Recent mining revival sparks déjà vu
Columnist recalls that similarly positive conditions prevailed in Alaska in 1998 just before the bottom fell out of the industry
Last updated 12/25/2011 at Noon
I was tempted to make a few 2012 predictions now that 2011 is nearly gone, but I decided not to when I came across the following lines and was struck by how closely they mimic our current mining climate:
"On a more local level, several old Alaska properties have been rejuvenated by new players to the Alaska mineral scene. Reserve announcements have touched off renewed land acquisitions and property negotiations. Contracts for technical personnel, drill rigs, helicopters and analytical services are being let earlier than in previous years as companies large and small try to beat the competition to the best services possible. All in all, Alaska looks like its heading into another year of frenetic exploration and development. Hopefully Alaska is reaching Yogi Berra status (nobody goes there any more, the place is too crowded)."
If you recognize these words, you really need to get out more - I wrote them in January 1998 for this publication's predecessor, Mining News Alaska. Little did I know, I was writing just before Alaska's mining industry fell out of bed, choking on a sandwich of multi-metals price collapse and the coincident flight of investment capital that plagued the industry for the next four years. So, while I am officially not superstitious, it seems foolish to tempt fate. Best just to shut my gob and enjoy the ride!
Novagold Resources Inc. and partner Barrick Gold Corp. announced the long-awaited feasibility study on the Donlin Creek in early December. The study indicates that the mine would produce 1.5 million ounces of gold per year in its first five years of operation at an average cash cost of US$409 per ounce, which is expected to accelerate project payback, and an average of 1.1 million ounces of gold per year at average cash cost of US$585 per ounce over its projected 27-year mine life.
The study was based on proven and probable mineral reserves estimated at 33.8 million ounces at an average grade of 2.09 grams per metric ton gold established along only 3 kilometers (2 miles) of a well-established mineralized corridor in excess of 8 kilometers (5 miles) long.
Current measured and indicated resources (including the above-mentioned resources) pencil out at 39.007 million ounces grading 2.24 g/t gold and an additional inferred resource of 5.993 million ounces grading 2.02 g/t gold.
Don't tell anyone but this puts total resources at an amazing 45 million ounces of gold.
Exploration upside is considered excellent.
The capital cost estimated at US$6.7 billion includes US$834 million for a natural gas pipeline and nearly US$1.0 billion in contingencies.
The resultant after-tax net present value using the base case three-year trailing average of US$1,200 per ounce gold displays a positive US$547 million using a 5 percent discount rate.
Importantly, the resultant net present value using sensitivity analysis shows a more than eight-fold expansion of the net present value using to US$4.6 billion at US$1,700-per-ounce gold, and then a nearly 50 percent increase again to US$6.7 billion at $2,000-per-ounce gold.
The economic analysis is based on a 27-year mine life with a mill producing 53,500 metric tons per day at a stripping ratio of 5.5 to 1.
Average life-of-mine recovery is estimated at 89 percent.
Milling will include use of a semi-autogenous grinding mill and two-stage ball mills, sulfide floatation autoclave pressure oxidation and carbon-in-leach cyanidation.
Operating costs are estimated at US$5.91 per metric ton mined and $38.13/t milled.
The partners anticipate the formal initiation of the environmental impact assessment and permitting processes by April 2012.
Zazu Metals Corp. announced additional drilling results from its Lik lead-zinc-silver deposit.
All 7 of the metallurgical test holes drilled in 2011 intercepted more than 5 percent lead, plus zinc intervals.
Significant results include hole 215 which intersected 50.3 meters grading 3.5 percent lead, 11.4 percent zinc and 86.4 g/t silver, hole 216 which intersected 10.7 meters grading 2.0 percent lead, 8.5 percent zinc and 9 g/t silver, hole 217 which intersected 23.2 meters grading 2.6 percent lead, 8.3 percent zinc and 29.4 g/t silver, hole 221 which intersected 7.9 meters grading 1.8 percent lead, 12.6 percent zinc and 5.5 g/t silver.
Field activities at the property have been completed for 2011 but additional metallurgical, engineering, access and environmental studies are ongoing.
Cedar Mountain Exploration Inc. announced drill results from its South Fox prospect on its Kelly Creek gold project on the Seward Peninsula.
Significant intercepts include 15.3 meters grading 0.42 g/t gold in hole 11SF05 and to 24 meters grading 0.76 g/t gold in 11SF06.
Mineralization in these holes is hosted within faulted and sheared quartz-veined and stock-worked mica quartz schists and partly calcareous graphite quartz schists that have been traced over 250 meters of strike length in drilling.
Elsewhere on the project, soil sampling at the Moose prospect returned gold in soils samples up to 1,105 ppb gold and defined a soil anomaly 800 meters long and open in three directions.
At the Jaeger prospect, soil sampling defined a new gold in soil anomaly with peak values of 129 ppb gold over a 600-meter-by-200-meter area.
Fire River Gold Corp. announced that operations at the Nixon Fork mine had resumed on December 14 after a four day shut down due to inclement weather which prevented support airplanes from reaching the mine for over 10 days.
During the third quarter, the mine produced 4,670 ounces of gold from ore averaging 17.4 g/t gold.
The company also completed work on a new dry-stack tailing impoundment facility and the 250 tpd carbon-in-pulp cyanide leach circuit.
It is expected that total gold recovery will exceed 90 percent when both the floatation and leach circuits are on-line.
The company also began development work on the newly discovered 3550 zone, located only 150 meters from existing mine workings.
Invenio Resources announced additional results from its Candle Hills project near McGrath.
Geochemical results indicate a 650-meter-wide by 1900-meter-long, northeast trending gold-in-soil anomaly that occurs on the western-most portion of the grid.
The gold, arsenic, and copper anomaly is open to the north, west, and southwest.
The soil sampling targeted a contact area between biotite-quartz monzonite of the Candle Hills pluton and porphyritic andesite and hornfelsed slate and sandstone of the Kuskokwim Group.
Northeast trending, porphyritic quartz-feldspar phyric rhyolite and quartz-feldspar-biotite phyric dacite dikes have been identified within the anomalous gold-in-soil trend and indicate that a major through-going structure may exist within the anomalous area.
Results from soil sampling, along with the discovery of favorable host rocks, visible gold in pan concentrates and geologic mapping define a 6.5-kilometer-long northeast trending gold-bearing corridor within the property.
The corridor is aligned with placer gold deposits that were historically mined along the Candle Creek valley and may be a source of these placer gold deposits.
Liberty Star Uranium & Metals Corp. announced results from a technical report on Big Chunk porphyry copper, gold and molybdenum project in southwestern Alaska. The report indicates that the best targets identified by previous geochemical sampling and geophysical surveys have not been drill tested. Previous drilling on the project intercepted only propylitic alteration, normally found in the outer-most alteration zone of a typical porphyry copper deposit. Recommendations include a US$24.3 million multi-rig drilling program lasting 12 to 18 months. This program would allow 12,000 feet or drilling in four drill holes at each of 6 to 12 ZTEM geophysical and/or geochemical targets.
Redstar Gold Corp. announced results from recent drilling on the Shumagin vein system at its Unga project near Sand Point.
Significant results include hole 11SH001 which returned 0.61 meters grading 16.75 g/t gold and 20.2 grams of silver per tonne, hole 11SH007 which returned 21 meters grading 4.02 g/t gold and 5.4 grams of silver per tonne, hole 11SH009 which returned 30 meters grading 2.141 g/t gold and 6.2 g/t silver including 0.9 meters grading 43.1 g/t gold and 37.2 g/t silver and hole 11SH010 which returned 29.65 meters grading 14.977 g/t gold and 11.5 g/t silver including 1.65 meters grading 246.419 g/t gold and 136.8 grams of silver per tonne.
Drilling has demonstrated the continuity of the vein system over at least 800 meters of strike with mineralization open in all directions.
The Shumagin vein occurs along a 1.5 kilometer wide and 9 kilometer long northeast-trending fault zone within volcanic rocks.
The vein has been identified over at least 1.3 km of strike with mineralization identified along at least 800 meters of the vein.
The epithermal gold-silver vein mineralization occurs within steeply-dipping quartz/carbonate veins and breccias at the faulted contact between andesite flows and a crystal-lithic tuff.
There are other mineralized vein zones within the vein corridor that have seen only limited exploration.
The company is planning an extensive drilling program in 2012.
Freegold Ventures Ltd. announced a resource update at its Dolphin deposit on the Golden Summit project.
At a 0.35 g/t gold cut-off grade, the revised Dolphin deposit resource include indicated resources of 14,480,000 metric tons grading 0.66 g/t gold (316,000 ounces) and an inferred resource of 50,460,000 metric tons grading 0.61 g/t gold (991,000 ounces).
The resource estimate is based on 77 drill holes (11,802 meters) that were drilled into the mineralized Dolphin stock, a multi-phase, felsic to intermediate intrusion.
The east-west elongated stock has been mapped on surface and is approximately 366 meters by 610 meters.
The new resource more than doubles the previously announced resource and is based on 6,500 meters of drilling conducted on the Dolphin prospect earlier this year.
Additional drilling is planned at Dolphin in early 2012.
Corvus Gold Inc. announced that it had re-acquired 100 percent interest in its LMS and West Pogo gold projects from First Star Resources Inc. During First Star's operating periods on the properties, approximately $3.5 million of exploration and development work was completed which defined an important high-grade feeder structure in the LMS deposit and a high-grade gold vein target on the West Pogo project.
A 7 drill-hole program totaling 2,332 meters was completed at LMS this summer and the results from these holes are expected shortly.
This work extended the main alteration and mineralization in the quartz breccia zone along strike 500 meters to the west and an extension of the system to 700 meters down dip with the deposit remaining open in all directions.
Additional drilling is planned in 2012.
At the West Pogo project First Star completed about $500,000 worth of work, primarily three dimensional induced polarization geophysical surveys, geological mapping and surface sampling.
This work has defined a kilometer long, high-grade, vein target with grades up to 118.5 g/t gold-in-quartz vein exposures.
Additional drilling is planned in 2012.
International Tower Hill Mines Ltd. announced that it had acquired certain mining claims and related rights in the vicinity of their Livengood gold project.
The assets, which were purchased for aggregate consideration of US$24.5 million in cash and relate to land that was previously unused or was used for placer gold mining.
The acquisitions enable the company to pursue additional site facility location evaluations and to investigate other land use opportunities including the potential for placer gold extraction in the near-term.
The company also announced that, while the bulk of engineering studies have been timely completed, a detailed review of their previously completed Preliminary Economic Assessment flow sheet has indicated further metallurgical optimization is possible.
As a consequence, the company has pushed back the expected publication date of the Prefeasibility Study to the first half of 2012.
Full Metal Minerals Ltd. announced results from exploration at its Rolling Thunder project in the Fortymile District.
This year's program collected 2,373 soil samples, 379 rock samples, and 178 trench samples.
Soil sampling focused on completing coverage of the ridges and spurs on Rolling Thunder claim blocks as well as expanding grids at South Pika and McElfish prospects and placing a soil grid at the Pika target.
Grab samples of sulfide veins at the Pike prospect returned 5,750 and 4,950 grams of silver per tonne.
Mineralization is associated with strong sericite-limonite-silica alteration observed in dominantly augen gneiss, a soil grid was established measuring about 2,000 by 2,000 meters at 50-meter centers and 100-meter line spacing.
Within the soil grid, as well as expanded 'ridge and spur' soil lines, five separate multi-element soil trends were identified, ranging from 400 to 1,800 meters in length.
One of these particular trends is 1,800 meters in length; 239 samples range from trace to 6.9 g/t silver in soil, averaging 1.0 g/t silver.
In addition, ten trenches were completed across the Pika prospect exposing a series of mineralized north-northeast trending structures carrying anomalous gold, silver or lead.
Trenches PC11-02 and PC11-03 contained 2.8 parts-per-million silver and 1,153 ppm lead over 17.7 meters and 1.9 ppm silver and 402 ppm lead over 30 meters, respectively.
One grab sample from PC11-04 assayed 256 ppm silver and 4.49 percent lead and grab samples from the trenches returned values up to 1.095 g/t gold, 5.75 g/t silver and greater than 20 percent lead.
Usibelli Coal Mine Inc. announced that it expects to load 18 ships with Healy coal destined for the export market, reaching 1.1 million metric tons of coal exported in 2011. Coal exports in 2012 are expected to exceed those shipped in 2011. For the first time in 26 years, the Seward Coal Terminal will load over one million metric tons of coal in 2011. Currently, Usibelli supplies fuel to Alaska's six coal-fired power plants, and exports coal to Chile, Japan, and South Korea.
Heatherdale Resources Ltd. announced results from its 2011 exploration program at the Delta Project in the central eastern Alaska Range.
The company deployed a single drill rig in 2011 to test copper-zinc-lead-silver-gold volcanogenic massive sulfide targets identified on the property.
In addition to drilling on the Mid Zone, the company's exploration team evaluated and sampled other potential targets on the property - including the DW, DDS and SC zones.
Significant drill results include hole 2011-153 which intersected 75.7 feet grading 0.42 percent copper, 2.91 percent zinc, 1.07 percent lead, 0.99 g/t gold and 44 g/t silver and hole 2011-154 which intersected 43.9 feet grading 0.56 percent copper, 5.21 percent zinc, 2.36 percent lead, 1.56 g/t gold and 85 g/t silver.
Thirty massive sulfide boulder and six outcrop samples also were collected with the boulders averaging 0.0.91 percent copper, 3.11 percent zinc, 3.57 percent lead, 15.86 g/t gold and 477.03 g/t silver.
The six outcrop grab samples collected had an average grade of 0.53 percent copper, 5.46 percent zinc, 4.93 percent lead, 3.62 g/t gold, and 150.16 g/t silver.
Kiska Metals Corp. announced additional drill results from the Island Mountain, Muddy Creek and Whistler Orbit areas at its Whistler project.
Results from Island Mountain include hole IM11-040, which averaged 0.53 g/t gold, 3.55 g/t silver and 0.13 percent copper over 364 meters, including a higher grade interval that averages 0.62 g/t gold, 6.36 g/t silver and 0.17 percent copper over 141 meters, hole IM11-036, which averaged 0.98 g/t gold, 0.51 g/t silver and 0.03 percent copper over 74 meters and hole IM11-037, which averaged 1.00 g/t gold, 0.28 g/t silver and 0.02 percent copper over 79 meters.
The company also released results from its first drill program at the Muddy Creek prospect.
Significant results include hole MC11-001, which averaged 0.43 g/t gold, 1.15 g/t silver and 0.03 percent copper over 38.8 meters and hole MC11-002 which averaged 0.41 g/t gold, 1.33 g/t silver and 0.04 percent copper over 45 meters.
Mineralization at Muddy Creek occurs as sheeted quartz veins within a 5-kilometer-wide diorite to monzonite intrusive complex.
The prospect is partially covered by contour soil sampling that highlights a 2.4 square kilometer area where soil samples average 2.3 g/t gold and 0.06 percent copper.
Rock samples collected within a 5.4-square-kilometer area averaged 4.4 g/t gold.
Corvus Gold Inc. announced results from the 2011 resource expansion drilling program on its Terra project in the western Alaska Range.
The four-hole, 2011 drill program has been successful in expanding the high-grade "Ben Vein" system an additional 200 meters to the north significantly expanding the potential size of the deposit.
Significant intercept include hole WGC-33-11, which intersected 0.84 meters grading 7.42 g/t gold and 69.39 g/t silver, hole WGC-34B-11 which intersected 3.4 meters grading 11.6 g/t gold and 106.5 g/t silver and hole WGC-35-11 which intersected 0.53 meters grading 25.6 g/t gold and 4.90 g/t silver.
The drilling also intersected additional vein systems outside of the current resource area in the hangingwall of the main Ben Vein.
These veins returned encouraging gold and silver values and will be followed up in future work.
Corvus has been notified by joint venture partner WestMountain that it intends to follow up this year's drilling success with further resource expansion drilling, and it intends to initiate bulk sampling in 2012 with the pilot plant mill constructed at the site in 2011.
Millrock Resources Inc. and Teck American Inc. announced results from drilling at the Shoeshine, Shadow and Discovery prospects of the Estelle gold property.
Significant results from the Shoeshine prospect include hole SE-002, which intersected 241.8 meters averaging 0.24 grams of gold per tonne.
Gold values in the core are associated with arsenopyrite, and minor chalcopyrite.
Sulfides were seen in narrow quartz veins and veinlets and disseminated in small grains throughout the intrusive host rock.
Six main zones of large-scale anomalous gold and pathfinder element geochemistry have been identified over the past two years at the Shoeshine, Shadow, Train, Oxide Ridge, RPM and Stoney prospects.
At the Shoeshine and Oxide Ridge prospects surface mineralization is spatially associated with porphyritic intrusive rocks, quartz stockworks and hydrothermal breccias.
At RPM rusty, pyritic, hornfelsed sediments with anomalous gold indicate the potential for an auriferous intrusion at a shallow level.
The Stoney prospect is a high-grade, polymetallic vein occurrence located near a strong, circular magnetic high pointing to the possibility of nearby porphyry mineralization.
Significant results include hole RC11-194 which intersected 110.6 meters grading 2.6 percent copper including 11.8 meters grading 7.5 percent copper, hole RC11-185 which intersected 121.3 meters averaging 1.4 percent copper including 18.1 meters grading 3.8 percent copper, hole RC11-186 which intersected 153.1 meters averaging 1.2 percent copper.
Over-limit assays on hole RC11-187 in the South Reef prospect modified this spectacular hole into a continuous interval of 178 meters grading 4.0 percent copper including 34.7 meters grading 12 percent copper.
The South Reef remains open to expansion and will be a focus of exploration drilling in 2012 to enable a resource estimate to be completed on this zone.
NovaGold also announced that it intends to spin off its base metal assets into NovaCopper Inc. and that longtime President and CEO Rick Van Nieuwenhuyse will step down as president and CEO of Novagold Resources to accept the same position at NovaCopper.
Andover Ventures Inc. announced that it has staked additional mining claims at its Sun massive sulfide project in the Ambler Mining District. The company now controls 45,920 acres of mining claims in the district.
Significant drilling results from the 25-hole, 4,404-meter program include 1.5 meters grading 6.57 g/t gold in hole LS11-0063 on the Aurora prospect and 2.1 meters grading 6.02 g/t gold in hole LS11-0041 on Rock Glacier prospect.
While constructing a drill-access road, the company encountered two zones of shearing with sheeted and stockwork quartz veinlets, approximately 5 meters and 15 meters wide.
These zones are located 135 meters vertically above and 200 meters southwest of the Aurora prospect holes.
Representative continuous chip sampling of these zones yielded assays of 2.8 g/t gold and 2.1 g/t gold.
Mineralized intercepts have now been intersected by drilling over a vertical elevation difference of 550 meters, with the lowest exposure being in the northeast at the Aurora prospect which is close to the Little Squaw alluvial gold deposit.
Additional soil sampling results are pending.
Heatherdale Resources Ltd. announced a 31 percent increase in mineral resources at its Niblack volcanogenic massive sulfide deposit on Prince of Wales Island.
Based on underground delineation drilling completed during 2011, the new resource model outlines a 33 percent increase in the indicated resource metric tons for the Lookout Deposit, while the inferred resource metric tons at the Trio Deposit have increased by 29 percent.
The new mineral resource estimate is based on data from 373 drill holes.
At the Lookout zone, indicated resources have increased to 5.638 million metric tons grading 0.95 percent copper, 1.73 percent zinc, 1.75 g/t gold and 29.52 g/t silver, while inferred resources now stand at 2.37 million metric tons grading 0.73 percent copper, 1.17 percent zinc, 1.42 g/t gold and 21.63 g/t silver.
At the Trio zone, inferred resources have increased to 1.023 million metric tons grading 1.00 percent copper, 1.56 percent zinc, 1.11 g/t gold and 16.56 g/t silver.
Current outlined dimensions of the Lookout Deposit are about 2,200 feet by 1,700 feet, with an average thickness of 70 feet.
Current outlined dimensions of the Trio Deposit are about 1,100 feet by 350 feet, with an average thickness of 220 feet.
Significant drilling results include the Deep Trench vein, hole 11F-3 intercepted a brecciated quartz vein averaging of 11.53 g/t gold over 3.52 meters, hole 11G-2 which intercepted 4.18 g/t gold over 4.6 meters, hole 11G-4 which averaged 9.26 g/t gold over 1.36 meters, hole 11F-1 which averaged 4.35 g/t gold over 1.55 meters and hole 11G-8 which intercepted 50.0 g/t silver and 0.42 g/t gold over an intercept of 1.18 meters and 3.43 g/t gold and 10.4 g/t silver over 1.35 meters.
The company plans to explore the property on 150-meter to 200-meter centers in 2012 with two drills on the Main, Goat and Deep Trench veins.