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Alaska is in for a wild and wooly ride Gold is down but activity up in state’s mining sector is way up Curt Freeman Petroleum News Contributing Columnist
Now that hostilities have begun in earnest in Iraq, the premium on the gold spot price attributed to war worries has disappeared and gold has retreated almost $20 per ounce to the $330-340 per ounce level.
Despite this decline, the leading economic indicators for Alaska’s mining industry (drilling prices and rig availability, how many helicopters are available, how many geologists are working as geologists and how often my phone rings) suggest Alaska is in for a wild and wooly year.
Drill rigs are in short supply, helicopters are becoming scarce, many of the state’s best geologists are gainfully employed (as geologists) and the phone is ringing at a rate not seen since 1998.
The most active areas of the state this year appear to be southeastern Alaska (yes Dorothy, it is part of Alaska), east-central Alaska and southwestern Alaska.
Commodities of interest span the period table and include gold, silver, copper, nickel, platinum, palladium, lead and zinc. All of the metals of interest are at strong or stable prices with the notable exceptions of palladium (now at five year lows) and zinc (lowest price since Julius Caesar’s reign).
Western Alaska St. Andrew Goldfields Ltd. said in March that it has acquired the Nixon Fork mine property near McGrath.
From 1995 to 1998 the 140 tonne per day mine-mill complex produced 137,750 ounces of gold grading 42 grams of gold per tonne (1.25 ounces per ton) and 2.1 million pounds of copper.
Resources in all categories reported in June 1, 1999, totaled 265,664 tonnes containing 22.6 grams of gold per tonne for a total of 194,214 ounces of gold.
The company is planning to carry out exploration and pre-production development programs that will consist of surface exploration, re-permitting the mine, rehabilitating the underground workings, refurbishing the mill, underground delineation drilling, acquisition of mining equipment and the development of mining areas for production.
The exploration program will also include a regional airborne high-resolution magnetic survey, prospecting and trenching and the drilling of known gold targets on the property.
A preliminary feasibility study completed in January estimated that $8.9 million over a 30-month period would be required to return the mine to production at a rate of 52,500 tonnes per year. Cash costs for gold production were estimated at $180 per ounce.
Payback of 1.5 years has been estimated based on a gold price of US$325 per ounce.
Gold production is expected to re-commence in the second half of 2004 at an annualized rate of approximately 50,000 ounces of gold, 500,000 pounds of copper and by-product silver.
Welcome to Alaska St. Andrew Goldfields!
Northern Dynasty Minerals Ltd. announced update resource estimates at its Pebble copper-gold deposit near Iliamna. Inferred mineral resources are estimated at 1.013 billion tonnes grading 0.61 percent copper-equivalent (0.40 grams gold per tonne, 0.30 percent copper, and 0.015 percent molybdenum) at a cut-off grade of 0.30 percent copper-equivalent.
This resource contains 13.1 million ounces of gold and 6.8 billion pounds of copper. In addition, the Pebble deposit contains a smaller but higher grade resource containing 141 million tonnes of 0.97 percent copper-equivalent (0.67 grams gold per tonne, 0.48 percent copper and 0.019 percent molybdenum) at a cut-off grade of 0.80 percent copper-equivalent.
Several areas have been identified within and adjacent to the deposit that have high potential to host substantial volumes of higher-grade mineralization. These include two newly identified granodiorite porphyry stocks within the deposit where gold-copper mineralization and quartz vein stockworks have been encountered in limited previous drilling.
Phase two drilling is planned for the 2003 season.
Eastern Interior Joint venture partners Teck Cominco and Sumitomo announced public release of the draft environmental impact statement for the proposed Pogo gold mine near Delta Junction.
The 60-day public comment period will include public open-house meetings in Delta Junction (April 29) and Fairbanks (April 30). The proposed alternative development plan includes a 49.5-mile all-season road beginning at the end of the existing Shaw Creek road, traversing the Shaw Creek Hillside and then over the Shaw Creek-Goodpaster River divide to the mine site on Liese Creek. The road would only be used by Pogo project-related traffic and it would be removed and reclaimed in its entirety at the end of mining operations. Mine-related vehicle use would average between 10 and 20 round trips per day during operations.
At the mine site ore from the underground operation would be ground and treated by a combination of gravity, froth flotation and cyanide vat leaching.
All tailings exposed to cyanide would pass through a cyanide destruction process and be deposited underground as a paste backfill in mine workings.
Non-cyanide exposed tailings would be deposited in an unlined surface dry stack in upper Liese Creek.
Mineralized development rock would be encapsulated in the dry stack, and nonmineralized development rock would be used for constructing roads and other facilities.
The mill and camp would be located in lower Liese Creek valley. Gravel for facilities and roads would be mined from existing and new pits on the Goodpaster valley floor and in upper Liese Creek.
Power would be supplied by a 50-mile power line that would follow the access road.
During operations treated industrial wastewater would be discharged to a soil absorption system adjacent to the airstrip or injected into underground wells.
Treated domestic wastewater would be discharged to underground drain fields at the camp in Liese Creek valley and at the existing exploration camp near the 1525 Portal.
A 3,000-foot airstrip would be located on the Goodpaster River valley floor just north of the mouth of Liese Creek. Details of the draft EIS can be found at www.pogomineeis.com.
Teryl Resources Corp. announced that joint venture operator Kinross Gold has proposed a two-phase exploration program for their Gil gold project in the Fairbanks District.
Current plans call for an $830,000 budget consisting of 25 diamond core and 35 reverse circulation holes totaling 17,000 feet on the Main and North Gil prospects.
If results are encouraging, a second phase of drilling, budgeted at $590,000, would include 74 drill holes totaling 22,000 feet.
Freegold Ventures Ltd. reported results from the first of three diamond core holes from the Cleary Hill mine area on its Golden Summit project in the Fairbanks District.
Hole CHD03-1 intercepted 408.5 feet grading 1.01 grams gold per tonne, including 5 feet grading 9.70 grams gold per tonne, 112.5 feet grading 1.85 grams gold per tonne, 15.2 feet grading 8.94 grams gold per tonne, 107.7 feet grading 2.39 grams gold per tonne and 26 feet grading 4.35 grams gold per tonne.
Drilling intercepted a vein swarm where previous drilling intercepted 64 foot grading 4.9 grams gold per tonne.
Additional results are pending from the 2003 drilling.
St. Andrew Goldfields said it had acquired the Uncle Sam gold project in the Richardson district from Kennecott Exploration.
The company must spend $250,000 on the project over five years and Kennecott retains a 2.5 percent net smelter returns royalty from production from the property.
During the period 1999 to 2001 Kennecott collected approximately 2,500 soil samples using hand augers, power augers and hand dug pits. Soil sampling identified 10 major gold-in-soil targets within a 5 by 8 kilometer area.
Individual soil sample values range as high as 15,959 parts per billion gold. Follow-up work included 23 core holes totaling 4,198 meters. Drill results include 8.54 meters of 3.24 grams gold per tonne, 21.34 meters of 3.22 grams gold per tonne (with 60 parts per million bismuth), 15.93 meters of 1.1 grams gold per tonne, 19.22 meters of 2.0 grams gold per tonne, 25 meters of 1.1 grams gold per tonne and 14 meters of 1.7 grams gold per tonne.
Gold mineralization is predominately shear hosted in the metamorphic country rock with additional local zones of hydrothermal breccia and sulfide veining.
Alteration consists of clay (mostly illite and kaolinite), sericite, and sulfides.
Pyrite is the most abundant sulfide with lesser amounts of arsenopyrite and local minor stibnite.
Tourmaline is locally associated with gold mineralization. Exploration plans for 2003 are being formulated. Alaska Range Nevada Star Resources announced six element platinum group element results from its MAN copper-nickel-platinum group element project in the central Alaska Range.
Samples from the Canwell and Rainy mafic-ultramafic complexes returned platinum values up to 19.9 grams per tonne, palladium values up to 15.5 grams per tonne, osmium values up to 0.90 grams per tonne, iridium values up to 0.84 grams per tonne, ruthenium values up to 1.6 grams per tonne and rhodium values up to 0.44 grams per tonne.
These results confirm earlier sampling which indicated that intrusives on the MAN project were significantly enriched in the minor platinum group elements (osmium, iridium, ruthenium and rhodium). Other Paul Burton of the London-based World Gold journal selected his top 10 undeveloped gold projects and listed Alaska’s 27.8 million ounce Donlin Creek deposit as his number five choice on the list.
Donlin Creek is in heady company, including the 72.3 million ounce Target North and Sun deposit in South Africa, Russia’s 46 million ounce Sukhoi Log deposit, Western Australia’s giant Telfer deposit and Chile’s 23.9 million ounce Pascua Lama deposit.
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