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Vol. 15, No. 39 Week of September 26, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Junior blazes own trail at Nixon Fork

Fire River launches drill program, studies mill configurations in anticipation of 2011 production at Alaska high-grade gold mine

Shane Lasley

Mining News

NIXON FORK – Flying more than 200 miles, or 320 kilometers, northwest from Anchorage, on a route that roughly parallels the legendary Iditarod trail, Fire River Gold Corp.’s Nixon Fork Mine looms on the horizon. The 4,000-foot airstrip and array of buildings resting atop a gold-veined ridge is an island of productivity in this vast expanse of Interior Alaska.

“You might look at the site and say, ‘It would never be built today.’ If this was just a hillside and trees and we were looking at flying in a bulldozer in pieces, you wouldn’t justify it. But, the reality is, this project is so far down the path that its threshold to launch is very, very low,” Fire River Vice President of Mining Richard Goodwin said during a during my August visit to Nixon Fork. “We’ve got an airstrip, camp, power, a mill on site, all the permitting is done, and also the underground development.”

Goodwin, an engineer with some 25 years experience, estimates that it would cost some US$150 million to establish the facilities that are in place at Nixon Fork. This would equate to around the value, at today’s price, of the entire 148,000 of gold recovered since Nevada Goldfields Inc. began mining at Nixon Fork in 1995.

Fire River acquired the entire package for US$3 million, giving the young junior an enormous lead to becoming a producing miner.

Though everything is in place to begin production at Nixon Fork, Fire River is not blindly jumping into production. Instead, the junior is carefully studying every facet of the project before deciding how to proceed.

Spending the past year sorting through the facilities, equipment and geological data left behind by the previous operators, Fire River’s team of geologists and engineers are now looking ahead to reopening the high-grade gold mine.

“We are very much at a crossroads right now. We spent all of our time up to this point looking backwards – looking at what’s been done, looking at what data exists – and we are just on the path now where we are breaking our own trail. The most significant part of that is we started our own drill program,” Goodwin explained.

Geologically driven

Though it pains him as an engineer to admit it, Goodwin concedes Nixon Fork “is a geologically driven mine.” The property hosts a skarn deposit with complex geology. Fire River knows that understanding the rock types and structure is paramount to demonstrating the continuity of the high-grade gold mineralization that will make the mine profitable.

The complexity of the deposit partially explains the disparity of the gold recoveries experienced by the two previous operators of the mine.

Though Nevada Goldfields Inc. averaged around 1.4 oz/t while operating Nixon Fork from 1995-1998, St. Andrew Goldfields Ltd., which purchased the mine in 2003, only averaged about 0.56 g/t during its nine months of production in 2007.

Due to these lower than expected grades, the Toronto-based miner shuttered operations and completed 9,381 meters of drilling in order to better define its targets at Nixon Fork. The company was contending with financial difficulties in 2008 and new management decided to pull the plug on the project.

The stockpiles remaining from St. Andrew’s mining has provided Fire River with clues as to why the former Nixon Fork operator milled the lower grades.

“They used a contract miner that basically got paid to get tons to the surface. There is a whole lot of limestone and marble sitting in that ore pile, so it didn’t run 30 grams (per ton) it ran about 18,” Fire River Manager of Geology Larry Hillesland explained. “You need to have a very good control; the stuff that comes up and runs through that mill needs to be good. “

The company believes the key to turning a profit at Nixon Fork is to stay in the high-grade zones, feeding the mill ore averaging around an ounce of gold per metric ton.

“Our cut-off grade is going to be 15 to 20 grams (of gold per metric ton) and the head grade will be over an ounce, in all likely-hood, for this mine,” Hillesland explained.

Drill program tests understanding

Armed with the geological knowledge gained from re-evaluating more than 10,000 meters of historical core, Fire River’s geological team launched a 28,000-meter drill campaign that is both delineating near mine resources for immediate mining and investigating promising new prospects on the property.

“We have been very encouraged by the impressive grades in our re-evaluation work and this drill program will allow us to test and demonstrate our understanding of the ore body,” Goodwin said.

The underground rig is primarily focused on expanding the 3300 zone at depth. This ore body, located near the Crystal Portal and mill, was the primary target of St. Andrew’s drilling and is anticipated to be a source of early high-grade ore.

The underground program also is investigating several other zones in the vicinity of the mill, including the 3100 and 3500 zones.

To ensure that the junior stays in pay dirt when it begins mining, Fire River is drilling these small yet very high-grade ore bodies on a very tight spacing. To this end the company has added a second rig to the underground program.

The surface drill began its investigation at Whalen and North Star, two prospects about 1,500 meters south of the Crystal Mine. In preparation for drilling geologists re-logged core from seven holes drilled at Whalen in 2007. Hole N07007 returned assays of 15.5 meters averaging 12 g/t gold and included a one-meter intercept grading 85 g/t gold. An inferred resource of 14,000 metric tons averaging 32.4 g/t was calculated for the prospect in 2005.

The company also plans to begin its investigation of the Southern Cross zone from the surface. This prospect about 400 meters northeast of the 3300 zone could be mined from an extension of the underground development already in place.

Once winter weather descends on Nixon Fork, the surface rig will be reconfigured and moved underground.

The 9,400-meters of drilling completed by St. Andrew prior to selling the mine were never incorporated into a resource estimate.

Hillesland said the bulk of an updated resource, based on Fire River’s re-logging and re-assaying of the core, will be contained in the 3300 zone, which is near the Crystal Portal and mill facilities.

Evaluating recovery methods

Though Nixon Fork may be geologically driven, developing the most efficient mine-plan and recovery system for the remote mine is keeping Fire River’s engineers busy.

The first item on the agenda is to evaluate utilizing a carbon-in-leach circuit, delivered to Nixon Fork and about 60 percent installed by St. Andrew, to reprocess the tailings from past production. The tailing pond a few hundred meters down the hill from the mine, which contains about 150,000 metric tons of mill tailings with an average grade of 8.1 g/t, or nearly 40,000 troy ounces of gold, is a potential source for early production.

A preliminary economic estimate on reprocessing the tailings through the CIL circuit is expected by October. Fire River has indicated that if it does not choose to process the tailings first, they will likely supplement the ore being mined.

The second PEA will evaluate the economic viability of resuming underground commercial production.

The 200-ton-per-day gravity and flotation circuit utilized by past producers resulted in about an 83 percent recovery, adding in the CIL circuit is expected to up this rate to around 90 percent.

Instead of using the CIL circuit, Fire River is considering using the Merrill-Crowe Process, a separation technique that utilizes zinc to precipitate the gold, silver and copper out of the mixture.

Goodwin said the precipitate could be smelted onsite and the final product would be doré containing about 80 percent copper, 20 percent gold plus silver credits.

This process is expected to provide significant savings on the shipping of carbon and concentrate to and from the remote mine.

“That would probably increase the value of our final product and also would make us question doing away with flotation entirely,” Goodwin explained.

The Merrill-Crowe Process is currently being employed at Coeur d’Alene Mines Corp.’s Palmarejo mine in Mexico.

The PEA to evaluate the milling options and underground mining is scheduled to be completed in December and Fire River hopes to be mining the high-grade gold at Nixon Fork in 2011.

“We have fabulous facilities all in place, and we have our permits all in place,” Goodwin said. “What we are looking at is a realistic start of spring next year.”

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