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MINING NEWS: Prices remain strong as Alaska prepares for this summer’s exploration season Interior, central Alaska Range, Alaska Peninsula and Southeast are exploration hot spots; plus several Brooks Range projects in the works; strong cash flow from mines results in mine and mill plant upgrades, mine-site exploration Curt Freeman For North of 60 Mining News The author
The author Curt Freeman, CPG #6901, is a well-known geologist who lives in Fairbanks. He prepared this column April 30. Freeman can be reached by mail at P.O. Box 80268, Fairbanks, AK 99708. His work phone number at Avalon Development is (907) 457-5159 and his fax is (907) 455-8069. His email is [email protected] and his web site is www.avalonalaska.com. Metals prices remain strong and funding for projects large and small is already in place or nearly so as Alaska prepares for the annual summer exploration dance. Exploration drilling on several winter drilling targets has been completed and summer drilling projects are beginning on several others.
Mine permitting issues at Pogo have cast a shadow over the otherwise bright picture of Alaska’s mining industry but resolution of this problem is expected sooner rather than later (see story on page 12).
Exploration hot spots for the coming months will be Interior Alaska, the central Alaska Range, the Alaska Peninsula and Southeast Alaska. Several Brooks Range projects are expected to take place in this long-ignored part of Alaska. Commodities of interest in these areas include gold, silver, copper, lead, zinc, molybdenum, nickel, diamonds, platinum and palladium.
With sustained strong metals prices, Alaska’s operating mines are enjoying a long-overdue period of strong cash flow, much of which will be ploughed back into mine and mill plant upgrades and mine-site exploration efforts. Western Alaska Teck-Cominco’s Red Dog mine saw dramatically improved operating profits in the first quarter of 2004 as a result of increased zinc and lead prices which averaged 50 cents and 40 cents per pound, respectively. These prices represent a 39 percent increase in zinc prices and a 90 percent increase in lead prices over the first quarter of 2003. Operating profit rose to $38 million versus an operating loss of $8 million in the same period in 2003. For the quarter, the mine generated 130,400 tonnes of zinc and 26,500 tonnes of lead in concentrate versus 144,000 and 29,000 tonnes of zinc and lead, respectively, in the first quarter of 2003. The mine sold 147,000 tonnes of zinc during the first quarter. Average zinc and lead grade mined was 22.8 percent and 6.2 percent versus 21.2 percent and 5.8 percent, respectively, in the first quarter of 2003. Mill throughput of 670,000 tonnes in the first quarter was 17 percent below first quarter 2003 output due to constrictions in the mill processing and tailings lines.
Full Metal Minerals recently announced that it has acquired the Kamishak copper-gold porphyry prospect on the Alaska Peninsula near Cook Inlet. Previous work on the property by American Copper and Nickel in the early 1990s included 17 shallow drill holes which returned values of greater than 0.35 percent copper and greater than 1 gram gold per tonne over 75 meters with narrow higher grade zones reaching greater than 1 percent copper and 12 grams gold per tonne. Mineralization is hosted in two breccia zones cutting Jurassic age biotite-hornblende diorite intrusive rocks. The breccia zones sit within a larger magnetic high measuring 2.5 by 3.3 kilometers in size. The company has recommended regional scale mapping and sampling within the magnetic high followed by more detailed geochemical sampling and induced polarization geophysical surveys in prospective drill target areas. Eastern Interior Teryl Resources said project operator Kinross Gold has delivered the 2003 final report on its Gil project in the Fairbanks district. The report indicated that the 2003 exploration program consisted of 127 reverse circulation drill holes totaling 28,000 feet, 31 core holes totaling 8,917 feet, four trenches totaling 1,150 feet, and 358 rock samples collected from surface exposures. Additional work included geologic mapping, reclamation, surveying, and environmental baseline studies. The focus of the exploration program was increasing the level of confidence in the grade and continuity of mineralization at both the Main and North Gil deposits. This work succeeded in increased confidence of grade and continuity between holes and in expanding mineralized limits of both zones. Exploration work also took place along Sourdough Ridge, the intersection of the Main and North Gil trends, and in the western portion of the joint venture claim block near the Fort Knox mine.
Sourdough Ridge fieldwork outlined two significant calc-silicate units that crop out on surface for approximately 300 feet in a northeast-southwest trend and remain open to the northeast. In the Intersection Area drilling confirmed strong gold values in trenching and outlined an east-west trend to the mineralization. One drill hole was collared in the western portion of the joint venture claim block but did not intersect significant mineralization.
Teryl Resources also reported results from phase one reverse circulation drilling on its West Ridge gold project in the Fairbanks district. The company reported 2,650 feet of drilling was completed in six reverse circulation drill holes in the Old Glory prospect area where previous soil, rock and trench results had revealed the presence of significant gold mineralization. All of the holes encountered anomalous gold mineralization with hole WR04-04 returning 35 feet grading 1.68 grams of gold per tonne including a 20 foot section that returned 2.2 grams of gold per tonne. Gold mineralization is preferentially hosted in quartzite and quartz mica schist and consists of brecciated zones containing sulfides and polyphase quartz veining. Mineralization is open to expansion in all directions. Additional drilling is planned for the project.
The worst news of the year came on April 13 when Fairbanks-based Northern Alaska Environmental Center filed an appeal challenging the U.S. Environmental Protection Agency’s wastewater discharge permit for Teck-Cominco and Sumitomo Metal Mining’s Pogo gold project in the Goodpaster District. The challenge came three days before the end of the appeal period and forced Teck-Cominco and Sumitomo Metal Mining to halt construction and lay off more than 300 construction workers active on the project. The action produced a storm of protests from state and local governments, civic organizations, labor unions, corporations and individuals around the state who saw the challenge as having no merit due to the exhaustive four-year permitting process recently completed by the mine’s owners, the EPA and the Alaska Department of Natural Resources. A local mediator has been hired and talks aimed at resolving the appeal are due to begin in early May. (See story on page 12 and previous stories every week in Petroleum News since the appeal was filed.) Alaska Range Golconda Resources and Shear Minerals said follow-up drilling was planned for its Shulin Lake diamond project west of Talkeetna. Two holes completed on the project last fall intersected a volcanic sequence of sandy tuffs and fine ash suggestive of a volcanic center. Diamond indicator minerals selected from these two holes show a chemical composition similar to eclogitic minerals found in lamproitic environments where diamond deposition is favorable. The joint venture plans to drill 10 holes for a total of 3,000 feet to test different areas of this circular structure in an effort to intersect volcanics with higher olivine content where diamond potential is most favorable.Southeast Alaska Bravo Venture Group and partner Olympic Resource Group said work has begun on the companies’ Woewodski Island massive sulfide project near Petersburg. They are planning an initial eight hole, 1,500 meter diamond drill program scheduled to commence in early May. Three distinct targets will be tested with a focus on the Mad Dog zone where previously reported high-grade mineralization included up to 44 ounces of silver per ton, 27.6 percent zinc and 16.3 percent lead from chip samples and 17.4 ounces of silver per ton, 21.3 percent zinc and 6.78 percent lead from a 1.5 meter channel sample.Other Coeur d’Alene Mines announced appointment of Troy Fierro to the position of senior vice president of Coeur Alaska, the corporate entity that will manage the advanced stage Kensington gold project near Juneau. The company also announced that Tim Arnold will become vice president and general manager of the Kensington project with primary duties being permitting and construction of the planned Kensington mine. Welcome to Alaska Troy and Tim.
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