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Despite mining pundits, gold is back Nixon Fork resources updated, commercial production rate by the end of 2004 Curt Freeman Petroleum News Contributing Columnist
Remember back a few years if you will, to the late 1990s, a time when the mining pundits and financial cognoscenti proclaimed “gold is dead”, not for the first time mind you. The same proclamations hit the streets in 1988 and 1993 and turned out to be wrong as well. But this time, they were sure, gold really was DOA. Now fast forward to late November 2003 and gold pops above the $400 per ounce mark for the first time in 7 (yes, seven) years. Somehow, the resilient metal has managed not only to come back to life, again, but push at price levels not seen for close to a decade. What do we hear now from the know-it-alls who proclaimed gold dead? A thundering silence. Did any of them predict gold’s revival? Hardly. Will they explain why gold went up, now that it has done so? Count on it. Funny that….. Western Alaska St. Andrew Goldfields Ltd. has updated both indicated and inferred resources on its Nixon Fork mine near McGrath. Indicated resources now stand at 69,000 tonnes grading 32.4 grams of gold per tonne (71,900 ounces), while inferred resources stand at 76,000 tonnes grading 26.4 grams of gold per tonne (64,400 ounces). Based on 2-D and 3-D modeling, the company believes there is potential to double the existing resource base with the two-phase drilling program currently under way. That program targets upgrading of known resources to reserve status and delineation of additional resources outside areas already known to contain resources.
Underground drifting is under way to connect the C-3000 and C-3300 zones on the 185 meter level. Phase 1 drilling (8,000 meters), now under way, is designed to extend the known resources down dip and down plunge. A follow-up drilling program, targeted at 23,500 meters, will be designed to upgrade resources to reserve status.
The company also is planning to connect the Crystal and Mystic declines with 350 meters of new drift.
Total estimated cost of Phase 1 work is $945,000 while Phase 2 work is budgeted at $2.3 million. Current capital cost estimates to bring the mine back into production at 44,000 ounces per year is approximately $7.5 million. Current estimated operating costs are $75 per tonne.
Development plans call for completion of a definitive feasibility study and reactivation of permits by the second quarter of 2004, upgrade of the mill and initial production by the third quarter of 2004 with full commercial production rate coming by December 2004. Eastern Interior Kinross Gold’s third quarter results from its Fort Knox-True North operations show the combined operations produced 98,518 ounces of gold at a total cash cost of $249 per ounce compared to 113,449 ounces of gold at a total cash cost of $219 per ounce during the third quarter of 2002. Mill throughput for the quarter averaged 44,650 tons (40,592 tonnes) per day at an average grade of 1.00 grams of gold per tonne. Recovery was steady at 84 percent and total operating costs were $341 per ounce. Production was down 6 percent from planned levels due to lower than average grade ore and lower mill recoveries due to slightly more refractory sulfidic ore from the True North open pit.
It is anticipated that True North ore will remain at current recovery levels through its planned closure in early 2005. Higher mill throughputs and more uniform blending with Fort Knox pit run ore are being utilized to maintain production rates.
During the third quarter the company spent $700,000 on exploration at the Gil and Ryan Lode prospects as well as in-pit expansion work at Fort Knox. An engineering scoping study was instituted at Gil to evaluate the economics of mining this nearby deposit (see below).
Teryl Resources and Kinross Gold said they plan to conduct a project assessment program designed to gauge the feasibility of mining the Gil deposit. The enhanced work program will gather environmental baseline data, conduct hydrologic characterization studies and evaluate engineering aspects of mining the deposit and hauling the ore for treatment at Kinross Gold’s Fort Knox mill complex located 5 miles west of Gil. The total cost of these revised work plans is approximately $1,075,000.
Teryl Resources also said 342 meters of trenching and additional auger soil sampling were completed recently at its West Ridge gold prospect in the Fairbanks District. A series of highly oxidized shear zones were sampled in the trenches and exhibited variable amounts of arsenic, antimony and iron oxides. Host rocks include highly sericitized granodiorite and schist. Assays are pending on trench rock sampling. Soil auger sampling has expanded the anomalous gold zone to 500 meters square and mineralization remains open to expansion in three directions. Drilling is planned as soon as sample results have been evaluated.
Golden Spirit Minerals has started exploration at its Ester Creek gold prospect near Fairbanks. The company plans to conduct stream sediment sampling, trenching, gold nugget analyses and evaluation of other mineralized prospects within 5 miles of the property. Results are pending. Alaska Range Nevada Star Resources’ drilling results for its Fish Lake Complex on its MAN nickel-copper-platinum group element project near Isabel Pass indicate mineralization with grades of up to 5.7 percent nickel, 5.7 percent copper, and 3.4 grams per ton of palladium. This semi-massive sulfide mineralization occurs in peridotite located near the border zone of the complex. A total of 565 feet were drilled on the LFF anomaly. The best intercept came from hole FL09-10 which returned 9 feet grading 1,175 parts per billion platinum, 1,022 parts per billion palladium and 3,319 parts per million nickel. Drill results included wide-spread disseminated mineralization as well as more sulfide-rich accumulations and indicate potential for a nickel and PGE-rich mineralized zone within the basal zone of the complex. Changes in metal ratios with depth further suggest that stratigraphically lower horizons within the basal zone could host nickel and PGE-rich massive sulfides.
Western Warrior Resources has begun exploration drilling at its Cliff mine prospect near Valdez. The diamond drill program will consist of 5,000 feet of drilling in holes 650 to 800 feet deep and is designed to confirm the known and projected ore shoot extensions beneath the existing mine workings on the property. The Cliff mine produced 52,000 ounces of gold at a recovered grade of 1.74 ounces of gold per tonne prior to closure by the War Production Board in 1942. Mining took place over a vertical extent of about 600 feet and was open at depth when the mine closed. Southeast Alaska Kennecott (70.3 percent) and Hecla (29.7 percent) announced third quarter 2003 production from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver at Greens Creek for the quarter was $1.14, a significant decrease over third quarter of 2002 costs of $1.93 per ounce. The average grade of ore mined during the quarter was 22.29 ounces of silver per ton. During the third quarter the mine produced 3,518,853 ounces of silver, 24,894 ounces of gold, 6,885 tons of lead and 14,002 tons of zinc. Total production costs for the quarter were $3.35 per ounce of silver produced versus $4.22 per ounce for the third quarter of 2002.
Bravo Venture Group announced surface sampling results from several areas of their Woewodski Island volcanogenic massive sulfide project near Petersburg. Significant surface samples of up to 44 ounces of silver per ton and 27.6 percent zinc from chip samples and 17.4 ounces of silver per ton, 6.78 percent lead and 21.3 percent zinc from channel samples have been recovered from the Mad Dog prospect where lenses of disseminated to massive sphalerite-galena-tetrahedrite are exposed near tidewater. Sulfides occur in conformable bands up to 0.6 meters thick and sit within a broader 3.5 to 8.0 meter wide mineralized zone. Other significant results include gold enriched mineralization from the Scott’s prospect (1.4 grams gold per tonne and 2.8 percent zinc from select barite-quartz veins) and the Brushy Creek prospect (0.58 grams gold per tonne, 1.8 ounces silver per tonne and 6.1 percent zinc from sulfide grab samples). Newly acquired historical data indicate up to 5.2 grams gold per tonne from select sulfides in the Mad Dog II-East Lake area. Drilling is planned for one or more of these prospects in 2004. Other Relative newcomer Spectrum Gold continued to turn heads across the border in British Columbia with more spectacular results from its Galore Creek copper-gold project. Of interest to Alaskans (other than the fact that Spectrum is managed by Rick Van Nieuwenhuyse and his team of wizards of NovaGold Resources fame), is the realization that extensive work at Galore Creek since the 1960s was primarily directed at the copper mineralization.
Such previous studies generally utilized broad composite assays for gold over widths of 100 feet rather than the five-foot individual copper assay intervals. In addition, most of the previous drilling probably under-reported gold values since it was completed with vertical drill holes and gold mineralization appears to be controlled by high angle structures. Recent drilling has shown the wisdom of angle holes and of assaying for gold and copper on five-foot intervals: the initial drilling completed on the project this fall averaged 120 meters grading 3 grams per tonne gold equivalent or 2 percent copper equivalent. More recent results include hole 441 which returned 158.7 meters grading 0.79 grams of gold per tonne and 1.1 percent copper along with an additional 65.3 meters grading 0.23 grams of gold per tonne and 1.2 percent copper Once again it has been shown that a new take on an old project can bring surprising results. How many more of these things are there out there waiting to be rediscovered?
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