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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 joins ranks of big producers

New mine will boost Southeast Alaska economy; Murkowski promotes legislation to support mining of strategic rare earth minerals

Curt Freeman

For Mining News

Two seminal events related to the Alaska mining industry occurred in the past month.

First, in late June, Coeur d’Alene Mines Corp. reported the commencement of production at it Kensington gold mine near Juneau. The mine has now joined the ranks of large-scale producers here in Alaska but only after lots of years and lots of dollars, capped by a trip to the U.S. Supreme Court! Hat’s off to Coeur for its commitment to Alaska and for its desire to do this job right.

Secondly, earlier this month Sen. Lisa Murkowski, R-Alaska) introduced the Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2010 in the U.S. Senate. This bill, previously introduced by Colo. Rep. Mike Coffman in the U.S. House of Representatives, would re-establish competitive domestic rare earths mineral production, processing, refining, purification, and metals production industries to support the growth of green job technology and manufacturing as well as the nation’s defense industry. Alaska’s Bokan-Dotson Ridge Project was singled out by Sen. Murkowski as one of the most advanced rare earth projects in the country, and one that would greatly benefit from a federal mandate to explore for and develop domestic rare earth element supplies and production facilities.

Western Alaska

NovaGold Resources Inc. announced data on second quarter 2010 activities at its Donlin Creek project. NovaGold and partner Barrick Gold Corp. approved a budget of approximately US$47 million, with US$13.6 million spent year to date. During the second quarter, expenditures at the Donlin Creek project totaled approximately US$8.9 million. The 2010 work program will complete the majority of the environmental and engineering studies required to review the natural gas pipeline option for the project. If a decision is made to proceed with on-site power generation using natural gas, the partners will work with reputable engineering firms to revise the project feasibility study, positioning the project to file permit applications by the end of 2011.

At its Rock Creek gold project near Nome, NovaGold Resources has budgeted US$19.1 million for 2010, with US$10.2 million spent year to date. During the second quarter of 2010, expenditures at the Rock Creek project totaled approximately US$3.9 million. Work at the property is focused on water management and completing a detailed review to determine future developments at the project.

Zazu Metals Corp. announced the engagement of JDS Energy and Mining Inc. to assist in the development of the company’s Lik deposit. JDS will review economic parameters of the company’s previously released preliminary economic assessment to refine capital and operating cost figures.

Millrock Resources Inc. and joint venture partner Kinross Gold Corp. announced commencement of drilling at the Council gold project on the Seward Peninsula. The US$800,000 exploration program will include approximately 2,500 meters of reverse circulation drilling to test for lode gold deposits in the uplands surrounding the historic placer workings from which 300,000 ounces of placer gold have been recovered. The program is targeting sediment-hosted vein deposits which past exploration has indicated are the source for placer gold deposits.

Fire River Gold Corp. announced additional results from previously unreleased drilling at its Nixon Fork gold project near McGrath. Significant results include 4.2 ounces of gold per ton over 8.2 feet in hole N07U065 and 3.15 oz/t gold over 9.8 feet in hole N07U063. The company also announced that it had recovered 900.5 ounces of gold from clean-up of the ball mill at the project. This bullion generated US$1,082,507 that will be used to fund ongoing exploration efforts.

Freegold Ventures and Western Standard Metals said merger discussions between the companies have been terminated and that Western Standard has terminated its interest in the Vinasale gold project near McGrath. Freegold retains 100 percent of the property, under lease from Doyon Ltd.

Liberty Star Uranium and Metals Corp. announced that in order to pay its former lenders, the company has sold 60.7 square kilometers of its Big Chunk and Bonanza Hills project acreage in consideration for both US$1 million cash payment and a US$3 million convertible loan from Northern Dynasty Minerals Ltd. The purchase of the claims and the loan are interdependent. The loan is secured by the company’s Big Chunk and Bonanza Hills properties and accrues interest at 10 percent per annum. As part of the transaction and subject to completing a definitive earn-in option and joint venture agreement, Northern Dynasty can earn a 60 percent interest in the company’s Big Chunk and Bonanza Hills projects by spending C$10 million on those properties over six years.

Kiska Metals Corp. reported results from drilling at the Island Mountain prospect of the Whistler gold-copper property in Alaska. Drill hole IM10-004 was collared approximately 50 meters northeast on the same section as the 2009 Island Mountain Breccia discovery hole and intersected two zones of gold mineralization. An upper gold-copper zone averages 0.70 grams of gold per metric ton, 2.5 g/t silver and 0.16 percent copper over 129.8 meters starting at 31.2 meters depth and a lower gold-only intersection averages 0.78 g/t gold over 151.6 meters starting at a depth of 231.5 meters. Island Mountain is hosted within a 4.5 kilometer by 3 kilometer area of anomalous gold-copper soil and rock geochemistry and is located 23 kilometers south of the Whistler deposit. Mineralization in the upper zone is hosted within diorite crackle breccia and hydrothermal breccia cemented by an actinolite-biotite-magnetite-pyrrhotite-chalcopyrite matrix. Higher grade intersections correspond to zones where the breccia matrix comprises a greater proportion of the interval. Mineralization in the lower zone is hosted within moderate to strongly albite-biotite-actinolite altered diorite porphyry with variable 5-20 percent net-textured pyrrhotite and trace chalcopyrite. Additional drilling is planned for the Island Mt. and Round Mt. prospects this year.

Interior Alaska

Teryl Resources Corp. and joint venture partner Kinross Gold Corp. announced initial drilling results from their 16,000 foot drilling program at their Gil gold project near Fairbanks. Significant results include 50 feet of 0.0458 oz/t gold in hole GVR10-551, 30 feet of 0.0581 oz/t gold in hole GVR10-551 and 45 feet of 0.0427 oz/t gold in hole GVR10-558. Two drills are currently working to complete 5,000 feet of core and 11,000 feet of reverse circulation drilling. Assays for 13 additional holes are pending.

Freegold Ventures and Western Standard Metals announced that merger discussions between the companies have been terminated and that Western Standard has terminated its interest in the Golden Summit gold project near Fairbanks. Freegold retains 100 percent of the property, parts of which are under lease from private land owners.

Full Metal Minerals Ltd. announced that it has staked nine claim groups at its Rolling Thunder in the Fortymile district. The claim blocks target the lode source to significant placer gold producing areas. The project now covers 34,000 hectares spanning a trend over 100 kilometers in length. At the 20X prospect, grab samples from oxidized quartz veins returned 5.5 g/t gold and 4.0 g/t gold, with anomalous molybdenum and other pathfinder elements similar to the recently discovered White Gold deposit in the Yukon Territory. Nine samples were collected at 20X, ranging from 0.014-5.5 g/t gold, averaging 1.53 g/t gold. At the Tweeden prospect, a grab sample from a one meter wide quartz vein returned 52.2 g/t gold. Secondary structures splaying off of main structure assayed 1-2 g/t gold within sheeted quartz veins. Follow-up work has commenced on these new target areas.

Northern Alaska

NovaGold Resources announced data on second quarter activities at its Ambler massive sulfide project in the Brooks Range. The company has budgeted US$1.5 million at Ambler for 2010, with $80,000 spent year to date and expenditures of $60,000 during the second quarter of 2010. Work at the property is focused on initiating the environmental and engineering studies necessary to complete a pre-feasibility level study to assess project economics.

Goldrich Mining Co. announced that commercial gold production had begun at its Chandalar property in the Brooks Range. The company expects to produce 5,000-7,000 ounces of gold this operating season, which ends with freeze up in late September. The production level is anticipated to reach 30,000 ounces of gold per year at full production. Current operations were commissioned following successful test processing in 2009 of some 13,800 cubic yards last season that recovered about 500 ounces of fine gold. Drilling has shown the deposit contains more than 10.5 million cubic yards of mineralized material at an average grade of 0.02456 ounces gold per cubic yard.

Southeast Alaska

Coeur d’Alene Mines reported the start of production ahead of schedule at its Kensington gold mine north of Juneau. The company anticipates that the mine will produce 50,000 ounces of gold during the remainder of 2010 and will average approximately 125,000 ounces of gold annually over the mine’s initial 12.5 year life. Once in full production, cash costs are expected to average about $490 per ounce over the mine’s life. The mine will employ close to 200 workers during operations. The company works closely with Berners Bay Consortium, made up of Klukwan, Inc., Kake Tribal and Goldbelt Native corporations on job training and supporting local and Native hire at the mine. Coeur also announced that it has entered into a contract with China National Gold Group Corp., China’s largest gold producer, for the purchase and processing of gold concentrates produced at Kensington. This agreement is the first of its kind between a state-owned corporation of the People’s Republic of China and a U.S. precious metals mine. Congratulations Coeur, on a job well done!

The Beard Co. said it has selected Norwest Corp. to assist the company in its efforts to develop the Tanis Mesa and Black Sands gold properties near Yakutat. At the Black Sands project, samples have been submitted for magnetic separation of the magnetite and ilmenite and for gold and silver analysis. Efforts to verify the original assay results for the Tanis Mesa property have to date been unsuccessful so additional sampling is under way to allow more exhaustive analytical work.

Niblack Mineral Development Inc. and joint venture partner Heatherdale Resources Ltd. announced additional drilling results from their Niblack massive sulfide deposit on Prince of Wales Island. Significant results include 11.1 feet grading 1.08 percent copper, 2.13 g/t gold , 2.38 percent zinc and 57 g/t silver in hole U039, 13.7 feet grading 2.3 percent copper, 4.09 g/t gold , 0.94 percent zinc and 67 g/t silver in hole U041, 29.5 feet grading 1.06 percent copper, 1.38 g/t gold , 1.17 percent zinc and 28 g/t silver in hole U041, 40 feet grading 1.51 percent copper, 2.14 g/t gold , 1.1 percent zinc and 41 g/t silver in hole U044 and 14.5 feet grading 2.07 percent copper, 3.74 g/t gold , 2.15 percent zinc and 83 g/t silver in hole U050. The partners have completed 25,000 feet of drilling since initiating their phase 1 work program in the fall of 2009 and will now commence a second phase of drilling designed to complete an addition 50,000 feet of drilling.

Ucore Rare Metals Inc. (formerly Ucore Uranium) announced that drilling has commenced at its Bokan-Dotson Ridge rare earth element project. The US$3 million program will consist of diamond drilling with a minimum target of 4000 meters of core drilling. Exploration work will also include extensive ground mapping, surface sampling and mineralogical studies, as well as ground geophysics activities to assess more than 30 known rare earth element-bearing prospects which have never been drilled.

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