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Vol. 15, No. 13 Week of March 28, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Winter drilling heats up at Livengood

ITH attributes success of winter program to a warm camp, dedicated drillers; infill drilling could connect higher grade zones

Shane Lasley

Mining News

LIVENGOOD – International Tower Hill Mines Ltd. is rising to the challenges posed by Interior Alaska’s sub-zero temperatures in successfully conducting a winter drill program here.

The explorer completed more than 30 holes since it kicked off 20,000 meters of drilling at the Livengood gold project about 70 miles, or 110 kilometers, north of Fairbanks in early February.

The company attributes the success of its winter campaign to the drill crews, an established camp and relatively mild temperatures at the onset of the program.

“Fortunately, the first week, when we started, it was actually about minus 10 degrees (Fahrenheit), and then the temperature dropped down right after we started,” International Tower Hill Vice President of Exploration Russell Meyers told Mining News.

“That meant everything was running and everybody was ready for it, so it wasn’t nearly as painful as if we were trying to get everything started at minus 40 (degrees Fahrenheit or Celsius).”

Drilling unifies higher grade zones

Using a higher grade cutoff of 0.70 grams per metric ton gold, the Money Knob deposit contains an indicated resource of 184 metric tons at an average grade of 0.98 g/t gold and an inferred resource of 56 metric tons at an average grade of 0.99 g/t gold.

The explorer said most of the 7.6 million ounces of gold contained in this higher grade mineralization is found in the Core and Sunshine zones, and these two areas will form the basis of the company’s starter pit design work.

Much of the area between these two higher grade zones needs to be drilled in the winter and most of the 30 holes completed in the first half of the 2010 winter program were drilled there. Meyers said the infill drilling has essentially connected the two zones that make up the envisioned starter pit at Livengood.

“There is a fold-nose in there and that fold-nose has a lot of quartzite in it that is not a very good host, but there is no question that the two things are going to run together. It is going to be one continuous zone,” the geologist explained.

On March 22 the explorer released assay results from 10 holes drilled between the zones. Highlights include hole MK-RC-0312, which cut 73 meters with an average grade of 1.03 g/t gold and MK-RC-0313 which cut 137 meters at 0.88 g/t gold. These two holes have expanded the Sunshine Zone about 150 meters toward the Core Zone. Hole MK-RC-0308, drilled about 200 meters east of the Core Zone, intersected 10.67 meters averaging 5.92 g/t gold.

“We weren’t optimistic about it, so this is a real pleasant discovery,” Meyers said.

Meyers said four of the holes drilled this winter have reached 1,500 feet, or 460 meters.

“Our rate of advance has been a little slower than we thought, mostly because we have been drilling these really deep holes,” he explained. “That slowed us down a little bit, but the reason why we are doing it is there is good mineralization.”

Improved resource confidence

In an updated resource released by International Tower Hill on March 10, the overall ounces of gold in the deposit remained virtually unchanged, but the confidence level of that resource has improved. About 1.2 million ounces (at a 0.5 g/t gold cutoff) has been shifted upward from the inferred to the indicated category.

According to the March estimate the deposit at Livengood contains an indicated 369 million metric tons of or at an average grade of 0.78 grams per metric ton gold, or 9.3 million ounces, and an inferred 122 million metric tons at an average grade of 0.77g/t gold, or 3 million ounces, both at a 0.5g/t gold cut-off grade.

“The continued expansion of the Money Knob deposit and its improving resource confidence is highly encouraging for our plan to advance Livengood towards production,” International Tower Hill President and CEO Jeff Pontius said.

With one core rig and three reverse circulation drills running around the clock, the company plans to complete a 20,000 meters of drilling by mid-April. The results from the winter drilling will be included in a resource update scheduled for the end of the second quarter of 2010.

Existing camp

Meyers said the use of a camp left over from construction of the trans-Alaska oil pipeline is one of the major factors in the success of a winter drill program in Interior Alaska’s winter chill.

“I think that if we didn’t have that camp there, life would be miserable,” Meyers said.

The pipeline camp, which is located about 5 miles from the Money Knob deposit, is the headquarters for International Tower Hill’s Livengood program. Between company employees and contractors, about 60 people are staying in the facilities.

Though the camp comes with kitchen facilities, office space, showers and enough rooms to sleep some 200 people, Meyers said the large workshops are the real advantage.

One of the expansive metal buildings is dedicated strictly as a geology shop.

“I cannot put enough value on those workshops; having that great working space to deal with those wet samples,” Meyers said.

Other similar buildings at the large fenced-in yard are used for maintenance and repair of the equipment needed to support the drill program, and have proven to be invaluable in preparing the launch of drilling in the sub-Arctic winter conditions at Livengood.

“It is minus 10 (F) outside and you can put your drill inside that workshop and do all the maintenance on it and then move it up to start work. That was a huge advantage,” Meyers explained.

“They (the drill crews) did a really good job. We didn’t have any specific weather related problems when the temperature did drop down for that week,” he added.

Southwest expansion

With the infill drilling complete, the explorer is now focused on expanding the deposit to the southwest. The company is targeting the completion of an additional 30 holes in the Southwest Zone by the wrap-up of the winter program in mid-April.

When International Tower Hill first drilled the Southwest zone during its winter 2009 program, the explorer was pleasantly surprised to encounter gold intervals that rivaled those found in the higher grade Core Zone.

The explorer was not able to drill the southwest expansion area during its summer drill program, but two holes drilled just to the north of the permafrost-laden zone encountered near surface mineralization.

Meyers hopes to find the extent of the Southwest Zone by the end of the winter program, but does not anticipate being able to drill it off on a 75-meter grid like the explorer has done on most of the rest of the mineralization.

“We will be walking that tightrope between stepping out as fast as we can and finding out where the edges are and coming in behind and making it concrete enough that it will go into our resource,” he said

Depending on the extent of the mineralization, he hopes to have the zone drilled on 150-meter intervals by mid-April.

Coring the Core Zone

The primary focus of the lone core rig at Livengood is to collect materials for metallurgical testing. With a portion of the core sent to be assayed, the remaining core is kept frozen until it is needed for metallurgical testing.

“We are infilling or re-drilling areas where we know we need material for metallurgical studies,” Meyers explained.

Current metallurgical studies are focused on the milling aspect of the mineralization at the Money Knob deposit. A preliminary economic assessment on building a heap leach facility at Livengood was released in November. SRK Consulting is currently working on an economic assessment for a combined mill and heap leach operation.

Hole MK 10-48, being drilled while Mining News was at the project, was targeted specifically to gather metallurgical samples from the higher grade Core Zone. Geologists believe the hole, drilled to 441 meters, struck the deep high-grade structure discovered below the Core Zone last year.

Hole MK 09-37, which intersected the deep structure last summer, cut 15.4 meters containing 6.55 g/t gold, starting at a depth of 432.4 meters.

The company plans to further explore the Deep Core Zone during its 2010 summer drill program.

Shifting gears

Now that International Tower Hill is considering building a mine at Livengood, its focus is shifting toward achieving this goal.

“We are shifting gears,” Meyers said. “This next year is going to see a lot more emphasis on the engineering development side.”

To accomplish this goal, International Tower Hill has begun assembling a team of operational experts. In January the company hired Carl Brechtel as its new COO. This 30-year mining veteran has spent the past 12 years working for AngloGold Ashanti Limited in various mining project development roles around the globe.

Pontius said the addition of Brechtel to the company’s management team is a major step for Livengood on its path to becoming Alaska’s next mine.

He said Brechtel adds depth in not only project development but also operational team building.

Under the advice of the new COO, the company added some 6,000 acres to the land package at Livengood.

“(The expanded land package) is primarily making sure we have enough space for everything we need to put in there. When Carl came on he did some quick calculations and said ‘guys you don’t have enough room here,’” Meyers explained.

The added acreage also encompasses a limestone deposit that could provide carbonate materials needed for the construction and operation of a mine built at the multi-million ounce gold deposit.

The focus of the drilling also is expected to shift from resource expansion to preparing the project for development. Meyers said a significant portion of the summer drill program will be dedicated to engineering drilling. The company also plans to drop back in and drill the additional holes needed to raise the confidence of the resource in the proposed starter pit to the measured category.

“Our plan is to take the part of the resource that would go into the first five years of mining and elevate that to a measured resource,” he said.

Meyers has no illusions that the transition from exploration to development will be an easy one.

“I am looking at Carl and looking at the project from an engineering point of view now, and I am realizing the easy part is over,” he said.

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