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Alaska mining news summary
Curt Freeman PNA Contributing Columnist
Despite the drop in gold prices since a month ago, exploration activities in Alaska are picking up. Two drill programs have already kicked off in Interior Alaska and more are likely to be completed before the end of March. Contracts for drilling rigs, helicopters and experienced geologists are being finalized at a rate not seen here in half a decade. In addition, Alaska’s new political administration is aggressively encouraging infrastructure development and making regulatory improvements to help Alaska’s mineral industry grow. I also have to correct last month’s lament that Alaska did not reach the $1 billion value mark in 2002. More accurate figures recently were provided which indicate that Alaska’s total mineral industry value topped the $1 billion level for the sixth straight year. Production value was $968.2 million, development value was $33.5 million and exploration value was $25.0 million bringing the year-end mineral value to $1,026,700,000. All things considered, it’s looking like a good year coming up.
WESTERN ALASKA The eagerly awaited decision finally came and in the end surprised nobody. NovaGold Resources announced that Placer Dome has elected to increase its interest in the Donlin Creek gold project by 40% (to 70%). In order to acquire this additional interest Placer Dome must expend $30 million on project development, complete a feasibility study and make a decision to construct a mine that produces at least 600,000 ounces of gold per year, all this by November 13, 2007. NovaGold would not be required to contribute additional funding until after the fist $30 million is spent and may elect to have Placer Dome arrange financings for NovaGold costs related to mine construction. The companies are on-track to complete a revised resource estimate based on all of the drilling completed in the last year and to develop plans to address the project’s power and access needs. Using a lower cut-off of 1.5 grams of gold per tonne, current resources at the project stand at 9.9 million ounces grading 3.0 grams of gold per tonne in the measured and indicated category with an additional 17.9 million ounces of gold grading 3.0 grams of gold per tonne in the inferred category.
Now that day to day management of Donlin Creek has passed to Placer Dome, NovaGold Resources announced plans to accelerate exploration and development of its holdings in the Nome District, including the Rock Creek gold project under option to TNR Resources, and its Nome Gold and aggregate projects. Independent Preliminary Economic Assessments are being completed on both projects to determine optimal development plans and exploration requirements for later this year.
The U.S. Bureau of Land Management announced the beginning of a planning process designed to review opening of the Southern National Petroleum Reserve Alaska (NPR-A) to mineral development. NPR-A is an enormous track of land originally set aside as a strategic petroleum reserve but which happens to contain the eastern end of the Red Dog zinc belt. Exploration conducted by the U.S. Bureau of Mines nearly 20 years ago indicated that the Drenchwater and Story Creek deposits have 50 to 100 million-ton resource potential with Story Creek having grades that are higher than the extremely rich Red Dog deposit. Access to these deposits, from existing roads to the west or the east, will be key to developing these resources.
EASTERN INTERIOR Kinross Gold announced that it had a successful year of exploration at its Fort Knox mine in the Fairbanks District in 2002. The company indicated that it had recovered 410,520 ounces of gold at a cash cost of $232 per ounce and added 623,000 ounces to new reserves as a consequence of renewed exploration drilling and revised engineering/mining techniques. In 2002 the operation mined 19.1 tons of material using a staff of 388 people, an activity that is expected to rise in 2003 to 33.5 million tons mined with a staff of 425 people. Projected production for 2003, from the combined Fort Knox and True North open pits, is 408,000 ounces of gold. Exploration spending by the company also is expected to increase in 2003 to $3.5 million.
Teryl Resources and Linux Gold Corp. (formerly Linux Wizardry Systems Inc) announced that a 6 hole, 1,500-foot drilling program was underway on its Fish Creek prospect in the Fairbanks District. The drill program is designed to test several magnetic highs for lode gold – arsenic - bismuth mineralization similar to that on the adjacent Gil project (Kinross Gold 80%/Teryl Resources 20%). In additional, the drilling will test for alluvial gold mineralization similar to that recovered in previous drilling on the project.
ALASKA RANGE Nevada Star Resources announced that it has made arrangements to raise $1.5 million to be used to continue exploration its MAN copper – nickel – platinum group element project in the central Alaska Range in 2003. Recent exploration discoveries in this area and the much anticipated release of airborne magnetic and resistivity data by the State Div. Geological and Geophysical Surveys and the U.S. Bureau of land Management has prompted renewed staking of prospective ground in the area.
NORTHERN ALASKA Silverado Mines reported that underground development work is continuing at its Nolan Creek placer mine in the southern Brooks Range. By the end of January the company had advance approximately 426 feet upstream and 500 feet downstream along the Nolan Deep Channel. This work and other development work has resulted in a stockpile of approximately 7,000 cubic yards of gold-bearing gravel that will be treated in the summer of 2003. The company plans to continue drifting along the Nolan Deep Channel until warmer spring weather forces seasonal closure of the underground and conversion of the operations to mining of stockpiled gravels. The company expects to mine about 1,500 feet of channel this winter season and complete surface drilling on the property in late spring.
SOUTHEAST Hecla Mining (29.73%) and Kennecott Mining (70.27%) announced revised ore reserves on its Greens Creek mine on Admiralty Island. The year-end 2002 proven and probable reserves stood at 7,049,944 tons grading 0.13 ounces of gold per ton, 14.9 ounces of silver per ton, 4.2% lead and 11.4% zinc. This equates to about 903,000 ounces of contained gold and over 105 million ounces of contained silver. The mine also contains 2,725,637 tons of material classified as “other resources” grading 0.13 ounces of gold per ton, 17.0 ounces of silver per ton, 4.9% lead and 11.3% zinc.OTHER State Democratic Senator Gretchen Guess and Democratic Representative Eric Croft introduced companion bills in the State legislature that would earmark revenue from mining claim rentals, leases, taxes and royalties for a mining infrastructure fund. These funds total about $5 million per year and would be used for projects that would spur or support mining development in Alaska. The Alaska Department of Natural Resources would administer the funds. The bill also would change current state policies into statutes such that mining wastewater discharge would not have to be cleaner than the water was when it entered the operations. Current regulations allow this policy to be applied at the State’s discretion but this bill would convert the policy to statute.
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