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Vol. 20, No. 44 Week of November 01, 2015
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Northwest Arctic miners

NANA delves into all phases of mining, including in-house gold exploration

Shane Lasley

Mining News

From an expanding ownership interest in one of the largest producing zinc mines on the planet to grassroots gold exploration, NANA Regional Corp. is delving into all phases of mining across the 24.3 million acres of extremely minerals-rich land in Northwest Alaska.

During the past 26 years, this Alaska Native regional corporation and the more than 13,800 Iñupiat shareholders whose forebears settled the northwest corner of Alaska thousands of years ago have enjoyed some US$1.7 billion in royalties, wages and tax payments from the Red Dog Mine.

With Teck Resources Ltd., the operator and co-owner of Red Dog, continuing to upgrade high-grade resources in nearby deposits to reserves and discover new deposits in the larger Red Dog District, it is likely the zinc-lead-silver economic engine will continue to chug along in Northwest Alaska for years to come.

In recent years, NANA also has been actively expanding its mining business. This initiative includes forging a partnership with NovaCopper Inc. to explore and develop the copper-rich deposits in the Ambler Mining District in the eastern part of its region and launching an independent campaign to explore the gold-rich Fairhaven Mining District in the southern areas of its territory.

“Mining has proven to be an economic catalyst for Northwest Alaska,” said Lance Miller, vice president of natural resources for NANA Regional Corp. “Today, our company continues to look at ways to responsibly explore and develop minerals to the benefit of our shareholders.”

Exploring Kugruk

NANA’s exploration team also has been systematically narrowing drill targets in the Fairhaven Mining District, an area that is estimated to have produced more than 600,000 ounces of gold since the turn of the 20th century.

This work culminated in a six-hole drill program that tapped high-grade gold and silver along with associated zinc and lead mineralization along a roughly 70-mile-long structural zone known as the Kugruk Mega Shear.

Stretching south from the Kotzebue Sound, this enormous structural zone is located roughly where the Seward Peninsula meets the rest of mainland Alaska.

Candle Creek, draining off the east side of this Kugruk Mega Shear, has been the source of the majority of the more than half a million ounces of placer gold produced in the area. Notoriously extensive ground cover in the region, however, has hidden the bedrock source of this alluvial gold.

NANA geologists, led by Miller, narrowed down the potential source with regional exploration including hydro-geochemistry, followed by systematic grid soil sampling by snow machine. The team further narrowed targets by mapping and sampling frost boils, areas were subsurface frost heaves up dirt and rocks.

This targeting led to this year’s drilling on NANA’s Kuulu property, a block of State of Alaska mining claims immediately west and upland of Candle Creek.

The best hole cut 5.8 feet (1.77 meters) averaging 20.5 grams per metric ton gold, 92 g/t silver, 1.79 percent zinc and 2.63 percent lead. This intercept included a 0.6 foot interval of 175 g/t gold and 470 g/t silver.

Other significant intercepts from NANA’s inaugural drill program along the Kugruk Mega Shear include: four feet of 7.9 g/t gold; 2.5 feet of 2.05 g/t gold; 0.5 feet of 10 g/t gold; and 1.1 feet of 2.51 g/t gold.

In 2012, NANA geologists collected rock samples of up to 9.4 g/t and 7.6 g/t silver at Motherwood Point, which is where Kugruk Mega Shear emerges on the northern shore of the Seward Peninsula some 20 miles (32 kilometers) to the north of the high-grade intercept at Kuulu.

Kennecott hit some intriguing zinc-lead-silver mineralization during a 1994 drill program at Anugi, a prospect located on NANA-owned land about seven miles south of Motherwood Point. Highlights from this drilling include 10 feet grading 5.3 percent zinc, 0.94 percent lead and 40 g/t silver; and 64 feet grading 2.5 percent zinc, 1.03 percent lead and 65 g/t silver.

Together with intriguing gold values found further south along the Kugruk Mega Shear in the area of Kiwalik Mountain, the work completed by NANA points to the enormous potential of this structural corridor that stitches the Seward Peninsula to the rest of Alaska.

Developing Arctic

As in-house geologists begin to unveil the mineral potential in the southern part of the NANA region, partner NovaCopper Inc. is studying the feasibility of developing a mine in the copper-rich Ambler Mining District to the east.

In 2011, NovaCopper and NANA formed the Upper Kobuk Mineral Projects, a partnership that brings together Bornite and a number of other copper-rich prospects on NANA-owned lands with the world-class Arctic deposit and dozens of similar volcanogenic massive sulfide prospects located on NovaCopper’s state, federal and patented mining claims in the Ambler Mining District.

Located a mere 16 miles apart, Arctic and Bornite are each considered world-class copper assets that would have long since been developed if not for their remote location, some 200 miles off the beaten path in Northwest Alaska. It is believed that advancing these deposits in tandem will improve the economics of both.

Since formation of the Upper Kobuk Mineral Projects, NovaCopper has expanded Bornite to 5.7 billion pounds of copper in a (March 2014) resource estimate averaging 1.56 percent copper.

With Bornite showing its world-class potential, NovaCopper is now focused on finishing what it started at Arctic.

“We see Arctic as the first mine to be developed and Bornite as the second; and we will work on the synergies between the two projects,” NovaCopper President and CEO Rick Van Nieuwenhuyse told Mining News.

The 2015 Upper Kobuk program included 3,056 meters of drilling and other engineering and environmental work needed to complete a prefeasibility study for Arctic, the most advanced of the deposits held by the NovaCopper-NANA partnership.

A 2013 preliminary economic assessment for developing an open-pit mine at Arctic supplying ore to a 10,000-metric-ton-per-day mill at Arctic that would produce roughly 1.5 billion pounds of copper, 1.8 billion lbs. of zinc, 289 million lbs. of lead, 30.5 million ounces of silver and 349,000 oz. of gold over a 12-year mine-life.

This scoping level study was based on an indicated resource of 23.85 million metric tons averaging 3.26 percent (1.71 billion lbs.) copper, 4.45 percent (2.34 billion lbs.) zinc, 0.76 percent (400 million lbs.) lead, 0.71 grams per metric ton (550,000 oz.) gold, and 53.2 g/t (40.8 million oz.) silver; plus an inferred resource of 3.63 million metric tons averaging 3.22 percent (239 million lbs.) copper, 3.84 percent (285 million lbs.) zinc, 0.58 percent (43.2 million lbs.) lead and 0.59 g/t (60,000 oz.) gold.

This year’s drilling focused primarily on testing vertical and lateral continuity of the high-grade deposit as well as upgrading inferred resources to the measured and indicated categories.

Highlights from the 2015 program include:

AR15-0145, which intersected four mineralized intervals – 22 meters of 3.86 percent copper, 0.86 grams per metric ton gold, 71 g/t silver, 1.15 percent lead and 5.36 percent zinc; five meters of 3.82 percent copper, 0.68 g/t gold, 74.7 g/t silver, 1.6 percent lead and 7.21 percent zinc; and 6.5 meters of 6.67 percent copper, 0.52 g/t gold, 31.4 g/t silver, 0.2 percent lead and 3.38 percent zinc;

AR15-0136, which cut two mineralized intervals – 32 meters of 3.08 percent copper, 1.56 g/t gold, 45.9 g/t silver, 0.18 percent lead and 2.72 percent zinc; and nine meters of 7.36 percent copper, 2.34 g/t gold, 219.3 g/t silver, 0.77 percent lead, and 5 percent zinc;

AR15-0144, which cut three mineralized intervals, including 11 meters of 7.1 percent copper, 0.7 g/t gold, 80.4 g/t silver, 1.09 percent lead and 9.04 percent zinc; and nine meters of 4.22 percent copper, 0.75 g/t gold, 76.7 g/t silver, 0.82 percent lead and 3.46 percent zinc.

Two of the 14 holes – AR15-0139 and AR15-0145 –specifically targeted geotechnical information for preliminary pit slope design work in the area of the high wall of the proposed open pit.

“We are pleased to have completed another successful drill campaign, one that saw zero loss time incidents, no environmental incidents, 56 percent local NANA shareholder hire and some really fantastic drill results that further demonstrate that the Arctic deposit is one of the highest grade, open pitable copper deposits known in the world,” Van Nieuwenhuyse said.

Economic driver

As NANA pursues the potential of the Kugruk Mega Shear and supports NovaCopper’s exploration and development of the copper-rich Upper Kobuk region, the Red Dog Mine, the second-largest zinc producer in the world, continues to be the primary economic driver in the Northwest Arctic region.

Through 2014, NANA has received US$1.1 billion in net proceeds from the Red Dog, of which it has paid more than US$705.5 million to other Alaska Native regions, Kikiktagruk Inupiat Corp. and at-large shareholders in accordance with stipulations under the Alaska Native Claims Settlement Act. Additionally, the Northwest Arctic Borough, which encompasses the entire NANA region in Northwest Alaska, has received US$139 million in payments in lieu of taxes to fund local government, provide services and to build schools.

Teck paid off its capital and operating costs at Red Dog in 2007, which triggered an increase in NANA’s net proceeds royalties to 25 percent of net profits from the zinc mine. NANA’s interest, which is bumped up by 5 percent every five years, currently sits at 30 percent and its next rise is due at the end of 2017.

Red Dog produced a record 596,000 metric tons (1.31 billion pounds) of zinc in 2014, or about 5 percent of the global zinc output last year. Through the third quarter of 2015, the Northwest Alaska operation has recovered about 430,800 metric tons (965.6 million pounds) of the galvanizing metal, which is about 2 percent lower than the first nine months of last year.

At the current production pace, Red Dog has enough reserves to feed the mill for more than a decade, and a number of deposits and prospects in the immediate and surrounding area will likely add to the life of the Red Dog Mine and the economic benefits it brings to the NANA region.

Going into 2015, Red Dog had 52.8 million metric tons of ore in reserves averaging 16.5 percent (7.1 million metric tons) zinc, 4.3 percent (1.2 million metric tons) lead and 80 grams per metric ton (64.4 million ounces) silver.

This includes first-ever reserves of 7.4 million metric tons averaging 24.7 percent zinc and 6.9 percent lead for Qanaiyaq, a near-surface deposit that lies to the south of the mined out Red Dog main deposit.

Paalaaq, a deeper deposit in the immediate mining area, is another potential source of high-grade zinc ore for the mill.

In addition to the near-mine deposits, Teck continues to explore some 224,000 acres of highly prospective land in the larger Red Dog region of Northwest Alaska.

Anarraaq-Aktigiruq, situated on State of Alaska land roughly eight miles (13 kilometers) northwest of the current operation, is among the high-quality targets Teck is pursuing. The company discovered Anarraaq in 1999, and subsequently reported an inferred resource of about 17.2 million metric tons grading 15.8 percent zinc, 4.8 percent lead, and 2.1 oz./t silver. While recent exploration, including drilling in 2015, has likely expanded this deposit significantly, Teck has not publically reported an updated resource in several years.

All told, the deposits and prospects in the Red Dog District indicate that Northwest Alaska will remain one of the world’s primary sources of zinc, and NANA shareholders will enjoy the benefits of an increasing ownership of Red Dog for many years to come.

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