by the mine, 215 of which were in the local area. These jobs contributed an additional US$26 million to the Alaska economy. The mine spent US$127.2 million with 290 Alaska-based vendors and contractors. Of that total, US$82.7 million was spent in with vendors and contractors in the local area. The mine paid US$24.3 million in taxes to state government, including US$5.9 million for the Alaska Mining License Tax and US$4.8 million in Alaska Production Royalty payments. The mine also contributed US$811,000 to 40 Alaska non-profit organizations, US$353,000 to the University of Alaska’s Mining Engineering Research Endowment and US$300,000 to the city of Delta for various capital and special projects. Mine employees also contributed an estimated US$170,650 to Alaska charities in 2012. Public school students of mine employees numbered about 207, bringing an estimated US$1.7 million in state education funding to local schools.

Endurance Gold Corp. announced final 2013 field results from its 4,960-acre Elephant Mountain gold project. The 2013 summer program returned gold values in grab samples up to 4.4 g/t gold associated with a strong gold-arsenic soil anomaly. The 2013 rock and soil sampling program collected 61 rock grab samples with the best gold values associated with altered intrusive and quartz vein stock-work material including 4,440 parts-per-billion gold, as well as 1,920 ppb, and 1,880 ppb gold. The highest gold value is related to the South Zone soil anomaly, where previous work by Placer Dome resulted in a grab rock sample that assayed 411.4 g/t gold and where a 2007 prospecting and sampling program resulted in the discovery of gold in grab samples of quartz vein material from the intrusive that returned 12.98 g/t gold, 5.21 g/t gold, 3.02 g/t gold, 2.59 g/t gold and 2.18 g/t gold. In addition, Placer Dome also completed trenching and 10 drill holes primarily in the North zone soil anomaly, where drill holes returned an average grade of 0.514 g/t gold over 99.4 meters. Gold mineralization in the North zone drill holes is associated with arsenopyrite and native gold related to quartz veinlet stock-work, in a multi-phase silicified, fractured and sericite altered Cretaceous plutonic complex. The company believes that nearby placer gold deposits, gold-in-soil anomalies, elevated gold-in-rock samples, and wide drill intersections in intrusive indicate that the property warrants a systematic exploration program of rock and soil sampling followed by trenching and drilling to confirm historic results, expand on those results, and identify new exploration targets. The 2013 program confirms the location of the historic prospects and a systematic 2014 program is currently in the planning stage.

Alaska Range

Usibelli Coal Mine Inc. recently announced an energy and economic impact summary of its Healy coal mining operations. The company’s 2 million ton per year operation is split about evenly between domestic consumers and foreign consumers. The coal used in Interior Alaska power plants provides one-third of the region’s power needs at the lowest cost per Btu of any of the available fuel sources utilized, including diesel, naphtha and natural gas. In 2012 alone, the company spent US$72 million in Alaska with 400 different suppliers, service providers and organizations. A total of 577 Interior Alaska jobs and US$44 million in annual payroll are connected with coal mining, distribution and consumption. Statewide, the company contributes US$52 million to 692 workers. The University of Alaska recently completed a study that showed that coal was the most cost-effective option for its planned powerhouse replacement project. The difference between coal, natural gas and diesel was arresting: natural gas was 4-5 times more expensive while diesel was 6-7 times more expensive, a cost savings of US$17 million to $25 million per year for the university. And for those of you who are members of Golden Valley Electric Association, as I am, you will the following cost numbers telling: GVEA’s cost per kilowatt hour when using coal is 5 cents, while other possible sources come in at 5 cents for hydroelectric, 9 cents for wind, 11 cents for natural gas, 17 cents for naphtha and 30 cents for diesel.

WestMountain Gold Inc. provided an update on its high-grade Ben Vein at its flagship Terra project in western Alaska Range. The company’s 2013 bulk sample program netted 275 ounces of gold. This doré came from a 75-ton bulk sample at an average head grade of 5 ounces-per-ton gold at a recovery rate of 60-70 percent. The company invested US$2.2 million at the project during 2013, of which US$1.6 million were for capital expenditures and $600,000 for exploration expenses. Capital expenditures included improvements in the 1-2 ton-per-day bulk sample mill, camp and access. The company hopes to collar an adit below the Ben vein in 2014 and process a 2,000-ton bulk sample. In addition, WestMountain plans to complete mill and access/infrastructure upgrades, complete an airborne aeromagnetic survey over the project and continue exploration of the Ben vein and other known veins on the project.

Northern Alaska

NovaCopper Inc. announced additional data from re-assaying of historic drill holes at its Bornite project in the Ambler District. These historical drill holes within the Ruby Creek zone were previously drilled but only selectively sampled by Kennecott. The resampling effort included 11,067 meters of drilling in 333 historical drill holes. Two additional metallurgical holes also have been completed and will eventually be incorporated into the resource model once metallurgical testing has been completed. Significant results from the re-assayed holes include RC29, which intersected 106.9 meters grading of 1.04 percent copper, hole RC30 which intersected 64.0 meters grading 1.16 percent copper, hole RC34 which intercepted 68 meters grading 1.03 percent copper, hole RC35W which intersected 25.6 meters grading 1.176 percent copper, hole RC50 which intersected 48.2 meters grading 1.26 percent copper, hole RC54 which intersected 77.0 meters grading 3.24 percent copper, and hole RC87 which intersected 58.0 meters grading 1.16 percent copper. The re-sampling and re-assaying program is expected to contribute to an increase in the mineral resource estimate at the Ruby Creek zone. Results from this re-logging and re-sampling program will be incorporated into a new industry-compliant resource estimate, which the company expects will be completed during the first half of 2014.

Southeast Alaska

Coeur Mining Inc. announced a summary of operating and financial highlights for the Kensington mine for the fourth quarter and full-year 2013. The mined produced 37,404 ounces of gold in the 4th quarter, up from the 28,717 ounces of gold in the fourth quarter of 2012. This 29 percent increase in production was due in large part to a 30 percent increase in head grades. For the year, the mine produced 114,821 ounces of gold, up significantly from 2012’s total production of 82,125 ounces of gold. Fourth-quarter cash operating costs are expected to be US$746 per ounce, about 24 percent lower than the company’s third-quarter 2013 results. Full-year 2013 cash operating costs are expected to be US$949 per ounce. The mine processed 149,246 tons of ore in the 4th quarter at an average grade of 0.26 ounces per ton. Average recovery was an impressive 96 percent. For the full year 2013, the mine processed 553,717 tons of ore grading 0.21 ounces per ton with an average recovery of 96.6 percent. The mine is expected to produce 105,000 to 112,000 ounces of gold in 2014.



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