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Kensington gold project on schedule State, federal agencies sign MOU with developer Couer d’Alene Mines Patricia Jones Petroleum News Contributing Writer-Fairbanks
State and federal permitting agencies recently signed a memorandum of understanding outlining a permitting schedule for the Kensington gold project being developed by Coeur d’Alene Mines Corp. some 45 miles north of Juneau, Alaska.
Coeur, a silver and gold producer headquartered in Idaho, has held a 100 percent interest in the development project since 1995. The underground gold deposit is believed to contain more than 3 million ounces of gold in its host rock.
The MOU, announced July 28, is touted by Coeur as a “major milestone toward the final permitting of Coeur’s Kensington Gold Project,” according to a company press release.
“The signing of this MOU brings certainty regarding completion of permitting so the final feasibility study can be updated on this major gold project, which would significantly increase Coeur’s gold production and bring several hundred jobs to Southeast Alaska,” said Dennis E. Wheeler, Coeur’s chairman and chief executive officer. January 2004 deadline for final EIS The MOU outlines agencies’ roles and responsibilities for a number of permits being sought by Coeur for Kensington. Included in that agreement is a schedule for completion and release of the project’s supplemental environmental impact statement.
A draft supplemental EIS is scheduled to be completed in October, with a final version due to be issued by regulators in January 2004, said Tony Ebersole, director of investor relations at Coeur.
Once the permitting process is complete, Coeur still has yet to make a final decision regarding construction and operation of a hard rock mine and mill at Kensington. That decision will come after the company updates a feasibility study, first completed in 1997, Ebersole said. Gold increases help Construction and start-up costs for a mine and mill capable of producing 175,000 ounces of gold annually are estimated at $150 million, Ebersole said. Despite completing optimization studies in 2000 and 2001, the company is still looking for a joint venture partner and for other ways to reduce those capital costs, he told Petroleum News Aug. 6.
“When the price of gold dropped in the 1990s, economically it wasn’t as doable as it is today,” he said.
Recent increases in gold prices have “been a big help in terms of bringing this back.”
Given the project’s current plan of operations, Kensington appears to be feasible at market prices for gold ranging from $310 to $330 per ounce, Ebersole said.
Cash costs to produce gold at Kensington are estimated to be about $200 per ounce. Those cash costs do not include acquisition, permitting or pre-construction costs the company incurs. Project history Coeur acquired its 100 percent interest in Kensington in 1995, buying out a 50 percent share from Echo Bay Alaska for $32.5 million and promising a scaled royalty on the first 1 million ounces of gold produced at the project, according to the 1995 Alaska Mineral Industry report.
Two years prior, Coeur acquired the Jualin gold prospect just a few miles from Kensington, on the opposite side of Lions Head Mountain.
Initial development plans in a record of decision issued in 1992 by the U.S. Forest Service called for facilities to be located near the portal access for Kensington. Mine tailings disposal would be in a dry tailings facility in the Sherman Creek drainage near Comet Beach, according to a scoping document on the U.S. Forest Service’s website.
Approximately 170 employees would be housed on-site in a camp facility, transported to and from the mine by helicopter. Supplies would be moved through Comet Beach on Lynn Canal. Total surface disturbance would be 268 acres. Operations plan modified That plan was modified and then approved by state and federal regulators in 1998.
More recently, Coeur submitted an amendment to that 1998 plan of operations, changing the location for site access. Mine entry is now proposed at the Jualin gold prospect, with a tunnel connecting to the Kensington workings.
Coeur has proposed constructing a concrete-faced rockfill dam for tailings impoundment at the Lower Slate Lake. The employee camp would be eliminated — employees would be ferried to the Slate Creek Cove from Cascade Point, then driven five miles to the Jualin mine site.
Total land disturbance is estimated at 196 acres.
Such changes require a supplemental EIS to the existing permits, according to the Forest Service, which is serving as the lead federal agency. The U.S. Army Corps of Engineers, which must modify its wetlands permit, and the Environmental Protection Agency, which must consider a new wastewater discharge permit, are also involved.
The Alaska Department of Natural Resources will coordinate all state involvement to ensure a consolidated response and to facilitate timely agency review, according to Coeur’s press release.
“The Kensington project is one that has been very important to Southeast and all of Alaska for some time,” Alaska Governor Frank Murkowski said in the press release.
“It is consistent with our goal of helping to create high-paying jobs in the natural resource sector. I am pleased with the signing of the MOU and look forward to the permitting and construction of the project.”
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