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MINING NEWS: Pogo gold project shows progress Developers OK final feasibility study, production program; construction costs increase, initial gold production expected in March ’06 Patricia Liles Mining News Editor
Partners in the Pogo gold project northeast of Delta Junction, Alaska, have officially approved the final feasibility study and production program, announcing plans on June 4 to complete construction and begin initial gold production in March 2006.
Production will ramp up to commercial rates by the end of August, 2006, the three partners said in a joint press release.
Development partners in the Pogo project, 40 miles northeast of Delta Junction in the upper Goodpaster River valley, include Teck Cominco Ltd., Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp.
Construction of Pogo was expected to be complete late in 2005, prior to a permitting delay that arose earlier this spring. A Fairbanks-based environmental group in April filed an administrative appeal of the project’s final water discharge permit, issued by the Environmental Protection Agency. Work stopped at the project until early May, when the issues were resolved and the appeal was withdrawn.
Now, crews are filtering back to the remote work site, currently accessible by air. In late May, 225 people were working on site, according to Karl Hanneman, manager of public and environmental affairs and special projects for Teck-Pogo Inc. “That will gradually increase over the next few weeks,” he said, peaking at 500 workers this summer and next.
Construction work on a 49-mile all-season road, connecting Pogo and the upper Goodpaster River valley to the Richardson Highway, should be complete this September, according to Teck Cominco’s June 4 press release.
Approximately 600 truckloads of materials and supplies have already been hauled to the remote site on the temporary ice road constructed in January and early February. Remaining supplies will be brought in after the all-season road is completed this fall, Hanneman said. Capital costs increase Estimates for Pogo’s capital costs have increased since the project’s interim feasibility study was completed in late 2002, according to Teck Cominco. The weaker U.S. dollar and changes in steel and oil prices have bumped the estimated capital costs to $280 million, up $30 million from prior estimates.
That increased capital cost does not include expenses for interest, escalation and suspension and remobilization costs associated with the permit appeal, Teck Cominco said. The three companies intend to finance Pogo’s capital costs through cash on hand and corporate credit facilities.
Once completed, Pogo’s estimated production rate will be 460,000 ounces per year for the first full three years of production. Mill crews will process 2,500 tons of ore per day. Updated reserve and resources at Pogo contain 4.5 million ounces of gold, with grades averaging slightly below one-half ounce per ton of rock. The partners consider that there is “substantial potential for additions to reserves through near mine exploration,” they said in the press release.
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