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Generating reserves at Gil Joint venture partners Kinross and Teryl Resources continue drilling to generate mineable reserves, more high-grade results released Patricia Jones Petroleum News Contributing Writer
Another batch of promising drilling intercepts taken from the Gil project, located six miles from Interior Alaska’s Fort Knox gold mine and mill complex, show continued high-grade gold intercepts at the exploration property.
Joint venture partners in the project, mining giant Kinross Gold and junior-sized prospector Teryl Resources both hope to move the exploration property to a development decision at the end of this year.
“If it looks good, we’ll pull out all the stops to get it online,” said John Odden, Gil project manager and a geologist at Fairbanks Gold, Kinross’ operating subsidiary for the neighboring Fort Knox complex. “I think we’ve had a pretty good year.”
Reverse circulation drills are currently turning on the property, Odden told Petroleum News Oct. 7, part of a planned second phase of exploration for Gil this year. Spending for the first phase was budgeted for $830,000, and the second, at $750,000.
“They’re moving right along,” he said. “The rest of the exploration core program will not proceed until they have completed a model (using results from this summer’s work). If it look promising, we’ll move on.”
So far this year, a total of 115 holes have been drilled at Gil. The bulk of those are reverse circulation holes, as 21 diamond core drill samples have been taken this year, Odden said.
Holes have been punched in a five-point pattern, he said, to tighten up or reduce distance between existing drill holes to about 70 feet apart. That increases geological confidence about the underground deposit and helps convert estimates to categories which carry more certainty.
“That’s the goal, to come up with a mineable reserve and a resource number attached after that,” Odden said. “That’s part of the reason we’ve been as aggressive in our core program. We want to get as many core holes in the main deposit as we can.” Development decision desired Driving the extensive exploration work is a desire to locate more gold and to generate more confidence in the existing knowledge about the deposit, necessary to make a development decision.
“The main goal for Kinross Gold is to develop the zone into proven reserves and analyze it for potential production at Fort Knox,” said John Robertson, Teryl president. “By calculating the economics, they will arrive at a production decision at the end of the year, the end of the drilling season.”
Before production could begin, a feasibility study must be completed, permits must be obtained from regulators and a haul road must be built, Robertson said. But the expensive part of hard-rock gold mining — the physical and chemical process of extraction — is already in place.
“This is why Teryl is in a very good situation. We have a zone that is very close to a mill and we have Kinross as our partner. Kinross has a very large mill that needs lots of ore. They want to grab at anything that is economic and within reach,” he said. “Every junior company would love to have a mine go into production.”
Environmental background has already been gathered in anticipation of the permitting process, Odden said.
“There hasn’t been an official feasibility study, but our environmental services has collected water data for several years,” he said. “There’s no official permitting yet, but the groundwork has been laid for it. The idea is to get it online as soon as possible.”
Production at another Fort Knox satellite mine site, True North, has started to wind down. Odden said it would be mined out “maybe next year.”
“Really, if everything worked out right, we could just change from True North to Gil,” he said. “True North is looking pretty hungry and we need to get (Gil) online quickly to keep feeding ore to Fort Knox.”
Additional employees and equipment added to Fort Knox in 2001, when True North started production, could be used for the new satellite, he said. “We’d really like to have that happen.” High-grade intercepts reported Teryl released on Sept. 29 assay reports from 20 drill holes completed at Gil this summer. A prior press release provided information about 35 other drill holes.
Of those 55 holes, 20 contained intercepts that assayed 0.1 ounces per ton of rock or higher. One hole contained a five-foot interval that assayed a little more than one ounce per ton of rock.
Comparatively, average grade mined and milled at Fort Knox is a little less than 0.03 ounces per ton of rock.
“Everyone is excited because with these higher grade intercepts, the more money you can make going into production,” said Robertson, at Teryl. “It’s all common sense. The higher the grades, the better it is.”
Both he and Odden noted that the high-grade intercepts were found in the northeastern section of the Main Gil mineralized area, now believed to be about 3,000 feet in length.
Also notable, Odden said, was the discovery of more mineralized material at surface, reducing the amount of stripping needed during mining.
The high-grade material creates a trade-off for geologists, though, Odden added. “In the northeast, it’s got good grades, but it’s more faulted up,” he said. “It’s tough to model.”
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