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By Shane Lasley
Mining News 

Pogo gold mine achieves 2M oz milestone

Sumitomo attributes success to Interior Alaska mine workers; near-mine exploration secures many more million-ounce gold pours


Last updated 8/26/2012 at Noon

Having poured 2 million ounces of gold July 31, the Pogo Mine appears to be living up to its new mantra, "mining done right."

Pogo General Manager Chris Kennedy is quick to attribute the continuing success at Alaska's most prolific gold mine to the efforts of the more than 330 employees and 150 contractors that work there.

"Milestones like this are only achieved when safety and environmental performance remain at the forefront of everyone's minds. No ounce of gold is worth harming a person, or the environment, and I am proud of our team for their performance," Kennedy said. "I offer my congratulations to the Pogo employees for their dedication and hard work."

Operated by Sumitomo Metal Mining Pogo LLC - a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent) - the 2,500-metric-ton-per-day mill at Pogo recovers some 1,000 ounces of gold daily.

At this rate, the 2.9 million ounces of gold reserves at Pogo will carry the underground operation through 2019, but exciting discoveries being made in the shadow of the mill are expected to substantially extend this current mine-life.

According to Dave Larimer, senior mine geologist at Pogo, "a lot of people used to think that Pogo is out of here in 2017."

"We are not as small as originally thought, and we are not going anywhere yet," he continued.

2-million-ounce trek

The trek to the 2-million-ounce milestone at Pogo did not happen without its setbacks. When the mine reached commercial production in 2007, the operation suffered from a high turnover rate - a situation that contributed to dismal environmental and safety performance.

Year by year, the staff and management at Pogo committed themselves to making continuous improvements in safety, environmental stewardship and production at the Interior Alaska gold mine.

Sliding into the position of Alaska's top gold producer, by 2008 Pogo had already overcome many of the early setbacks. With the mill running at about 90 percent capacity, the mine produced 347,219 ounces of gold that year.

As a result of the improved operational performance, Teck Resources Ltd., then 40 percent owner of Pogo, realized its first annual profit from the Interior Alaska gold mine - reporting C$23 million in operating income from Pogo for 2008.

With the gold mine turning a profit, 2009 was watershed year for both the operation and the Japanese co-owners of the mine.

Buying out Teck's 40 percent stake, the Sumitomo Group companies gained full ownership of Pogo. With Teck management remaining onboard to assist in a smooth transition, Pogo became the first overseas mine managed and operated by Sumitomo Metal Mining.

The improvements in 2009 were across the board. The Japanese owners boasted a 40 percent improvement in safety performance, a 36 percent reduction in reportable spills, a 34 percent decrease in manpower turnover and a 12 percent increase in gold production and over 2008.

This success led to the 1-millionth ounce of gold poured at Pogo in October 2009. Sumitomo Metal Mining commemorated the event by acknowledging continued improvements at the mine.

"The celebration of this event is not specific to the actual millionth ounce poured, but is rather focused on the journey undertaken by Pogo to continually improve performance in the safety, environment, people, production and cost areas," the company wrote.

Pogo produced a total of 389,808 ounces of gold in 2009, a record that stands to this day.

With the mine hitting its marks in safety, environment, people, production and costs; the Teck transitional team withdrew early in 2010. This shift to full operational management by Sumitomo Metal Mining was a yet another milestone for the Tokyo-based company.

Pogo is the first mine outside of Japan that is operated by Sumitomo Metal Mining. The company hopes to build on this endeavor by expanding its mining business worldwide.

During its first full year of complete ownership, Sumitomo produced 383,434 ounces of gold at Pogo, while continuing to make improvements on the environmental and safety fronts.

Despite running at designed mill capacity and a recovery rate of 90 percent, lower grade ore resulted in a 15 percent drop in gold production at Pogo during 2011 compared to the previous year. Milling 929,020 tons of ore, or 2,545 tpd, the mine produced 325,708 ounces of gold last year.

More milestones ahead

The first 2 million ounces of gold produced at Pogo were mined from the Liese zone - three flat-lying, parallel quartz veins that carry high-grade gold. These gold-rich shear zones are dubbed L1, L2 and L3.

Earlier this year, Pogo's chief geologist said the Liese zone remains open to the south, and there is potential for additional gold-enriched shear zones at depth.

Sumitomo's hope of continuing to mine high-grade gold at Pogo, though, does not rest entirely on expanding Liese.

The gold-rich veins of the Liese zone end abruptly where they come in contact with a gold-barren body of diorite to the northeast. Two years ago, the Pogo exploration team set out to see if it could find additional gold mineralization on the opposite side of the intrusive body.

"That's what we started doing in 2010, we tried to do some road-based drilling just to the north of the diorite," explained Larimer.

This drilling tapped a zone containing quartz-vein structures with grades and thicknesses remarkably similar to those that have provided feedstock for the Pogo mill over the past six years.

The Pogo geological team now believes that the Liese and East Deep zones are actually the same ore body that became separated when the diorite split the two zones as it intruded along the Liese Creek fault about 95 million years ago, or about 12 million years after the zones were mineralized.

Two vein systems, E0.5 and E1, have been intersected in the East Deep zone.

Larimer hypothesizes that E0.5 surfaces at Liese, leaving only scattered gold-veined rubble as an indicator of its existence and E1 is continuation of L1.

According to a March statement by Sumitomo, drilling has outlined 12.33 million metric tons averaging 12.5 grams per metric ton for an estimated 1.3 million ounces of gold in the E1 zone.

This initial resource, according to Kennedy, could be the tip of the iceberg when it comes to East Deep. The total extent of this zone is unknown and the deposit remains open to the west, north and northeast.

If Larimer's theory of a continuation of Liese holds true then two deeper vein systems could add to the richness of this Pogo discovery.

Sumitomo has driven two drifts through the some 300 meters of diorite that separate Liese from East Deep. From this deeper vantage point, drills are able to test for the hypothesized E2 and E3 veins. These access drives linking the East Deep zone to the established underground workings at Pogo are also accelerating Sumitomo's ability to mill the gold-rich ore found here.

Finding the full extent and relationship of the gold-rich ore bodies lying in the shadow of the mill is the near-term focus of the Pogo exploration team.

"We really want to find out the expanse of this target … It is so close to the mill," Larimer said.

With reserves and resources exceeding 12.3 million metric tons containing nearly 5 million ounces of gold and new ore being added daily, Pogo is poised to celebrate many more million-ounce milestones in the coming years.

Author Bio

Shane Lasley, Publisher

Over his more than 11 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.

Email: [email protected]
Phone: (907) 726-1095


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