Miners see grade as king now, always
Despite dire-sounding market signal and significant declines among other metals, gold price turned in strong performance in 2011
Last updated 1/22/2012 at Noon
After an extremely busy, productive year, the final weeks of 2011 and the first few weeks of the New Year were remarkably quiet for Alaska's mining industry. But not to worry, it appears to be just a pause, while everyone catches their breath before heading into what promises to be another eventful year.
While reading the plentiful (and sometimes bizarre) end of year reviews and forecasts, I came upon one that surprised me. In a Dec. 30 news release, Reuters noted that gold prices had formed the dreaded "death cross," where the 20-day moving average gold price dips below the 200-day moving average gold price. The event signals a long-term decline in the gold price and suggests that further price erosion is coming in the near future. The event signals a general trend to sell rather than accumulate gold, for a myriad of reasons.
To make its point, Reuters pointed out that the last time this occurred was in August 2008 when gold prices tickled the US$1,000 per ounce mark before deteriorating to US$680 per ounce after the worldwide economic crash of September 2008.
To be fair, gold turned in a 10.1 percent gain for 2011, a rate of return bested only by U.S. and German 10-year treasury notes and Brent crude oil.
To be even more fair, other metals did not do so well, with silver returns declining by 10.2 percent (worse than Italian 10-year bonds, ouch!) while copper headed farther south, dropping a whopping 21.3 percent for the year.
And then there were the rare earth metals, whose prices have plummeted 25-50 percent since their stratospheric levels at the start of the year.
So what does this mean to the mining industry in Alaska? Same thing it has always meant: the higher the grade of the ore, the better the chances of reaching and staying in production.
Put another way, grade is king (and likely always will be)!
Fire River Gold Corp. announced revised resource estimates at the Nixon Fork mine. Using a 10-grams-per-metric-ton gold cutoff, indicated resources now stand at 129,060 metric tons grading 24.9 g/t gold (103,438 ounces) and inferred resources are 53,980 metric tons grading 28.0 g/t gold (48,545 ounces). The resources were calculated using 24,800 meters of drilling conducted in 2010 and 2011. Resources were expanded in the 3,000, 3300 and 3550 zones. The resources do not include 6,200 ounces recovered from 11,300 metric tons grading 17.1 g/t gold since mine start-up on July 4, 2011.
Millrock Resources Inc. announced modifications to its option agreement with Crescent Resources Corp. on the Uncle Sam gold project in the Goodpaster District.
Instead of issuing 18 percent of its issued and outstanding shares by the first anniversary of the option agreement, Crescent is now required to issue 1.5 million shares by the first anniversary of the option agreement and 2.6 million shares by the earlier of the second anniversary of the option agreement or the date upon which Crescent elects to exercise the option.
In addition, Millrock has been granted the right to participate in any future equity financing of Crescent to maintain the same equity interest it holds in Crescent immediately prior to such equity financing.
Crescent spent about US$2.3 million on the project in 2011 conducting soil sampling and 1,950 meters of diamond drilling.
The property was explored for gold by Placer Dome and North Star Exploration which reported a gold-arsenic soil geochemical anomaly over an intrusive body that extends for at least 6,000 feet and up to 1,500 feet wide, with peak values in soil samples up to 1,540 parts per billion gold.
Significant drill results from Placer Dome's work include 0.015 ounces per ton gold over 326 feet.
In the drill holes, gold mineralization is associated with arsenopyrite and native gold in quartz vein stockworks in a silicified and sericite altered intrusive.
The intrusive host is a Cretaceous-aged diorite to granite pluton that intrudes quartzite, siltstone and shale.
Under the terms of the letter agreement, Endurance can earn 100 percent interest in the Elephant Mountain property by completing a total of US$200,000 in exploration expenditures, making cash payments of US$200,000 and delivering 400,000 Endurance common shares by Dec. 31, 2017.
The option is subject to a 2 percent net smelter royalty and Endurance can purchase half of the royalty at any time.
Corvus Gold and joint venture partner Ocean Park Ventures Corp. announced the discovery of the Jolly Green zone, a new high-grade gold-silver-copper discovery at its Golden Range prospect on its Chisna project in the Slana District.
The Jolly Green zone is characterized by widespread copper staining of sheared, quartz-arsenopyrite veined quartz diorite host rocks.
Gold values ranged from 1 to 126.5 g/t gold and were accompanied by silver values ranging from 25.7-198-grams-per-metric-ton silver and 0.4-17.7 percent copper.
Preliminary mapping in 2011 extended the strike of mineralization for 300 meters with mineralization open along strike.
Additional work is planned for 2012 prior to drill testing.
The company also released results from other exploration work, including the Corazon target bedrock trench CZ-TR-01 which encountered 7.5 meters of 3.3 g/t gold and 4.6 g/t silver, the Matador target drill hole GR-11-08, which encountered 2.7 meters grading 681 g/t silver, and the City target drill hole GR-11-01 which returned 0.7 meters of 6.2 g/t gold and 6.7 g/t silver.
Alix Resources Corp. announced results from the remaining drill holes completed in 2011 at Golden Zone gold-silver-copper property in the Valdez Creek District.
Low grade gold mineralization was encountered in three holes completed at the GAS prospect and four holes completed at the Long Creek prospect.
One hole was completed at the BLT zone prospect and encountered three intervals of elevated gold mineralization, including 4 meters grading 0.77 g/t gold, 4.5 g/t silver and 0.03 percent copper, 27.7 meters grading 0.23 g/t gold, 0.93 g/t silver and 0.03 percent copper, and 4.8 meters grading 0.18 g/t gold, 0.52 g/t silver and 0.02 percent copper.
The company also announced that stream sediment sampling identified anomalous gold, silver, bismuth, copper lead and antimony in the undrilled Long Creek South and Geoff's Anomaly prospects.
Pure Nickel Inc. announced results from its 2011 exploration program at the MAN project, Alaska.
The property is currently under a joint venture agreement with Itochu Corp., which has invested about US$17 million in exploration expenditures and vested a 30 percent interest.
The 2011 work program completed 2580 meters of drilling in 11 holes a total of 151 line kilometers of detail ground magnetometer surveys, and 6.9 line kilometers of ground electromagnetic surveys.
The majority of exploration work completed in 2011 focused on the Alpha mafic-ultramafic complex where the potential for "reef-" style platinum group element mineralization was encountered in previous drilling.
The mineralization was associated with a distinctive gabbro/pyroxenite sequence interpreted as discrete layers in the complex.
During the 2011 program, three holes targeting the potential reef successfully intersected the correct lithological sequence, but assay results did not confirm the presence of economic concentrations of platinum group elements.
In addition, drilling was conducted on the Tres Equis massive sulfide prospect and hole PNI-058 intersected 0.21percent copper and 0.65 percent nickel over 0.91 meters.
The partners also tested the Rainy complex for the first time and hole ER-11-02 encountered disseminated sulfides at several depths, with anomalous platinum group element values of up to 650 parts per billion over 2.52 meters.
Brixton Metals Corp. announced that it had terminated its option with Millrock Resources Inc. on the Kahilt project in the Kahiltna District. Millrock retains 100 percent interest in the project. Results from the 2011 program conducted by Brixton were not released.
Ucore Rare Metals announced results of reconnaissance sampling on its Ray Mountains alluvial rare earths elements and tin property holdings in central Alaska.
Potentially economic grade concentrations of these metals were identified in the upper Kilolitna River, the Ray River and No Name Creek.
Each of these drainages returned a threshold of at least 0.15 kilograms per cubic meter of rare earths elements and/or tin, along with byproduct concentrations of tungsten, zirconium, niobium, and tantalum.
Locally samples contain up to 1 kilogram per cubic meter each of tin and rare earth elements in the extensive floodplain of the Ray River.
Mineralized sediments from No Name Creek and the Caribou Heights prospects contain up to 9 kilograms of tin per cubic meter.
Samples consisted of heavy mineral concentrates composed primarily of ilmenite with cassiterite, monazite with lesser xenotime, zircon, wolframite (ferberite end-member), and trace amounts of allanite, scheelite, and yttrofluorite.
The concentrates contain up to 50 percent tin, up to 10 percent total rare earth elements and 0.01-1.0 percent tungsten, tantalum and niobium.
The heavy rare earth elements make up 15-25 percent of the total rare earth element component, except for samples from No Name Creek which delivered up to 60 percent heavy rare earth elements in the total rare earth component.