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Fortune Hunt Alaska 2012: Alaska blazes trail to mineral wealth ‘Roads to Resources’ stretches into resource-rich regions of Last Frontier Shane Lasley Mining News
From the world-class Kennecott and Treadwell mines of days gone by to the massive Pebble, Donlin Gold, Arctic and Livengood deposits in line to become the state’s next generation of superlative operations, Alaska has long been regarded as one of the most mineralized expanses of real estate on the planet.
When Canada-based think-tank Fraser Institute asked 490 mining executives to rank the mineral potential of the top 79 mining jurisdiction around the globe, the industry leaders voted the 49th state the most mineral-rich region on earth.
Alaska owes its rich mineral endowment and its rugged beauty to a dynamic geological history that spans eons. Most of the state — which is roughly twice the size of Texas with enough acreage left for Maine or South Carolina — is an accumulation of terranes riding on the backs of tectonic plates that crashed onto the western shores of North America.
“From a geologic perspective, Alaska occupies the space of a collision zone between the North American Plate and the Eurasian Plate. When you have two massive continents that have been bumping into each other for eons you get a lot of ground preparation, a lot of fracturing and obviously a lot of mineralization. That is fundamentally why Alaska is such a good place to explore,” explained NovaCopper CEO Rick Van Nieuwenhuyse during a recent interview with Mining News.
Graphite, rare earth elements, uranium, platinum group metals, tungsten and diamonds have been discovered amongst the gold, silver, zinc and copper that spilled across Alaska’s landscape.
Yet, only a handful of mines dot the vast expanse of the Far North state.
When asked why Alaska’s mineral potential remains largely untapped, Van Nieuwenhuyse said, “It’s pretty simple — lack of infrastructure and lack of power at commercial rates.”
His contemporaries agree.
The same group of mining executives that ranked Alaska as the most mineralized province on the planet placed the state a dismal 56th when it comes to infrastructure, according to the Fraser Institute’s “Survey of Mining Companies 2011/2012.”
This perception is not unfounded. Much of Alaska’s resource wealth is locked up in a 350,000-square-mile expanse — roughly the size of Texas and Oklahoma combined — that lacks roads and power.
“We are a young state; it is going to take a long time to get our infrastructure in place. It is an expensive place to operate; our geography and climate makes it expensive,” said Alaska Miners Association Executive Director Deantha Crockett.
Alaska is doing its part to overcome some of the challenges that face the fortune hunter seeking to explore and develop the immense mineral wealth of the Last Frontier.
Spearheaded by Alaska Gov. Sean Parnell, the state is investing millions in its “Roads to Resources” program to drive arterial routes into remote mineral- and oil-rich regions of the state. If realized, this endeavor would ultimately reach the limits of western expansion in North America.
“Throughout our history, Alaskans have blazed the trail for others. We are the descendants of elders and pioneers who pushed the boundaries of this Last Frontier. While these early Alaskans did not always know what challenges would arise between checkpoints, they never lost faith in where they were headed — to greater opportunity,” Gov. Parnell said during his 2012 State of the State address. “Our journey today is no different. Rather than hunkering down and hoping for the best, it is time to act.”
The state’s 2013 budget also includes funding for streamlining the permitting process in Alaska, continued assessment of the state’s rare earth element potential and a statewide digital mapping program. All of which are aimed at bolstering the development of the rich mineral resources of the Last Frontier.
“A thriving minerals industry is essential for Alaska’s economic growth,” said Alaska Department of Natural Resources Commissioner Dan Sullivan. “If Alaska were a country, we would be among the top 10 countries in the world for coal, zinc, copper, lead, zinc, and silver resources. By responsibly developing these resources, we have the potential to support the economies of entire regions of the state and help secure a stable domestic supply of minerals.”
Copper Road For the mineral industry, the most important infrastructure project being funded by the state may be a proposed road to the Ambler Mining District — a region of Northwest Alaska renown for a 70-mile-long belt of world-class volcanogenic massive sulfide deposits rich in copper, zinc, lead, gold and silver that sweep across its breadth. Among the 50-some known prospects in this landlocked district are Arctic and Bornite, considered to be two of the highest grade deposits of copper on the planet.
Alaska’s 2013 budget includes $4 million towards defining an optimal transportation corridor linking the Ambler Mining District to the state’s highway system some 200 miles to the east; establishing a right-of-way; and beginning the environmental and permitting work to build a road to the remote copper-rich region. The new funding adds to the $5.25 million approved by the Alaska Legislature during the past two budget cycles for scoping the viability of establishing a transportation link to Ambler.
“Getting a road into a district like Ambler will unlock a lot of value and create a lot of jobs for multi-generations,” said Van Nieuwenhuyse.
The NovaCopper leader has a professional interest in seeing ground transportation linking the Ambler District to world markets. His company and NANA Corp., the Alaska Native regional corporation for Northwest Alaska, have forged a partnership to explore and develop the Ambler District.
Drilling in the Ambler region uncovered Arctic and Bornite, and the district has a multitude of prospects waiting to be tapped.
Arctic — the most advanced deposit in the district — has an indicated resource of 19.45 million metric tons averaging 4.05 percent copper, 5.8 percent zinc, 59.55 grams per metric ton silver and 0.97 g/t gold. Additionally, the deposit has an inferred resource of 11.41 metric tons averaging 3.47 percent copper, 4.84 percent zinc, 46.75 g/t silver and 0.80 g/t gold.
A preliminary economic assessment completed by SRK Consulting (U.S.), Inc. investigated the viability of a 4,000-metric-ton-per-day underground operation at Arctic that would produce 1.7 billion pounds of copper, 2 billion pounds of zinc, 291 million pounds of lead, 266,000 ounces of gold and 22 million ounces of silver over a 25-year mine life.
While studying the economics of building a mine at Arctic, SRK determined that extending a road westward from the Dalton Highway to the village of Kobuk, would be the best route for linking the copper-rich deposit to Alaska’s road-system.
For purposes of the study, SRK assumed that the road would be designed and constructed by the state, and NovaGold would then reimburse Alaska over the operating life of the mine. A similar arrangement exists between the state and the Red Dog Mine in Northwest Alaska for its road and port facility.
The Delong Mountain Transportation System — consisting of a 52-mile-long road, storage and port facilities — was built by state-owned Alaska Industrial Development and Export Agency to facilitate the shipment of zinc and lead concentrates from Red Dog. The agency is being reimbursed for its $267 million investment through fees paid by Teck Resources Ltd. and NANA, co-owners of the mine.
Bornite, which is being advanced by NovaCopper and NANA, is another rich copper deposit at the western terminus of the proposed road to Ambler.
Drilling carried out at Bornite in 2011 cut 4 percent copper over 178 meters, including 11.4 percent copper over 34.7 meters.
Other projects in the Ambler region also would benefit from access. Andover Ventures Inc.’s Sun deposit, for example, has a historical resource of 20.3 million metric tons averaging 74 g/t silver, 1.9 percent copper, 4.5 percent zinc and 1.2 percent lead.
“You are talking about a whole district here at Ambler and the exploration has only scratched the surface, and it has already been very successful,” said Van Nieuwenhuyse. “If there was a road into there, you would be able to build at least two or three mines with what is already known there, and we have probably 50 (other) prospects with historic drilling on at least half of them.
Road to Nome The road to Tanana — the first leg of a proposed 500-mile highway to the legendary mining town of Nome — is another ambitious project being studied under Alaska’s Road to Resources program.
While the “Road to Nome” idea is not targeting any specific mining region as it wends its way to the Seward Peninsula, it would serve as an artery through the center of vast, mineral-rich western Alaska.
The preferred route for building what would be the final leg of U.S. westward expansion begins at Manley Hot Springs near the end of the Elliot Highway. From here the envisioned highway heads nearly due west for some 70 miles to the village of Tanana where it would cross to the north side of the Yukon River. From Tanana, the artery would roughly parallel the historical waterway for much of the route as it continues to the westernmost reaches of Alaska.
The state proposes building this ambitious project in seven stages — an endeavor that will take a number of years to complete.
Mining companies seeking to develop the Donlin Gold and Pebble projects are not waiting for the state to build infrastructure to their mega-deposits in western Alaska.
The 40-million-ounce Donlin gold deposit — being developed by Barrick Gold Corp. and NovaGold Resources Inc. — highlights the vast mineral potential of western Alaska and the expense of building a mine there.
It will cost nearly $7 billion to build the mine facilities and supporting infrastructure at the enormous deposit located in the Kuskokwim Mineral Belt of Southwest Alaska, according to preliminary estimates released last September.
Affordable power is the biggest impediment to operating in this remote region. To address this, Donlin’s developer plans to build a natural gas pipeline some 300 miles northwest from Alaska’s Cook Inlet to the massive gold deposit. While a 12-inch line would more than meet the needs of the mine, Donlin Gold is considering a 14-inch line to accommodate future expansion and to supply gas to other users in the Kuskokwim region.
“It is a vastly underexplored area, it is remote and it is expensive to operate there with the lack of infrastructure, but I suspect that will change when we get Donlin built,” NovaGold founder Van Nieuwenhuyse said.
Smoothing the trail In addition to advancing projects to establish transportation corridors toward resource-rich regions of western Alaska, Parnell intends to smooth the way for companies seeking to gain permissions to extract these resources. To that end the governor’s budget includes $3.3 million for streamlining the state’s permitting process.
The governor said that between 85 percent and 90 percent of Alaska’s general fund revenue comes from the development and use of state’s land and natural resources. Streamlining the permitting process would provide for timely decision-making for mining, timber, public access, land sales and transfers, and other resource development applications.
“Mineral exploration expenditures are up, and with our efforts to streamline the permitting process, we are working to secure Alaska’s resources for Alaskans’ benefit,” Parnell said.
Alaska has secured $15.9 million — $3.7 million from the state’s general fund, with the balance from federal funds — in this year’s budget to initiate a statewide digital mapping program.
“One thing often overlooked in growing an economy is the value of a good map. USGS (United States Geological Survey) topographic maps of Alaska are more than 50 years old, inaccurate, and do not meet national mapping standards,” Parnell explained. “Accurate elevation data is vital to responsible resource and economic development, aviation safety, navigational devices, modern-day emergency response, and routing for roads and pipelines.”
Assessing Alaska’s rare earth element and critical minerals potential has been a priority for Parnell. During the 2012 budget cycle, Alaska lawmakers approved $498,000 proposed by the administration to begin a statewide REE evaluation. This year’s budget includes $2.7 million for a three-year project to continue this initiative.
“The timing is right for rare-earth development,” Parnell told an audience at the Strategic and Critical Minerals Summit held Sept. 30 in Fairbanks. “We’re on track to assess, incentivize and develop the rare earth elements we can provide the world.”
From mapping Alaska’s potential to blazing trails across its vast, rugged landscape, the state has set out to smooth the way for those who hunt for mineral fortunes on the Last Frontier.
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