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Vol. 15, No. 30 Week of July 25, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Kensington opening benefits Coeur, Juneau

Startup of production at the underground gold mine is expected to bolster the Idaho miner’s performance, capital city’s economy

Shane Lasley

Mining News

In June 2009, the U.S. Supreme Court handed down a 6-3 ruling that upheld a tailings disposal permit for the Kensington gold mine near Juneau. 

Owner Coeur d’Alene Mines Corp. fired up Kensington’s mill June 24, one year and two days after the high court made its decision.

“The startup of production at Kensington represents the culmination of a communitywide effort by the Juneau community, which has supported the project from the beginning and who will participate in the economic benefits Kensington will provide,” said Coeur President and CEO Dennis E. Wheeler.

Coeur expects the underground mine to produce 50,000 ounces of gold during the rest of 2010 and about 125,000 ounces of gold annually during the operation’s initial 12.5-year mine life. Once in full production, cash costs are expected to average about US$490 per ounce.

“Kensington represents Coeur’s third new precious metals mine to commence production in the past three years and will provide continued, meaningful growth to the company’s production and cash flow,” Wheeler said.

In addition to bolstering Coeur’s bottom line, Kensington is strengthening the economy in and around Alaska’s capital city.

“Kensington’s opening is the best news that our region has had in years.  It means the employment of hundreds of local men and women in careers that provide year-round, family wage jobs,” State Rep. Cathy Muñoz, R-Juneau, told Mining News July 14.

Along with providing some US$25 million in annual payroll, the Juneau-area mine has spent US$19.3 million on supplies and services in the region and is expected to generate about US$2.5 million in local tax revenue.

“Alaska now has six large operating mines providing high quality, skilled, year-round jobs. Given the opportunity, this is only the beginning of what should be a significant diversification of Alaska’s economy,” said Alaska Miners Association Executive Director Steve Borell.

Long road to production

Coeur has been working toward putting Kensington into production since it acquired the high-grade gold project in the mid-1990s.

After shelving the project when gold prices plummeted at the turn of the century, the Idaho-based miner acquired permits for the project in 2005. Environmental groups quickly challenged the permits, sparking a legal battle that ultimately was decided by justices of the nation’s highest court.

“Kensington was nearly derailed by environmental NGO harassment and lawsuits. However, the company and its supporters in the community pressed on and were able to prevail, even going to the U.S. Supreme Court to defend the very rigorous permitting process,” Borell explained. 

The high court’s ruling, however, was not the final chapter in Coeur’s long saga to begin production at Kensington. Shortly after the high court affirmed the company’s permit to dispose of tailings in a nearby lake, the U.S. Environmental Protection Agency solicited the U.S. Army Corps of Engineers to reconsider the tailings permit issued for Kensington.

This unprecedented move by the EPA prompted many of Muñoz’s constituents to rally to the support of the Juneau-area gold mine.

“Last year, after the Supreme Court ruled in favor of the Kensington, the EPA interjected its authority into the Corps of Engineers 404 permit.  This action was unusual, and risked further delays in the opening of the project,” the Juneau representative explained.  “The community of Juneau came together and rallied in support of the Kensington’s final approval.  Many individuals and groups wrote letters and the Alaska State Legislature passed resolutions urging the cooperation and opening of the mine.” 

In August the Corps re-issued the long-disputed permit, clearing the way for Coeur to complete construction needed to begin operations at Kensington.

“After nearly 20 years in the permitting and development stages, it is wonderful to see Kensington up and running,” Muñoz said. “Kensington is a great project.  The leadership team has worked hard to ensure that the public is informed throughout all stages of development, and the project is planned in a way that works extremely well with the natural environment.”

Juneau’s mining legacy

Gold mining dates back to Juneau’s very foundation and the opening of the Kensington Mine continues the capitol city’s 130-year legacy as a gold mining town.

“Juneau was built on gold production.  We have one of the most outstanding trail systems in the world because of the history of mining in our area,” Muñoz explained.

In 1880 Auk Chief Kowee, a Tlingit from nearby Admiralty Island, led prospectors Joe Juneau and Richard Harris to the headwaters of the appropriately named Gold Creek. The capital city, named Harrisburg before being changed to Juneau, was established near the find later the same year.

In 1881 operations began at the Treadwell gold mine located southeast of Juneau. At its peak, Treadwell employed 2,000 Juneau residents and was the largest gold mine in the world. From 1881 to 1922, more than 3 million troy ounces of gold were extracted from the mine.

Gold was discovered on the Kensington property around 1895. Between the Jualin and Kensington mines, both now encompassed by Coeur’s property, 40,513 ounces of gold from 75,208 tons of ore was recovered from 1896 to 1928.

Over the initial 12-year mine life of the contemporary Kensington mine, Coeur plans to add 1.5 million ounces to the 7 million ounces of lode gold historically produced in the Juneau Mining District.

Good jobs

Though Kensington will not rival Treadwell in shear manpower, the modern-day mine will provide good paying jobs to some 200 full-time employees, most of whom live in Southeast Alaska.

“It is important for young people of a community to see opportunities, and the Kensington is a project that provides multiple career opportunities (such as) direct mining, geology, engineering, human resource management and business,” Muñoz said.

Six of Kensington’s newest employees are June 18 graduates of the Entry Level Underground Miner training program in Juneau, an innovative course that prepares Alaska residents to work in the mining industry.

Alaska mining companies, in collaboration with the Alaska Department of Labor and Workforce Development’s Employment Security Division as well as the University of Alaska’s Mining and Petroleum Training Service developed the curriculum for the new miner training.

“By partnering with industry, we are developing a premier work-force development model that will meet employers’ needs,” Labor Deputy Commissioner David Stone said. “Our goal is to increase the ability of companies to hire locally and keep dollars in Alaska, helping raise the standard of living in our communities.”

Alaskan miners earn an average salary of US$83,000 a year.

“As somebody who grew up in Southeast and has seen the ups and downs of our economy, it is very gratifying to see the hope that is generated by good employment; employment that pays benefits and provides opportunity for advancement,” Muñoz said.

Coeur also works closely with Berners Bay Consortium, made up of Klukwan Inc., Kake Tribal and Goldbelt Native corporations, for on-the-job training and supporting local Native hire at Kensington.

“Kensington is an example of the benefits that mining can bring to communities all across the state.  For most of the state, mining provides the very best opportunity for local jobs and local economic development.  And for some areas it is the only viable alternative for family wage jobs,” Borell said.



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