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

Pebble Partnership copper gold molybdenum mine project Alaska Northern Dynasty NAK NDM

By Curt Freeman
For Mining News 

Once-hot mining investment climate cools

Caution tempers former enthusiasm for exploration projects across Alaska, resulting in buyer's market for early-stage ventures

 

April 29, 2012



The winds of change are once again blowing across Alaska's mineral industry, not only because the industry is gearing up for another busy summer season, but also because the mining investment climate has turned from cautiously optimistic to decidedly undecided.

The sea change occurred steadily and without a lot of fanfare between mid-January and mid-March.

As is always the case, good projects continue to advance with those that are drilling and adding resources or moving through advanced development stages having a significant funding advantage over earlier stage exploration projects.

The results - already in evidence by the entry of two new companies acquiring joint venture interests over the past month - is a buyer's market for early stage exploration projects.

Mergers and/or acquisitions of more advanced-level projects can be expected over the coming months.

Western Alaska

Novagold Resources Inc. reported first-quarter 2012 operating results and future plans for its flagship Donlin Creek project, a 50:50 joint venture with Barrick Gold Corp. NovaGold raised US$318 million with which it will fund its share of permitting expenses. The partners have approved a 2012 budget of approximately US$37.2 million for permitting activities, community development and planning for future development. Project permitting with the Alaska Department of Natural Resources and the U.S. Army Corps of Engineers is expected to commence during the first half of 2012.

Millrock Resources Inc. said joint venture partner Kinross Gold Corp. has confirmed programs and budgets for drilling programs at its Humble project in southwest Alaska and its Council project on the Seward Peninsula.

At the Humble project, the partners plan to drill five core holes totaling 1,000 meters beginning in April.

The drilling targets are conductive zones with coincident multi-element soil geochemical anomalies possibly indicative of a buried porphyry deposit.

The Council project targets sediment-hosted vein gold deposits and the partners plan to drill six holes totaling about 1,000 meters beginning in July.

The drill holes will test a 7-kilometer (4 miles) long gold - arsenic soil anomaly that overlies a regional structural feature.

At places the soil anomaly is up to 400 meters wide.

Fire River Gold Corp. said it has secured a US$12.75 million gold-backed credit facility with Waterton Global Value Limited Partnership. The credit facility will be used to fund the development of the company's Nixon Fork Mine and to support its ongoing operational and logistical objectives. As part of the transaction, the company has agreed to sell to Waterton the gold and silver produced from the Nixon Fork Mine pursuant to a gold and silver supply agreement.

Freegold Ventures Ltd. reported updated resources at its Vinasale gold project under option from Doyon Ltd. Revised inferred resources now stand at 49.3 million metric tons averaging 1.09 grams of gold per metric ton for 1,735,000 ounces of gold utilizing a cut-off value of 0.5 g/t gold as a possible open-pit cutoff.

The new estimate includes an additional 13 drill holes completed in 2011.

A total of 85 drill holes containing 10,945 gold assays have been completed on the project within three areas: the Central, Northeast and South zones.

The highest density of drilling has been completed in the Central Zone where 41 drill holes totaling 9,948 meters were used in estimating the resource for the Central zone.

Gold assays were capped at 22.0 g/t gold.

The new drilling expanded the resource over the March 2011 resource estimate by 32.4 percent on tonnage at essentially the same grade for an increase in total contained ounces of 30.4 percent.

To date, mineralization in the Central zone extends over a strike length of 400 meters and remains open to the south, east and at depth.

The 2012 program will consist of additional drilling in the Central zone where it remains open to the south, as well as potential resource definition in the North East zone.

The State of Alaska's Attorney General, Michael Geraghty, recently sent a letter to US. Environmental Protection Agency Region X Administrator Dennis McLerran voicing the State's concern over EPA's Bristol Bay Watershed Assessment program, the central focus of which is Anglo American/Northern Dynasty's advanced Pebble copper-gold-molybdenum project.

Among other things, the Attorney General indicated that EPA has overstepped its authority under the federal Clean Water Act, and pointed out that the assessment is premature, in conflict with both state and federal laws, relies on draft documents for its guidance, lacks scientific credibility, relies on a hypothetical (imaginary) large-scale development to draw conclusions, disregards Alaska's permitting process, limits review time by outside agencies, ignores potential benefits of these hypothetical developments and essentially extinguishes Alaska's statehood-granted mineral rights and those of mining claim owners without authority.

Other than that, Mr. Geraghty seemed pretty satisfied with the process.

…

Full Metal Minerals Ltd. and Antofagasta Minerals said a 3,000-meter core drilling is planned for the Pyramid copper-molybdenum-gold project on the Alaska Peninsula.

The primary objective of the upcoming drilling program is to test extensions of mineralization as well as follow up on high grades encountered during the 2011 drilling program around the southern limits of the mineralizing system.

A significant portion of the surface expression of stockwork veining, favorable alteration and copper mineralization has not yet been tested by drilling.

Mineralization is open in all directions and at depth.

The 2012 exploration program will be funded by Antofagasta, who is currently earning a 51 percent interest in the property.

Interior Alaska

Freegold Ventures Ltd. posted additional 2012 drilling results from its Golden Summit project near Fairbanks.

At the Cleary Hill prospect, drilling designed to fill in the undrilled gap between Cleary Hill and the company's 1.3 million-ounce Dolphin deposit intersected significant grade-thickness intervals, including 341.1 meters grading 0.69 g/t gold with 132.7 meters grading 1.19 g/t gold in hole GSDL1201; and 115.1 meters grading 1.08 g/t gold in hole GCDL1204.

Holes GSDL1202 and 2014 were drilled on the extreme northeastern edge of the Dolphin prospect.

Hole GSDL1202 represents the farthest north hole yet drilled in the Dolphin zone while hole GSDL1204 represents the farthest east hole yet drilled in the Dolphin Zone.

The company also reported additional drilling results from the Cleary Hill prospect where holes GSCL1208, 1029 and 1210 encountered significant widths of +0.5 g/t gold mineralization in a mineralized envelope both above and below the high grade Cleary Hill vein.

Drill results include 14.48 meters grading 1.11 g/t gold in hole GSCl1208, 98.3 meters grading 0.68 g/t gold in hole GSCl1210.

These holes represent the western-most drilling completed during the 2011 - 2012 drilling campaigns and results indicate mineralization remains open along strike to the west.

Additional assays are pending and additional drilling is planned.

Tri-Valley Corp. reported results from 2011 exploration on its Richardson gold project. The work, conducted under option by McEwen Mining (formerly US Gold Corp.) included collection of 1,507 power auger soil samples, 150 rock samples and completion of 2,863 feet of core drilling in three holes. In addition, airborne magnetic and gamma-ray spectrometry geophysics were acquired. Additional work was curtailed due to the on-set of winter weather. Results of this work were not released.

Sumitomo Metal Mining Co., Ltd. announced that a new gold deposit was identified during a recent exploration carried out with the aim of acquiring additional deposits in the Pogo gold mine area.

The new East Deep deposit is located northeast of the main Liese deposit and contains approximately 1.283 million ounces of gold.

The East Deep deposit (E1 orebody) was identified 1,000 feet northeast of the Liese gold deposit.

At year-end 2011 the latest resource and reserve estimates at Pogo, including the East Deep deposit, total 13.594 million metric tons grading 12.5 g/t gold (4.973 million ounces).

The development of new access drives to the E1 orebody is to be begin this year to accelerate production at the East Deep deposit.

In addition, drilling continue in 2012 to explore the extension of the East Deep deposit, which remains open to the northeast, north and west.

International Tower Hill Mines Ltd. provided an update of its activities at its Livengood gold project and announced plans to conduct district-wide exploration this year.

In addition to advancing its Pre-Feasibility Study towards expected completion in the third quarter of 2012, the company is carrying out approximately 12,000 meters of drilling in support of permitting activities, engineering design, condemnation of proposed infrastructure sites and district-wide exploration.

The company also announces that it will postpone all further studies for placer gold extraction on its recently acquired placer claims to focus on advancing the Livengood gold deposit towards development and a production decision.

The company is currently carrying out detailed metallurgical testing after a review of the Preliminary Economic Assessment flow sheet indicated that further optimization is possible.

Due to the large amount of testing underway, the publication date for the Pre-Feasibility Study is now expected in the third quarter of 2012.

On the exploration front, the company plans to drill 3,000 meters in 10 core holes as part of its initial district-wide exploration program focused on making new discoveries within the 145 square-kilometer land package.

Prior drilling, mapping and surface geochemical sampling conducted in 2010 had identified an area northeast of the Money Knob deposit where faults, dikes and anomalous gold coincide, indicating an area of potentially significant mineralization.

An initial three holes are planned to target the area to assess the extent of the mineralization.

In addition, a 40-hole, 6,000-meter program of condemnation drilling will be carried out to either sterilize or establish the presence of significant mineralization in the area surrounding the Money Knob deposit and extending northeast towards existing mineralized exploration drill holes.

The purpose of the condemnation drilling program is to determine appropriate areas for infrastructure development.

Alaska newcomer Eurasian Minerals Inc. reported staking the 15,000-hectare (37,065 acres) Moran Dome gold project in the Melozitna Mining District.

The property hosts multiple gold targets associated with a granitic intrusive suite identified from a regional reconnaissance sampling program and historic datasets.

The project area occurs in the headwaters of several historic and modern-day placer-gold-mining operations.

The Moran Dome project covers prospective portions of the mid-Cretaceous Melozitna pluton and its contact aureole.

The pluton ranges in composition from granite to quartz monzonite and is coarsely crystalline to strongly porphyritic.

The contact aureole consists of strongly hornfels-altered Proterozoic to Mesozoic metasediment and greenstone rocks.

The company's early-stage work at Moran Dome defined several areas containing prospective host rocks and anomalous gold mineralization.

The project area is divided into three separate claim blocks including the MD claim group, which consists of three separate targets with coincident geochemistry and geophysical anomalies covering an area of 45 square kilometers.

The eastern target area lies in the headwaters of Tozimoran Creek, and contains anomalous gold-in-stream sediments, elevated arsenic-antimony in regional geochemical datasets, and historic gold-tin placer production.

The other two targets within the MD group were identified using Bulk Leach Extractable Gold geochemical anomalies, magnetic anomalies, and the presence of altered and mineralized float.

The Vermilion claim group is marked by a strong color anomaly centrally located within the Melozitna Pluton.

Outcrops exhibit stockwork quartz-sulfide veining in quartz-sericite-clay altered quartz monzonite and anomalous copper-molybdenum-bismuth mineralization in rock samples.

The Eureka Creek claim group is outlined by BLEG anomalies along the southern margin of the pluton, in an area without previous exploration activity.

Additional work is planned for 2012.

Welcome to Alaska Eurasian Minerals Inc.

Contango ORE, Inc. said it will conduct a US$6.4 million exploration program on its Tetlin project near Tok will have two exploration rigs drilling with one rig focused on the Chief Danny copper-gold-silver prospect (20 - 30 core holes planned), and one rig dedicated to drilling another approximately 20 core holes to condemn or advance four of our six copper-gold prospects.

Multiple areas of gold and copper mineralization was discovered on the 675,000 acre property by Contango in 2009 and advanced by trenching, soil auger sampling, ground and airborne geophysics and 8,057 feet of drilling.

The Chief Danny prospect is the principal exploration target and contains anomalous gold, copper and pathfinder mineralization over a 9-square-mile (23 square kilometers) area.

The prospect is located in a district-scale magnetic low.

Trenching returned results including 70 feet grading 0.69 g/t gold, 8.6 grams per metric ton silver and 0.38 percent copper in sheared metamorphic host rocks.

Significant drilling results include 12 feet grading 3.1 g/t gold, 300.2 g/t silver and 0.26 percent copper in hole Tet11-05 and 21.2 feet grading 7.4 g/t gold, 4.9 g/t silver and 0.15 percent copper in hole Tet11-07.

The project is located largely on Tetlin Village private land within both the Tintina Gold Belt and a northeast-trending porphyry copper-gold-molybdenum belt containing several previously explored porphyry systems.

Alaska Range

Alaska newcomer Goldspan Resources, Inc. and Alix Resources Corp. signed a letter of intent that will allow Goldspan to obtain up to a 60 percent ownership interest in the 24,500-acre (9,915 hectares) Golden Zone project. The letter of intent requires Goldspan to spend $3.5 million over the next three years for exploration and development, repay to Alix of $1,000,000 in past exploration expenses and an estimated $250,000 for ongoing maintenance fees. Welcome to Alaska Goldspan Resources, Inc.

Alaska newcomer GTSO Resources said it has signed a letter of intent with Diamond V Associates to acquire and develop placer gold and rare earth metals in Alaska. The only specific mention of an Alaska property that might be considered for evaluation was the Valdez Creek district. GTSO plans to begin evaluating Diamond's precious metals and rare earth prospects immediately. According to the letter of intent, GTSO has 90 days to conduct due diligence toward a potential acquisition, joint venture or partnership with Diamond. Welcome to Alaska GTSO Resources.

Millrock Resources Inc. said Teck American Inc. has met the requirements to earn a 55 percent interest in the Estelle gold project.

The joint venture partners have planned a seven-hole, 1,500-meter drilling program for 2012 that is scheduled to commence in July.

Five of the planned holes will be drilled at the Oxide Ridge occurrence where hole SE-001 intersected variably altered magmatic intrusive rock with quartz veins and stockworks which included an interval that returned 0.43 g/t gold over 365.27 meters.

Two more holes will be used to test geochemical anomalies in pyritic rocks on the margin of an intrusion at the RPM showing located at the south end of the claim block.

Millrock's share of the 2012 exploration program is estimated to cost approximately $800,000.

Under the terms of a recently signed loan agreement with Teck, Millrock will borrow up to the entire amount necessary to cover its share of the planned program costs.

The loan may be repaid by December 31, 2012, and if Millrock does so, it will retain its 45 percent interest.

If the planned program is carried out and Millrock elects not to repay the loan, its equity interest in the project would be reduced to approximately 35 percent.

Northern Alaska

Goldrich Mining Co. said it has signed a letter of intent to create a joint-venture with NyacAU LLC, a privately owned Alaska company, to bring Goldrich's Chandalar placer gold properties into production.

Under terms of the agreement, NyacAU will provide a funding package of loans and equity that, subject to the timing of production, are estimated to total approximately $8.5 million.

Once all loans have been repaid and working capital and budgeted reserves have been established, profits from the placer production will be paid out, on a 50:50 basis, to each of the joint venture partners.

The agreement covers production from all placers on Goldrich's Chandalar property including, but not limited to, Little Squaw Creek, Big Squaw Creek, Big Creek and Tobin Creek, as well as all future properties within two miles of these claims.

Subject to permitting, preparation for mining is expected to begin in June 2012.

Production is anticipated to begin by June 2013.

The JV anticipates eventual production of approximately 10,000 ounces of fine gold per season.

NyacAU, LLC is owned by the family of Dr.

J. Michael James, which is also the owner of Nyac Gold LLC, one of the largest Alaskan placer gold producers.

Southeast Alaska

Grande Portage Resources Ltd. and its joint venture partner Quaterra Resources Inc. reported an initial resource estimate for the Herbert Glacier gold project near Juneau.

The resource estimate, which is based on drill results from two of four principal veins on the property, contains an inferred resource of 1.57 million metric tons grading 4.86 g/t gold (245,145 ounces).

The resource was calculated using a cut-off of 2 g/t gold.

Assay composites used in the resource estimate were statistically capped at 40 g/t gold.

The resource remains open in multiple directions along these defined veins.

The resource estimate is based on results from 65 diamond core holes (9,386 meters of drilling) and 4 trenches (19.7 meters of trenching) along the Main and Deep Trench veins and represents about 20 percent of the total mapped strike length of all the veins identified on the property.

The undrilled surface exposure of the Main Vein continues for another 280 meters along strike and the resource model also remains open down dip.

The Deep Trench Vein remains open along strike for another 520 meters of mapped surface exposure and down dip.

The 2012 drilling program will consist of 12,000 meters of infill drilling designed at a nominal drill hole spacing of 25 meters with the objective of expanding and upgrading the "inferred" resource to "indicated"; and 3,000 meters of exploratory drilling both within other vein targets (Goat and Ridge Veins) and along the open strike extents of the Main and Deep Trench Veins.

Ucore Rare Metals announced receipt of an underground mine design study at its Bokan-Dotson Ridge rare earth element project.

The mine design study was completed by Stantec, of Tempe, Ariz.

The mine design study is an important component of Preliminary Economic Assessment currently under way on the project.

The responsibility for the overall Preliminary Economic Assessment rests with Wardrop.

Based on a review of the geometry of the mineralized body, blasthole stoping was recommended as the most appropriate mining method for the project.

Designed mine production rate was 1,500 metric tons per day for 540,000 metric tons per year.

The mine design study suggests the use of mill tailings as paste backfill to fill the mined out areas of the underground.

This technique promises to minimize the need for surface tailings impoundment.

After a review of the block model inventory at various total rare earth oxide cutoff grades, it was determined that 0.4 percent total rare earth oxide would be utilized as an economic cutoff for the mine design.

At this cut-off, the resource consists of 5.3 million metric tons of mineralization at an average grade of 0.65 percent total rare earth oxide, of which 40 percent are heavy rare earth oxides.

The total required operating manpower of the underground mine is estimated at 118 persons, including mine administrative personnel.

Detailed capital and operating cost estimates will be released in conjunction with the preliminary economic assessment.

 

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