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Fort Knox digs deeper for exploration funding Kinross Gold almost doubles exploration budget for 2003, focusing on
in-pit drilling and advancing Gil to feasibility and permitting stage Patricia Jones Petroleum News Contributing Writer
Kinross Gold, owner of the Fort Knox gold mine northeast of Fairbanks, plans to nearly double its exploration spending on the property this year in an effort to extend the life of Alaska’s largest gold mine.
Based on existing geological work, the Fort Knox gold deposit will be mined out in 2010, said Rick Dye, Fort Knox mine manager. “That’s our current projected mine life, if no other changes take place. We know we can expand it and add another year’s life if the gold price stays where it’s at — $325-plus per ounce,” Dye told Petroleum News April 4.
This year, Kincross plans to invest $3.2 million in further exploration work at Fort Knox, compared to a $1.7 million budget in 2002. Last year’s exploration work already added a year of operation at Fort Knox, one of the Interior’s largest employers with a workforce of 400 people.
Kinross hopes to further extend the life of the mine through exploration drilling scheduled for this summer in the existing pit and in a well-defined mineralized area about six miles east of the Fort Knox complex, a resource called Gil, Dye said.
The company will spend $710,000 this year for in-pit drilling and $2.2 million on property-wide drilling, which includes work at Gil. Drilling at Gil this summer could advance that property to a feasibility and permitting stage in 2004.
“That’s going to be our major exploration focus — to get it to the stage to do that,” Dye said. “We need enough density of drilling to make it happen.”
An additional $278,000 will be spent in 2003 on exploration drilling at the neighboring True North deposit, which Kinross already has tapped as a supplemental ore feed for the Fort Knox mill.
More than 15 million tons of ore churn through the mill each year at a rate of more than 41,000 tons per day, producing about 410,000 ounces of gold annually.
“It’s a big mill, and it takes a big resource to feed it,” Dye said. “The best source is that intrusive itself (Fort Knox ore body). We changed our focus and came to the realization that we can find more supplemental feed actually within the pit, in extensions to the south and by deepening it. That’s the best potential we’ve got.” Focus on Fort Knox pit The $1.7 million budgeted for property-wide exploration in 2002 focused on drilling within the existing pit, and it was the largest in-pit exploration effort since production started at the mine in 1995.
That geological effort produced knowledge of new gold that “replaced everything we mined in 2002,” Dye said. “We added a full year of reserves, a full year of life to the project.”
2002 drilling added 281,000 ounces to the Fort Knox reserves, while crews mined 276,000 ounces from the same ore body, Dye said. Remaining production in 2002 came from True North.
Repeating that reserve replacement with this summer’s exploration work “is the goal. That is very realistic,” Dye said. “We would have to go deeper and expand the pit. If the gold price stays where it is, there’s no question we’ll be able to do it, because we’ve already identified it.” Advancing Gil to feasibility Kinross and its 20 percent partner in the Gil property, Teryl Resources Corp., plan to intensify their exploration effort on the neighboring gold resource, with hopes of increasing the reserve estimate and defining an economically viable project.
The current reserve number for Gil — 133,000 ounces of gold — is based on a $325-per-ounce market price, Dye said. “It has a reasonable expectation of being developed at that price, but it’s not necessarily financially proven.”
In the past, geologists have estimated that Gil could contain as much as 400,000 ounces of gold, a figure based on less precise criteria, Dye said. The current estimate is “a significantly smaller number than what you’ve seen in the past — it’s very, very conservative.”
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