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

Between phase 7 of its exploration program, a new heap leach facility and an extended mine life, Fairbanks Gold Mining Inc. is ramping up activity to boost production more than 6,000 ounces annually at the Fort Knox gold mine in Interior Alaska.

The "exciting" growth will mean new hires and major equipment purchases, Fairbanks Gold executive Dan Snodgrass told the Alaska Miners Convention in early November.

Snodgrass said Fairbanks Gold, a wholly owned subsidiary of the Canadian mining giant Kinross Gold Corp., plans to hire significantly more employees, including 19 people to work in ore processing and 30 or so in mine operations. The mine currently employs 400 people full time.

To meet the needs of a new heap leach facility, Fairbanks Gold also has placed orders for six more 240-ton trucks and is buying a larger 35-yard shovel. Workers are stacking stockpiled waste rock at a rate of 40 tons per day in 3-foot lifts in the heap leach operation, Snodgrass said. The process will enable Fort Knox to extract additional gold from millions of tons of stockpiled low-grade (0.0064 average) rock formerly categorized as waste that now can be processed for $1.28 per ton vs. nearly $5 per ton if the ore were processed through the mill, he said.

"Our priorities are in line with our environmental responsibilities," Snodgrass said. "If you are going to mine in this day and age, you ought to be able to do so with this set of priorities."

Heap leach facility will extend mine's life

The U.S. Army Corps of Engineers, Alaska District, issued a permit Oct. 31 for a heap leach facility at Fort Knox capable of handling 161 million tons, or 153.3 million metric tons, of rock.

The proposed Walter Creek Fill Heap Leach Facility project would be situated in the northwest portion of the mine site upstream of the mine's tailings ponds and seepage collection system. It would encompass 403 acres, including 57.6 acres of U.S. waters, the Corps said.

Kinross originally expected Fort Knox production to end in 2010. The heap leaching should keep the mine active until 2014 and processing facilities operating through 2019.

Since December 1996, when the mine opened, Fort Knox has produced more than 3.5 million ounces of gold.

Kinross reported a 5 percent increase in gold production in the third quarter at Fort Knox, compared with the same period in 2006, due to the processing of higher grade ore somewhat offset by less plant throughput. Revenue from Fort Knox rose 19 percent to $64.1 million from $54 million a year ago due to higher realized gold prices and higher sales of gold equivalent ounces.

Gold prices recently have climbed to more than $750 an ounce.

The cost of third-quarter sales of Fort Knox production also jumped 29 percent year-over-year, due mainly to increases in revenue-based royalties and higher costs, especially for fuel, power and steel.

Fort Knox will produce 338,000 ounces of gold this year on an operating budget of $102 million, Snodgrass said. A major employer in the Fairbanks area with a $39 million annual payroll and $2.3 million in taxes, the mine also draws on goods and services from some 500 local companies and contractors. It also is expected to consume more than $14 million in fuel and some $80,000 per day in electricity this year.

Process clears intensive federal, state scrutiny

Heap leaching is a gold ore-processing technique used to recover gold from low-grade, oxidized ore. It involves stacking ore on an impermeable pad and spraying or dripping a solution of sodium cyanide over the ore. Microscopic particles of gold dissolve in the solution, which is later retrieved and processed to extract the gold.

A valley fill heap leach uses a valley's walls as part of the containment structure for the stacked ore.

Fairbanks Gold applied for the Corps permit in May 2006.

After an extended review that included consultation with the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service and others, the Corps issued the permit provided that the State of Alaska oversee the operation and any reclamation required when production is completed.

The Alaska departments of Natural Resources and Environmental Conservation issued state authorizations for the project July 3.

"It took a lot of work," said Snodgrass, who observed that obtaining regulatory permits require a lot of back and forth between agencies and applicants rather than a simple "yes or no."

"We got a lot of 'No's and a lot of 'Hell, no's, but we got it done," he said.

Programs add gold to resource estimate, production

Fort Knox, meanwhile has entered phase 7 pit expansion and completed 19 percent of a $9 million exploration program. The operator also has added 300,000 ounces of gold to the mine's resource estimate, according to Snodgrass.

With five rigs running throughout the year, explorers have drilled more than 166,000 feet, he said.

The mine also completed a major equipment upgrade at the mill that should boost annual gold production by 6,000 ounces, he added.