Alaska mining activity up in September

Availability of funding, warm weather, extend exploration across Alaska

Curt Freeman

Petroleum News Contributing Columnist

Hold on to the reins gang, the pony is about to bolt! September marks a high-water mark for this millennium for mining activity in the Alaska bush. Not since the heady days of the mid-1990s have we seen this much interest and this much activity in the state.

The activity spans the range from new acquisitions by new players in the state to preliminary feasibility studies and final environmental impact statements for soon-to-be mines.

A quick check of the world markets indicate this is no local aberration: the venerable Northern Miner posted an op-ed piece in their Aug. 18-24 issue entitled “Did we hear a tap opening?” in which they noted the increasing number and dollar-value of public offerings relating to mining activities.

The last month has shown that yes, they did hear a tap opening as exploration and development funding has come from public and corporate coffers on a wide range of projects and commodities.

Global warming has aided Alaska by delivering one of the warmest Septembers on record allowing exploration to continue unabated across the state. October promises to bring more good news but for now, stop and smell the sulfides!

Western Alaska

St. Andrew Goldfields says their 8,000 meter underground drill program at the Nixon Fork mine is due to begin in October. The program will target resource upgrades and reserve definition as well as testing of new targets for future production. The program budget is estimated at $500,000.

Northern Dynasty Minerals has reported additional core drilling results at its Pebble property copper-gold project near Iliamna. Results include 149.4 meters grading 0.42 grams gold per tonne, 0.63 percent copper and 0.030 percent molybdenum in hole 3094, 57.3 meters grading 0.44 grams gold per tonne, 0.64 percent copper and 0.046 percent molybdenum in hole 3098, 45.7 meters grading 0.73 grams gold per tonne, 0.62 percent copper and 0.011 percent molybdenum in hole 3099 and 46.5 meters grading 0.25 grams gold per tonne, 0.62 percent copper and 0.043 percent molybdenum in hole 3105. The intercept in hole 3105 came from a hole west of and outside the Pebble deposit boundaries, opening up potential for expansion of the deposit in this area. The company said it expects to complete an additional 20,000 feet of core drilling before the end of the 2003 field season.

NovaGold Resources has completed a $35 million financing that will be used in part to fund continuing work at its Rock Creek gold deposit near Nome. The company said it expects to achieve production of 110,000 ounces per year at Rock Creek by 2006.

Geocom Resources posted results for a core drilling program at its Iliamna copper-gold porphyry project west of Lake Iliamna. Deeper than expected overburden, up to 428 feet, prevented completion of drilling in some areas but the company reported low-grade gold-copper mineralization in schists and quartz diorite intrusive in other drill holes. The company plans to conduct additional geophysical work in 2003 in preparation for a second drilling campaign in 2004.

Anchorage-based Holitna Energy Corp. said in May that it applied for four shallow gas leases on 31 square miles of state land in the Holitna River basin of southwestern Alaska. (See June 1 story in Petroleum News, and follow up stories in July and August.)

The goal of this application was to develop natural gas resources that could be used to generate electrical power for the proposed Donlin Creek gold mine near Crooked Creek. State regulators expect to make a decision on the lease later this year and Holitna indicated it hoped to commence exploration in the coming winter months. While this was going on Nuvista Light and Power said initial planning efforts have indicated the most economical power source for supplying electrical power to the Donlin Creek mine and other parts of southwestern Alaska is a 96 megawatt coal-fired power plant mounted on a barge based in Bethel. The power plant would be connected to Donlin Creek and a series of towns and villages by a 191 mile long 138 kilovolt power line. Combined power plant and power line cost was estimated at $372 million.

The company expects to complete a more detailed feasibility study on the project by the end of this year.

Eastern Interior

Teryl Resources Corp. also reported expansion of gold mineralization at the Old Glory prospect on its West Ridge prospect in the Fairbanks District. Soil auger sampling has expanded the Old Glory anomaly to 400 meters by 200 meters. Anomalous gold (to 1,155 parts per billion) trends northeast-southwest and is associated with highly anomalous arsenic and tungsten. Rock samples from this area contained up to 10,000 parts per billion gold associated with anomalous arsenic and bismuth. Field efforts have identified eclogite-terrane rocks at West Ridge and suggest possible affinities to the nearby True North gold mine currently being operated by Kinross Gold. Expansion of the soil grid and trenching of the main Old Glory anomaly are planned for October.

Partners Teck Cominco (40 percent) and Sumitomo (60 percent) said the final environmental impact statement has been released for the Pogo gold mine in the Goodpaster District. Details on final EIS can be found at www.pogomineeis.com. The companies also said the U.S. Army Corps of Engineers has released a draft wetlands permit for the project. The comment period for the wetlands permit is open through Oct. 20 (send comments to Victor Ross at [email protected].) Final permits from state and federal agencies are expected later this year and the partners hope to begin construction on the mine in January 2004 with construction completed by the end of 2005.

Rimfire Minerals reported results of core drilling conducted by AngloGold USA Exploration on the company’s ER claims in the Goodpaster District. Drilling was targeted at a 1,500 by 300 meter gold-arsenic-bismuth soil anomaly and included 6 holes totaling 2,161 meters of drilling. The drilling intersected widespread quartz-sericite-pyrite alteration enveloping multiple quartz-sulfide veins and vein breccias, some of which contain visible gold. A total of 24 intercepts returned values in excess of 1 gram of gold per tonne. Results include 3.9 meters grading 1.10 gram of gold per tonne in hole ER03-1 and 0.2 meters grading 161.34 1 gram of gold per tonne in hole ER03-5. The company also indicated that soil auger sampling was continuing on the company’s Eagle prospect south of the ER property. Results are pending.

As an example of the renewed optimism infusing the mining industry, Bright Star Ventures said “the company is negotiating to acquire an interest in mineral claims in the Alaska Tintina gold belt area.” It has been more than five years since anyone felt that such intentions were newsworthy, despite the fact that the Tintina gold belt of Alaska and the western Yukon has produced more than 34 million ounces of gold and retains resources in excess of 73 million ounces of gold, most of which were defined in the early to mid-1990s.

Alaska Range

Northridge Exploration has discovered additional massive sulfide mineralization on its Forbes Emerick property in the central Alaska Range. The company said assays are pending on the new discovery near the Forbes prospect where previous sampling returned 5.43 percent nickel, 3.19 percent copper, 3 grams of gold per tonne and 2 grams of platinum plus palladium per tonne. The new mineralization is similar to the Forbes showing and is comprised of a massive sulfide showing covering an area 150 feet by 200 feet in size. The sulfides include pyrrhotite, pentlandite and chalcopyrite. Additional exploration is in progress.

Freegold Ventures said it has acquired an option on Canalaska Ventures’ Rainbow Hill gold project in the Valdez Creek District. The company can earn a 50 percents interest by expending $2 million over six years, making cash payments of $160,000 over four years, and issuing 300,000 shares over four years. Freegold may increase its interest to 60 percent by completing a positive feasibility study, and to 65 percent by putting the project into commercial production. Limited core and reverse circulation drilling were conducted on the project in 1989-90 and resulted in discovery of the TMC zone where drill results delineated a series of stacked gold-bearing zones over a vertical distance of 600 feet. The zones are characterized by visible gold associated with arsenopyrite and pyrite in polyphase sericite-carbonate-quartz stockworks and veins ranging up to 12 inches thick. The drilling indicated good continuity along strike (approximately 1,000 feet) and down-dip (approximately 200 feet). Drill-inferred gold resources of 90,285 total ounces were estimated using a lower cutoff of 0.03 ounces of gold per ton. Weighted average grade for this resource is 0.21 ounces of gold per ton with an average true width of 17 feet. IP/resistivity data suggests mineralization continues along strike to the west at least 1,000 feet and down-dip at least 500 feet. Freegold said it intends to conduct limited core and reverse circulation drilling at Rainbow Hill in early spring to confirm the grade and up-dip extent of mineralization at the TMC zone. Results of this program will be merged with existing project and district-wide databases to allow formulation of an expanded exploration program for mid-2004.

Usibelli Coal Mine said it has resumed exporting coal to South Korea under a revised contract with the Alaska Railroad and Hyundai Merchant Marine. The new contract will involve export of 400,000 tons of coal per year to South Korea using the Alaska Railroad’s newly purchased coal loading facility in Seward. The facility, previously co-owned by Hyundai and the Alaska Industrial Development and Export Authority, was the weak link in the Korean export program. The change in ownership reduced Hyundai’s debt costs making Alaska coal better able to compete with coal from eastern Asia. Usibelli indicated that it hoped to replace the current two-year contract with a longer term arrangement in the future.

Western Warrior Resources said it plans exploration drilling for the long dormant Cliff Mine near Valdez. The diamond drill program will consist of completing seven drill holes for an estimated 5,000 feet of drilling. The drill program 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. Mineralization is hosted by quartz veins occupying northwest-trending faults with a possible conjugate fault set trending northeast. The quartz veins, where mineralized, contain pyrite, arsenopyrite, sphalerite, galena and free gold. The shoots typically have lengths and down-plunge extents measured in hundreds of feet. The mineralized veins are up to 4 feet wide, but average less than 1 foot wide. The mine has never been drilled and is situated at seaboard near infrastructure at the ice-free port of Valdez.

Geologix Exploration said it terminated its option with Teck Cominco on the Macomb gold property in the foothills of the northern Alaska Range.

Brooks Range

Southeast Alaska

Alaska newcomer Century Mining Corp. (formerly Saxony Explorations Ltd.) has acquired a series of gold and base metal prospects in the Juneau gold belt from Kent Burns Group LLC and a series of private parties. The most significant of the properties include the old Treadwell mine which produced 2.9 million ounces of gold prior to being flooded in 1917. Exploration by Echo Bay Mines Ltd. in 1990 intersected 187 feet of 0.11 ounces of gold per ton containing a 49 foot zone of 0.22 ounces of gold per ton at an elevation that was 1,300 feet below the lowest elevation previously mined at Treadwell. Also included in this acquisition is the nearby Yakima property where past work by Hecla returned 26 feet grading of 0.14 ounces of gold per ton from drill hole YAK-2. Other significant properties include the Eagle River mine where a stockwork zone was sampled underground and averaged 36 feet grading 0.18 ounces of gold per ton, the Bessie prospect where sampling of the #2 adit returned an average grade of 0.163 ounces of gold per ton over a 200 foot strike length and included a 50 foot section averaging 0.431 ounces of gold per ton and the Gold Fork prospect where drilling by Kennecott Minerals returned 55 feet grading 0.22 ounces of gold per ton. Welcome to Alaska Century Mining Corp.!

Harris replaces Swainbank