Mining News: Report delivers eye-opening insightsAnalysis concludes that porphyry copper-gold projects like Pebble and Mount Polley may be vital to future global gold production Curt Freeman For Mining News
At the same time as the EPA is pushing forward on its planned precedent-setting, pre-emptive, pre-permit veto of the Pebble project and the tailings dam failure at the Mount Polley mine in British Columbia, former Gold Fields Ltd. Chief Geologist Rael Lipson published an eye-opening summary of where porphyry copper-gold projects like Pebble, Mt. Polley and dozens of others around the world fit into the future of gold production.
The article, appearing in the July 2014 Newsletter of the Society of Economic Geologists, drew conclusions from more than 9,000 gold deposits across the globe. Mr. Lipson separated these deposits into 10 basic ore deposit types and then summarized where the majority of the world’s current production is derived and where future gold production was likely to be derived. What struck me between the eyes was the conclusion that future gold production will come increasingly from porphyry copper-gold deposits like Pebble and Mt. Polley. Such deposits are easier to find because of their large footprint, easier to evaluate because of their predictable morphology and provide revenue from more than one metal, somewhat softening the impact of individual metals price swings. Unfortunately, once discovered, porphyry deposits are more expensive to acquire and more expensive to put into production because their lower grades, which require larger mining and milling investments to generate positive economic results. Mr. Lipson also concluded that only the highest grade copper-gold deposits were likely to make it to production in the economic market we are likely to see in the near term. His final conclusion was extremely timely: the social demand for smaller-impact mining operations will increase the pressure to move operations underground and while underground bulk-mining methods are available, utilization of such methods often requires higher ore grades than many deposits have and better metal prices than we currently enjoy.
Western Alaska Teck Resources Ltd. and partner NANA Inc. announced second quarter results from its Red Dog mine. During the quarter, the mine produced 141,500 metric tons of zinc in concentrate. Zinc ore grade decreased slightly to 16.5 percent, while mill recoveries were down slightly to 82.1 percent. The mine also produced 26,700 metric tons of lead in concentrate. Lead ore grade increased to 4.6 percent, while mill recoveries decreased significantly to 55 percent. The mine posted an $80 million operating profit for the quarter, up significantly from the $56 million profit in the year previous period, partly due to rising zinc and lead prices. Zinc and lead production in the second quarter increased 2 percent and 7 percent, respectively, due to the processing of softer ores, which substantially increased metric tons milled in the period. These items were partially offset by lower zinc ore grades and recoveries. The mine plans to ship 996,000 metric tons of zinc concentrate and 184,000 metric tons of lead concentrate from the port facility this shipping season.
Graphite One Resources Inc. reported drilling and exploration plans at its Graphite Creek property on the Seward Peninsula. The company plans to conduct infill drilling at approximately 50 meter spaced centers, with the goal being to convert a portion of the National Instrument 43-101 compliant inferred resource of 284.71 Million metric tons at 4.5 percent graphite to the indicated and/or measured category. The resource represents drilling along 4.8 kilometers of an 18- kilometer (11 miles) long conductor. The 2014 drilling is designed to continue to demonstrate the continuity of the mineralization both along strike and down dip. The company also plans to collect a small bulk sample from both surface exposures and existing drill core. This material will be used for bench scale metallurgical testing.
Millrock Resources Inc. announced completion of the second phase of field exploration work on its Alaska Peninsula project. The work consisted of geological mapping along with rock and a soil geochemical sampling. The work was part of a two-phase summer program, funded by First Quantum Minerals Ltd. Combined results from phase 1 airborne geophysical surveys and the phase 2 mapping and sampling will be utilized to outline and prioritize drilling targets.
Redstar Gold Corp. offered an update on the exploration program at its Unga gold project near Sand Point. A two-month surface mapping and sampling program includes select, continuous-chip and gridded rock sampling along the project’s two principal mineralized structural trends, Shumigan and Apollo. The overall objective of the 2014 surface program will be to delineate diamond drilling targets with the potential to host high-grade underground mineable gold-bearing structures. Work on the Apollo Trend, host to the past-producing Apollo and Sitka mines, will focus on rock sampling of numerous existing mineralized trenches and open stopes followed by grid and select rock sampling along strike of defined mineralized structures. At the Shumigan Trend, exploration will consist of grid and select sampling to target high-grade vein systems at the Aquila prospect area, which has yielded numerous high-grade hand samples and drill intercepts. Redstar is the first company to consolidate land holdings at Unga, a volcanic-hosted, intermediate-sulfidation epithermal vein system with more than 22 kilometers (13.5 miles) of documented mineralization on two parallel gold trends. Past production from the Apollo and Sitka vein systems from 1891 to 1922 is estimated at 150,000 oz gold at an average grade of 10.3 grams per metric ton gold.
Interior Alaska Kinross Gold reported second quarter results from the Fort Knox mine near Fairbanks. The mine produced 91,316 oz of gold at a cost of $834 per ounce in the second quarter, versus 102,740 oz gold at a cost of $575/oz in the year-previous period. During the quarter, the mine milled 3.24 million metric tons of ore grading 0.50 g/t gold and processed an additional 6.64 million metric tons of ore grading 0.29 g/t gold via valley leach. Gold recovery in the mill averaged 84 percent. Gold recovery on the heap leach pad was not released.
International Tower Hill Mines Ltd. announced a progress report for the Livengood project for the second quarter of the year. The company continues to investigate a number of opportunities for optimization and cost reduction for the project. The mine plan was reviewed and modified to include changing pit slope designs, improvement of scheduling ore release, waste mining and stockpile management. The feasibility study metallurgical test work was reviewed to identify opportunities for optimization that may be confirmed by additional test work. Power supply alternatives were reviewed to determine how changing energy supply dynamics might impact the project assumptions regarding electrical generation. Construction and operations camp alternatives were reviewed to better define the costs of supporting the manpower requirements for the project. Environmental baseline efforts are continuing in order to prevent any significant delays in future permitting. The company also indicated that it remains open to a strategic alliance to help support the future development of the project, while it considers all other appropriate financing options.
Freegold Ventures Ltd. announced that it had commenced a ground geophysics program at its Shorty Creek copper gold porphyry project. An area of extensive alteration associated with quartz porphyry and granodiorite porphyry intrusives was previously identified over a four kilometers by 4 kilometers (2.5 miles by 2.5 miles) area. One stream sediment sample from this location exceeds 550 parts per billion gold and a second exceeds 100 parts per billion gold. The best exposure of the altered intrusive rocks is reported to be in the middle reaches of Shorty Creek 835 feet below mineralized outcrops on Hill 1835 and 335 feet below the bottom of the deepest drill hole on the property.
Endurance Gold Corp. announced it has commenced is 2014 summer field program at its Elephant Mountain project in the Rampart – Eureka – Hot Springs District. Planned activity includes establishment of ATV trails followed by rock and soil sampling to confirm and expand drill target areas. Previous exploration identified a gold-arsenic soil geochemical anomaly over the intrusive that extends for at least 6,000 feet and up to 1,500 feet wide with peak values in soil samples up to 1,540 parts-per-billion gold. Limited drilling intercepted low-grade gold mineralization associated with arsenopyrite and native gold related to quartz stockwork veining in silicified, fractured and sericite altered intrusive. Subsequent work revealed quartz vein material from the intrusive ranging from 2.18 g/t gold to 12.98 g/t gold in a second area. The company’s efforts are designed to clarify the most prospective drill target for future testing.
Alaska Range Miranda Gold Corp. announced that it has signed a letter of intent on its Willow Creek gold project with Alaska newcomer Gold Torrent Inc. The principal terms of the letter of intent provide that within 15 days of Gold Torrent completing a 60-day due diligence period, the parties will enter into a joint venture agreement providing for the development of the Willow Creek project. At this point, Miranda will assign the underlying lease and other data, reports and information on the Willow Creek project to the joint venture. Gold Torrent will sole fund the first $10 million of expenditures to earn a 70 percent interest in the venture at which time Miranda will have a 30 percent interest. Gold Torrent will be entitled to 90 percent of the cash flow from production at the Willow Creek project until it recovers its $10 million initial capital investment and thereafter it will be entitled to 70 percent, with Miranda being entitled to first 10 percent, and then 30 percent of the cash flow. Gold Torrent plans to develop a small scale-underground mine operation and to bring the currently known mineralization into production, funded by the US$10 million contribution. After adequate access has been developed underground, expansion and exploration drilling will be conducted both during construction and during commercial production. This drilling is expected to expand the known mineralization well beyond the current levels. Recorded gold production from the Willow Creek District was 667,000 oz at 1.2-ounces-per-ton gold. Welcome to Alaska Gold Torrent Inc.!
Northern Alaska NovaCopper Inc. reported a project update for its Bornite deposit at its Upper Kobuk Mineral Projects in the Ambler District. The company commenced its 2014 field program consisting of transporting 12,918 meters of historic drill core from the prospect. This core is being re-logged and resampled in Fairbanks. These historical holes are located within the extensions of the Upper and Lower Reef mineralization captured in the open pit resource estimate released earlier this year and the up dip portion of South Reef zone. The company also indicated that the Alaska Industrial Development Export Authority was continuing to engage with the communities in the vicinity of the Ambler Mining District Industrial Access Road project. AIDEA has also drafted permit applications currently under review pursuant to both the Alaska National Interest Lands Conservation Act Transportation and Utility System Right-of-Way Application and the Corps of Engineers 404 Wetland Permit Application. In addition, AIDEA has made significant progress on the Interior Energy Project which would involve the production, transportation and distribution of liquefied natural gas from the North Slope of Alaska to end users in Fairbanks. AIDEA and its contractors are finalizing the estimated costs of the Interior Energy Project and expect first delivery of trucked LNG to end users commencing before the end of 2016. The company expects to be a consumer of LNG from this project.
Southeast Alaska Hecla Mining Co. announced second quarter 2014 production results from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver produced at Greens Creek for the quarter was $3.52 per ounce versus $2.71 per ounce in the year previous period. Mining costs per ton were up compared to the same period in 2013, primarily because of increased labor costs and lower production. These cost increases were partially offset by lower electrical costs due to the availability of hydroelectric power from the Snettisham hydroelectric facility. The average grade of ore mined during the quarter was 12.03 oz/t silver, down significantly from the average grade of 13.72 oz/t that was mined in the second quarter of 2013. During the second quarter the mine produced 1,689,183 oz silver, 14,931 oz gold, 5,044 tons of lead and 15,288 tons of zinc. The mill processed 201,146 tons of ore during the quarter, down from 211,755 tons milled in the year-previous period. In addition to production, exploration and definition drilling continued during the second quarter. Definition and pre-production drilling continued to upgrade the 5250, West Wall and Deep Southwest resources. Drilling of the Deep 200 South confirmed the resource model and shows the upper limb of the bench fold extends up to 150 feet east beyond the current model. Drilling of the bench mineralization provided some impressive intercepts, including 85.1 oz/t silver, 0.18 oz/t gold, 10.2 percent zinc, and 4.8 percent lead over 12.9 feet, and 44.3 oz of silver per ton, 0.40 oz/t gold, 23.1 percent zinc, and 12.4 percent lead over 3.2 feet. Drill intersections at the Deep 200 South continue to be encouraging and mineralization remains open to the south. Three surface drills were testing the south, middle and north regions of Killer Creek to follow up on broad zones of high-grade copper, silver, lead and zinc stockwork mineralization defined by in 2012 and 2013 surface drilling programs. This program is intended to define the extents of copper and silver-zinc rich stockwork mineralization and evaluate the deeper mine contact.
Coeur Mining Inc. announced updated resource estimates at its Kensington gold mine. The mine contains proven and probable reserves of 6 million tons grading 0.163 oz/t gold (981,000 oz), additional measured and indicated resources of 2.7 million tons grading 0.211 oz/t gold (566,000 oz), and additional inferred resources of 1 million tons grading 0.259 oz/t gold (263,000 oz).
Constantine Metal Resources Ltd. and funding partner, Dowa Metals and Mining Co. Ltd., announced initial results from a 10,000-meter 2014 drilling program on its Palmer volcanogenic massive sulfide project near Haines. The initial 2014 drilling has intersected a thick lens of high-grade massive sulfide 150 meters down dip of the lower edge of the South Wall Zone. Drill hole CMR14-54 returned 22.1 meters grading 2.48 percent copper, 4.05 percent zinc, 24.0 grams of silver per metric ton and 0.39 grams of gold per metric ton. The intersection represents a significant expansion of the zone to depth. The hole was designed to test a large conductive geophysical target projected to be southwest of and down dip of the existing deposit. CMR14-54 confirms that the conductive zone is associated with significant grade massive sulfide which has now been defined over a vertical distance of over 600 meters and remains open to expansion at depth and along strike. This promising new intercept has caused the company to re-prioritize drilling on its US$6.2 million program in order to rapidly assess the size and grade potential of the South Wall zone. Shortly after these results were released, the company announced that Japan Oil Gas and Metals National Corp. has entered into a funding agreement with Dowa that would allow JOGMEC to fund up to 45 percent of Dowa’s required earn-in amount to earn 45 percent of Dowa’s interest in the project. Dowa can earn 49 percent in the Palmer project by making aggregate expenditures of US$22 million over four years. Constantine’s right to retain 51 percent majority interest in the Palmer project remains unaffected by JOGMEC’s participation in the project.
Ucore Rare Metals announced a progress report for its 2014 exploration at its Bokan – Dotson Ridge rare earth element project on Prince of Wales Island. The company has contracted with SRK Consulting to compile baseline data and qualitative results from ongoing engineering studies to produce a formal plan of operations for the project. The plan of operations will be submitted to the United States Forest Service to facilitate delivery of an Environmental Impact Statement and initiate the review process set out in the National Environmental Policy Act. The company also reported that two drills are operating, one focused on infill drilling for the purpose of upgrading the existing inferred resource to the indicated category. The other drill rig is testing multiple targets with the goal of expanding the existing resource at depth. This rig will also drill a number of geotechnical holes and groundwater monitoring wells to obtain supplementary data for use in the engineering and permitting of the project.
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