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Mining powerhouses seek Bering Sea gold

AngloGold-De Beers JV runs into rough seas during an initial investigation of its placer project off the golden beaches of Nome

Roughly a mile beyond the golden beaches of Nome, Placer Marine Mining Inc. - a joint venture that combines the gold mining expertise of AngloGold Ashanti Ltd. with the marine mining experience of De Beers - is investigating the potential of dredging a vast placer gold deposit lying beneath the icy waters of the Bering Sea.

These gold-rich placer deposits in Alaska's Arctic Northwest are not the first marine mining endeavors undertaken jointly by AngloGold Ashanti and De Beers. In 2009, the mining powerhouses formed AuruMar Ltd., a partnership to explore and ultimately mine marine placers rich in gold and other heavy metals on the continental shelves of the world.

"By combining one of the world's most successful gold exploration teams with the foremost authority in ocean mining and exploration, we're creating a powerful base to tackle this new frontier," AngloGold Ashanti Chief Executive Officer Mark Cutifani said upon the formation of AuruMar.

While AuruMar and Placer Marine Mining have identical shareholders, they have different objectives.

"Placer Marine Mining is focused on the Nome Offshore Project whereas AuruMar, based in Cape Town (South Africa), performs services for the joint venture partners across the world," AuruMar General Manager Gary van Eck explained during a Nov. 8 presentation at the 2012 Alaska Miners Association Convention in Anchorage.

Since the discovery of gold there in 1899, the Nome Mining District has produced roughly 5 million ounces of placer gold.

Based on historical exploration, it is believed that the 16,581 acres of offshore leases secured by Placer Marine Mining about a mile beyond the golden beaches of Nome could hold as much gold as has been recovered from the legendary Nome Mining District over the past 113 years.

The AngloGold-De Beers joint venture spent some US$6 million during the short summer season of 2012 to begin to find out just how much gold lies below on its portion of the gold-rich placer deposits in the Bering Sea.

While this work applied an array of state-of-the-art exploration techniques, the unruly weather may have provided some of the most crucial data for Placer Marine Mining to process as it considers the feasibility of mining the multibillion-dollar gold deposit believed to lie below the sea.

"Both the sampling and surveying programs were significantly affected by adverse weather conditions, which is a valuable lesson to be learnt for future offshore operations," according to Placer Marine Mining.

10 million ounces?

Placer Marine Mining picked up its properties beyond the gold-rich beaches of Nome during an offshore lease sale held by the Alaska Department of Natural Resources in September 2011.

The state divided its offering into two groups - 53 smaller near-shore parcels, ranging from 40 acres to 160 acres, and 31 larger tracts measuring up to 2,794 acres located in the deeper waters from roughly one mile off the beach to the three-mile limit of Alaska-owned land.

During an outcry auction held in Nome, small-scale miners, including some Nome residents, bid US$6,500 to US$90,000 to win the smaller lots amenable to suction dredge mining. The final tally of the state's take on these smaller near-shore tracts remains unclear due to a technical dispute on 12 of the parcels.

The winning submissions among sealed bids for the tracts larger than 160 acres added slightly more than US$6 million to state coffers.

Placer Marine accounted for US$5.5 million of this take, grabbing nearly 70 percent of the 23,793 acres of marine placer gold prospects auctioned by DNR's Division of Mining, Land and Water. All told, the company submitted winning bids on 26 of the lease tracts, including a US$1.6 million bid on tract 74, the largest and most prospective of the lot.

The tracts secured by Placer Marine Mining start about a mile (1.6 kilometers) offshore and run out to about the three-mile (4.8 kilometers) limit of state-owned land and for some 20 miles (32 kilometers) parallel to the shoreline.

While the Nome beaches and near-shore marine gold deposits have been continuously worked and reworked for more than a century, the depth of the icy water covering the deposits leased by Placer Marine Mining has prevented individuals and small-scale operations from dredging there.

One semi-successful attempt at a commercial operation to mine the marine placers in these deeper waters was carried out by Western Gold Exploration and Mining Co. Limited Partnership (WestGold) in the late 1980s.

Purchasing Bima, a secondhand bucket dredge used for mining tin off the shores of Indonesia, WestGold set out to mine a section of the "Central Core," a region that had been partially drill-tested by Shell Oil Co. in 1967 and Asarco in 1973.

From 1986 through 1990, WestGold recovered just over 118,000 ounces of gold from the submerged placer deposit. Frequent storm swells, harsh Arctic weather and tough mining conditions battered Bima over its five seasons off of Nome. Structural failures coupled with gold prices sinking to around US$370 per ounce proved to be the undoing of the oceangoing dredge.

During its five-season tenure off the coast of Nome, WestGold drilled 2,479 holes, considerably enhancing the density in the gold-laden marine placers.

In 2000, the University of Alaska Fairbanks, Department of Mining and Geological Engineering applied geographical information system technology to the data collected from some 3,200 holes drilled by WestGold, Shell and Asarco. After digitizing and processing the historical information, UAF engineers estimated that more than 3.3 million ounces of gold lies in the tested regions.

All told, it is commonly believed that more than 10 million ounces, or roughly US$17 billion, of economically viable gold lies beneath Norton Sound.

AuruMar's 2012 exploration program set out to test these historical assumptions.

Harsh conditions

While the rough seas that pounded Bima are well-known, the west coast of Alaska was hit hard by a series of storms during the 2012 season, providing Placer Marine Mining with firsthand insight on what it could be up against if it decides to mine its golden leases off the west coast of Alaska.

As soon as the ice relinquished its grip on Norton Sound this summer, the marine miner began investigating the gold potential of its Nome Offshore Project.

The specialist began work on a 100-day geophysical program that involved a detailed bathymetric - the underwater equivalent of topographic - program and a 925-line-mile (1,490 kilometers) seismic survey.

Placer Marine Mining ran geophysical lines 100 meters apart parallel to the shore and then 300 meters apart in a perpendicular direction.

"Because of the difficulty of mobilizing vessels up into the area, we decided to do as detailed a survey as possible," explained AuruMar Exploration Manager Neil Fraser.

The company hired two local boats to conduct the extensive survey - Quicksilver, a 32-foot vessel, was used to conduct side scan sonar and swath-bathymetry surveys and the 60-foot Thunder was utilized for the seismic surveys.

"Weather played a major issue with our season up in Nome," Fraser said.

Quicksilver, which was operating on 12-hour shifts, was anchored about 20 percent of the time due to weather. Thunder, which was slated for around-the-clock operations, was inactive about 43 percent of the time due to the harsh conditions.

Despite weather delays, the survey was successfully completed. With the bathymetric survey providing an accurate view of the ocean floor and the seismic survey providing geological information on the various layers for up to 150 meters (500 feet) further down, Placer Marine Mining is gaining a better understanding of its Nome Offshore Project.

In June, AuruMar announced it had purchased Maptek Vulcan 3D modeling software for its marine continental shelf gold exploration. AuruMar said it will apply Vulcan GeoModeller to the 26 placer gold mining leases that make up the Nome Offshore Project.

"We wanted to be able to look at and model our geological data in 3D," said Urban Burger, AuruMar geologist. "The Vulcan platform also offers us the opportunity in the future to do resource modeling, mine planning and reconciliation in the same environment."

Fraser told attendees at the 2012 AMA Convention, "We are busy going through all of the geophysics to produce a 3-D model to help us build up our resource estimates."

He said the company anticipates the majority of the gold lies in the top two to three meters (6.5 to 10 feet) of the ocean floor.

Placer Marine Mining hired Denali Drilling, a company that also did sampling for WestGold, to test this gold-laden layer.

Mounting a sonic rig on a landing craft known as Polar Bear, Denali drilled 146 holes during a 40-day sampling program.

To confirm historical drilling, Placer Marine Mining completed 130 holes in two claim blocks previously sampled by WestGold. In general these holes were drilled on 100-meter centers along lines spaced 200 meters apart.

The remaining 16 holes explored a previously untested 700-by-1,000-meter area revealed by the seismic surveys carried out earlier in the season. While the marine gold company tested this exploration area on a wider spacing, each sample site was tested with two holes to increase the confidence in the data.

Results from Placer Marine Mining's drilling are still pending, according to Fraser.

Not unlike the geophysical program and the Bima, Placer Marine Mining's drill program was hampered by unruly weather. Fraser said the drill ship was only available for operation for about 37 percent of the allotted time. The AuruMar General Manager said the landing craft upon which the sonic drill was mounted was not ideal for the conditions off the shores of Nome, and the company hopes a better suited ship will increase their time at sea when they return to the project in 2013.

The AngloGold-De Beers partnership believes it will have collected the geological and environmental data needed to advance the project into permitting by mid-2014.

"Our intentions are that by the middle of 2014 we will have completed our project feasibility studies to the point that our shareholders will be able to make an informed investment decision, and we can proceed with the permitting," van Eck told the audience.

If all goes well, Placer Marine Mining intends to begin recovery of Bering Sea gold by the 2017 season.

Author Bio

Shane Lasley, Publisher

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Over his more than 16 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.


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