The plunge of base metal prices and turmoil in the financial markets caused explorers and producers alike to scale back exploration budgets for 2009. North of 60 Mining News estimates this year's exploration spending in Alaska to be around US$125 million, down more than 60 percent from the US$328.6 million spent in 2008.

Though the global financial meltdown played its role, it was not the largest factor in the dramatically scaled back exploration in Alaska.

Alaska's two megaprojects - the Pebble copper-gold-molybdenum project in the Bristol Bay region of Southwest Alaska and the Donlin Creek gold project in the Kuskokwim region of Southwest Alaska - accounted for about 60 percent of the funds spent on exploring for minerals in Alaska in 2008.

This year, the owners of both projects scaled back exploration as their focus shifted to permitting.

Combined, the Pebble Partnership (a 50-50 partnership between Northern Dynasty Minerals Ltd. and Anglo American plc) and Donlin Creek LLC (co-owned by Barrick Gold Corp. and Novagold Resources Inc.) are expected to spend less than US$30 million in 2009, down significantly from the US$200 million spent a year earlier.

Gold shines in 2009

Gold continued to shine despite (or because of) the global recession. The Tintina Gold Belt, a gold-rich province that arcs from northern British Columbia through the lower half of the Yukon Territory and across the breadth of Alaska, was a prime target for explorers seeking the glimmering metal in Alaska.

Fort Knox owner, Kinross Gold Corp, invested in explorers with promising gold prospects in the 145-million-square-acre Tintina Gold Belt and grubstaked others to hunt for new discoveries in Alaska and the Yukon Territory. The win-win deal provided the juniors with cash in a tough financial market and provides the operator of the largest mine in the prolific gold district with an inside position on any discoveries made by the tenacious explorers.

The biggest gold producer in the district is also keeping a watchful eye on International Tower Hill Mines Ltd. as that explorer expands the multimillion ounce gold resource at its Livengood gold project about 60 miles, or 100 kilometers, north of Fort Knox. Entering 2009 with about 4 million ounces of gold at Livengood, the junior bumped that to 12.5 million ounces in September and is expected to be touting nearly 15 million ounces of gold by the end of the year.

Little appetite for base metals

Though Alaska is well known for its gold, the value of the base metals produced eclipses the worth of the precious metals mined in the state every year. In 2008 Alaska producers mined US$1.34 billion worth of zinc and lead, while they unearthed US$695 million worth of gold and US$219.5 million worth of silver during the same period. Early in 2009 investors did not have an appetite for companies searching for basic metals, leaving explorers seeking lead, zinc, copper and nickel in Alaska short on funds.

One exception to the rule was Pure Nickel. The Toronto-based junior teamed up with Tokyo-based Itochu Corp. to explore the Man nickel-copper-platinum group element property on the south slopes of the Alaska Range.

Explorers also sought base metals at volcanic massive sulfide projects in Southeast Alaska. Both the Niblack and Palmer polymetallic projects were drilled in the second-half of 2009.

Southeast Alaska was also explored for uranium and rare earth elements. In addition to undertaking a drill program on the Bokan property on the southern end of Prince of Wales Island, U.S. Geological Survey sponsored researchers joined Ucore Uranium Inc. in studying the heavy rare earth element-rich prospect.

Recovering

The latter half of 2009 began to show signs of renewed exploration interest in Alaska. Many of the juniors that laid low early in the year returned to their projects to complete late-season drill programs or to identify drill targets for next year. In a similar fashion, many of the producers hit hard by the unexpected events of 2008 upped their exploration budgets as the year wore on.

With gold prices hanging around the US$1,000 mark, the rebound of base metal prices and the return of investor confidence, Alaska mining industry leaders are anticipating a busy exploration season in 2010.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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