North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Power, road access and availability of limestone are all key issues that Placer Dome is working through in its effort to produce a feasibility study for the 28-million ounce gold deposit called Donlin Creek, in remote southwest Alaska.

The major mining company is "on schedule" to produce a feasibility study in the second quarter, project manager Gregg Bush told Mining News on Feb. 5.

"There's no white smoke yet, but so far, there's no black smoke," he said. "We're encouraged."

Placer Dome is working through the infrastructure hurdles of developing a large-scale mine and mill at the remote deposit, some 175 miles up the Kuskokwim River from Bethel and about 12 miles north of the river from the village of Crooked Creek.

"There are some big infrastructure hurdles and potential fatal flaws, but we're chipping away and getting fewer and fewer of those," Bush said. "Personally, I'm confident we'll find a solution to all those challenges."

Consensus on road route

Access to the mountainous area is one hurdle that has been worked on extensively, and has resulted in some success. Local stakeholders, including Calista Corp. and TKC, the regional and local Native corporations in the area, have reached consensus with the company on a preferred route from the river up to the proposed mine site.

"This is significant progress, and gives (Alaska Department of Transportation) some clear direction what everyone would like to see, if it is a public road."

The groups prefer river access a short distance downriver from the village, and following a route that's roughly 18 to 20 miles up to the deposit area. "It's a little longer, but it gets the road right out of the middle of the community," Bush said.

Power supply still being considered

Placer Dome is still considering the best method for electric power supply. A large-scale mine and mill will require up to 70 megawatts of power, currently unavailable from the local area. Most area villages rely on diesel-fired generators, and are paying about $1.40 a gallon for fuel.

"We are continuing to evaluate a number of alternatives to provide power," Bush said. "It's really premature to start comparing one to another."

One scenario would involve a coal-fired power plant operated in Bethel, with power lines stretching to Donlin Creek. Another possibility being developed by a former geologist and project manager at Donlin Creek involves prospecting for and developing shallow gas resources in the neighboring Holitna Basin, about 50 miles to the southeast.

Holitna Energy, headed by Phil St. George, had hoped to drill two holes in the basin this winter, to identify potential gas resources. But the four shallow gas leases have not yet been approved by state regulators, and without that secured land access, Placer Dome declined to contribute to drilling.

"It hasn't gotten to the stage yet where it could be funded, because the leases haven't been granted … you have to work yourself up to those decisions. We were not in anything to pull out of, we were in the evaluation stage," Bush said. "We're still interested in the possibility of the Holitna basin providing an energy resource."

Limited on-site work

A mine project at Donlin Creek would also require significant amounts of limestone, varying from year to year, but averaging about 150,000 tons of limestone annually, Bush said.

"We've found more than one alternative that gives limestone in cost effective amounts considered to be adequate," he said.

Other work in progress includes drilling water monitoring wells, to gather background data needed for permitting. Condemnation drilling, needed to identify tentative sites for waste dumps, mill processing buildings and other facilities, will also be completed.

Through the remaining winter and spring months, Bush expects to keep a staff of up to 25 people working.

"There's not going to be a lot of activity out there this year, because a lot of desktop engineering needs to take place," he said. "We will have some wildlife survey work and other small, discreet activities to prepare for permitting."

Timeline for Donlin Creek

Placer Dome prospected Donlin Creek for about five years during the 1990s, spending more than $30 million to define a 13-million ounce gold resource. Although considered large, with record low gold prices and substantial infrastructure hurdles to overcome the company deemed it uneconomic.

Pulling out of Alaska, Placer Dome optioned the property to Novagold Resources in 2001. The junior exploration company spent $10 million on the property in 16 months, doubling the resource estimate and earning a 70 percent interest of the property.

Now, Placer has less than four years to bring the property to a mine construction decision and to regain a 70 percent interest in Donlin Creek. Terms call for Placer to spend $30 million on the property, including producing a feasibility plan and acquiring necessary permits to operate a large-scale mine and mill.