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Kensington mine review expected soon Draft EIS for Juneau-area hard rock gold mine anticipated Jan. 23, regulatory review schedule slipped several months Patricia Jones Petroleum News Contributing Writer
A draft supplemental environmental impact statement for the proposed hard rock gold deposit called Kensington near Juneau, Alaska, should be published Jan. 23, according to state regulators coordinating the environmental review.
“Everyone is feeling good that things are pretty tight, environmentally, and this is a pretty doable project,” said Ed Fogels, project manager for the Alaska Department of Natural Resources.
Kensington, some 45 miles north of Juneau, has been advanced by Coeur d’Alene Mines Corp. for a number of years. The silver and gold producer headquartered in Idaho has held a 100 percent interest in the development project since 1995.
Due to changes in gold market prices and additional property acquisition, Coeur modified an already-approved development plan which required additional environmental impact review. A draft of the supplemental EIS was expected to be complete in October 2003, with the final review to be issued this January, according to a memorandum of understanding between the developer and regulatory agencies announced in July 2003. (See story in Aug. 13, 2003, issue of Petroleum News.) Permitting schedule slips That schedule slipped due to a number of minor reasons, Fogels told Petroleum News on Jan. 6. For one, comments from the Environmental Protection Agency were submitted late. Working with a third party contractor for the environmental review work also slowed the process, he said.
“There’s been some delays but really there’s no one major thing,” Fogels said. “Early on, we all realized that the best case scenario would be early 2004.”
Coeur’s project manager Rick Richins said the delay has not yet affected the company’s planned development schedule, but the time margin has been eliminated.
“It is late,” he said. “We’re still hoping we can get the record of decision by the end of the second quarter … if we get that done, we should be able to do what we hoped to get done in 2004.”
That includes constructing a tunnel from the Jualin prospect to the Kensington prospect, located on opposite sides of Lions Head Mountain. Coeur hopes to start this site clearing and preparation for construction of the 4,000 ton per day mill complex, which is anticipated to start gold production in the fourth quarter of 2005.
“At this point, there are no major construction activities that are out of the realm of possibility … but there’s no room for misses,” Richins said. Project economics improve The underground gold deposit is believed to contain more than 3 million ounces of gold in its host rock.
Re-engineering and optimization work completed by Coeur last year place estimated capital costs to put Kensington into production at $75 million, according to a company statement released in late December. That’s half of the start-up costs estimated last summer.
Coeur is estimating annual production of 100,000 ounces of gold per year, with an average cash operating cost of approximately $195 per ounce. Existing exploration has identified a gold resource for a mine life of at least 10 years.
“Coeur believes that significant exploration potential exists at Kensington and intends to continue an active exploration program upon commencement of mine development,” the company release said. Project financing starts Kensington is one of two major development projects that Coeur is currently pushing. The second is a silver mine in South America called San Bartolome.
The company announced on Jan. 6 an offering of $130 million in principal amount of convertible senior notes with proceeds intended for general corporate purposes, “which may include the development of its Kensington gold project and its San Bartolome silver project.”
“That’s a good indication of the company’s commitment to this project,” Richins said. “They’re willing to jump in the middle to get it done.”
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.
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