Less may be more in turbulent down cycle
Mining companies are increasingly focused on good grade, moderate-size projects that have remained sidelined during past decade
Last updated 6/28/2015 at Noon
The world's mining industry has once again transmogrified itself in the face of changing global metals markets and investor expectations.
In a recent Reuters report, several companies, including Newmont Mining Corp., Goldcorp Inc. and Yamana Gold Inc., were singled out as having taken steps to bring smaller, leaner, lower output projects into production to avoid the cost over-runs which have plagued the large multibillion-dollar projects in recent years.
The same large mine projects also tend to have the highest probability of becoming bogged down in social issues, including labor unrest, political issues and environmental opposition.
Evidence for this "smaller is better" movement includes a 15 percent drop in the average annual gold output from mines newly commissioned in 2014 versus the previous five-year average.
This production decline coincides with a decrease in the average size of debt and equity financings, which fell to an average of $128 million, the lowest level in more than seven years.
Does this mean that companies are no longer interested in large projects? Decidedly not! However, it may signal an increased interest in good grade, moderate-size projects that appealed to few mining companies in the past decade.
Graphite One Resources announced the acquisition for cash and stock of 28 State of Alaska mining claims that give it unfettered right to mine 100 percent of the graphite resource that it has outlined at the Graphite Creek project during the past few years.
The claims were acquired from noted Alaska geologist Ron Sheardown, who will become a member of the company's advisory board.
The acquisition puts to bed the question of whether graphite could be mined from 20 claims the company had acquired through lease from Kougarok LLC. The U.S. Bureau of Land Management held that the 20 claims in question were staked at a time when only metalliferous minerals could be acquired by staking, and graphite was not considered a metalliferous mineral.
The State of Alaska over-selected the lands in question and its mining regulations make no such distinction so the question of whether or not graphite is a metalliferous mineral is now moot.
Thus endeth our Mining Law 101 lesson for today.
Northern Dynasty Minerals Ltd. reported that a federal court has rejected an EPA motion to dismiss the Pebble Partnership's lawsuit that accuses the EPA of violating the Federal Advisory Committee Act in advancing its Bristol Bay Watershed Assessment study and a subsequent pre-emptive veto under Section 404(c) of the Clean Water Act. This leaves in place a preliminary injunction granted in November 2014 that forbids the EPA from advancing any action under 404(c) affecting the Pebble project until the case in question runs its course.
Redstar Gold Corp. announced results from two of the eight holes it drilled at the Shumagin zone of its Unga gold project near Sand Point in western Alaska.
Hole 15SH011 intersected 1.9 meters grading 202 grams per metric ton gold and 82 g/t silver, while hole 15SH012, drilled from the same pad, intersected 7.3 meters grading 11.8 g/t gold and 72.7 g/t silver, including 2.0 meters grading 25.3 g/t gold and 209 g/t silver and an additional 3.0 meters grading 16.95 g/t gold and 183 g/t silver.
The company indicated that four of the eight holes completed so far are designed to confirm and clarify mineralization within areas of the Shumagin zone where previously drilling has occurred, while the other four holes are designed to extend the zone 100 meters along strike to the northeast.
The company also noted that although assays were only available for the first two holes, the Shumagin vein system had been encountered in all eight of the holes drilled.
This vein consists of higher grade material within cockade to colloform textured quartz-adularia-rhodocrosite-green clay veins within a broader envelope of sulfide mineralization.
The steeply dipping vein system averages seven to 10 feet thick and is surrounded by quartz-sericite-pyrite veins and stockwork, commonly extending for more than 10 meters into the hanging wall.
Pending the results of the other six holes, the company is planning a phase 2 drilling program for later in the year.
Northern Empire Resources Corp. and joint venture partner Sonoro Metals Corp. announced the completion of the field work for its phase 1 2015 exploration program at the Hilltop gold project in the western Richardson District.
Work completed in phase 1 includes submission and receipt of a multi-year exploration permit, 13.2 kilometers of road improvement to provide better crew and equipment access to priority zones, excavation, mapping and sampling of eight trenches over a total strike extent of 213 meters, completion of six test pits in areas with prospective geology and/or hosting anomalous historic results from previous exploration groups, initial prospecting and reconnaissance work, which includes visiting the locations of anomalous sample sites taken on the property by previous exploration groups and collection of 228 rock samples and 397 soil samples including 61 due diligence top-of-bedrock soil samples and 336 B-horizon enzyme leach soil samples.
Results are pending.
Endurance Gold Corp. announced that a 2015 exploration program has commenced on its 4,960-acre (12,850 square kilometers) Elephant Mountain gold property in the Rampart District. Exploration has confirmed an intrusive-hosted target area of at least 1.8 kilometers by 0.6 kilometers in size encompassing two gold-arsenic soil and rock sample anomalies (the North and South Zones) and an untested IP chargeability anomaly (the Central Zones) located between the two soil anomalies. The 2015 program consists of grid soil auger sampling that will focus on the Central and South zones to better define and prioritize targets for diamond drilling.
Coventry Resources Inc. announced that it had completed financing for its Caribou Dome copper project in the Valdez Creek District and started its planned ground geophysics program.
In addition to ground geophysics, planned work in 2015 includes further diamond drilling, additional soil sampling and geologic mapping.
The drilling will focus on confirming results of previous drilling to allow historic results to be incorporated into a mineral resource estimate and to conduct exploration of some of the high-priority targets that have yet to be drilled, including the Lense 2 target that is up to 15 meters wide and more than 200 meters of strike.
This target coincides with a strong 350-meter-long induced polarization geophysical anomaly.
The current geophysical survey will include electromagnetic surveying over all nine known lenses of mineralization.
Ground electromagnetics has never been employed at the project, and is expected to facilitate the accurate definition of drill targets.
Additional electromagnetic surveying and/or controlled-source audiomagnetotellurics and/or induced polarization ground geophysics will be undertaken over other high-priority targets along strike from the known mineralization.
Many of these targets coincide with highly anomalous copper-in-soil geochemistry.
Following the planned two-week geophysical program, the company will prioritize targets in preparation for an early-July drilling program.
The program plans about 6,000 meters of diamond drilling to be completed with two drill rigs.
Drilling will be focused on resource growth, with holes targeting the lower elevations of the recently updated, and significantly expanded, inferred mineral resource of 8.1 million metric tons grading 1.41 percent copper, 5.25 percent zinc, 0.32 g/t gold and 31.7 g/t silver.
The resource is open to expansion in most areas, with the thickest part of the deposit located at the current down-dip limit of the South Wall Zone.
The thickening trend of the deposit in this direction, combined with mineral zoning and borehole geophysical data, support the potential for a copper-rich core zone within the Lower Offset target, located below the Kudo fault.
This target, and the open strike extensions of the thick SW EM Zone resource, represent the priority target areas for the 2015 drill program.
Other work planned for the 2015 season includes borehole geophysical surveys and environmental and geotechnical studies.