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Vol. 19, No. 44 Week of November 02, 2014
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining Explorers 2014: A quiet year for Alaska explorers

Japanese mineral exploration investments resonate in Last Frontier void

Shane Lasley

Mining News

Mineral exploration spending in Alaska will likely struggle to top US$80 million for 2014, a dramatic fall from the US$365.1 million pinnacle reached in 2011.

“The din of mineral industry activity that is normally a part of the summer months in Alaska is decidedly muted this year as the global mining industry attempts to lift itself off the bottom of a plus-18-month-long slump,” Avalon Development President Curt Freeman opined in a June column written for Mining News.

Unlike 2013, where a handful of big-budget projects across Alaska helped soften the blow landed by unruly equity markets, in 2014, only a single mining explorer operated in Alaska with an exploration budget north of US$15 million. Previous big spenders – such as Novagold, NovaCopper, Pebble Partnership and Contango Ore – carried out minimal exploration programs at best.

“Some Alaska projects are moving forward but most field budgets are small with commensurately reduced goals attached. Larger mining companies, many under new management, are rapidly shedding non-core assets while revising budgets and timeframes for exploration, new development and planned operational upgrades,” longtime Alaska geologist Freeman added.

While many companies are turning down the volume at promising mineral projects across the Alaska landscape, a pair of Japanese firms dialed up mineral exploration investments in the Last Frontier.

$17M of exploration at Pogo

Sumitomo Metal Mining Pogo LLC – a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent) ranked as the most prolific mining explorer in Alaska during 2014.

Located roughly 60 miles (100 kilometers) southeast of Fairbanks, the companies’ Pogo gold mine lies in the heart of Alaska’s eastern Interior, a roughly 85,000-square-mile (220,207 square kilometers) swath of Alaska that stretches westward from the Yukon Territory border and is flanked by the Brooks Range to the north and the Alaska Range to the south.

The Japan-based owners of Pogo are spending roughly US$17 million on defining and expanding new deposits immediately adjacent to the underground workings at their high-grade gold mine this year.

“Some of the companies are reducing their exploration costs; we aren’t doing that,” said Sumitomo Metal Mining Pogo General Manager Chris Kennedy.

Instead, the company is ratcheting up exploration and delineation drilling at East Deep, North and South Pogo, three zones of high-grade gold mineralization adjacent to the current underground workings at Pogo.

A few miles beyond the southeastern exploration horizon of Pogo proper, subsidiaries of Sumitomo Metal Mining (95 percent) and Sumitomo Corp. (5 percent) continue a broader search for high-grade gold on a group of claims that are part of the Stone Boy project.

The Stone Boy partners have been exploring the larger Pogo district since 1991. This includes recent drilling on the Monte Cristo property, located about 40 miles (65 kilometers) west of Pogo, and the Ink claims situated roughly 15 miles (24 kilometers) southeast of the mine.

Sumitomo is not the only global mining company that is interested in this segment of the Tintina Gold Belt that trends southeast from Pogo Mine.

Over the course of 2012 and 2013, Newmont Mining Corp. staked two blocks of claims – Healy and Healy River – immediately south of Stone Boy’s Ink property.

Newmont North America Exploration Ltd., the North American exploration arm of the Colorado-based global gold miner, completed a reconnaissance-stage program of geochemical sampling and mapping at its Healy claims during 2013.

Mining News was unable to confirm whether Newmont is conducting exploration at Healy this year, but the fresh claims staked in 2013 is a good sign of continued interest in the area.

Roughly 100 miles southeast of Pogo, Contango ORE is sitting on a gold-copper-silver skarn deposit at the Peak zone of its Tetlin project with an initial 1.1 million-ounce gold-equivalent resource and a 760,000-acre land package with enough “blue sky” potential to keep a mineral exploration company busy for decades.

In October, Contango Ore inked an agreement with Royal Gold Inc. in which the royalty company has the opportunity to invest US$30 million to further reveal the vast potential at Tetlin and earn a 40 percent interest in the project.

Kinross Gold Corp. (Fort Knox, Circle Mining District); Freegold Ventures Ltd. (Golden Summit, Shorty Creek); and Endurance Gold Corp. (Elephant Mountain) were other active gold explorers in Interior Alaska.

In addition to gold exploration, Ucore Rare Metals completed a reconnaissance level field program at its Ray Mountains rare earths-tin project roughly 110 miles (175 kilometers) northwest of Fairbanks; and MMG Ltd., owner of the famed Century zinc mine in Australia, is quietly carrying out early-stage base metals exploration on its Twenty Mile and Squaw Creek projects in the Rampart District, roughly 20 miles (32 kilometers) south of the Ray Mountain claims.

MMG seeks Southcentral nickel

MMG’s land holdings in the Rampart District are a small portion of the company’s Nikolai project, an exploration campaign targeting Alaska’s nickel potential. The larger portion of this endeavor is focused in Southcentral Alaska, where the Australia-based miner holds three large blocks of mining claims that follow an arc south of the Alaska Range.

These claim groups include Amphitheater, which borders Pure Nickel’s Man property to the south and west; Butte Creek, located about 40 miles (65 kilometers) southwest of Amphitheater; and Talkeetna, a block of claims roughly 30 miles (about 48 kilometers) further along this arc that coincides with the Wrangellia Terrane, a band of rocks known to host nickel-platinum group metal deposits that arcs from Southcentral Alaska through southern Yukon Territory and along the coast of British Columbia.

During 2013, the U.S. exploration subsidiary of MMG invested at least US$2 million on early-stage exploration at the Nikolai project. This work included geophysical surveys, mapping, rock sampling and 1,188 meters of drilling on the properties geophysical surveys in Southcentral Alaska.

MMG continued it Nikolai exploration, including drilling, in 2014. The global miner, however, is keeping the details, results and future plans for this nickel project close to its vest.

Itochu Corp., which had invested roughly US$23.5 million on nickel exploration at Pure Nickel’s Man property since 2008, withdrew from the project late in 2013. As a result, Pure Nickel did not carry out any significant exploration on the property that lies east of MMG’s Amphitheater claims.

About 15 miles west of the Man property, Millrock Resources is investigating Stellar, a property added to the company’s portfolio in 2012.

The Stellar claims cover a copper-gold skarn deposit known as Zackly and are considered prospective for porphyry copper-gold deposits.

Kiska Metals Corp. completed minimal work on its Whistler copper-gold project in 2014. The company did, however, attract a potential partner to its Copper Joe project, an earlier staged project situated about 20 miles (30 kilometers) southeast of Whistler.

To secure the exclusive right to option Kiska’s Copper Joe property, First Quantum Minerals Ltd. agreed to fund an initial 1,500-meter drill program on the property. The program, operated by Kiska, began in September.

If First Quantum decides to option Copper Joe, the company formerly known as Inmet Mining can earn an initial 51 percent interest in the project by funding expenditures of US$5 million before the end of 2017, a stake that will increase to 80 percent if a decision to mine Copper Joe is made.

Dowa turns up spending in SE

In Southeast Alaska, Tokyo-based Dowa Metals & Mining Co. Ltd. has agreed to invest US$6.2 million on a 2014 exploration program at Constantine Metals Resources’ Palmer volcanogenic massive sulfide project located near the coastal community of Haines.

The 10,000-meter program slated for 2014 found early success at this property located at the northern end of the Southeast Alaska panhandle. In July, Constantine reported a 22.1-meter drill intercept grading 2.48 percent copper, 4.05 percent zinc, 24 grams per metric ton silver and 0.39 g/t gold in hole CMR14-54.

This lens of high-grade massive sulfide mineralization was cut 150 meters below the lowest previous intercept at the South Wall zone. CMR14-54 expand upon a 4.75-million-metric-ton deposit already delineated at Palmer and is the first hole to tap a 400-square-meter conductive plate that could represent an enormous extension of the VMS mineralization further down-dip.

The 2014 program marks the second year of exploration funding by Dowa which has the option to earn a 49 percent joint venture interest in Palmer by investing US$22 million over four years. The investment is part of the Tokyo-based smelting and mining company’s strategy of securing copper and zinc concentrates by investing in mines and promising exploration projects.

At the southern end of the Southeast Alaska Panhandle, Ucore Rare Metals had two drills turning at its Bokan Mountain-Dotson Ridge rare earths project in 2014.

Late in 2013, Ucore published an updated Dotson Ridge resource of 2.9 million metric tons averaging 0.614 percent (39.7 million metric tons) total rare earth oxides in the indicated category and 2 million metric tons averaging 0.605 percent (26.6 million pounds) TREOs in the inferred category.

The smaller of two rigs drilling this year is aiming to upgrade a portion of the inferred resources to the indicated category by infill drilling of the rare earths deposit.

The larger rig is drilling multiple deep holes with the goal of expanding the resource to depth, as well as completing a number of geotechnical holes and groundwater monitoring wells to obtain supplementary data for use in the engineering and permitting of the project.

This program is expected to provide engineers with the data needed to complete a plan of operations for mining the heavy rare earth element-enriched deposit at Bokan Mountain.

Between Palmer and Bokan Mountain, Southeast Alaska’s two producers continued exploration around their respective mines.

Coeur Mining Inc. budgeted US$6.2 million to follow up on recent success in discovering additional high-grade gold zones near its Kensington mine.

After hitting several intercepts of more than one once per ton gold near underground workings at Kensington, Coeur increased the exploration budget to US$9.1 million.

Hecla Mining Company’s 2014 exploration at Greens Creek was divided between continued expansion and delineation of near mine deposits and exploration of Killer Creek, where previous drilling has encountered broad zones of high-grade copper, silver, lead and zinc stockwork mineralization.

All quiet in SW Alaska

Southwest Alaska, home to some of the world’s biggest deposits of copper and gold, has traditionally been a juggernaut of mineral exploration in the state. During 2014, however, exploration spending in this region is diminutive.

This flagging of exploration expenditures is largely attributable to the status of the Donlin and Pebble projects.

Though it has been several years since partners NovaGold Resource Inc. and Barrick Gold Corp. have completed any appreciable exploration at Donlin Gold, spending at this 40-million-ounce gold project has traditionally been attributed to the exploration category.

Two years into the permitting process, this project has clearly crossed the threshold between advanced exploration and development.

The U.S. Army Corps of Engineers continues to forge ahead with an environmental impact statement for Donlin. A decision on the final EIS and the bevy of accompanying permits is slated for 2016, a few months later than hoped for but still within the four-year estimated time-frame.

If permits are approved, mine construction is anticipated to take about four years, putting first production at 2020.

Once in operation, Donlin is expected to produce more than 1 million ounces of gold per year, singlehandedly doubling Alaska’s output of the precious metal.

The Pebble project, on the other hand, was dealt a series of setbacks. The most notable, in terms of exploration expenditures, was the withdrawal of funding partner Anglo American at the end of 2013.

After spending more than half a billion dollars to take the Pebble project to the cusp of permitting, the mining giant pulled out of The Pebble Limited Partnership, an alliance it forged with Northern Dynasty Minerals Ltd. to gain a 50 percent stake in one of the largest copper-gold-molybdenum deposits on the planet.

According to the most recent published resource estimate, Pebble contains 80.6 billion pounds of copper, 107.4 million ounces of gold and 5.6 billion pounds of molybdenum.

Now solely owned by Northern Dynasty, the Pebble Partnership is battling a proposal by the U.S. Environmental Protection Agency’s to limit the footprint of any future mine at this mammoth deposit by restricting the surface disturbances that would be allowed.

This pre-emptive move by the EPA is unprecedented, and the Pebble Partnership has challenged the agency’s authority to impose limitations on Pebble before the company gets a fair hearing under the established state and federal permitting process.

“Litigation is necessary in order to get the agency’s attention and bring some rational perspective back to the U.S. permitting process,” explains Pebble Partnership CEO Tom Collier.

In September, the presiding federal judge dismissed the case on the grounds that EPA had not yet placed any restrictions on development. The Pebble Partnership will revisit the case if and when the federal agency does take preemptive action to limit development. A second case relating to the legitimacy of an assessment for which EPA is basing its restrictions is pending.

WestMountain Gold Inc. continues bulk sample mining and milling operations at Terra, a high-grade gold located roughly 125 miles (200 kilometers) northeast of Pebble and about the same distance southeast of Donlin.

Alaska Peninsula gets a glance

Stretching some 1,600 kilometers (1,000 miles) off Southwest Alaska into the Pacific Ocean, the Alaska Peninsula and trailing Aleutian Islands is rich with porphyry copper-gold and epithermal gold systems but has had limited modern exploration, making this island arc environment prime for new discoveries.

Hoping to take advantage of the limited exploration, Millrock Resources Inc. has secured an exploration agreement with option to lease on a 1.6-million-acre- (650,000 hectares) tract of prospective land owned by Bristol Bay Native Corp.

This massive property, appropriately named the Alaska Peninsula project, covers a number of porphyry copper-gold-molybdenum prospects as well as intrusive-related deposits such as polymetallic skarn and replacement deposits, base metal veins and epithermal gold deposits.

In January, First Quantum Minerals Ltd. agreed to fund an initial US$600,000 exploration program in exchange for an exclusive right to enter into an option to joint venture the large copper and gold project in Southwest Alaska.

This program involved 1,140 line-kilometers of high-resolution airborne magnetic and radiometric flown over three porphyry copper-gold occurrences – Kawisgag, Mallard Duck Bay and Bee Creek – followed up by a mapping and sampling program that started in July.

Pyramid, situated roughly 50 miles (80 kilometers) to the southwest, is the most advanced porphyry copper-gold project on the Alaska Peninsula.

From 2010 through 2012, Full Metal Minerals Ltd. and Antofagasta Minerals S.A. completed roughly 7,486 meters of drilling in 30 holes at Pyramid. This effort confirmed and expanded upon 19 shallow historical holes completed by Quintana-Duval during the 1970s and resulted in an inferred resource of 1.34 billion pounds of copper, 74 million pounds of molybdenum and 488,000 ounces of gold.

As a result of its three-year tenure at Pyramid, Antofagasta earned a 51 percent joint venture stake in Pyramid, an interest Full Metal has cut a deal to re-acquire and regain full ownership.

In turn, Pyramid is to be rolled into CopperBank Resources Corp., a new company that will result from the amalgamation of Full Metal and Pyramid; Enexco International Inc. and its Contact copper project in Nevada; and Choice Gold Corp., which will serve as the vehicle for the emergent company.

On Unga Island, just off the peninsula from Pyramid, Redstar Gold Corp. carried out a two-month surface program at its high-grade Unga gold project.

The Unga project covers the legendary Apollo gold mine, considered to be the first hardrock gold mine in Alaska.

Redstar’s 2014 surface program involved chip and rock sampling along with detailed mapping on two of the most prospective high-grade gold trends on the property.

This work initially focused on the Apollo Trend, home of the historic Apollo Mine, before investigating the Shumagin Trend, a parallel high-grade gold vein system about 3,000 meters northwest of the Apollo Trend.

From Au to Zn in Northwest

The Seward Peninsula and Alaska Northwest continues to be a hunting ground for explorers seeking zinc, lead, silver, copper, gold and graphite.

The Nome Offshore Project, a large tract of marine placer gold properties off the golden shores of Nome, is being advanced towards a production decision by an international consortium known as Placer Marine Mining.

In 2013, a PEA was completed on the large-scale marine placer project that was originally a joint venture between De Beers and AngloGold Ashanti. Some C$5.1 million was invested on exploration of the marine property last year. Exploration, environmental baseline studies and other work in support of the operation outlined in the PEA are ongoing.

In August, Graphite One Resources Inc. announced a late-season drill program at its aptly named Graphite Creek deposit, located on the Seward Peninsula roughly 40 miles (65 kilometers) north of Nome.

Over the previous two years, the company has outlined an inferred resource of 186.9 million metric tons grading 5.5 percent (10.35 million metric tons) graphite. This deposit represents drilling along less than 30 percent of an 18-kilometer- (11.2 miles) long.

This year’s program, however, did not focus on expanding the breadth of the deposit. Instead, Graphite One focused on upgrading a portion of the inferred resource to either indicated or measured categories by infill drilling on roughly 50-meter centers. The program also involved the collection of mini-bulk samples for ongoing bench-scale metallurgical testing.

The company plans to incorporate the results of the 2014 program into a preliminary economic assessment slated for completion in 2015.

NovaCopper Inc., which invested more than US$30 million on exploration in the Ambler District of Northwest Alaska over the previous two years, only allotted US$2.7 million for this year’s program at the Upper Kobuk Mineral Projects.

UKMP combines Bornite and a number of other mineral prospects on Native lands owned by NANA Regional Corp. with the world-class Arctic deposit and dozens of similar VMS prospects located on NovaCopper’s claims in the Ambler Mining District.

Between Bornite and Arctic, the equivalent of roughly 9.5 billion pounds of copper has been identified, so far, at Upper Kobuk Mineral Projects, when you calculate the worth of the zinc, lead, silver and gold found with the copper at Arctic.

No drills turned at Bornite, or any of the other Upper Kobuk projects during 2014. Instead, the program filled gaps inside Bornite deposit by re-sampling some 12,000 meters core from drilling carried out by Kennecott Mining from 1957 until 1975.

A similar re-sampling program completed last year played a crucial role in adding some 2.6 billion pounds of copper when the resource was updated.

While advancing UKMP on a budget, NovaCopper will continue to support AIDEA’s work on permitting a road to the copper-rich Ambler District, an overland route that is key to the economics of mining Arctic, Bornite and the number of other deposits that dot this region of northwestern Alaska.

Teck Resources continues to expand high-grade zinc deposits in the area of its Red Dog Mine.

At the end of 2013, Teck reported 50 tons of reserves at Red Dog with an average grade of 15.8 percent zinc, 4.1 percent lead and 2.1 ounces per ton silver.

Teck’s recent Red Dog targets include Qanaiyaq and Paalaaq, potential sources of near-term higher-grade ore to supplement the reserves currently being mined from the adjacent Aqqaluk pit.

Qanaiyaq, a near-surface deposit that lies to the south of the mined out Red Dog main deposit, has an indicated resource of 8.3 million tons with an average grade of 25.7 percent zinc, 6.9 percent lead and 3.99 ounces per ton silver. Teck has not released a resource for Paalaaq, a deeper deposit immediately north of Aqqaluk.

In addition to NANA-owned lands immediately surrounding the Red Dog Mine, Teck exploration interest includes Noatak, a block of state claims bordering the west side of the Red Dog property.

In March, Zazu Metals Corp. published an updated PEA for Lik, a sediment-hosted zinc project about 14 miles (22 kilometers) northwest of Red Dog. The company, however, completed only minimal site work at the project in 2014.

Spurred by growing interest in zinc, Millrock has staked Lisburne, a grassroots zinc prospect some 85 miles (140 kilometers) northwest of Red Dog.

“We can see the potential for zinc shortages and price increases in the medium to long term and therefore have decided to act on this conceptual target,” said Millrock President and CEO Greg Beischer.

Typical to its project generator business model, Millrock is seeking a partner to advance this prospective zinc discovery.



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