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By Shane Lasley
Mining News 

Fort Knox's new plan

Report: Mine begins winding down in 2017, near prospects may extend life

 

Last updated 2/15/2018 at 6:32am



For nearly two decades, the Fort Knox Mine in Interior Alaska has been a steady low-cost gold producer for owner, Kinross Gold Corp., and an economic driver for the nearby city of Fairbanks. A new technical report, however, outlines a mine plan that begins winding down operations in 2017. It is an important reminder that this Interior Alaska mine has an expiration date.

Including the 387,285 ounces recovered in 2014, Fort Knox has produced 6.35 million oz of gold since the mine went into operation in 1996. Based on the reserve estimates and production schedule included in the report, the Interior Alaska operation is on pace to top 8 million oz in 2020.

According to the March 2015 technical report for Fort Knox, the mine is expected to churn out an average of 387,000 oz per year through 2017 before gold production drops off due to the phasing out of its mill. Once the mine has crushed its final ore for the mill, the operation is anticipated to continue recovering gold from the Walter Creek heap leach facility for nearly a decade, depending on gold prices versus operating costs as Fort Knox winds down.

The pending date to shut down the mine, which serves as a cornerstone of Kinross' portfolio, however, is not set in stone.

Current plan

At the end of 2014, Fort Knox had 263.8 million metric tons of proven and probable reserves, averaging 0.46 grams per metric ton (2.4 million oz) gold. These reserves, calculated at a US$1,200 per ounce gold price, form the basis for the mine plan outlined in the technical report.

These reserves are being mined during the phase-8 expansion of the open-pit at Fort Knox.

"In 2015, we plan to initiate stripping of the phase-8 pushback, which is forecast to extend mining through 2018 and beyond," Kinross COO Warwick Morley-Jepson told investors in February.

Fort Knox spokeswoman Anna Atchison said phase-8 ore will begin to produce gold in the latter half of this year.

According to the latest mine plan, some 40.3 million metric tons of the higher grade reserves will be processed through the mill during the next three years. This would mark the first phase of a winding down of more than two decades of gold production at Fort Knox.

Though ore with gold grades sufficient to efficiently feed the mill are slated to run out sometime in 2017, lower grade reserves are scheduled to continue to be stacked on the Walter Creek heap leach pad into 2019.

The ability to economically recover gold from lower grade ore by processing it on the heap leach pad has been a vital component of both the phase-7 and phase-8 expansions at Fort Knox.

Since its start-up in 2009, the heap leach pad has accounted for 601,855 oz of gold produced at Fort Knox; and the facility is anticipated to contribute roughly another 158,000 oz this year.

"From an economic standpoint, it is a very valuable technology to have," Atchison said.

According to the production schedule outlined in the report, the heap leach pad itself would produce roughly 172,000 oz of gold in 2018; climb to 232,000 oz the following year and then taper off as less gold becomes available for the leachate to rinse from the pit-run ore stacked on the pad.

Kinross said it will continue recovering gold through ongoing heap-leach processing as long as the oz recovered covers the cost of operating the pad. It is currently estimated that this balance would be met until about 2027, marking the final phase of operations at Fort Knox.

Golden prospects

While Fort Knox is no doubt aging, there is still potential to add a few years to the life of this Interior Alaska mine.

"We are currently evaluating whether or not we extend the mill beyond 2017 and are considering several economic scenarios," Atchison told Mining News.

Above and beyond the mineral reserves that support the current mine plan, the area in and immediately surrounding the open-pit at Fort Knox has 75.9 million metric tons of measured and indicated resources, averaging 0.37 g/t (912,000 oz) gold.

At a roughly 20 percent lower grade than the current reserves, much of this material, if brought into the mine plan, would likely be stacked on the heap-leach pad.

The Gil gold property, located about five miles east of Fort Knox, is another source of potential ore to extend the life of mine.

Gil has been defined by 73,876 meters of drilling in 738 holes, including 11,665 meters of drilling completed by Kinross after buying full ownership of the property in 2011.

Based on this exploration work, Gil has 29.5 million metric tons of measured and indicated resources averaging 0.56 g/t (532,700 oz) gold.

Both the Fort Knox and Gil resources are calculated at a US$1,400 per ounce gold price.

Kinross did not complete any drilling at the neighboring Gil property in 2014. The company, however, is resuming both meteorological data collection and exploration at Gil this year.

Atchison said 2015 exploration plans for Gil include some drilling.

Gilmore, an area immediately west of the phase-8 expansion, is another prospect that could add to Fort Knox's mine life.

In 2014, the U.S. Bureau of Land Management authorized Kinross to conduct mineral assessment work on federal lands adjacent to the open-pit at Fort Knox that were previously withdrawn for use by the National Oceanic and Atmospheric Administration.

Fairbanks Gold Mining's proposed work on this adjacent property includes soil sampling, geologic mapping, and drilling. This activity would occur on land near the western boundary of the Fort Knox mine.

While Gil, Gilmore and other mineral resources at Fort Knox have the potential to extend the gold mine beyond phase-8, Atchison cautions that it is too early to know the economic viability of bringing these deposits into the mine plan.

 

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