Fairbanks, Alaska — This year’s exploration activity in Alaska will likely exceed that of the last few years combined, as companies continue to be spurred into action by the recent surge in metal prices, especially gold.
After nearly a decade of inactivity, exploration programs are encompassing grassroots- and development-stage projects, and everything in between.
Most companies are searching for gold, which is hovering in the US$400-per-oz. range, but there is also renewed interest in base and platinum group metals.
Leading the charge are
Staking has been fast and furious statewide, though the areas surrounding Pebble, in the southwest, and Pogo, in the east, are especially hot. Claim-staking activity started to increase in 2003 and has reached levels not seen since 1997.
Things got off to a late start this past summer, owing to the incineration of huge tracts of land by forest fires. The fires had forced the evacuation of
Teck Cominco’s Pogo operation was shut down and evacuated as the fires threatened the camp and airstrip.
Realizing the importance of its mining industry, which is valued at more than $1 billion, the Alaska government appears to be serious about streamlining its permitting process, which by most accounts has been time-consuming and fraught with snags.
Pebble
Thanks to the stellar performance of the metals contained in the colossal Pebble deposit, even the nay-sayers are seeing the once-frowned-upon deposit in a different light. Vancouver-based Northern Dynasty is spending more than US$25 million this year to move the Pebble copper-gold-molybdenum-silver project toward development and production.
The company can acquire the Pebble deposit claims by paying Teck Cominco US$10 million in cash or stock by Nov. 30, 2004, and purchasing the Hunter-Dickinson group’s 20% interest in shares at an independently appraised value. Following this, the junior can earn a half-stake in the surrounding property by drilling 18,290 metres before Nov. 30.
Northern Dynasty was busy drilling to meet its spending commitments and moved aggressively toward the bankable feasibility study stage. The company didn’t waste any time in getting the ball rolling on the permitting process for the proposed open-pit operation either.
The inferred resource at Pebble now sits at 26.5 million oz. gold and 16.5 billion lbs. copper contained in 2.7 billion tonnes of material averaging 0.27% copper, 0.015% molybdenum and 0.3 gram gold per tonne, based on a cutoff grade of 0.3% copper-equivalent. This inferred resource was based on 38,301 metres of drilling in 169 holes.
This year’s drill results are being used to upgrade the inferred resources by the first quarter of 2005.
The company’s most recent estimate of the cost of the project is US$1-1.5 billion for a 100,000-to-200,000-tonne-per-day operation. At the higher rate, the mine would produce 674,000 oz. gold, 210,000 lbs. copper, 2.5 million oz. silver and 15 million lbs. molybdenum per year.
Development of the near-surface, porphyry-style deposit requires a large-scale operation with four pits. Processing of mill feed will produce a flotation copper sulphide concentrate with gold and silver credits, as well as a separate molybdenum-sulphide concentrate.
Metal recoveries are estimated at 88% for copper, 76% for gold and silver, and 60% for moly.
An 86-mile road will have to be built to connect the project to tidewater at Cook Inlet and a deep-sea port facility.
Copper concentrate will be transported to the port via a concentrate pipeline, with the moly-sulphide concentrate shipped separately.
Northern Dynasty and Teck Cominco now hold a total of 150 sq. miles of claims surrounding Pebble, but other juniors are moving in as the economics and scale of the Pebble project sink in.
Pebble
Tucson, Ariz.-based
The company initially flew an airborne magnetic survey that outlined four significant magnetic anomalies. It was planning to spend US$3 million to explore further.
Geological, structural and aeromagnetic studies outlined 21 anomalies of interest, and 9,303 samples were collected for analysis this past summer.
The geophysical work indicated an induced-polarization anomaly, named White Sox, in the northern portion of the Big Chunk ground. The White Sox IP target trends northwesterly for 3 miles and lies 9 miles northwest of the Pebble deposit. The company believes the anomaly may represent disseminated sulphides adjacent to a strong magnetic high, perhaps a porphyry intrusion.
Ground follow-up revealed fragments of altered copper-bearing rocks in the soil. The area also coincides with a geochemical anomaly. Further geophysics are planned to map out the extent of White Sox, along with 2,000 ft. of drilling on 11 targets.
Liberty Star’s exploration manager, Phil St. George, is no stranger to the Alaskan exploration scene. He managed the Donlin Creek gold project for NovaGold and is credited with the initial Pebble discovery while working for Cominco.
Also active in the area is
Pogo
Despite some setbacks, construction is now in full swing at the Pogo gold project, 140 km southeast of Fairbanks.
Following, a 4-year permitting process, a local environmental group tried to throw a wrench in the works earlier this year by contesting the issuance of the permit. Then forest fires forced the evacuation of the camp, delaying construction for a week. But the fires are now out and the permit is firmly in place.
Teck Cominco is earning a 40% interest in the Pogo project with the remainder held by
Projected capital costs are US$280 million. A 2,500-ton-per-day underground mine-and-mill operation is being constructed, with startup planned for the first quarter of 2006. The mine is expected to produce 400,000 oz. gold per year over 10 years.
Pogo contains an indicated reserve of 7.7 million tons grading 0.48 oz. gold per ton outlined through surface drilling and underground development over the past six years.
Teck had budgeted US$75 million for development spending in 2004, and most of that is earmarked for Pogo.
Idaho-based
The technical and economic viability at Kensington was shown in a recent feasibility. The mine is estimated to cost US$91.5 million and could begin operations in 2006. Annual production is pegged at 100,000 oz. gold at a cost of US$220 per oz. over 10-15 years.
Probable reserves, based on a gold price of US$375 per oz., are pegged at 4.2 million tonnes grading 0.25 oz. per ton, equivalent to more than 1 million oz. The estimate was calculated using a cutoff of 0.16 oz. per ton. Indicated reserves are estimated to be 617,000 tons grading 0.436 oz. gold per ton, or 269,000 oz., using a cutoff of 0.12 oz. Inferred resources are estimated to be 2.5 million tons grading 0.234 oz. gold per ton, or 584,000 oz., using the same cutoff.
South African-based
gloGold Ashanti
Vancouver-based
Fort Knox
Toronto-based Kinross Gold acquired the Fort Knox open-pit mine, near Fairbanks, in 1998. In addition to the main open pit, the operation includes the True North pit, 15 km to the northwest. Mining at the True North pit was suspended for several months as the mining fleet was needed for a tailings dam lift at the Fort Knox pit for a major pit expansion. The layback will take three years and cost about US$60 million but serve to prolong the life of the mine.
For the year, output is projected to be 340,000 oz. gold at a cost of US$220 per oz.
Next door to Fort Knox, diamond drilling and trenching were stepped up by
The Golden Summit property comprises 17,820 acres divided into three areas. The company’s new partner
Meridian recently upped the budget by nearly US$200,000 from the US$650,000 it had planned to spend this year.
The portion of Golden Summit that consists of high-grade zones has been mined historically, though it has not seen exploration for half a century. The geology is believed to be similar to that of Fort Knox: Carlin-style gold in high-grade underground and surface bulk-tonnage deposits.
Tolavana lies 2,500 ft. southwest of the Cleary Hill Mine where the joint venture drilled six holes earlier this year and confirmed that high-grade gold extends underneath the old Cleary Hill workings. A 7-hole, 3,900 ft. core drilling program is evaluating several of the trench targets identified earlier in the summer.
Channel samples collected along 1,790 ft. of backhoe trenching on the Tolovana prospect in August returned gold hosted in schists and intrusive rocks. The 7E trench contained 0.017 oz. gold over 155 ft.; in the East cut there was an interval of 1.06 grams gold over 60 ft.; and in Zeba, a 0.04 oz. interval over 130 ft. Narrower zones with considerably higher grades are found within these intervals.
Drilling below the old Cleary Hill mine workings along a 790-ft. strike length intersected several mineralized veins and structures in the hanging wall. Highlights include a 6-ft. interval of 0.283 oz. gold from an unknown vein at a down-hole depth of 125.5 ft. in hole 401 and a 10.5-ft. interval grading 0.449 oz. gold from the Cleary vein itself at a 567-ft. depth in hole 403.
Recent trench mapping and sampling has shed some light on the nature of the gold mineralization in the Tolovana area and drill targets are ready for testing. The seventh hole is testing the offset to a 1996 high-grade reverse-circulation (RC) drill intercept grading 1.6 oz. gold from granodiorite at 325 to 335 ft. depth.
Historically, Tintina has lode-produced more than 3.5 million oz. gold, and placer production exceeds 31 million oz.
Teryl’s West Ridge property is situated two miles south of Kinross’s True North deposit, and six miles north of the Fort Knox deposit. Rock and soil samples were collected a mile west of the Old Glory prospect where the company found gold mineralization last year.
Anomalous gold in rocks and soils was associated with elevated arsenic and antimony. The work was followed up by 161 power auger soil samples from a small grid over the southern part of the property, revealing anomalous gold and pathfinder elements in four discrete areas.
Reverse-circulation drilling totalled 2,650 ft. in six holes, all of which were said to have returned anomalous gold mineralization with up to 35 ft. grading 0.049 oz. gold per ton in one hole.
Teryl’s Fish Creek claims, in which
Teryl has a 20% interest in the Gil project, with the remainder held by Kinross.
Donlin Creek
In southwestern Alaska,
Placer Dome has a 30% stake in Donlin Creek, with joint-venture partner
A preliminary economic assessment by AMEC E&C determined that a conventional open-pit mine would be economic. Donlin Creek is envisaged as a 20,000-to-30,000-tonne-per-day operation capable of producing 1-1.4 million oz. gold per year.
At a cutoff of 1.5 grams gold per tonne, the measured and indicated gold resource is estimated at 11.1 million oz. Inferred resources stand at 14.3 million oz. gold.
NovaGold has been busy at its Rock Creek project, near Nome in western Alaska, where startup could occur as early as next year.
The company recently completed delineation drilling for the full feasibility study of the Rock Creek deposit and initiated the final permitting process with state authorities.
The 19,450-ft. drill program started in late June and was designed to increase the infill definition of the deposit, as well as confirm historic drill results. Ten trenches totalling 3,300 ft. were excavated and sampled across the top of the deposit to provide additional geologic data. More than 10,000 ft. of twin drilling were carried out in 40 holes to confirm historic drill results.
An in-house study suggests Rock Creek could produce 100,000 oz. a year at a cash cost of US$150 per oz. Capital costs, including working capital, are pegged at US$30 million for an open-pit mine.
Permitting could be completed in the second half of 2005. The independent feasibility study by Norwest and AMEC is on target for completion by the second quarter of 2005.
Meanwhile, NovaGold, which is also a sand and gravel operator, intends to restart placer mining at its nearby Nome project, where mining was suspended in 1998 as a result of low gold prices. The potential for using dredges or conventional open-pit methods at the sand-and-gravel operation is being studied.
The gold resource at Nome is about double that of Rock Creek, but production would be around 50,000 oz. a year at higher costs. The property contains a measured and indicated resource of 1.2 million oz. gold and an inferred resource of 1.1 million oz. More than 4 million oz. have been extracted from the property since 1900. US$500,000 was slated for delineation drilling and engineering work in 2004.
In the same area, east of Nome, NovaGold is conducting grassroots exploration on the Big Hurrah property. An initial 9,500-ft. program of RC and core drilling tested the potential to develop a near-surface gold resource. Historic work identified multiple
, near-surface zones of gold mineralization with characteristics similar to those of Rock Creek.
Assays are pending, but drilling encountered mineralization that included zones of veining with coarse visible gold; these are open at depth and along strike.
The company’s target is 100,000-200,000 oz. gold from surface, grading between 0.17 and 0.34 oz. per ton.
In west-central Alaska,
Earlier this year, the company completed the 140-metre exploration drift on the 185-metre level of the Nixon Fork mine in an effort to define the continuation, orientation, extent, grade and thickness of the C-3000 and C-3300 zones.
The second phase of underground drilling (23,500 metres) was designed to upgrade the resources in the C-3000 and C-3300 zones and define additional resource and reserve tonnages nearby. The company was hoping to add 120,000 tonnes by way of the drilling.
Highlights from the C-3300 Chute zone include 6.6 metres grading 110.1 grams gold and 6.9 metres grading 11.8 grams gold in hole 83; 7.7 metres grading 28.7 grams gold in hole 84; and 2.4 metres grading 10 grams gold and 1.4 metres grading 13.2 grams gold in hole 87.
Production of gold from underground is to begin next autumn, after completion of the tailings re-treatment program, which will start in the spring of 2005. Plans call for 30,000 oz. gold to be recovered at costs of less than US$100 per oz.
Base metals
Drilling by
Hole 1 intersected 5.3 metres grading 437 grams silver, 3.79% lead and 18.45% zinc at a down-hole depth of 30.3 metres depth, as well as 17 metres of 223 grams silver, 0.97% lead and 11.27% zinc at 40.7 metres down-hole. Hole 2 hit four intervals of mineralization, including 2.6 metres grading 261 grams silver, 0.89% lead and 14.8% zinc at 62 metres down-hole. Hole 3 cut 1.8 metres of 361 grams silver, 3.78% lead and 10.95% zinc at 44.8 metres down-hole.
The Woewodski Island project is 145 km south of the Greens Creek mine, a high-grade, precious-metals-rich volcanogenic massive-sulphide (VMS) deposit and an active producer of silver, gold, lead and zinc. Here,
NovaGold is exploring the Ambler VMS project in the Brooks range of mountains, in the northern part of the state, as part of an option agreement with Kennecott.
Several massive-sulphide occurrences discovered more than 35 years ago include the Arctic deposit, which has an inferred resource containing some 36.3 million tonnes at an average grade of 4% copper, 5.5% zinc and 0.8% lead, plus 0.7 gram gold and 54.9 grams silver per tonne.
NovaGold’s recent 10,000-ft. drilling program confirmed high-grade copper and precious metal mineralization. Results were highlighted by two high-grade massive-sulphide horizons with a composite interval totalling 26 metres of 8% copper-equivalent in Hole 78. Four high-grade massive-sulphide horizons with composite intervals totaling 48.6 metres averaged 8.9% copper-equivalent in hole 79.
Platinum group metals
Nevada Star recently signed an agreement with
Anglo can earn a 51% interest in the property by spending US$12 million by the end of 2008. MAN comprises five areas: Canwell, Rainy/Eureka, Summit Hill, Dunite Hill-Fish Lake, and Broxson.
Geophysical surveys, geologic mapping, soil and rock sampling, and RC drilling at the Canwell prospect uncovered a 5-mile-long, standard-frequency horizontal loop-EM conductor along the eastern margin of the Canwell mafic-ultramafic complex. The combined soil and geophysical results suggest a conductor dipping 70 to the southwest within 200 ft. of surface. Six RC drill holes tested the target, and results are pending.
The Union Bay prospect of
The Union Bay prospect is underlain by a zoned ultramafic-mafic complex, which ranges from dunite through wehrlite and magnetite-bearing olivine clinopyroxenite to hornblendite and gabbro on the margins.
Exploration work, including drilling, began earlier this year in conjunction with partner
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