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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining Explorers 2012: Alaska exploration takes a hit

Down but not out, a number of juniors fund drill programs across state

Shane Lasley

Mining News

Ending a streak of robust growth, mineral exploration spending in Alaska during 2012 took a downward turn from the record US$300 million spent a year earlier.

“More advanced-stage projects that added ounces or pounds to their resource base had a better go of it than early-stage exploration projects which have taken a hard right cross to the jaw!” Curt Freeman, a well-known Alaska geologist and president of Fairbanks-based Avalon Development, observed in September.

This blow delivered by unrelenting turmoil and uncertainty in the global financial markets was felt by junior explorers all year.

Greg Beischer, president and CEO of Millrock Resources Inc., said the scarcity of venture capital available to the junior exploration sector was palpable at the Cambridge House World Resource Investment Conference he attended in June.

“Things are dire,” he told Mining News upon returning from the Vancouver, B.C. gathering. “I think that companies that have money are conserving it, because there is no telling when they will be able to raise money again – those that don’t have money are in big trouble.”

Despite the dismal equity markets, a number of juniors had enough money to mount 2012 exploration programs in Alaska – others found alternative means to continue advancing their projects.

“Down maybe but not out, this industry is fueled by an irrepressible optimism that we can and do create new wealth from a patch of dirt,” Freeman said. “While nobody can tell us what the future will bring, this industry is the living embodiment of the old Chinese proverb that says ‘Those who say it cannot be done should not interrupt those doing it.’”

Gold and copper once again topped the list of minerals sought in 2012 by junior and senior mining companies exploring Alaska. Explorers also chased clues to stores of silver, zinc, graphite and rare earth elements across the vast expanse of the Far North state.

Copper-rich northwest

Though exploration activity slowed across many regions of the 49th state during the year, a pair of companies spent some US$20 million investigating the Ambler Mining District – a region of Northwest Alaska renown for a 70-mile- (110 kilometers) long belt of world-class volcanogenic massive sulfide deposits.

NovaCopper Inc. – spun out of NovaGold Resources Inc. to explore and develop copper-rich deposits in the Ambler District – mounted a US$16.5 million exploration program aimed at adding to the some 3.6 billion pounds of copper resources the company and its predecessors have already outlined in the district.

About 2.6 billion pounds of this copper is found at the Arctic VMS deposit. The remaining 1 billion pounds is contained in the Ruby zone at Bornite – a carbonate replacement style deposit situated about 17 miles (27 kilometers) southwest of Arctic.

The marriage of these copper-rich deposits is the product of a partnership between NovaCopper and NANA Regional Corp., an Alaska Native regional corporation owned by the Inupiat who have called Northwest Alaska home for eons.

The Upper Kobuk Mineral Project – the name given to the alliance – focused the bulk of some 17,000 meters of drilling carried out this year on South Reef, a prospect situated roughly 250 meters east of the Ruby Creek resource.

Drilling at South Reef in 2011 encountered exceptional copper values including: DH-187, which cut 178 meters averaging 4.01 percent copper, including a 34.7-meter section grading 12.03 percent copper.

The 2012 drilling at South Reef continues to cut robust copper grades.

RC12-202, an early hole of the 2012 program, cut three mineralized intervals with a composite total of 50.1 meters averaging 3 percent copper, including 7.8 meters averaging 12 percent copper.

“These deposits are unfolding in a way that makes the Ambler district one of the most exciting copper plays in the world,” said NovaCopper President and CEO Rick Van Nieuwenhuyse.

NovaCopper was not the lone explorer in the Ambler Mining District. Andover Mining Corp. invested US$3.5 million on expanding the copper-silver-zinc-lead-gold mineralization at its Sun project located some 35 miles (55 kilometers) east of the Arctic deposit.

In 1977, Anaconda Copper Mining had a resource calculated for Main Sun deposit of 2.4 million tons averaging 2.39 ounces per ton silver, 1.93 percent copper, 4.51 percent zinc and 1.2 percent lead; plus a larger underground resource of 17.89 million tons averaging 2.37 o/t silver, 1.91 percent copper, 2.46 percent zinc and 1.18 percent lead.

One of the primary goals of Andover’s 2012 drill program at Sun is to upgrade and expand this resource.

“We designed our program this year to enable us to come out with a new resource calculation this fall and then move straight to PEA,” Andover Chairman and CEO Gordon Blankstein told Mining News.

SUN 12-29 – the first hole of the 2012 program – cut three zones of mineralization. From a depth of 71.9 meters, hole 29 cut 8.6 meters averaging 1.5 percent copper, 9 percent zinc, 1.6 percent lead, 66.2 g/t silver and 0.19 g/t gold. From 100.5 meters this hole intersected 6.2 meters averaging 2.7 percent copper, 6.5 percent zinc 1.3 percent lead, 116.4 g/t silver and 0.40 g/t gold. At a depth of 130 meters, this hole cut 2.3 meters averaging 1.7 percent copper, 1 percent zinc, 0.26 percent lead, 48.9 g/t silver and 0.14 g/t gold.

S.W. Sun, a fault off-set extension of Main Sun, was also targeted in 2012.

Early results from the 2012 drilling at S.W. Sun include SUN 12-34, which cut 4 meters (3.6 meters true width) averaging 1.02 percent copper, 80.7 g/t silver, 6.45 percent zinc, 2.13 percent lead and 0.21 g/t gold.

As Andover and NovaCopper continue to add to the high-grade deposits in the district, the state of Alaska is studying the potential of building a road that links Ambler to the highway system some 200 miles (320 kilometers) to the east.

Over the past three years, Alaska has invested some US$9.25 million toward making this vital transportation link a reality.

“If there was a road into there (Ambler District) you would be able to build at least two or three mines with what is already known, and we have probably 50 prospects with at least half with historic drilling on them,” said Van Nieuwenhuyse.

Bering Sea graphite

From the 1899 Nome Gold Rush to the Discovery Channel’s recent reality series, “Bering Sea Gold”, the Seward Peninsula has become legendary for roughly 5 million ounces of alluvial gold mined from its beaches and streams.

Though a growing crowd of individual and corporate miners continue to dredge aurum from beneath the Bering Sea waves breaking on the golden beaches of Nome, this 20,600-square-mile isthmus protruding off western Alaska is rich in a vast array of minerals.

An enormous store of graphite is one of the non-gold resources found here.

Anticipating the demand for graphite to skyrocket, Graphite One Resources Inc. is taking a fresh look at the aptly named Graphite Creek project about 40 miles (65 kilometers) north of Nome.

Some 200 million metric tons of ore at the Graphite Creek project has historically been estimated to hold 6 million to 20 million metric tons of crystalline-flake graphite.

An 18-hole, 4,248-meter drill program carried out by Graphite One focused on bringing this resource up to modern standards.

The tenor of the mineralization at the project is exemplified by 353 meters of 2.7 percent graphite cut in 12GC002, the second hole of the 2012 program.

“The results from this year’s program continue to be exciting as they show us the continuity of this high-grade, large-flake graphite ore body,” said Graphite One Resources President Anthony Huston.

An NI-43 101-compliant resource calculation for Graphite Creek is expected by early 2013.

While graphite grabbed the largest exploration program on the Seward Peninsula, the search for the lode source of the placer gold the isthmus is famous for continued in 2012.

Millrock Resources, in partnership with Kinross Gold Corp., drilled some 1,200 meters to find the source of some 1 million ounces of alluvial aurum recovered from the streams draining its Council project. This program targeted a northwest trending fault at the Elkhorn Creek zone.

NANA – which boasts the Red Dog Mine and Ambler Mining district as part of its traditional territory – is seeking the lode source of some 580,000 ounces of alluvial aurum recovered from the Fairhaven Mining District on the north coast of the Seward Peninsula.

“There is very little outcrop on the northern part of the Seward Peninsula – those districts have produced a fair bit of gold, and there is known copper and zinc occurrences all through that country,” explains NovaCopper’s Van Nieuwenhuyse.

Despite the limited bedrock exposure, geochemical survey carried out by NANA geologists have outlined an orogenic-stratabound gold system adjacent to the Kugruk Fault.

Rock samples gathered at Motherwood Point, where this major fault emerges on the northern shore of the Seward Peninsula, have returned assays of up to 9.4 g/t and 7.6 g/t silver.

Golden Arc

Even in tough financial markets, the prolific Tintina Gold Belt continues to draw robust exploration programs. Though this vast aurum province that sweeps some 850 miles (1,350 kilometers) across the breadth of Alaska has given up Fort Knox, Pogo, Donlin and Livengood; these world-class deposits only begin to account for the more than 17 million ounces of alluvial gold recovered from this Golden Arc.

Alaska’s portion of the Tintina Gold Belt can be divided into two distinct groups – the eastern extent, which runs from the Alaska-Yukon border some 300 miles (480 kilometers) into the state, and the 74,000-square-mile (190,000 square kilometers) Kuskokwim Mineral Belt in southwestern Alaska.

Freegold Ventures Ltd. was the first and among the most prolific of the junior explorers active in the eastern half of Alaska’s Golden Arc in 2012.

Located five miles (eight kilometers) north of the Fort Knox gold mine, Golden Summit blankets 80 known gold occurrences, including three high-grade, past-producing gold operations – Cleary Hill, Hi Yu and American Eagle.

Although remnants of these high-grade vein systems remain, Freegold is focused on large, bulk-tonnage targets more akin to Fort Knox or Kinross’ True North Mine about 3.5 kilometers (two miles) to the west.

According to a late 2011 calculation, the Dolphin zone at Golden Summit contains an indicated resource of 14.84 million metric tons averaging 0.66 g/t (316,000 oz) gold; and an inferred resource of 50.46 million metric tons averaging 0.61 g/t (991,000 oz) gold.

A 15,000-meter program carried out by Freegold in 2012 aimed at significantly expanding this resource and connecting it to the nearby Cleary Hill Mine area, a target that demonstrates similar size and tenor to the Dolphin zone.

Among the most exciting developments in the eastern portion of Alaska’s Tintina Gold Belt is a high-grade gold discovery made at Sumitomo Metal Mining’s Pogo Mine.

The first 2 million ounces of gold produced at Pogo were mined from the Liese zone – three flat-lying, parallel quartz veins that carry some 14 g/t gold.

The gold-rich veins of the Liese zone end abruptly where they come in contact with a gold-barren body of diorite to the northeast.

Drilling on the north side of this diorite has discovered a new deposit known as Deep Trench. According to a March statement by Sumitomo, drilling here has outlined 12.33 million metric tons averaging 12.5 g/t (1.3 million ounces) gold.

The total extent of this zone is unknown and the deposit – being extensively drilled in 2012 – remains open to the west, north and northeast.

Many geologists believe that Pogo is only the first economical gold deposit that will be discovered in this region of Interior Alaska.

“I honestly believe that there will be other ore-bodies found in that area. It is very underexplored so far,” said Millrock President and CEO Beischer. “There is going to be more mines in that region.”

Millrock, Freegold Ventures and Corvus are amongst the junior explorers with promising land positions in the area around Pogo.

Kuskokwim Mineral Belt

The geology of the Tintina Gold Belt begins to change as it dips towards Southwest Alaska. This sub-region – referred to as the Kuskokwim Mineral Belt – has produced some 4 million ounces of gold, 500,000 ounces of silver and more than 40 million ounces of mercury.

The 40-million-ounce Donlin Gold project — being developed by Barrick Gold Corp. and NovaGold Resources Inc. — is the crown jewel of the Kuskokwim. The search for other large intrusive-related gold deposits in this promising region of Southwest Alaska continues.

“There are a lot of porphyries throughout that belt that are a similar age to Donlin so I think there is tremendous opportunity there,” said Van Nieuwenhuyse.

Hoping to expand upon a 1.74-million-ounce gold resource at its Vinasale project – situated about 90 miles (145 kilometers) northwest of Donlin – Freegold Ventures is one of the few juniors that mounted drill programs in the northern regions of the Kuskokwim during 2012.

Toward the south end of this mineral belt, TNR Gold has set out to confirm a historic 1-million-ounce gold resource at its Shotgun project.

Located about 110 miles (175 kilometers) south of Donlin and about the same distance northeast of Pebble, the property lies at the intersection of two trends known to host big deposits.

Like most juniors, TNR Gold’s share price was hammered by the global financial unrest. This undervaluation, though, did not prevent the company from securing a C$3.5 million loan to fund a drill program aimed at bringing the 980,000 ounce gold resource there up to NI 43-101 compliance.

SR12-56, the first hole of this program, cut 242 meters averaging 1.25 grams per metric ton gold.

Besides Donlin Creek-style mineralization, the Kuskokwim region also hosts Nixon Fork, a carbonate skarn deposit rich in copper, silver and high-grade gold. Mercury, antimony, tin, platinum, tungsten, rare earth elements, and native bismuth have been recovered with the placer gold found along this mineral-rich belt.

Porphyry-rich southwest

A band of terranes paralleling the Tintina Gold Belt to the south are rich in minerals and steeped in controversy. This arc consists of the Wrangellia Composite and Kahiltna terranes, two interrelated but distinct assemblages.

The Kahiltna Terrane – home of the enormous and contested Pebble deposit being advanced by Anglo American plc and Northern Dynasty Ltd. – is highly regarded for its potential to host other world-class porphyry copper-gold and intrusive gold deposits.

With its 80.6 billion pounds of copper, 107.4 million ounces of gold and 5.6 billion pounds of molybdenum, the Pebble deposit ranks amongst the world’s largest for any of these metals – combined it is extraordinary.

Formed when the Wrangellia Composite Terrane thrust up the ocean floor as it collided with Alaska and pumped with copper and gold-bearing fluids at least twice, the more that 650-kilometer (400 miles) long Kahiltna Terrane provides the ideal setting for enormous porphyry deposits.

Millrock Resources continues to be amongst the most tenacious of the explorers in the Kahiltna Terrane.

Kinross has partnered with Millrock to explore Humble, a prospect that demonstrates similarities to Pebble, located about 80 miles (130 kilometers) to the east.

Targeting coincidental geochemical and geophysical anomalies, Millrock and Kinross conducted a four-hole drill program at Humble in 2012.

Millrock has also forged a strategic alliance with Brazil-based mining giant Vale S.A. to generate porphyry prospects in the Kahiltna Terrane.

“They would love to find another Pebble — as would we,” Millrock CEO Beischer explained.

Porphyry copper is not the only mineralization Millrock is after in the Kahiltna Terrane. Teck Resources Ltd. is funding exploration at the junior’s gold dominated Estelle project situated in the heart of the assemblage.

A four-hole drill program funded by Teck in 2011 provided for the first drilling at Estelle since Millrock acquired the expansive property in 2008. This program included 450.7 meters averaging 0.38 g/t gold in hole SE11-01, the discovery hole of a prospect known as Oxide.

SE12-04, drilled to the southeast of the discovery hole, cut 41.5 meters averaging 1.1 g/t gold, indicating the partners are narrowing in on the zone they are seeking. A strong geophysical anomaly further southeast is the planned focus of drilling in 2013.

The 2012 drilling at Estelle also cut promising gold at RPM and West Wing, two discoveries made across the 313-square-kilometer Estelle project.

A belt of much younger porphyries can be found further southwest on the Alaska Peninsula and Aleutian Islands.

Several epithermal gold and porphyry copper-gold mineralizing systems have been identified along the nearly 1,600-kilometer- (1,000 miles) long Ring of Fire island arc.

Full Metal Minerals Ltd. – which has an agreement to explore around 1.4 million acres of prospective Native-owned land on the Alaska Peninsula – is focused on the Pyramid copper-gold-molybdenum porphyry project.

The Vancouver, B.C.-based junior and its Chile-based project partner, Antofagasta Minerals S.A. carried out a 3,000-meter drill program to expand and upgrade a historic resource of 125 million metric tons of near-surface mineralization grading 0.403 percent copper and 0.025 percent molybdenum.

Results from the 2012 drilling include hole PY12-019, which cut a high-grade zone averaging 1.01 percent copper, 0.165 grams per metric ton gold and 0.009 percent molybdenum over 42 meters, from 24 meters down-hole.

Golden discoveries in Southeast

The Southeast Alaska panhandle has no shortage of precious, base and rare earth metals deposits and prospects.

Herbert Glacier – a high-grade gold deposit in the heart of the 100-mile (160 kilometers) long Juneau Gold Belt – is one such target.

Based on 65 holes and four trenches completed at Herbert Glacier through 2011, Grande Portage Resources Ltd. produced an inferred resource of 245,145 ounces of gold at an average grade of 4.86 grams per metric ton in 1.57 million metric tons of ore early in 2012

A 15,000-meter drill campaign being conducted by Grande Portage in 2012 is focused on upgrading and expanding this inaugural resource. This program is highlighted by a 3.6-meter intercept averaging 117.5 and an 8.08-meters interval averaging 55.53 g/t gold.

A 725-kilometer- (450 miles) long belt of VMS deposits that stretches along the entire length of the Southeast Alaska panhandle.

At the southern end of this belt, Heatherdale Resources Corp. is continuing to expand a precious metals-rich deposit at its Niblack VMS project on Prince of Wales Island.

According to a resource estimate released in 2011, Niblack contains an indicated resource of 4.1 million metric tons averaging 1.13 percent copper, 2.32 grams per metric ton gold, 2.27 percent zinc and 38.7 g/t silver; and an additional inferred resource of 1.74 million metric tons grading 1.21 percent copper, 1.77 g/t gold, 2.29 percent zinc and 25.90 g/t silver.

Heatherdale’s 2012 program at Niblack is expanding this resource in preparation for a prefeasibility study expected to be completed by mid-2013.

Situated about 15 miles (25 kilometers) south of Niblack, Ucore Rare Metals Inc. is advancing its Bokan Mountain REE project toward production.

Bokan – the most advanced of a band of REE targets that span the Southeast Alaska Panhandle – hosts an inferred mineral resource of 3.7 million metric tons grading 0.75 percent total rare earth oxides.

Though not particularly large or high-grade, around 39 percent of the REEs at Bokan are the highly valued heavy rare earth oxides.

Ucore believes this heavy REE-enriched Bokan deposit holds great potential for the U.S. to develop a fully independent rare earth industry.

“Ucore is actively pursuing collaboration with the U.S. government to accelerate the development of Bokan Mountain’s heavy rare earth resources, and is pleased with the progress of federal initiatives to date,” said Ucore President and CEO Jim McKenzie.

From Ucore’s efforts to develop a domestic supply of heavy REEs to the billions of pounds of copper being drilled by NovaCopper 950 miles (1,500 kilometers) northwest, exploration companies continue “to create new wealth from a patch of dirt” across Alaska.

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