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Vol. 19, No. 51 Week of December 21, 2014
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: First Quantum eyes SW copper potential

Growing global miner joins Millrock on promising Alaska Peninsula Project; confirms porphyry system with drilling at Copper Joe

Shane Lasley

Mining News

Since buying out its mining rival Inmet Mining Corp. in early 2013, First Quantum Minerals Ltd. has shown a keen interest in Alaska’s copper potential.

With seven mines in operation and five mineral projects under development, First Quantum is a growing, diversified miner with a particular focus on copper. Its operating mines and development projects are located in Africa, Australia, Finland, Spain, Turkey and Latin America. Yet the company has no foothold in North America.

Carrying forward a relationship built between Inmet and Millrock Resources Corp., First Quantum is now exploring the possibility of expanding its copper business into Alaska.

Early in 2014, the copper miner cut a tentative deal with Millrock that gave it an exclusive right to option the aptly named Alaska Peninsula Project. This early-stage copper and gold project, involves roughly 500,000 acres (203,000 hectares) of Alaska Native land on the isthmus that extends into the Pacific Ocean from Southwest Alaska.

Millrock came by this extensive and highly prospective land package on the Alaska Peninsula through an exploration and option-lease agreement signed with the Bristol Bay Native Corp. in 2012.

“We are proud to engage with BBNC to responsibly explore for and develop mineral resources. We look forward to performing systematic regional-scale exploration and making great discoveries on these lands,” Millrock President and CEO Greg Beischer said at the time.

Towards that goal, Beischer told Mining News that the Millrock team has “has moved the project forward in a measured, systematic, careful fashion” over the past two years.

In addition to the agreement with Bristol Bay Native Corp., which owns the subsurface minerals rights, Millrock has consulted the five Native village corporations that own surface lands in the area.

“We have worked closely with the village corporations to secure surface use agreements for the purpose of early stage mineral exploration work,” Beischer said. “Local village corporations and residents can supply services for our activities, and we make a real effort to buy locally.”

Beischer, who worked several years prior to the 2007 founding of Millrock as a consulting geologist for BBNC, is quite familiar with the mineral potential of the Alaska Peninsula lands.

He and his team at Millrock also value the importance of keeping BBNC shareholders in the boardroom and villages alike abreast of its plans for the Alaska Peninsula project.

Millrock Executive Vice President Sarah Whicker said, “We look forward to building our relationships in the region as we further explore the potential of this project for all its stakeholders.”

Before committing to a longer term deal on Millrock’s Alaska Peninsula project, First Quantum invested US$600,000 towards a 2014 reconnaissance program aimed at investigating some of the more intriguing targets on the property. In exchange, Millrock granted First Quantum an exclusive right to an option to earn up to an 80 percent joint venture interest in the property if it liked what it saw on the first-pass exploration.

Though results from the 2014 program were not yet available in early December, First Quantum decided to move ahead with a longer term option on the Alaska Peninsula property, which likely indicates that the results met the copper miner’s expectations.

First Quantum’s interest in Alaska’s mineral potential also goes beyond the Alaska Peninsula. In August, the company secured a right to option Kiska Metals Corp.’s Copper Joe project, another prospective porphyry copper-gold property located just south of Kiska’s Whistler and Millrock’s Estelle properties in the Alaska Range of Southcentral Alaska.

Aleutian Arc

The Alaska Peninsula project extends roughly 75 miles (120 kilometers) from Stepovak Bay, near the southwestern end of the Alaska Peninsula, to just north of Chignik Bay, one of the primary ports in the area.

The project covers a portion of the Aleutian Arc, a Pacific Ring of Fire island arc being formed as the Pacific Ocean plate dives under the North American plate. This tectonic activity is witnessed in the geologically young mineralization – 3 million to 21 million years – being targeted by Millrock and First Quantum’s exploration.

The geologically active region has received limited modern exploration and is prospective for epithermal gold as well as intrusive-related deposits such as skarns and porphyry copper-gold mineralizing systems.

While systematic mineral exploration is limited, a number of prospects have been identified along the more than 1,000-mile (1,600 kilometers) long peninsula and island chain, including at least 34 know mineral occurrences on a roughly 1.6-million-acre (650,000 hectares) portion of this active island arc being explored by Millrock and First Quantum.

The initial exploration funded by First Quantum included 1,140 line-kilometers of high-resolution airborne magnetic and resistivity surveys flown over three of the highest quality porphyry copper-gold occurrences – Kawisgag, Mallard Duck Bay and Bee Creek – followed up by a mapping and sampling program that started in July.

Three prospects

The Kawisgag prospect, located near the southwestern extent of the Alaska Peninsula land package, hosts two main zones of mineralization. These zones – referred to as the northern cirque and southern cirque areas – are inferred to merge below the ridge that separates them.

Airborne magnetic surveys carried out this year now define the limits of the magnetic intrusions and magnetic alteration. Zoned, large-scale, multi-element geochemical anomalies and porphyry copper-gold deposit alteration zones were defined.

While results from any sampling completed in 2014 have yet to be released, a soil grab sample collected from the Kawisgag prospect in 2012 returned encouraging results of 1.24 grams-per-metric-ton gold, 123 parts-per-million copper and 79 ppm molybdenum.

Millrock says a number of viable drill targets have been identified at Kawisgag.

Located about 45 miles (70 kilometers) northwest of Kawisgag, the Mallard Duck Bay prospect hosts an underexplored 809.4-hectare (2,000 acres) alteration zone situated five kilometers (three miles) south of Chignik Lagoon that has never been drilled. The zone of hydrothermal alteration has been dated at about 21 million years. Induced polarization and ground magnetic surveys completed in 2005 identified two chargeability anomalies, one coincident with exposed mineralization in a potassic alteration zone.

Millrock says airborne magnetic surveys, mapping and rock sampling have helped refine the geological interpretation at Mallard Duck Bay.

While Mallard Duck Bay is the earliest staged of the three prospects, geochemical sampling done in 2014 delineated several strongly anomalous zones that could warrant drilling.

Bee Creek, situated roughly 20 miles (32 kilometers) north of Mallard Duck Bay, is the most advanced prospect at the Alaska Peninsula project.

Dated at roughly 3.6 million years, the mineralization at Bee Creek is hosted in hornfelsed sediments intruded by multi-phase diorite intrusive rocks containing mineralized veins and disseminated chalcopyrite, molybdenite and pyrite.

The prospect was initially explored by Bear Creek Mining, which drilled five holes in 1976.

In 2005 and 2006, Metallica Resources Inc. and Full Metal Minerals Ltd. carried out geochemical and geophysical surveys, and drilled two holes. One of the holes cut 118 meters averaging 0.31 percent copper, 0.009 percent molybdenum and 0.126 grams per metric ton gold. Mineralization, alteration and anomalous copper values in soils and rocks extend over a broad area at the Bee Creek prospect.

As a result of the work done this year, Millrock now knows that mineralization, alteration and metallic anomalies in soil occur over a substantial area.

A 2014 airborne magnetic survey indicates the known mineralization may continue to the southwest below a ridge in that area. The soil geochemical results indicate a zoned distribution with high copper, gold and molybdenum in a core area surrounded by a halo of anomalous zinc, lead and manganese.

Although several holes have been drilled at the property, only a small portion of the geochemical and geophysical anomalies have been tested.

Though Millrock and First Quantum have yet to fully develop an exploration plan for 2015, Bee Creek represents the most promising of the drill targets.

Philip St. George, Millrock’s chief exploration officer, said, “The results of the initial exploration program are quite encouraging, and we look forward to testing the drill targets that emerge from the program in 2015.”

Millrock plans to have the 2015 work plan for the Alaska Peninsula project developed by early in the second quarter.

Copper Joe

In August, First Quantum increased its exploration profile in Alaska by cutting another tentative deal on Kiska Metals Corp.’s Copper Joe property located roughly 110 miles (175 kilometers) northwest of Anchorage.

Situated roughly 20 miles (30 kilometers) southwest of both Kiska’s Whistler and Millrock’s Estelle projects, Copper Joe is in a region of Southcentral Alaska known for its copper-gold potential.

To secure the exclusive right to option the property, First Quantum funded a late-season drill program.

Originally slated to be 1,500 meters, the program included 885 meters of drilling in two holes. In early December, Kiska reported that the drilling did not return any significant assay results, but confirmed the presence of a strong porphyry-hydrothermal system.

Kiska and First Quantum are currently undertaking an alteration and mineral chemistry study of rocks from surface and drill core to further evaluate the property and potentially identify vectors towards the core of the porphyry system.

First Quantum has until the end of March 2015 to notify Kiska of its intentions regarding an option to enter a joint venture on the Copper Joe project.

If the copper miner chooses to pursue an option at Copper Joe, it can earn an initial 51 percent interest by investing US$5 million in the project by 2017. First Quantum’s interest would increase to 80 percent if Copper Joe was advanced to a production decision.

Kiska holds an exclusive right to acquire a 100 percent interest in the mining claims that comprise the Copper Joe Project from Kennecott Exploration Company pursuant to an option agreement which was amended to, among other things, permit the transfer of rights or interests of Kiska under the Copper Joe agreement to First Quantum.

Kiska may exercise its option under the Copper Joe agreement to acquire a 100 percent interest in the Copper Joe Project upon the expenditure of US$5 million by Dec. 31, 2018. First Quantum’s initial earn-in would cover this expense, and upon the vesting of Kiska's interest, 51 percent of such interest will be transferred to First Quantum.

Under the amended Copper Joe agreement with Kennecott, First Quantum would pay Kennecott US$10 million upon the completion of a pre-feasibility study, and US$5 million upon the announcement of a decision to mine.

In addition to these milestone payments, Kennecott would retain a royalty on the Copper Joe project.

“Kiska is very pleased to be able to restructure the Copper Joe agreement, and welcome First Quantum as a new partner on the project. The agreement provides Kiska with the opportunity to retain an important carried interest in the project, and is an excellent example of Kiska executing the prospect generator business model to create shareholder value,” said Kiska President Grant Ewing.

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