JUNIOR MINING — Alaska offers opportunities for exploration

Native land claims settlements coupled with a government campaign to encourage mining are providing fresh opportunities for exploration companies in Alaska. Environmental constraints remain, however.

Many of the lands, frozen since l971 to resolve native land claims, are opening up. Private lands, including those held by native peoples, consist of 46.1 million acres, almost all of which is open to mining, according to the Alaska Miners Association. Many are under the auspices of native groups which, generally opting for joint-venture agreements, are being praised by companies for demonstrating a business-like attitude.

The lands are sparking renewed interest for yet another reason: Exploration technology has surged forward during the roughly 20 years when they were under moratorium.

But exploration in Alaska is not without its pitfalls. There are concerns that the election of Albert Gore, who is a known advocate of some forms of environmental protectionism, to vice-president of the United States will result in even stricter environmental regulations. Many mining and forestry representatives believe Alaska’s guidelines in this area are already tough enough.

Kensington, the joint-ventured gold property near Juneau of Echo Bay Mines (TSE), has run afoul of environmental protests. “A coalition of environmental groups has filed in court opposing a city permit,” says David Stone, Echo Bay’s spokesman for the project. He says the Juneau planning commission approved the permit and that it was then appealed to the city. The Juneau city council upheld the permit, causing the coalition of environmentalists to take the matter to Alaska Supreme Court in a bid to see the permit remanded back to the planning commission.

Stone says the legal battle follows on the heels of 60 public meetings. Echo’s other property, the Alaska-Juneau (A-J), has suffered through l00 public hearings.

“We filed for a city mining permit four years ago and it was unanimously approved at the end of April, l993,” says Stone, adding that both properties are in the final stages of permitting. He is optimistic Echo Bay will win the court battle so the mines can move forward.

As of December, 1992, about $80 million had been spent on Kensington and $54 million on A-J. The latter is slated for a $15-million program of infill drilling, to last 18 months, which the company hopes will add 20-30% to reserves, says Stone. He adds that the project has been placed on the fast track to take advantage of displaced manpower from the Greens Creek operation, near Juneau, which was shut down because of soft metal prices. Stone says that while Echo Bay believes gold prices will strengthen, it has a long-term view of the minesite development, so the prices are not a determining factor. No work is being done on Treadwell, which is “a prospect that would have to follow A-J.”

The Greens Creek underground operation is 53% owned and operated by a unit of Kennecott, with Hecla Mining (NYSE) and two other minority partners. Situated on Admiralty Island, 18 miles southwest of Juneau, it was producing silver, gold, lead and zinc.

Cominco (TSE), no stranger to Alaska, continues to work its Pebble Copper deposit, about 200 miles southwest of Anchorage. The porphyry-style copper-gold deposit is on Alaska state claims and is held l00% by the company. George Tikkanen, vice-president of exploration, says $300,000 will be spent “looking for an extension or new additional zone.” The money will also be spent on environmental baseline work.

No work is being done in the vicinity of the Red Dog zinc-lead mine which, because of low prices, has not been profitable in l992.

Tikkanen says there is little indication that environmental constraints will tighten as a result of Gore’s election. “Alaska already has very tough environmental standards,” he says.

Cominco Chairman Norman Keevil, commenting on Pebble Copper at the annual meeting, said previous infill drilling of the higher-grade core of the deposit confirmed a resource of 60 million tonnes averaging 0.5% copper and 0.5 grams gold per tonne. This is contained within the overall deposit’s probable resource of 420 million tonnes with an average of 0.35% copper and 0.4 grams gold.

American Copper and Nickel Co., a subsidiary of Inco (TSE), plans to spend about $2.4 million this season exploring for base metals in Alaska. “We are working on some property positions and doing some research and grassroots reconnaissance to acquire more,” says Phil Rush, Vancouver-based manager of exploration for ACNC.

The subsidiary has a base metals program at Hetta Inlet on land owned by Sealaska, a native regional corporation based in Juneau. Under the agreement, Inco has options to lease the land to exploration while Sealaska has the option to joint-venture on any discoveries.

Amax Gold (NYSE) is spending $5 million on its Fort Knox gold-silver property in l993. Fort Knox, 15 miles north of Fairbanks, has passed the feasibility stage and is awaiting permits. It received positive comments during its first review, says Amax spokesman Gina Wilson. A 365,000-tonne-per-year mill is planned for the porphyry-style deposit. Besides permitting, funds are being spent on optimization site studies.

Meanwhile, FreeGold Recovery (VSE), in an agreement with Amax, is set to perform further work this year on its Golden Summit project, 20 miles north of Fairbanks.

Under the joint-venture option agreement, Amax must spend US$5 million over six years to earn a 51% interest. At its option, Amax may earn an additional 4% by producing a bankable feasibility study and an additional 5% by providing financing to begin production. A total of $500,000 is being spent on the property this year.

— Jean Sorensen is a freelance writer from Vancouver.