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Vol. 12, No. 47 Week of November 25, 2007
Providing coverage of Alaska and Northwest Canada's mineral industry

MINING NEWS: Most exciting industry developments in a decade highlight ’07 Alaska Miners Convention

Curt Freeman

For Petroleum News

For those of you who could not attend the Alaska Miners Association convention in Anchorage in early November, you missed what I understand was a record attendance and presentations on some of the most exciting mining developments in the last decade. In addition, I noticed a lot more business being conducted around the conference hotel than is normally the case. Geologists and engineers from companies large and small could be seen hunkered down over reports and maps with prospectors and consultants. The atmosphere was electric with anticipation over what 2008 will bring.

Western Alaska

Teck-Cominco reported third-quarter 2007 results from their Red Dog mine which turned in operating profits of $380 million vs. an operating profit of $216 million in the same period in 2006. For the quarter, the mine generated 154,400 metric tons of zinc and 36,000 metric tons of lead in concentrate versus 155,300 and 32,900 metric tons of zinc and lead, respectively, in the third quarter of 2006. The mine sold 177,800 metric tons of zinc and 91,300 metric tons of lead during the third quarter.

Average zinc and lead grades mined were 20.5 percent and 6.2 percent vs. 20.5 percent and 6.1 percent, respectively, in the third quarter of 2006. Mill throughput of 884,000 metric tons in the third quarter was down slightly from the 891,000 metric tons milled in the third quarter 2006.

During the early July to late October shipping season the mine shipped a total of 1,070,000 metric tons of zinc concentrate and 262,000 metric tons of lead concentrate. During the third quarter the mine paid out $127 million in royalties to its partner, NANA Regional Corp.

Hands down, best news of the month: NovaGold Resources and partner Barrick Gold reported that they have reached an agreement to advance the development of the Donlin Creek project and resolve all outstanding legal disputes between the two companies. The various transactions contemplated in the settlement include formation of a 50-50 limited liability company to develop Donlin Creek, dismissal of all legal suits between the parties and a transfer to NovaGold of the Grace claims at the Galore Creek copper project in northern British Columbia.

The companies have appointed Doug Nicholson, vice president of NovaGold Resources Alaska, to serve as the initial general manager of the Donlin Creek project until Dec. 31, 2009. As part of the restructuring, NovaGold has agreed to reimburse Barrick over time for approximately $63.5 million by paying the next approximately US$12.7 million of Barrick’s share of project development costs. The remaining approximately $50.8 million will be paid out of future mine production cash flow.

In early October St Andrew Goldfields reported a temporary suspension of production at its Nixon Fork gold mine in order to concentrate its efforts on better defining the existing mineral resources and identify new zones of gold-copper mineralization. The company has been encountering ore production issues at the upper portion of the 3300 zone of the Crystal deposit as the actual geometry of the mineralized zone is much different than the mineral reserve estimated.

During the temporary suspension in production the company will continue delineation drilling of the existing mineral resources and reserves in the 3000 and 3300 zones in order to better define the irregular geometry of the gold mineralization. In addition, both underground and surface drilling will be conducted during the winter and spring of 2007-08 at various locations along the approximately 4 kilometer long, monzonite-limestone skarn contact zone where previous drilling has intersected a number of anomalous zones, namely the Mystery, J5A, Southern Cross and Whalen zones. The company also is considering a grassroots exploration program for the summer of 2008, which will focus on several known zones of gold mineralization on the mine property, such as the Pupinsky and Cowboy Shear zone.

NPN Investment Group and JV partner Millrock Resources Inc. reported drilling results from their Divide gold project near Nome. Five holes totaling 561.1 meters were drilled to test a strong gold-arsenic soil anomaly on the property. The anomaly measures more than 2,600 meters long and 660 meters wide.

The strongest portions of the anomaly, which exceed 200 parts-per-billion gold over a broad area, had not been previously drill tested. Highlights of the drilling program include 8.99 meters grading 1.5 grams of gold per metric ton in hole DIV-07-03, 3.05 meters grading 10.0 grams of gold per metric ton in hole DIV-07-04 and 8.23 meters grading 5.8 grams of gold per metric ton in hole DIV-07-05. The companies are planning on expanding exploration activities in 2008.

Full Metal Minerals Ltd. and Triex Minerals Corp. reported the discovery of a new uranium zone at its Boulder Creek project on the Seward Peninsula. Exploration focused on the Boulder Creek deposit and the newly discovered Fireweed prospect.

A total of 1,790 soil samples were collected at McCarthy Marsh 30 kilometers west of Boulder Creek and 230 soil samples were collected over the new Fireweed occurrence 25 kilometers north along-strike from Boulder Creek.

A ground magnetic survey was completed over the entire McCarthy Marsh grid and a portion of the Fireweed grid. Detailed mapping and scintillometer prospecting were done in both areas. A total of 129 biogeochemical samples were also collected from these two grid areas.

Following discovery of a 1,800 meter long east-west by 700 meter wide north-south area of anomalous radiometric content, five short drill holes were completed for a total of 267 meters. Quartz syenite is the predominant host rock. Brick red hematite-silica zones similar in appearance to the pebbles mapped on surface were observed in hole 5 and were five times background radioactivity. Geochemical results are pending. Diamond drilling also was conducted at the Boulder Creek deposit where eight holes were completed for a total of 890 meters. No new and continuous zones of significant radioactivity were intersected at Boulder Creek.

Gold Crest Mines reported exploration results from its Luna project. During 2007 exploration included 16 line-miles of induced polarization-resistivity geophysics and 40 line-miles of ground magnetics. A total of 41 stream silt samples from the prospect area outline a 10 square mile gold, arsenic, and antimony anomaly. Silt samples returned values up to 1052 parts-per-billion gold. A total of 40 of 72 rock chip samples collected from the prospect area contain anomalous gold, with values as high as 0.75 ounces of gold per ton.

Gold is associated with anomalous arsenic (up to 8,400 parts per million), antimony (up to 158 parts per million), bismuth (up to 36 parts per million), molybdenum (up to 64 parts per million), silver (up to 23 parts per million,) copper (up to 0.44 percent), lead (up to 0.12 percent) and zinc (up to 0.6 percent). Mineralization is hosted in calcareous siltstones, cherts and tuffaceous sedimentary rocks as well as in dikes, sills and small stocks ranging in composition from diorites and granodiorites to rhyolites.

The prospective area contains ubiquitous disseminated, vein and stockwork sulfide mineralization including several zones of stratiform sulfide replacement mineralization with cherty silica alteration containing up to 70 percent sulfides, primarily fine-grained pyrite, arsenopyrite and stibnite and to a lesser extent chalcopyrite and sphalerite. Additional work is planned in 2008.

Geoinformatics Exploration Inc. reported additional drilling results from its Whistler project in southwestern Alaska. Work in 2007 has confirmed that the mineralization at Whistler is a gold-copper porphyry system which crops out at the surface over a 750 meter by 460 meter area and has been followed to a depth of 570 meters. Within this broadly mineralized envelope, the higher-grade Main Zone extends for 350 meters along strike averaging more than 100 meters in width with mineralization confirmed from surface to depths between 200 and 570 meters.

Additional drilling results include 354.6 meters grading 0.38 grams of gold per metric ton and 0.12 percent copper in hole 3; 64 meters grading 1.08 grams of gold per metric ton and 0.40 percent copper in hole 4 within a longer intersection of 238.7 meters grading 0.64 grams of gold per metric ton; and 0.27 percent copper and 54 meters grading 1.52 grams of gold per metric ton and 0.16 percent copper in hole 5 within 180 meters grading 0.84 grams of gold per metric ton and 0.16 percent copper. Additional drill results are pending for two of the seven holes in the 3,300-meter 2007 drill program.

International Tower Hill Mines has reported drilling results from its Terra gold project The Ben vein system, where most drilling has been completed, has been explored along strike for 400 meters and to 300 meters down dip and remains open in all directions. The mineralized vein varies in true width from 0.2 to 3.0 meters, and averages 1.04 meters at 19.8 grams of gold per metric ton with the high-grade zone averaging 1.27 meters at 23.0 grams of gold per metric ton.

The company also released results from the Ice vein prospects which returned 2.42 meters grading 9.53 grams of gold per metric ton in hole TR07-29 and 5.30 meters grading 3.89 grams of gold per metric ton in hole TR07-30. Initial drill testing of the Ice vein has established the continuity of this vein system for 175 meters down dip from the outcrop. An initial resource estimate is planned for this winter.

Eastern Interior

Kinross Gold reported third-quarter 2007 production results from its Fort Knox mine near Fairbanks. For the quarter the mine produced 85,755 ounces of gold vs. 81,348 ounces produced in the third quarter of 2006. Cash costs were $338 per ounce vs. $281 per ounce in the previous third quarter.

The mine processed 3,106,000 metric tons of ore grading 0.90 grams of gold per metric ton. Recovery for the quarter was 87 percent. Production increased 5 percent in the third quarter of 2007 as compared with the third quarter of 2006 due to a higher grade offset by lower plant throughput. Revenue increased 19 percent to $64.1 million from $54.0 million year-over-year due to higher realized gold prices and higher sales of gold equivalent ounces.

Cost of sales increased 29 percent year-over-year mainly due to increases in revenue-based royalties and higher consumable costs, in particular, for fuel, power and steel. The company continues to work on advancing the phase 7 pit expansion and the Walter Creek heap leach project.

Freegold Ventures Ltd. reported additional drilling results from the Tolovana vein prospect at its Golden Summit project. Drilling has extended the strike length of the high grade Tolovana vein to more than 825 feet. The Tolovana vein and its accompanying hanging and footwall gold mineralization remain open in all directions.

Highlights from the drilling include 78 feet averaging 4.11 grams of gold per metric ton in hole 581 including 9 feet averaging 28.53 grams of gold per metric ton; 75 feet averaging 1.24 grams of gold per metric ton in hole 589; and 69 feet averaging 2.18 grams of gold per metric ton in hole 600 including 3 feet averaging 26.98 grams of gold per metric ton. The company believes the Tolovana vein is continuous with the previously drilled and bulk sampled Wackwitz vein approximately 1,100 feet away to the east.

Teck-Cominco reported third-quarter production results from its Pogo mine. For the quarter the mine produced 57,600 ounces of gold at a cash cost of $554 per ounce. The operation treated 170,000 metric tons of ore grading 13.0 grams of gold per metric ton with a mill recovery of 81 percent.

Third-quarter production was lower than full capacity due to poor equipment availability and lower recoveries. Ore grades were also below planned levels due to stope sequencing and higher than expected ore dilution.

International Tower Hill Mines reported additional drilling results from its Livengood gold project. Significant drilling results include 155 meters grading 0.77 grams of gold per metric ton in hole MK07-23 and 145 meters grading 0.74 grams of gold per metric ton in hole MK07-22.

In addition, step-out drilling 400 meters to the south intercepted 76 meters grading 0.60 grams of gold per metric ton in hole MK07-24 and 26 meters grading 0.65 grams of gold per metric ton in hole MK07-25. The company is planning to spend $7 million on a 50,000 meter drilling program in 2008.

Northern Alaska

Andover Ventures Inc. reported additional drilling results from its Sun massive sulfide project in the Ambler Mining District. Highlights included 37.01 meters grading 1.17 percent copper, 1.85 percent lead, 7.26 percent zinc, 44.0 grams of silver per metric ton and 0.179 grams of gold per metric ton, including 11.9 meters grading 1.07 percent copper, 5.38 percent lead, 16.54 percent zinc, 86.6 grams of silver per metric ton and 0.210 grams of gold per metric ton. Additional assays are pending.

Little Squaw Gold Mines reported trenching values from its Chandalar gold project in the Brooks Range. Trenching on the Summit prospect cut a 20-foot-wide structure that assays 10.58 parts-per-million gold. The Summit structure is an east-west-trending shear zone that has been traced for more than a mile across the central sector of the project.

Prospecting along this structure has identified gold mineralization over at least 1,800 feet of its strike length. Gold values are hosted in irregular quartz lenses and in a shear zone. Core drilling is planned for this zone in 2008.

Southeast Alaska

Coeur d’Alene Mines said it will join the Southeast Alaska Conservation Council, Lynn Canal Conservation and the Juneau Group of the Sierra Club in requesting that the U.S. Forest Service examine the use of a site near Comet Beach for disposal of the Kensington mine tailings. The site is essentially the same as the previously approved Dry Tailings Facility site, but Coeur is now proposing to store the tailings using paste technology instead of dry stacking.

Based on the 1997 supplemental environmental impact statement for this site and the work of environmental consultant Dr. David Chambers, the conservation groups believe that the potential adverse environmental impacts of the Comet Beach site are less than the impacts of alternative sites that have been identified. If the Comet Beach site is approved, Lower Slate Lake would not be used in any way for tailings storage or disposal.

Any revised operations plan is subject to federal, state and local regulatory approval and permitting. The next step is for the parties to meet with the Forest Service to discuss the regulatory process that would be followed to evaluate the Comet Beach site.

Pure Nickel Inc. announced its plans for exploring its Salt Chuck copper-palladium property on Prince of Wales Island. The company has completed ground reconnaissance and mapping, community consultation with area stakeholders and is planning to carry out 2,500 meters of diamond drilling beginning in late November.

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