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Vol. 18, No. 13 Week of March 31, 2013
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Alaska slips in 2012 Fraser rankings

Industry leaders still ranked state among top 10 of 96 political jurisdictions around the world when it comes to mining investment

Curt Freeman

For Mining News

In a year that has started off with more than its share of mining industry gloom and doom, this year’s Fraser Institute “Survey of Mining Companies, 2012/2013” provided a bit of sunshine for Alaska. The annual survey of exploration and mining companies gauges the pros and cons of working in various political jurisdictions around the world. This year’s results came from 742 mineral industry companies working in 96 jurisdictions worldwide and represented cumulative 2012 exploration expenditures of more than US$6.2 billion.

The perception of Alaska from the companies working here last year was not far different from 2011. However, Alaska ranked fifth under the “Policy/Mineral Potential index with no land use policies in place and assuming industry best practices” category, down from its surprising first-place position in 2011. Alaska reclaimed sixth place in “Mineral Potential with current land use policies in place” behind Greenland, Finland, Sweden, Nevada and Saskatchewan. Alaska also climbed to No. 19 in 2012 from 25th place a year earlier in the Policy Potential Index category, which measures all things related to regulatory policy.

All in all, we did pretty well with a seventh-place overall finish (versus No. 4 in 2011) behind Yukon, Finland, Nevada, Sweden, Western Australia and Wyoming. Alaska received high marks for its supportive and proactive state government, its public-sector digital database and its unequivocal identification of Alaska Native land claims. As usual, there is some lingering uncertainty out there regarding the consistency of administration and interpretation of existing regulations and on Alaska’s well-recognized access and infrastructure challenges. We also got hammered for the heavy hand that the U.S. federal government can play in Alaska’s mining industry.

Western Alaska

Freegold Ventures Ltd. announced and updated NI43-101 compliant Mineral Resource estimate at its Vinasale gold project near McGrath. Indicated resources now stand at 3.41 million metric tons averaging 1.48 grams per metric ton gold for 162,000 ounces, and inferred resources are 53.25 million metric tons averaging 1.05 g/t gold for 1.799 million oz of gold utilizing a cutoff value of 0.5 grams of gold per tonne. Of significance is the increase in grade in the indicated category and the potential to both increase the grade and tonnage within that category. A total of 98 drill holes containing 11,284 gold assays have been completed on the project within three areas: the Central, Northeast and South Zones. The highest density of drilling has been completed in the Central Zone where 53 drill holes totaling 12,352 meters were used in estimating the resource for the Central Zone. The company’s 2013 program is expected to consist of additional drilling in the Central Zone where it remains open to the south, as well as potential resource definition in the North East Zone.

Fire River Gold Corp. provided an update of activities over the last three months at it Nixon Fork mine near McGrath. The first production stope in the Mystery Mine was started and continues to deliver high grade ore. Additional adjacent mineralization has increased the size of the zone, and the company expected to exceed both the tonnage and grade forecasts for this first production area. Recent production has come from two existing longhole stopes. In addition, development drilling in the 3100 zone is nearly finished and resumption of development work there is being scheduled for the near future. Design work and planning for access to the 3550 zone is underway. Following several improvements in the milling system, production has improved from 921 ounces of gold produced in November 2012 to 2,032 ounces of gold produced in January 2013. The recovery rate during the period varied from 71-73 percent. The company also announced development drill results from the 3550 zone at the Crystal mine. Significant results include 6.36 meters grading 7.86 g/t gold in drill hole N12U-108; 5.35 meters grading 53.98 g/t gold in drill hole N12U-123; 4.28 meters grading 18.80 g/t gold in drill hole N12U-128; 3.43 meters grading 21.10 g/t gold in drill hole N12U-130, including 1.10 meters grading 48.00 g/t gold; and 3.35 meters grading 57.17 g/t gold in drill hole N12U-114 including 1.93 meters grading 99.00 g/t gold. Additional definition drilling in the 3550 zone is continuing.

Millrock Resources announced that funding partner Kinross Gold Corp. has dropped its option on the Humble project in southwest Alaska and the Council project on the Seward Peninsula. Both projects are available for option with new funding partners.

Interior Alaska

Freegold Ventures Ltd. announced resumption in February of resource expansion drilling at its Golden Summit project near Fairbanks. Drilling will initially be targeted at the 6 million ounce Dolphin/Cleary Hill deposit where infill drilling will be conducted to upgrade inferred ounces to indicated ounces and expansion drilling will be conducted to determine the limits of mineralization. Mineralization remains open to west, east and at depth and covers an area of at least 300 meters by 1,500 meters. The program for 2013 will include 20,000 to 25,000 meters of diamond core drilling, metallurgical testing and the initiation of a Preliminary Economic Assessment.

Teryl Resources Corp. announced acquisition of a 50 percent working interest in the Fish Creek gold property from Linux Gold Corp. Linux Gold will retain a 5 percent net royalty interest with a cap of US$2 million. Teryl has the right to purchase the 5 percent net royalty interest for US$500,000 within one year of production. The Fish Creek property is located adjacent to Kinross Gold Corp.’s Gil gold project and nearby Fort Knox gold mine.

International Tower Hill Mines Ltd. provided a corporate update at its Livengood gold project. The company is focusing on completing all the engineering and analysis to support the completion of its Feasibility Study and the environmental work needed to maintain its current schedule. The company also indicated that the Livengood Feasibility/Optimization Study is on schedule and on budget. This work included completion of mine design/production schedule alternatives including equipment specifications and bids, completion of metallurgical tests to optimize recovery, completion of the milling process design circuit has with on-going work on throughput optimization. The mill will include an initial gravity circuit followed by standard carbon in leach recovery circuit. Equipment bids have been received and are being reviewed. The company also reported that environmental baseline information collection has entered its fifth year, establishing critical benchmarks for mine permitting needs.

Bluestone Resources Inc. announced receipt of a five-year exploration permit from the State of Alaska at its Shorty Creek gold project south of Livengood. The company plans to conduct confirmation drilling and additional exploration drilling programs. An historical 20 hole drill program produced drill intercepts of 70 meters grading 1.2 g/t gold, including 7.6 meters of 4.6 g/t gold, while subsequent soil geochemistry provided a positive correlation to the drill results, supporting the possible presence of a under-explored intrusion related gold system.

Contango ORE Inc. announced completion of a private placement to fund exploration at its Tetlin gold-copper-silver project near Tok. The company will use the approximately US$14.2 million in net proceeds of the private placement to fund its 2013 exploration program in Alaska. Assuming success on initial drill holes, the company has budgeted up to US$13 million on exploration and general corporate purposes. The company plans to spend about US$5 million in the first phase of drilling and, after reviewing initial results, allocating the remaining capital towards the prospects that offer the best potential for expanding its recently discovered Peak zone and upgrading and identifying resources at one or more or its currently identified exploration targets. The company plans to utilize two or three core drilling rigs in this effort as well as conduct additional airborne geophysics, reconnaissance exploration and environmental baseline studies.

Alaska Range

WestMountain Gold, Inc. announced a NI 43-101-compliant resource update at its Terra gold-silver project in the Alaska Range. Using a cut off of 5 g/t gold, the estimate includes indicated resource of 49,809 oz gold at 13.25 g/t gold and 112,723 oz silver at 29.98 g/t silver and inferred resource of 369,795 oz of gold at 15.63 g/t gold and 653,884 oz silver at 27.63 g/t silver. Compared to previous estimates, tonnage increased 100 percent, inferred and indicated resource increased by 150 percent and gold grade grew by 25 percent. The company is planning a 2013 field season with a budget of US$4.2 million that covers a larger scale bulk sample program with an improved pilot mill, which has the ability to process up to 40 metric tons per day. In addition, the company will continue exploratory drilling on the project. Just prior to this announcement, joint venture partner Corvus Gold Inc. agreed to sell all of its interest in the Terra project, subject to a retained production royalty, for US$6.2 million in cash over time and issuance of 1 million shares of WestMountain. Corvus will retain a sliding scale net smelter production royalty of 0.5 percent to 3 percent on precious metals and 2 percent on base metals.

Millrock Resources announced that a NI 43-101-compliant technical report on the Stellar project concluded that historical estimates of copper and gold present within the Zackly Main Skarn area are not reliable, and that re-drilling will be necessary to confirm the mineralization and/or allow a new industry-compliant resource estimate to be completed.

Southeast Alaska

Hecla Mining Co. announced year end 2012 production results from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver produced for the year was $2.70 per ounce versus negative $1.29 per ounce in 2011. The average grade of ore mined during the year was 11.13 oz per ton silver, down slightly from the average grade of 11.49 oz per ton in the year previous. For the year the mine produced 6,349,235 oz silver, 55,496 oz gold, 21,074 tons lead and 64,249 tons zinc. The 100,000-oz decrease in silver production year-over-year is due to lower silver ore grade and higher mining costs, partially offset by higher mill throughput and lower milling costs. While not replacing reserves in 2012, Greens Creek made significant progress in growing the potential of the 200 South and NWW zones. 200 South had some of the widest and highest grade intercepts in recent history at the mine, including 50 feet grading 0.08 oz per ton gold, 35.9 oz/t silver, 11.2 percent zinc and 4.9 percent lead in hole GC3483, 19 feet grading 0.49 oz/t gold, 65.8 oz/t silver, 7 percent zinc and 3.5 percent lead in hole GC3490, and 39 feet grading 0.18 oz/t gold, 29.7 oz/t silver, 9.1 percent zinc and 3.5 percent lead in hole GC3457. The mine expects 2013 to be a year of infill drilling in order to develop a mine plan on 200 South and Southwest Bench. Exploration results from surface drilling at Killer Creek defined a 150-foot wide zone of stockwork veins which comprises intervals with silver up to 1.5 ounces per ton and copper up to 5.4 percent. This mineralization, combined with discovery of zinc mineralization 1,500 feet away at the mine contact, might represent the exposed roots of a new mineralized zone. Surface core drilling at Killer Creek during 2013 is expected to total 25,000 feet.

Coeur d’Alene Mines Corp. announced 2012 fourth quarter and year-end results for its Kensington mine. The mined produced 28,717 ounces of gold in the fourth quarter, more than double the fourth quarter production from 2011. For the year the mine produced 82,125 ounces of gold. While cash operating costs for the year were up 25 percent over year on year to US$1,358 per ounce, cash operating costs in the fourth quarter were down 41 percent year on year to US$1,065 per ounce and are expected to decline further in 2013. These cash cost declines followed the mine’s return to full production in April 2013 after a planned shutdown in late 2011 and early 2012 to complete several underground and surface infrastructure projects and to establish increased underground development footage. Total capital expenditures in 2012 were $37 million. For the year, the mine processed 394,780 tons of ore grading 0.22 oz/t gold. Recovery rates averaged 95.6 percent, a significant increase over the already impressive 92.7 percent recovery rate experienced in 2011. During 2012, the company spent US$7.1 million on exploration at the mine, completing 143,796 feet of core drilling mostly devoted to in-fill drilling of Block K and the Raven veins. Additional drilling focused on other targets such as Kensington South, the Ann Trend, Elmira and the historic Jualin mine. The company plans for an additional underground drilling program in 2013 on Zone 10, Zone 50, Zone 30, Kensington South, Elmira vein, and Ann. Continued surface drilling is planned at Jualin and several other targets on the property. The total 2013 exploration program is expected to be $8.6 million. Drilling results at the Raven vein, located approximately 2,000 feet from the main underground workings at Kensington, identified initial proven and probable reserves of 50,400 ounces contained within 151,000 tons, at an average gold grade of 0.33 oz/t gold, 51 percent higher than the overall average reserve grade at Kensington. The mine’s proven and probable reserves at year-end 2012 totaled 1.0 million ounces of gold compared with 1.3 million ounces of gold in 2011. The mine is expected to produce 108,000 to 114,000 ounces of gold in 2013.

Grande Portage Resources Ltd. and joint venture partner Quaterra Resources Inc. announced an updated NI 43-101 resource estimate for their Herbert gold project located near Juneau. Using a cut-off of 2 grams of gold per tonne, the updated estimate contains an indicated resource of 821,100 metric tons grading 6.91 g/t gold for 182,400 ounces of gold in the Deep Trench and Main veins. The Deep Trench and five veins that have had limited drill testing contain an additional inferred resource of 51,600 metric tons grading 7.73 g/t gold for 12,800 ounces of gold. The continuity and consistency of gold mineralization identified by in-fill drilling suggest that exploration on the other veins has the potential to produce similar results. The 2012 infill drilling campaign converted 52.3 percent of the metric tons and 74.4 percent of the ounces from the inferred to the indicated resource category. The grade increased by 42.2 percent compared to the previous resource estimate. At a cut off of 3.0 g/t gold, 56.0 percent of the metric tons and 81.7 percent of the ounces were converted to the indicated resource category, with an increase in grade of 46.2 percent. The program also delineated a higher grade shoot within the Deep Trench vein. The resource remains open in multiple directions along the defined veins.

Arrowstar Resources Ltd. announced that it had filed its application for a drilling permit on its Snettisham iron ore prospect located near Juneau. The drilling permit covers a proposed 3,600 meters of drilling consisting of 9 to 15 holes ranging in depth from 200-500 meters. Initial review has identified three high-magnetic intensity areas over a 750-meter distance with the largest area having a magnetic intensity greater than 78,000 nanoTeslas over a surface area of about 750 meters by 750 meters. The drilling program is designed to determine the extent of the mineralization at depth, the mineralogy and petrology, the contact rock and the magnitude of the mineralization. With this data, an industry-compliant resources estimate will be prepared.



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