Prospecting for platinum

South African producer funds grassroots platinum property in Alaska

Patricia Jones

Petroleum News Contributing Writer

Exploration on the Union Bay platinum property near Ketchikan, Alaska, started in May, shortly after announcement of a long-term financing deal involving a major South African platinum producer.

A crew of about 10 will spend this summer on an $815,000 exploration program that includes up to 10,000 feet of diamond core drilling and surface reconnaissance work on the rocky 6000-acre plus grassroots property located about 35 miles northwest of Ketchikan.

“Rock sampling, geological mapping and drilling — it’s a pretty simple program…a good-sized first year program,” said Curt Freeman, a Fairbanks-based consulting geologist who first identified in early 2000 the potential platinum target for client Harry Barr, chairman and CEO of Freegold Ventures.

Freegold, along with its corporate partner Pacific North West Capital, both Vancouver, B.C.-based exploration companies headed up by Barr, announced on May 21 a joint venture with London-based Lonmin, the world’s third-largest producer of platinum with its primary operations in South Africa.

A grassroots through production deal

“It’s a grassroots through production deal — they’re harder to get,” Barr said in an interview with Petroleum News on May 26.

Lonmin can earn a 70 percent interest in Union Bay by delivering a full feasibility study, which would outline economic options for platinum production. Should the joint venture proceed to commercial production, Lonmin will arrange 100 percent of the financing on terms acceptable to all parties.

Barr’s company will operate Union Bay through the exploration phase, an important factor, he said, when the major financier hasn’t worked in Alaska before.

Platinum peaks prospector’s interest

The late 1990s freefall of gold prices to the mid $200s per ounce dried up spending for junior exploration companies such as Freegold. But Barr held tight to his promising gold properties and diversified — asking geological consultant Curt Freeman to evaluate platinum exploration targets in Alaska.

While gold tanked, market prices remained strong for platinum and its co-host mineral palladium, versatile industrial-use metals used in catalytic exhaust converters and in fuel cell technology.

Freeman combed archived geological reports, looking for platinum occurrences noted by past prospectors. He produced a report, noting about 180 past occurrences of PGE minerals in Alaska, and has since updated that list to 210.

“It’s a case where mining the old data base created a new property,” Freeman said. “We looked through piles of information…Union Bay stood out among the crowd because of its reliable numbers.”

Fairly high platinum concentrates found in stream samples taken by the U.S. Bureau of Mines in 1995 caught Freeman’s attention. Because the data was recently gathered and also near land available for staking, Union Bay became front and center on the prospector’s list.

Prospecting Union Bay

Quaterra spent about $550,000 on Union Bay, which included four diamond core drill holes and additional staking and surface prospecting.

One drill hole intersected a northwest-trending PGE (Platinum Group Elements) bearing horizon at a depth of 62 feet, with a 1.5 foot-interval assaying .327 ounces per ton platinum and palladium, according to the 2001 Alaska Mineral Industry report.

Exploration during 2001 at Union Bay identified six zones of platinum-palladium mineralization, believed to be one greater reef structure extending along two corridors, the largest three miles across.

Both corridors remain open along strike with mineralization occurring over a vertical distance of at least 1,800 feet, according to the state report. Also notable about past exploration is that most of the mineralization found was platinum, Barr said.

“What’s different about this is that usually you have two-thirds palladium and one-third platinum, but with Union Bay, there’s hardly any palladium,” he said. “It’s 95 to 97 percent platinum.”

Property becomes available

After six months of negotiations, Barr said, he finalized the deal with Lonmin.

“Platinum-palladium is a different animal…with gold prospects, you have to do a lot more work to attract a major,” Barr said.

PGE occurrences are more rare, added Freeman, and fairly difficult to find.

“There’s a much smaller stable of occurrences to pick from…and there’s not many platinum mines,” he said. “The metallurgy is more difficult in terms of recovery…it’s very different exploration and development criteria that these guys apply.”

With a steady industrial and fine jewelry demand for platinum and no aboveground stockpiles that can be sold into the market to fill gaps in supply, Freeman anticipates strong prices for PGEs during the next five to 10 years.

“We’re just happy someone outside of Alaska has taken an interest,” he said. “There’s 210 PGE occurrences here and we’ve barely scratched the surface of one, with limited work on just a handful of others.”

Fast-track exploration start

“We had four guys hit the ferry that day,” said Curt Freeman, owner of Avalon Development, the Fairbanks-based geological consulting firm that first identified the Union Bay platinum exploration target.

Up to 10 workers will spend most of the summer at the Southeast Alaska platinum prospect, located 35 miles northwest of Ketchikan.

Four workers started last week with pre-drilling ground work, and with setting up a remote camp, Freeman said.

“Essentially the camp and heavier gear is barged up, with the camp right at tidewater,” he said. “Weather and access is better — we can be resupplied by fixed wing or boat.”

Helicopters provide access to the prospecting targets, located about two miles from the near shore camp, he added.

Rocky terrain eliminates soil sampling from the prospectors’ work, replaced by rock chip sampling, Freeman said.

He and his crew enjoyed their past work in Southeast Alaska, he said, noting good relations with businesses in Ketchikan.

Southeast a good place to work

He’s optimistic about the mineral potential of Southeast Alaska, and at Union Bay.

“It’s been encouraging enough to go back and m put the drill in the ground, to see if there’s enough continuity to make it worthwhile or whether it’s a geological oddity,” Freeman said. “When the drill goes on the property, we say the truth machine has arrived.”