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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining Explorers 2012: Pogo gold discovery within sight

Deep Trench adds 2M oz. of high-grade gold to Sumitomo’s Alaska mine

Shane Lasley

Mining News

The best place to find a new mine is in the shadow of a headframe” is an adage that has served geologists well in their search for new deposits of metals that the world needs and desires. This proverb has once again proven its worth at Pogo, Alaska’s highest producing gold mine.

Though Pogo does not boast an iconic headframe towering over its underground operations, new gold-rich zones discovered “within eyesight of the mill” are rapidly adding high-grade ore to the reserves at the Interior Alaska mine.

Sumitomo Metal Mining Pogo LLC – a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent) to operate Pogo – celebrated the first 2 million ounces produced at the mine in July.

The 2,500-metric-ton-per-day mill at Pogo churns out around 1,000 ounces of gold per day. At this rate, the 2.9 million ounces of gold reserves at Pogo will carry the underground operation through 2019. With an additional 2.1 million ounces of gold in resources and exciting discoveries made in the shadow of the mill, there is no end in sight for the Interior Alaska operation.

“We are not as small as originally thought, and we are not going anywhere yet,” according to Dave Larimer, senior mine geologist at Pogo.

To ensure Pogo continues to churn out some 380,000 ounces annually for years to come, Sumitomo invested in some 27,000 meters of exploration drilling and 30,000 meters of definition drilling in 2012.

East Deep discovered

The first 2 million ounces of gold produced at Pogo were mined from the Liese zone – three flat-lying, parallel quartz veins that carry high-grade gold. These gold-rich shear zones are dubbed L1, L2 and L3.

Although the 2012 drill program continues to expand Liese to the northwest, Sumitomo’s hope of continuing to mine high-grade gold at Pogo does not rest entirely on adding ore to this deposit.

The gold-rich veins of the Liese zone end abruptly where they come in contact with a gold-barren body of diorite to the northeast.

“We actually mine right up to the diorite and stop, that’s it,” explained Larimer.

Two years ago, the Pogo exploration team set out to see if it could find additional gold mineralization on the opposite side of the intrusive body.

Some road-based drilling just north of the diorite tapped a zone with quartz-vein structures with grades and thicknesses similar to those that have provided feedstock for the mill over the past six years.

The Pogo geological team now believes that the Liese and East Deep zones are actually the same ore body that became separated when the diorite split the two zones as it intruded along the Liese Creek fault about 95 million years ago, or about 12 million years after the zones were mineralized.

Two vein systems, E0.5 and E1, have been intersected at East Deep.

Larimer hypothesizes that E0.5 surfaces at Liese, leaving only scattered gold-veined rubble as an indicator of its existence and E1 is continuation of L1.

Through the end of 2011, Sumitomo had outlined 2 million ounces of indicated and inferred gold resource at East Deep. The US$4.80 per ounce discovery cost of this gold is a fraction of the US$30-US$40 dollar industry average for each ounce of gold found.

This initial resource, according to Pogo General Manager Chris Kennedy, could be the tip of the iceberg when it comes to East Deep. The total extent of this zone is unknown and the deposit remains open to the west, north and northeast.

If Larimer’s theory of a continuation of Liese holds true then two deeper vein systems could add to the richness of this Pogo discovery.

Sumitomo has driven two drifts through the some 300 meters of diorite that separate Liese from East Deep. From this deeper vantage point, drills are able to test for the hypothesized E2 and E3 veins. These access drives linking the East Deep zone to the established underground workings at Pogo are also accelerating Sumitomo’s ability to mill the gold-rich ore found here.

More deposit within sight

East Deep is not the only discovery Sumitomo has made within eye sight of the mill. North Zone, located just on an adjacent ridge immediately north of Liese, is another deposit adding to the longevity of Pogo.

“We went back and took a look at some of the condemnation drilling that was done for the mill. We had some vein intercepts,” Larimer explains. “To test this out we decided to drill off the road right below the mill and sure enough we hit a continuous quartz-vein body. We call this our North Zone vein-system. There is not just one, but two North Zone veins.”

With mineralogy that is remarkably similar to Liese, Pogo geologists believe the nearly vertical North Zone veins may represent a feeder for the flat-lying zones of Liese.

South Pogo, situated about 600 meters south of the Liese zone, is another promising near-mine target Pogo geologists are investigating in 2012.

Focused on finding the full extent and understanding the relationship of the gold-rich ore bodies lying within sight of the mill. Pogo geologists are ensuring Pogo continues to mine high-grade gold from within sight of the mill for years to come.

At the end of 2011, Sumitomo reported resources and reserves of 12.32 million metric tons of ore averaging 12.5 g/t gold for 4.95 million ounces of the precious metal.

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