A little gold might be a good idea
Some analysts say recent run-up in prices may be just the beginning as European, U.S. economies grapple with unwieldy debt burdens
Last updated 9/26/2010 at Noon
As we near the end of September and the metals market remains robust, the mining industry is breathing a sigh of relief as we remember the market meltdown of early September 2008. Although nobody is suggesting that the larger economy is in any way out of the woods yet, the worldwide demand for metals and metal products continues to expand.
For example, the gold price hit US$1,274.95 earlier this month, well above the previous record of US$1,261 hit on June 28. Some believe gold is heading higher, much higher: Jeff Clark, senior editor of Casey's Gold and Resource Report was wondering about how high the price of gold might go and took a novel approach to predicting what might happen.
He analyzed the major surges in gold price in the last 10 years and found that the most recent surge, a 13.4 percent jump from late March to mid-May 2010, is the smallest of 12 price surges in the past 10 years and far behind the 35.5 percent jump in mid-March to mid-May 2006. The average of all surges in the gold price since 2001 is 23.5 percent. If we hit that average, gold would spike to $1,428 in this current run-up. Crazy talk? How about this little show stopper: gold prices surged a whopping 128.5 percent from Oct. 8, 1979, to Jan. 21, 1980, while U.S. inflation blew past 10 percent without a backward glance.
Do the math, a 128 percent increase puts the gold price way up there. Really crazy talk? Perhaps, but with no end in sight for the debt crisis in Europe and the debt crisis in the U.S. getting worse, maybe buying a few ounces of gold would a good idea, just in case your next paycheck is paid with a wheelbarrow full of green paper.
Fire River Gold Corp. announced additional results from previously unreleased drilling at its Nixon Fork gold project near McGrath.
Significant results include hole N07U0083 ,which returned grades of 26 grams of gold per metric ton over 2.9 meters, including 64 g/t gold over 1.0 meter and hole N07U084, which returned grades of 32 g/t gold over 2.6 meters.
The company also announced acceleration of its underground drilling program by addition of a company-owned drilling rig.
The rig will concentrate on the 3300 zone and other prospective zones at the deposit.
The company also announced that they have engaged Snowden Mining Industry Consultants Inc. to prepare a preliminary economic assessment to evaluate the economic viability of resuming underground commercial production.
The study will present a preliminary mine plan for the project, including dilution and recovery analysis, stoping method selection, production and development forecasts, capital and operating cost estimations, revenue projection, and a financial model.
This work is due for completion by mid-December.
Teryl Resources Corp. and joint venture partner Kinross Gold Corp. announced additional drilling results from their Gil gold project near Fairbanks. Significant results in the North Gil zone include 35 feet grading 0.0418 ounces per ton of gold in hole GVR10-573, while results in the Sourdough zone include 25 feet grading 0.0508 oz/t gold in hole GVR10-560. During 2010 the partners have completed 5,431 feet of core drilling and 9,546 feet of reverse circulation drilling. Additional assays for 18 holes are pending. Following development of a three dimensional model, the partners intend to complete an updated resource estimate and develop preliminary mining plans for the deposit.
International Tower Hill Mines Ltd. announced additional drilling results from its 45,000-metre summer 2010 drilling campaign at its Livengood gold project.
Drilling continued to expand the shallow, high-grade, northwest trending zone within the Core Zone.
Hole MK-RC-405 returned 6.1 meters grading 18.2 g/t gold.
This consistent trend of 6-plus g/t mineralization extends for nearly a half a kilometer within the larger but lower grade Core zone and is emerging as an attractive early mining target after commercial startup.
This northwest-trending structural zone corresponds to a broad area of late quartz veining and suggests that other high-grade zones may exist within the larger lower grade zones.
Drilling results from the recently discovered Olive zone continued to return promising results including hole MK-RC-391, which returned 45.7 meters grading 1.1 g/t gold and hole MK-RC 396 which returned 13.7 meters grading 2.1 g/t gold.
Mineralization at the Olive zone is hosted in the same rock types as the main deposit but is not associated with a soil anomaly, opening up a large exploration area to the south of the main deposit that was previously thought to be unprospective.
At present the company has six drilling rigs operating with a seventh planned.
These rigs are conducting infill, expansion, district exploration and condemnation drilling on the deposit.
The company also released a series of project enhancement options, which have been developed as a result of the previously released preliminary economic assessment.
The first option involved a heap-leach-only production schedule that would provide cash flow for construction of a milling operation.
This option had an initial capital cost of US$638 million to produce 513,000 ounces of gold per year for seven years.
The mine would operate at a rate of 100,000 tons per day of ore mined and added to the heap leach at a stripping ratio of 1.1 to 1.
Gold recovery was estimated at 71 percent.
Operating costs came in at US$486 per ounce with a net present value of US$579 million and a 26.9 percent internal rate of return on investment using a gold price of US$950/oz and a 5 percent discount rate.
The other alternative to the base case was a large combined mill-heap leach project.
This option had an initial capital cost of US$1.027 billion to produce 833,000 ounces of gold per year for 12.6 years.
The mine would operate at a rate of 135,000 tons per day of ore milled and added to the heap leach at a stripping ratio of 1.07 to 1.
Gold recovery was estimated at 73 percent for the heap leach and 81 percent for the mill.
Operating costs came in at US$534/oz with a net present value of US$1.113 billion and an 18.5 percent internal rate of return on investment using a gold price of US$950 per ounce and a 5 percent discount rate.
Radius Gold Inc. provided an update on progress at its Sixty Mile project, which straddles the Yukon/Alaska border.
Approximately 10 percent of the project's lands are on the Alaska side of the border.
To date, the company has completed soil sampling, auger drilling, excavator trenching and helicopter-borne magnetic-radiometric-electromagnetic geophysical surveys.
Bedrock gold mineralization has been identified in two distinct geological settings: thrust or detachment fault controlled gold mineralization and epithermal gold mineralization in the Sixtymile graben.
Work in the former setting has defined a northeast-trending tectonic mélange unit associated with a thrust or detachment fault zone within a package of schists and quartzites overlain by younger andesitic volcanic rocks.
Gold is associated arsenic and limited trenching has returned significant grade-thickness results including 8 meters grading 1.1 g/t gold, 10 meters grading 1.6 g/t gold and 13 meters grading 1.6 g/t gold.
In the epithermal setting, soil sampling has defined a strong gold-in-soil anomaly on the southeastern bank of the Sixty Mile river valley.
The anomaly measures 800 meters by 300 meters, is open in all directions and is defined by strongly anomalous gold hosted in andesitic volcanic rocks.
Grab samples of the limited bedrock outcrops in the area have returned values from trace up to 5 g/t gold.
The company plans to conduct drilling on both targets in September.
The Sixty Mile gold district was discovered in 1892 and has produced in excess of 500,000 ounces of placer gold since that time.
Kiska Metals Corporation reported that Kennecott Exploration Company will not exercise its rights to back in on the Whistler project, giving Kiska a 100 percent interest in the project with Kennecott retaining a 2 percent net smelter return production royalty on the property. Exploration at the project is on-going with one rig working on the Island Mountain breccia prospect and the other on the main Whistler prospect. The company anticipates completion of a revised mineral resource estimate at Whistler following completion of the 2010 drilling program.
Teryl Resources Corp. announced acquisition of 11 state mining claims in the Kahiltna Terrane of the southern Alaska Range. Under terms of the deal Teryl will issue 100,000 treasury shares to the vendor in two installments in the first year, and will issue an additional 100,000 treasury shares and pay US$10,000 in cash after two years. Teryl must also contribute US$50,000 expenditures in the first year and US$100,000 expenditures in the second year of the agreement.
Coeur d'Alene Mines Corp. announced new exploration results from its Kensington gold mine north of Juneau.
On the Horrible vein system, which is located about 1,500 feet to the west of the main Kensington Mine, mineralization remains open at depth and on-strike and is easily accessed from existing underground infrastructure.
This year's program focused at the north end of a more than 14,000-foot long, northeast-trending mineralized belt that contains the recently Kimberly vein as well as the Jualin and several other gold-bearing quartz veins located west of the operating mine.
Significant results include 6.5 feet of 2.39 oz/t gold from core hole H10-016, 3.9 feet at 0.907 oz/t gold from core hole H10-029 and 3.5 feet of 1.069 oz/t gold from core hole H10-031.
Many of the drill holes cut multiple quartz veins which are typical of the style of mineralization seen at the nearby Kensington ore body.
Additional definition drilling is planned in this area.
Constantine Metal Resources Ltd. announced additional results from its 10 hole, 4,017 meter drilling program at its Palmer copper-zinc-gold-silver volcanogenic massive sulfide project near Haines.
Significant results include the RW Zone where Hole CMR10-38 intersected 10.15 meters grading 0.70 percent copper, 6.51 percent zinc, 1.02 percent lead, 0.39 g/t gold, and 89.7 g/t silver.
This zone is immediately underlain by 13.65 meters grading 1.13 g/t gold and 148.0 g/t silver.
In the South Wall Zone I, hole CMR10-40 intersected 20.8 meters grading 1.03 percent copper, 5.01 percent zinc, 0.14 g/t gold and 11.3 g/t silver, including 12.05 meters grading 1.41 percent copper, 6.13 percent zinc, 0.17 g/t gold and 14.4 g/t silver.
In South Wall Zone III, hole CMR10-39 intersected 2.45 meters grading 1.10 percent copper, 4.52 percent zinc, 0.13 g/t gold and 24.8 g/t silver.
South Wall mineralization has now been defined from surface to a vertical depth of 525 meters and over a strike length of 450 meters.
The 2010 exploration program also included both surface and downhole electromagnetic geophysical surveys.
Downhole surveys were completed on six of the 10 holes drilled in 2010.
Surface-based electromagnetic surveys totaled approximately 37 line kilometers and covered areas along trend from the 4.12-million-metric-ton inferred resource, as well as the Mount Henry Clay prospect, an area of poor bedrock exposure that hosts numerous high-grade massive sulfide boulders.
Grande Portage Resources Ltd. announced a preliminary update from its diamond core drilling program at the Herbert Glacier prospect north of Juneau.
A total of 1,296.3 meters of drilling has been completed in seven holes and a second drill rig has been approved for the project.
Quartz veins and sulfidized shear zones have been encountered in every hole at predicted intervals for targeted mineralized zones.
The Main or Number 1 vein has been traced on surface for more than 800 meters and has been known since about 1980 when it was discovered as it was exhumed from glacial cover.
A parallel vein in the hanging wall of the Main Vein had originally been mapped, and this quartz vein also was intersected in each of the seven holes drilled to date.
Mineralization consists of sulfides and visible free gold.
This has now been named the "Ridge Vein" located about 100 meters north of the Main Vein.
The Ridge vein is now believed to be at least 300 meters long.
In addition, the Deep Trench Vein was known previously only from a poorly exposed vein structure about 200 meters south of the Main Vein.
It has been encountered as a complex vein in the deepest hole drilled at the prospect.
This vein will be explored by additional drilling planned for 2010.
Copper Ridge Explorations Inc. announced that it has completed a five-hole 1,537 meter drill program at its Duke Island copper-nickel-platinum-palladium property in Southeast Alaska.
Significant results include 0.294 percent copper and 0.075 percent nickel over 4.9 meters and 0.148 percent copper and 0.039 percent nickel over 13.4 meters in hole DK10-08.
Despite drilling to depths of up to 468 meters, the targeted basal contact of the mineralized intrusion was not encountered.
Drilling results suggest that zoning within the ultramafic complex is more complex than originally modeled and that what had been thought to be the basal contact, as interpreted through several geophysical techniques, was in fact rafts of partially assimilated sedimentary rocks.
The combination of high sulfide content and graphite in these rafts produced strong electromagnetic conductors.
The company believes that magmatic sulfide accumulations along basal contacts or within a feeder zone remain a unique and prospective exploration target due to the intrusion's high sulfide content, the magmatic or net-textured nature of the sulfide mineralization and nickel depletion of some of the intrusion's silicate mineral phases.
Ucore Rare Metals Inc. announced that the United States Geological Survey has increased its research involvement at the company's Bokan Mountain rare metal project.
In 2009, the USGS awarded a research grant to further study the Bokan Mountain rare earth and uranium deposit.
The USGS also sent a team of geoscientists to the project in 2010 to increase its understanding of the area's unique heavy rare earth mineralogy.
The USGS intends to utilize the Dotson Ridge area to evaluate vein-type and alternative rare earth element deposits associated with alkaline-peralkaline intrusive complexes.
The USGS team examined multiple areas comprising the Bokan Complex, the Dotson Shear, Geoduck, Wennie, and Geiger zones.