Alaska mining news summary: Several exploration projects in the works for the season; most funded by junior companies
Geologist Curt Freeman says optimism, caused by bump in gold prices, is creeping back into Alaska's mining industry; Alaska newcomer Rio Fortuna Exploration acquired the Nome region's Divide project and Full Auto prospect
Last updated 5/12/2002 at Noon
Is it my rose colored glasses or has the mining industry brightened considerably in the past month? The bump in the gold prices along with the slow but steady increase in the abysmal prices for other metals seems to have infused the mining industry with, dare I say it, optimism!
Quite frankly I'm not sure how to react since we have not seen an industry-wide "smile" since the heady days at the end of the last millennium before the Busang scam devastated the industry and helped hasten the plunge of the already declining gold price.
As a result of all this, Alaska's exploration season is shaping up to be one composed of several large projects, like Donlin Creek and Pebble, and lots of smaller ones spread from the west coast to far southeast.
The commodities of interest range from base metals and gold to platinum group and rare metals.
Oddly enough, with a few exceptions, most of Alaska's exploration efforts are being funded and directed by junior exploration companies. While money is still tight, the increased optimism has translated into increased venture capital that is available to the starved junior and intermediate markets.
In a perfect world, the ultimate beneficiaries of both the optimism and the capital will be the state of Alaska and the major companies that bring the new discoveries to production.
And the band played on Western Alaska
Teck-Cominco's Red Dog mine saw increased production in the first quarter of 2002 but low zinc prices contributed to a $3 million loss during the quarter. For the quarter, the mine generated 141,700 tonnes of zinc in concentrate, a 12 percent increase over the first quarter of 2001. The mine also produced 25,400 tonnes of lead in concentrate during the first quarter of 2002 and sold 128,800 tonnes of zinc and 9,400 tonnes of lead during the first quarter. Zinc prices average $0.36 per pound during the first quarter, a drop of 22 percent from prices in the first quarter of 2001.
Novagold Resources has begun its 2002 drilling program at its 23 million ounce Donlin Creek deposit in southwestern Alaska.
The program is part of an $8 million pre-feasibility study budgeted for 2002.
In addition to drilling, the program will include additional engineering, environmental and economic analyses.
The focus of the core and reverse circulation drilling programs will be further definition of areas containing plus-five gram per tonne gold values.
By mid-April the company had completed 1,076 meters of drilling in 11 holes and reported intersecting quartz-arsenopyrite mineralization in all holes.
Results are pending.
NovaGold also reported completion of an $18.5 million equity financing and announced that 2001 operating revenue of $2,824,024 was nearly identical to 2000 revenue while first quarter 2002 revenue of $494,426 from its Nome holdings was nearly double that generated in the first quarter of 2001.
Northern Dynasty Minerals said it will start working its newly acquired Pebble copper-gold project near Iliamna this month (May). Initial drilling will include 22,000 feet of drilling in approximately 40 holes designed to test a series of previously defined geochemical and geophysical targets within a 34 square mile IP chargeability anomaly. Most holes will be drilled on at least one-half mile centers. A primary focus of this year's work is delineation of additional higher-grade copper-gold resources similar to one previously outlined within the property which contains estimated resources of 54 million tonnes grading 0.54 percent copper and 0.46 grams of gold per tonne.
Alaska newcomer Rio Fortuna Exploration Corp. acquired the Divide project north of Nome from well-known geologist Dave Lajack and partners.
Limited trenching and drilling at Divide was conducted on the property within a coincident gold-arsenic anomaly measuring 8,000 feet by 4,500 feet.
Coarse visible gold was discovered in trenches that returned values up to 55 feet grading 0.473 ounces of gold per ton.
Subsequent drilling returned intercepts up to 18.9 feet grading 0.236 ounces of gold per ton.
Rio Fortuna can earn a 100 percent interest in the Divide prospect by making cash payments of $1 million over five years and issuing one million shares of its stock.
The company is planning to conduct mapping, geochemical sampling, trenching and grid drilling on the project in 2002.
Welcome to Alaska Rio Fortuna!
Rio Fortuna also announced acquisition of the Full Auto prospect west of Nome from Royal Pretoria Gold.
The property has been mined in several areas for placer gold but has received virtually no lode gold exploration.
The property is situated along the Penny River fault which is known to be associated with gold at the Mt. Distin and Divide prospects to the northeast.
Placer gold operations on the project returned gold with associated native bismuth, scheelite and gold-bearing native bismuth.
Anomalous gold (to 2,900 parts per billion) with elevated arsenic and antimony was detected in rock samples collected by the state Division of Geological and Geophysical Surveys in 1994.
Terms of the acquisition and exploration plans for 2002 were not released.
Kinross Gold reported first quarter results from its Fort Knox operations.
The mine produced 93,160 ounces of gold at a total cash cost of $256 compared to 103,347 ounces of gold at a total cash cost of $186 per ounce during the first quarter of 2001.
Total production costs increased to $377 per ounce versus $270 per ounce for the first quarter of 2001.
Production declines were due primarily to planned maintenance expenditures and to lower than reserve grade production from the Fort Knox pit.
Mining of this lower grade portion of the pit is expected to be completed during the second quarter of 2002.
Production grades exceeded reserve grades at the True North satellite pit.
During the first quarter the mill processed 3.5 million tonnes of ore grading 0.98 grams of gold per tonne compared to 3.3 million tonnes of ore grading 1.09 grams of gold per tonne during the first quarter of 2001.
Gold recovery was 83 percent down from 87 percent in the year previous period.
Teck-Cominco said feasibility work is continuing at its Pogo gold project in the Goodpaster District. The company indicated that a revised mine plan and water management plan have been submitted to state and federal permitting agencies. These plans include a revised mine-mill site location plan that is expected to improve capital and operating cost parameters at the project.
Project operator Golconda Resources and partner Shear Minerals said they have completed a six-hole, 3,600 foot core drilling program at their Shulin Lake diamond project near Talkeetna. The drilling was designed to follow-up four reverse circulation drill holes completed earlier in the year. The core holes were placed over an area measuring 300 meters by 600 meters and intersected clay-altered tuff and pyroclastics that are thought to be the crater facies of a volcanic pipe. Analysis of the core is under way for diamond and diamond indicator minerals.
Kennecott (70.3 percent) and Hecla (29.7 percent) announced first quarter 2002 production from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver at Greens Creek for the quarter was $1.91, a slight increase compared to the first quarter of 2001. The average grade of ore during the quarter was 21.07 ounces of silver per ton. During the first quarter the mine produced 2,789,095 ounces of silver, 23,800 ounces of gold, 6,545 tons of lead and 19,434 tons of zinc. Total production costs for the quarter were $4.45 per ounce of silver produced.
The shape of things to come: British Columbia is instituting map-staking to supplant previous ground staking regulations for mining claims. The move is designed to increase mineral exploration and development activities by reducing non-productive activities and costs and opening the mining arena to a wider user group.
Alaska took a tentative first-step in this direction a few years ago with implementation of grid-based MTRSC staking.
When British Columbia's new regulations come into effect in 2004, an interested party can acquire mining rights by designating an area on a map which will become immediately available in digital form. No more back-dating, no more boundary disputes, no more humping claim posts back into the woods from whence they were harvested by the timber companies!