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Vol. 21, No. 5 Week of January 31, 2016
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Pogo celebrates 10 years

Manager recounts a decade of travails and triumphs at Alaska gold mine

Shane Lasley

Mining News

On Jan. 12, 2006, the first ore from high-grade underground gold reserves was fed into the mill at the Pogo Mine located near the community of Delta Junction in Alaska’s Interior region. Ten years, four floods, two fires and some 3.1 million ounces of gold later, the operation is seen as an example of mining done right.

Pogo General Manager Chris Kennedy shared a decade of travails and triumphs, and the lessons learned, during a presentation at the Jan. 21 Resource Development Council breakfast in Anchorage.

“The main thing that we have learned is there are a lot of challenges out there but they are nothing you can’t overcome if you spend the time, do it the right way, and do it safely,” the mine manager told business and community leaders at the gathering.

Kennedy attributes much of Pogo’s success to the mine’s management team and encouraged the business leaders assembled to find good people to fill leadership roles.

“That’s the key for all general managers to look for; good individuals that can help guide the people under them,” he advised.

“Get good people, get them up front as soon as you can,” Kennedy added.

Strong leadership and conscientious employees has helped elevate Pogo from a fledgling mine with a tumultuous start to an efficient operation that boasts more than two years without a lost-time injury and that is looking ahead to a golden future that could span decades.

Tumultuous start

After more than two decades of exploration and permitting, the startup of operation in January 2006 and the pouring of the first gold bar was welcome news for then-owners of Pogo – Teck Cominco Ltd., operator with 40 percent interest; Sumitomo Metal Mining Co. Ltd., 51 percent interest; and Sumitomo Corp., 9 percent.

The celebration, however, was short-lived for the owners of the up-start mine.

The troubles began when the Goodpaster River flooded, inundating the lower camp at Pogo that summer. While this presented a logistics problem for owners and a blow to employee morale, it was not the biggest setback for the mine that year.

In October, a high-voltage cable was severed underground, causing a fire in the main electrical room that connects the mine to the electrical grid.

“Huge fire, it totally destroyed ER-1 (equipment room), we were without power for quite a while,” said Kennedy, who was the mine’s maintenance manager at the time.

While temporary power allowed for resumption of underground operations, it took several months to repair the damage and get the mill back into production.

The now general manager takes a pragmatic view of such setbacks.

“You never really lose the gold, you just lose the opportunity to make it at the time,” he said.

Considering that gold prices shot up from US$597 per ounce at the time of the fire to a high of US$1,895/oz. five years later, better opportunities to make gold was in Pogo’s future.

After recovering from the electrical room fire, things began to smooth out for Pogo’s operations.

Two more river floods occurred in 2008 and 2013. However, the mine was better prepared to deal with such intermittent natural occurrences.

Mother Nature’s unruly temperament, however, did shut down production again, this time with fire.

In 2009, the Gilles Creek fire swept through the Goodpaster District where Pogo is located. While the wildfire did not threaten the mine itself, management made the decision to de-energize the 50-mile line that supplies the mine with its electricity.

“We were without power for nine days,” Kennedy recalled.

He said the decision to shut down the power at the expense of production was to ensure the safety of crews fighting the fire.

Transitioning to normalcy

Since recovering from the 2006 electrical room fire, Pogo had not entirely overcome all of its struggles, but the young mine was beginning a transition to normalcy.

In each of the four ensuing years, the Interior Alaska operation graduated to higher levels of competency that was reflected in the “buzz word(s)” for the year – ‘survival’ for 2007, ‘credibility building’ for 2008, ‘continuous improvement’ for 2009 and ‘being proactive’ for 2010, according to former general manager Larry Davey.

During this transitional period, Teck sold its 40 percent operating interest in Pogo to its partners, resulting in the current Sumitomo Metal Mining (85 percent) and Sumitomo Corp. (15 percent) ownership of the high-grade gold mine.

“2009, was a huge change for us because we were operated prior to that by Teck Cominco,” Kennedy explained.

Along with the ownership change, came a large shift in management as many of the longtime Teck employees were phased out to pursue other opportunities with the Canada-based miner.

The vacuum at the top eventually led to Kennedy, who had been at Pogo since 2005 and witnessed the ups and downs of putting and keeping the mine in production, being promoted to general manager.

“I became the general manager in 2011,” he told the RDC breakfast attendees. “I am proud to be the manager of Pogo and of the culture that we have developed.”

The culture fostered at Pogo resulted in two significant milestones in 2015 – in July, the 320 mine employees surpassed two years without a lost-time incident and two months later Pogo poured its three-millionth ounce of gold.

“The journey to three million ounces has taken 10 years of planning and permitting and more than nine years of operation. Producing 3 million ounces is a huge accomplishment, and I am proud of the team at Pogo,” Kennedy has said. “Even more important is the strong safety culture we’ve developed. All 320 employees on site are looking out for their own safety and that of their fellow miner.”

Expanding to the future

Now a smooth operation producing 1 million ounces of gold every three or so years, Pogo is focused on the next 10 years and beyond.

Ensuring a long and golden future for the mine falls on the shoulders of the exploration team at Pogo.

“Our goal is to replace what we pull out of our reserve every year,” Kennedy said.

The Pogo exploration team took a large leap towards this goal with the 2010 discovery of the East Deep zone, a deposit that is geologically and geochemically similar to the ore-body on which Pogo was founded.

Development of East Deep began in 2012 and mining of ore from this major Pogo extension began in 2013. It was not until the completion of a 14 feet-wide ventilation shaft in 2015, however, that infrastructure was established to the point that the company considered development complete.

In 2015, SMM Pogo invested roughly US$15 million in discovering and delineating gold deposits at Pogo, making it the largest exploration program in the state during the year. It followed a US$17 million program in 2014.

The 2015 program included nine drills focused on the discovery and expansion of targets surrounding the mill, including the northern end of the East Deep deposit, North Zone and Pogo South, three zones of high-grade gold mineralization adjacent to the current underground workings at the mine.

The work included some 219,500 feet of exploration drilling – 174,000 feet from surface and 45,500 feet underground – and about 103,000 feet of definition drilling.

“We continue to expand the mine. Our exploration department is doing a great job – we are finding more resource every day,” Kennedy said.

To continue this expansion, SMM Pogo has budgeted another US$10 million for exploration at and around the mine in 2016.

“So, we are going to be there for a while,” the Pogo manager said.

An awesome place

While Pogo has come a long way from its tumultuous beginnings, the second decade of operations will not be without challenges.

The most persistent of the current challenges is keeping the underground workings dry.

At one point last year, the mine held 48 million gallons of water, or enough to fill 72 Olympic-sized swimming pools.

“When we take a look at what we need to do, water management is critical for us,” Kennedy said. “We chose to go ahead and close some of the headings and store water underground and treat it at a later time.”

The mine also has added to its water treatment capacity, providing the ability to treat larger quantities of the accumulated water so that it can be discharged.

However, many of the challenges ahead are geared towards increased efficiency, such as improving mill recovery, making the camp a home for the mine’s 330 employees and continuing to set higher standards for safety.

“At the end of the day we have got the right group of people out there doing that,” Kennedy said.

With those human resources, Alaska’s second-largest gold producer moves into its second decade.

“Pogo is an awesome place,” Kennedy boasted. “We have gone through a lot of struggles, learned a lot, and we are going to continue to carry on.”

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