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New look at Nixon Fork Mystery Creek Resources plans to explore closed underground gold mine in remote central Alaska this year, may restart production in 2004 Patricia Jones Petroleum News Contributing Writer
Denver-based mining company is breathing new life into the underground, high-grade Nixon Fork gold mine — closed since mid-1999 — located in the remote region near McGrath, Alaska.
Mystery Creek Resources Inc., a wholly owned subsidiary of publicly traded St. Andrew Goldfields Ltd., acquired a mining lease for the closed gold mine last winter, according to Mystery Creek President Paul Jones.
He said plans for Nixon Fork include starting an exploration program this summer and continuing underground prospecting this winter, in hopes of discovering enough mineable gold to restart the processing facilities in the later part of 2004.
“We took a very careful look at what has been done there before. Nixon Fork is a good property, with good geology,” Jones told Petroleum News May 15. “We would not be up there doing this if we were not confident in the potential.”
According to a company press release, Mystery Creek will need to spend $8.9 million to restart production. In addition to exploration spending, development costs will include refurbishing the mill, which is in “very poor shape,” Jones said. Mystery Creek is also in the process of re-permitting the mine, and should a production decision be made, the company will need to acquire and ship mining equipment.
Nixon Fork facilities were abandoned by trustees in a bankruptcy court case, Jones said, and the mining leases reverted back to original property owners — McGrath-area miners with family ties to the property starting in the 1920s. Past production at Nixon Fork Consolidated Nevada Goldfields Inc. started gold and copper production at Nixon Fork in October 1995, after spending about $13.5 million to construct facilities at the remote mine, located roughly 30 miles northeast of McGrath.
Equipment to construct and operate the 150-ton per day mill, a 50-person camp and a tailings dam and water containment system, along with underground mining machines, was flown to the site in 75 trips on a C-130 Hercules aircraft, according to the 1995 Alaska Mineral Industry Report.
A workforce of about 60 produced a gold and copper concentrate that was flown biweekly from Nixon Fork to Palmer, Alaska, then shipped to Japan for final processing.
Annual production from 1996 through 1998 averaged a little less than 40,000 ounces per year, according to state mineral reports. Copper production ranged from 170 tons in 1996 up to 500 tons in 1998, when Real del Monte Mining Corp. took over operations.
Nixon Fork’s gold grade averaged more than one ounce per ton of rock, according to Dick Swainbank, mineral development specialist with the Alaska Department of Community and Economic Development.
“From our point of view, that was a nice little producer for a while. But with the price of gold going down for a while, they just were not making a profit,” Swainbank said. “With the price of gold going up, a number of these things are going to be reexamined.”
Copper, while included in the mineral concentrates shipped out, didn’t factor much into the economic mixture of Nixon Fork, he added. That’s because copper prices also dropped, from $1.03 per pound in 1997 to today’s price of about 70 cents per pound.
Growing gold reserves Notable about the state’s past reports at Nixon Fork is that operators continued to explore the area, making discoveries that replaced the amount of gold mined nearly every year.
“They were basically keeping up with themselves, and had a number of targets that hadn’t been tested yet,” said Swainbank. “Those types of deposits are notoriously difficult for exploration because they occur in a relatively small area with little pipes and pockets.”
Mystery Creek plans to use a three-dimensional geological modeling system, developed by an affiliated company called Geoinformatics Exploration, to aid in that exploration work.
“It’s a sophisticated proprietary software used very successfully in Australia and we’re using it in Timmins, Ontario,” Jones said. “It makes the initial exploratory drilling more intelligent … we will finish up modeling of the geology at Nixon Fork and use that model to develop exploratory targets.”
He expects the summer surface exploration program to start sometime in July and continue throughout the rest of the summer. The underground winter program will follow up on already identified resources and “other things the summer program may turn up,” Jones said. “Our intention is once we start, it will continue until we get to feasibility.”
According to the company’s press release, all categories of gold resources reported by previous operators in June 1999 totaled 194,214 ounces of gold.
“The difference between resources and reserves is that no one places resources in production. We need to upgrade resources to reserves. The level of certainty for resources is much less than the level of certainty for reserves,” Jones said. “The whole point of the summer and winter program is to upgrade and increase the reserves that are there.”
A development decision weighs on whether geologists can define enough gold reserves to justify putting the property back into production, he added. Gold prices factor heavily in that decision-making process.
“At $355, it’s a good project,” Jones said. “That property will do well at that price.”
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