The Alaska Industrial Development and Export Authority is moving ahead with plans to retrofit Skagway Ore Terminal for use by mining companies. AIDEA's board of directors voted 5-0 March 29 for a resolution approving a cost reimbursement agreement to analyze proposed improvements to the terminal. The agreement is with Vancouver-based Sherwood Copper, which is developing the Minto copper-gold project in Canada's Yukon.

AIDEA passed a resolution last year to support a similar study by Toronto-based Cash Minerals, owner of the Division Mountain coal property in the Yukon, but research on the possible use of Skagway Ore Terminal for coal shipments is on hold while Cash Minerals completes a feasibility study. That resolution authorized AIDEA to spend up to $50,000 while the latest resolution authorizes up to $150,000 for Sherwood Copper's project.

Meanwhile, Sherwood Copper is completing its updated feasibility study for the entire Minto project, including the transportation of copper concentrates from the mine site. The port of Stewart, British Columbia, is considered the most likely destination for the mine's product, as Skagway hasn't been used by mining companies since 1997. Skagway is approximately 2.5-3 times closer to Minto than Stewart, so the question is whether the capital cost to retrofit Skagway Ore Terminal would be lower than the additional trucking cost to Stewart, according to Sherwood's president and CEO, Stephen Quin.

Railway owns three Skagway docks

The White Pass & Yukon Route Railway owns three docks at Skagway, including the ore dock, and the port sees a high volume of cruise ship traffic in the summer. White Pass has told AIDEA, the owner of the ore terminal, that mining companies could have unrestricted use of the port in the winter, but from May through September it would only be available for industry on Fridays, Saturdays and Sundays. The practicality of this will be addressed in the AIDEA-funded study, Quin told Mining News. "You can load the ship in three days, but what if the ship gets there two days late?" he asked. One possible option would be night loading, Quin added.

A back-of-the-envelope estimate is that the cost of retrofitting Skagway Ore Terminal would be anywhere from C$2 million to C$6 million, according to Quin. At $2 million the project might be feasible but at $6 million it would be difficult for Sherwood, he said. AIDEA is hoping there will be more than one user of Skagway Ore Terminal to make it economically viable.

Letter of intent signed for power

The Minto project has been making progress in other respects lately too: Sherwood Copper signed a letter of intent at the end of March with Yukon Energy for the provision of grid power to the proposed mine. Hooking into the Whitehorse hydroelectric grid could be significantly cheaper for the company than on-site diesel generation. The letter of intent sets out the essential elements of a power purchase agreement. Currently the Whitehorse grid terminates just north of Carmacks, but if the agreement is approved, it will be extended to the Minto site along the Klondike Highway and then likely follow the existing mine access road from Minto Landing.

Also in March Sherwood Copper announced an extremely high gold grade - 76.8 grams per ton gold over 18.4 meters - in one of Minto's two latest infill holes.

"While visible gold has been reported sporadically in core from the Minto deposit, the current results are exceptionally high grade even for the higher-grade bornite-rich core of the deposit," Quin said.

"While these high results will undoubtedly be capped in resource estimates, limiting their effect, the presence of coarse visible gold suggests an opportunity for upside in grades during operations and likely warrants a gravity recovery circuit in the proposed mill to maximize gold recoveries and payments.

Potential to define a high-grade gold zone within the overall resource is also becoming apparent."

The resource estimate for Minto as of February was 340 million pounds of copper, 155,000 ounces of gold and 2.0 million ounces of silver in the measured and indicated category, and another 13 million pounds of copper, 6,000 ounces of gold and 0.1 million ounces of silver in the inferred category, using a cut-off grade of 0.5 percent copper.