Price run-up startles
Zinc, lead and silver follow gold's lead, while copper lags other sectors
Last updated 2/28/2016 at Noon
Although there is plenty of Alaska mining industry news this month, the big dog in the pen is the dramatic and unexpected run-up in the price of gold, which moved from a low of $1,078 per ounce to a high of $1,246/oz., most of which occurred after Feb. 1.
Although profit-taking and other factors have caused the price to back off a bit, the move was both dramatic and unexpected.
As you might guess, the ether is full of talking heads telling us why it went up, why it either won't stay up or will stay up, and what the price increase means for the mining industry, for bullion speculators and for gold end-users.
But all of this explanatory noise came after the fact.
What I want to know is who, if anyone, predicted the gold price run-up - that's the Nostradamus I want to cozy up to! Zinc, lead and silver also tracked up with the gold increase, reversing multiyear declines and putting smiles on the faces of Alaska's large metal mines.
However, copper lagged behind, with only a few cents rise as it bounced around the $2 per pound mark.
Over the past couple years, it has become clear that copper, once thought of as a reliable leading economic indicator, can no longer claim that title.
It is clear that global economics are changing the dynamics of commodity supply and demand, whether we like it or not.
One other item caught my eye: the European Space Agency announced Feb. 11 the detection, for the first time, of gravitational waves in space, some 100 years after Albert Einstein predicted their presence.
And guess what they used to make this ground-breaking discovery? Gold and platinum! The LISA Pathfinder spacecraft, contains two identical gold and platinum cubes, measuring 46 millimeters on each side and weighing 1.96 kilograms each.
The metals were chosen and combined in such a way that the magnetic susceptibility of the finished alloy was virtually zero, allowing the spacecraft to detect minute amounts of deformation by gravity waves.
The news that gravitational waves really do exist had science nerds swooning, but it also had to bring a smile to the faces of gold and platinum producers worldwide!
Mill throughput in the fourth quarter was 15 percent lower than a year ago, primarily due to an extended annual mill maintenance shutdown that resulted in zinc production slipping 12 percent from a year earlier.
Lead production declined by 22 percent, primarily due to the lower throughput and reduced recoveries, which are partly offset by higher ore grades.
In the fourth quarter the mine produced 136,200 metric tons of zinc in concentrate, and for the year, the mine produced 567,000 metric tons of zinc in concentrate.
Zinc ore grade for the year was steady at 16.7 percent and mill recoveries were up slightly to 84.2 percent.
The mine also produced 29,200 metric tons of lead in concentrate during the 4th quarter and 117,600 metric tons of lead in concentrate for the year.
Lead ore grade for the year increased to 4.8 percent, while mill recoveries decreased to 60.7 percent.
Gross operating profit for the fourth quarter was $149 million, compared with $200 million in 2014.
Gross operating profit for the year was $537 million, compared with $574 million in 2014.
Mill throughput for 2015 was down significantly to 4,026,000 metric tons due in part to the extended annual mill maintenance shutdown.
During 2015 the mine paid partner NANA Regional Corp. and the State of Alaska royalties of $178 million versus royalties of $215 million in the year-earlier period.
Zinc and lead sales volumes were 19 percent and 27 percent higher, respectively, than in the fourth quarter of 2014 due to timing of annual shipments.
The mine's expected production of contained metal in 2016 is expected to be in the range of 545,000 to 570,000 metric tons of zinc and 115,000 to 120,000 metric tons of lead.
From 2017 to 2019, mine production is expected to be in the range of 500,000 to 550,000 metric tons of zinc and 100,000 to 110,000 metric tons of lead.
Studies are in progress to increase mill throughput and thus zinc metal production as feed grade continues to decline.
Novagold Resources Inc. released its year-end financial results and project update for its flagship Donlin gold project, owned 50 percent with Barrick Gold Corp. Major milestones for 2015 include publication by U.S. Army Corps of Engineers of the draft environmental impact statement.
A five-month public comment period is now in process and will include public meetings in 15 villages in the Yukon-Kuskokwim region and Anchorage.
The company advanced multiple major permits, including Section 404, integrated waste and water management permits, reclamation permits and air-quality permits.
Over 100 permits will be required to reach production.
The partners also continued evaluating alternatives to reduce initial capital costs through third-party owner-operator agreements including a Request for Expression of Interest for third-party participation in the proposed natural gas pipeline to the project.
The company indicated its share of expenses at Donlin for 2015 was $11,016,000, indicating the total expenditures for the project were about $22,032,000.
For 2016 the partners have budgeted roughly $18 million to fund expenditures at Donlin and an additional $2 million for joint project technical studies.
Kinross Gold Corp. announced fourth quarter and year-end 2015 results from its Fort Knox mine.
The mine produced 401,553 oz. of gold at a cost of $629/oz. versus 379,453 oz. of gold produced at a cost of $712/oz. in 2014.
During the 4th quarter of 2015 the mill processed 3,407,000 metric tons of ore grading 0.66 grams per metric ton gold.
Mill recoveries were 82 percent for the quarter.
During the 4th quarter the mine placed 6,712,000 metric tons of ore grading 0.26 g/t gold on the valley leach facility.
The mine also announced year-end revised resources, including proven and probable reserves at the mine were 147,318,000 metric tons grading 0.40 g/t gold (2,022,000 oz.).
Measured and indicated resources at the mine were 95,822,000 metric tons grading 0.50 g/t gold (1,423,000 oz.).
Inferred mineral resources were 14,824,000 metric tons grading 0.50 g/t gold (221,000 oz.).
Contango ORE Inc. announced year-end and near-term exploration plans for its Tetlin gold project, operated by a subsidiary of joint venture partner Royal Gold Inc. During 2015 the joint venture expended about $6.8 million for exploration, development and project management, focused primarily on its Peak gold deposit and other newly discovered gold bearing areas on the property.
The joint venture recently approved phase 1 expenditures up to $4.4 million for a winter exploration program which commenced in mid-February.
Depending on phase 1 results, a more extensive phase 2 drilling and reconnaissance program may be approved for the summer and fall of 2016.
One objective of the 2016 exploration program will be to gather data sufficient to allow the joint venture to complete a new mineral resource estimate by the spring of 2017.
Royal can earn up to 40 percent interest in the project by contributing up to $30 million by Oct. 31, 2018.
Of this amount, Royal has contributed $6.8 million to work completed through 2015 and has committed an additional $4.4 million to the upcoming phase 1 winter exploration work.
Alaska newcomer White Rock Minerals Ltd. announced acquisition of Metallogeny Inc.'s Red Mountain volcanogenic massive sulfide project in the Bonnifield District.
Previous exploration has resulted in historical estimates of mineral resources at the two main prospects - Dry Creek and West Tundra Flats.
Significant drill results from Red Mountain include 4.6 meters grading 23.5 percent zinc, 531 g/t silver, 8.5 percent lead, 1.5 g/t gold and 1.0 percent copper from 6.1 meters, 5.5 meters grading 25.9 percent zinc, 346 g/t silver, 11.7 percent lead, 2.5 g/t gold and 0.9 percent copper from 69.5 meters, and 7.1 meters grading 15.1 percent zinc, 334 g/t silver, 6.8 percent lead, 0.9 g/t gold and 0.3 percent copper from 39.1 meters.
Significant drill results from West Tundra Flats include 1.3 meters grading 21.0 percent zinc, 796 g/t silver, 9.2 percent lead, 10.2 g/t gold and 0.6 percent copper from 58.6 meters, 3.0 meters grading 7.3 percent zinc, 796 g/t silver, 4.3 percent lead, 1.1 g/t gold and 0.2 percent copper from 160.9 meters and 1.7 meters grading 11.4 percent zinc, 372 g/t silver, 6.0 percent lead, 1.7 g/t gold and 0.2 percent copper from 104.3 meters.
Mineralization is hosted in Lower Mississippian to Middle Devonian Totatlanika Schist, composed predominantly of metamorphosed volcanic and volcaniclastic rocks, and subordinate amounts of intercalated sedimentary rocks.
The Dry Creek and WTF deposits have the volcanic, geochemical, alteration and sulfide assemblage characteristics of a very shallow water, boiling hydrothermal system with higher prospectivity for precious metal enrichment.
Historical estimates for the combined resources at Red Mountain and West Tundra Flats are 5.7 million metric tons grading 5.0 percent zinc, 120 g/t silver, 2.1 percent lead, 0.7 g/t gold and 0.16 percent copper.
Mineralization was discovered by a Phelps Dodge - Getty Oil joint venture at Red Mountain in 1976 and by Resource Associates of Alaska at West Tundra Flats in 1982.
Significant core drilling and other work has been conducted on the prospects during the period 1975 through 1999, with other companies participating, including Houston Oil and Minerals, Grayd Resources and Atna Resources.
White Rock currently is conducting data compilation and interpretation to help define future exploration targets.
Welcome to Alaska White Rock Minerals Ltd.!
Millrock Resources Inc. announced that First Quantum Minerals has elected not to renew its option to acquire a joint venture interest in the Alaska Peninsula property. No mineralization of significance was discovered in drilling at the Mallard Duck Bay prospect. Mineralization intersected at the Dry Creek prospect, while highly anomalous, was not strong enough to encourage further drilling. Millrock is discussing an extension of the option to lease agreement concerning the lands with the underlying subsurface land owner, Bristol Bay Native Corporation.
Millrock Resources Inc. also announced that the company and joint venture partner Teck American Inc. have elected to terminate the joint venture concerning the Estelle project in Alaska. The project has been inactive since 2014 and efforts to attract a third party to the project have been unsuccessful. The claims that comprise the project have been allowed to lapse.
Diamond Gold Corp. has filed a plan of operations to expand Fire Brick mine, a gold-copper-silver prospect in the Yentna District.
Gold and copper mineralization at the S15 zone occurs along a 5,000-foot-long, 1,500-foot-wide east-west trending fault.
Mineralization is in quartz-carbonate altered zones of carbonatite and peridotite containing anomalous platinum and palladium in addition to copper and gold.
Drilling and underground workings have tested the mineralization to at least 500 feet.
Mineral resources are estimated at 300 million short tons grading 0.28 oz. per ton gold, 0.20 oz. /t silver and 0.063 percent copper.
The company spent $500,000 at the project in 2015, including exploration work, cyanidation and flotation tests as well as bulk sampling of the No. 3 vein from underground workings.
Mill flowsheet work is ongoing.
The project is a joint venture with NANA Regional Corporation Inc. During 2015 the company advanced the Arctic volcanogenic massive sulfide deposit towards pre-feasibility with 3,056 meters of drilling completed in the summer.
The intent of the in-fill drill program is to re-classify the inferred resources to the measured and indicated categories for the potential of reporting reserves and resources in a future pre-feasibility study.
The company spent $5.5 million during 2015, mainly on a successful field program comprised of 14 diamond drill holes, 12 of which were resource estimation holes and two of which were designed to collect geotechnical and hydrology information within the proposed Arctic open-pit.
The company also noted that the Alaska Industrial Development Export Authority was given authorization by the State of Alaska to begin an environmental impact study on the Ambler Mining District Industrial Access Road, a process the company anticipates requiring 2-3 years to complete.
The company plans to invest $5.5 million at the Upper Kobuk Mineral Projects during 2016, mainly for drilling at Arctic during the field season as well as to complete in-pit geotechnical, hydrological and metallurgical studies.
Funds will also be utilized for environmental and engineering studies, as well as to complete the LiDAR survey initiated in 2015.
The company plans to continue community engagement and its efforts on local hiring and education along with continuing to engage with the State of Alaska on the permitting of the Ambler access road.
The company also announced that its president and CEO, Rick Van Nieuwenhuyse, and its past vice president, exploration, Joseph Piekenbrock, received the prestigious 2015 Colin Spence Award for Excellence in Global Mineral Exploration from the AME-BC. As part of the team at Novagold Resources Inc. they received the Thayer Lindsley Award for the discovery of the Donlin Creek deposit from the Prospectors & Developers Association of Canada in 2009.
Congratulations Rick and Joe for this well-deserved award!
Hecla Mining Company announced 2015 exploration and year-end resource estimates for its Greens Creek mine on Admiralty Island.
During 2015 mining and revised resource calculations at lower silver prices resulted in an 8 percent decrease in gold and silver reserves.
But that factoid does not tell the whole story: the resource/reserve model for the NWW zone was not updated in time for 2015 year-end reporting.
The NWW current resource includes indicated resources of 800,200 silver oz. and 13,000 gold oz. and inferred resources of 18.5 million silver oz. and 91,700 gold oz., a high proportion of which is expected to be converted to reserves with additional drilling.
The NWW zone update should be completed during the first quarter of 2016 and is anticipated at minimum to replace in 2016 the current reserve deficit from 2015.
Large inferred resources in the Deep 200 South (9.6 million silver oz. and 76,500 gold oz.) and East Ore (11.4 million silver oz. and 106,000 gold oz.) are targeted for infill drilling in 2016 and significant portions are expected to be converted to reserves in 2016.
On the exploration front, exploration drilling of the 9A and 5250 trends expanded the resource along the projected mineralization trends.
Recent drilling of the lower NWW Zone confirmed and upgraded the resource model of the shared and upper limbs.
Significant results from this drilling include 86.8 oz./ton silver per, 0.19 oz./ton gold, 4.9 percent zinc, and 2.2 percent lead over 17.2 feet and 46.9 oz./ton silver, 0.22 oz./ton gold, 17.4 percent zinc, and 6.2 percent lead over 9.5 feet.
Drilling has defined additional West Wall mineralization up to 205 feet down-dip from the current resource model and includes an intercept of 14.7 oz./ton silver, 0.04 oz./ton gold, 12.2 percent zinc, and 4.7 percent lead over 12.3 feet about 70 feet down-dip of the current model.
Follow-up to historic high-grade drill intersections of the 9A Zone has defined continuous mineralization proximal to the Maki Fault block.
Exploration drilling has defined a complexly folded horizon of mineralization stretching about 180 feet along strike and 320 feet along dip.
Drilling of the Deep 200 South Zone in the past few years has defined three stacked folds of high-grade mineralization that represent up to 600 feet of down-dip continuity.
Recent drilling of the folded upper bench mineralization to the south has defined mineralization of similar extent, thickness, and geometry compared to the resource model.
A recent exploration hole to the south intersected intermittent mineralization and the resource remains open to the south.
Exploration drilling of the down-plunge projection of the 5250 trend of mineralization intercepted strong mineralization within argillite that dips down toward the Deep 200 South bench.
Recent exploration drilling at the southern extent of the East Ore Zone above and below the Klaus Shear intersected the mine contact but had weak mineralization indicating that the contact folds sharply into the fault.
The company also announced year-end 2015 reserves and resources for the mine, including proven and probable reserves of 7,214,000 tons grading 12.3 oz. /ton silver, 0.09 oz. /ton gold per ton, 3.0 percent lead and 8.1 percent zinc.
In addition, the mine contains measured and indicated resources of 1,227,000 tons of indicated resources grading 10.6 oz. /ton silver, 0.10 oz. /ton gold, 3.0 percent lead and 7.5 percent zinc.
The mine also reported inferred resources of 3,255,000 tons grading 12.8 oz. /ton silver, 0.09 oz. /ton gold, 2.8 percent lead and 6.7 percent zinc.
If you add up the silver in all resource categories, the mine is carrying over 143 million oz. of silver in resource.
Coeur Mining Inc. presented fourth quarter and annual production on its Kensington gold mine north of Juneau.
The mine produced 126,266 oz. of gold in 2015 compared to 117,823 oz. of gold for 2014.
For the year, the mine processed 660,464 tons of ore at an average grade of 0.20 oz./ton.
Average recovery was 94.9 percent.
Average cost of production was $798/oz. The mine spent $2.6 million on exploration in 2015.
Development of the Jualin decline has advanced about 2,000 feet and remains on-schedule.
Underground drilling of the high-grade Jualin deposit is expected to begin during the first quarter of 2016.
The mine is expected to produce 115,000 to 125,000 oz. of gold in 2016 with costs expected in the $825-875/oz. range.
Capital expenditures in 2016 are estimated to be approximately $30 million and consist mostly of underground development of the Jualin deposit, further development of the Kensington and Raven ore bodies, as well as capitalized exploration.
The company also announced year-end resources and reserves at the mine, including proven and probable reserves at Kensington of 2,659,000 tons grading 0.194 oz. /ton gold (517,000 oz.) and an additional 166,000 tons grading 0.259 oz. /ton gold (43,000 oz.) at Raven.
Measured and indicated resources for Kensington are 1,775,000 tons grading 0.278 oz. /ton gold (493,000 oz.) and an additional 58,000 tons grading 0.414 oz. /ton gold (24,000 oz.) at Raven.
Total inferred resources for Kensington are 1,741,000 tons grading 0.285 oz. /ton gold (496,000 oz.), an additional 29,000 tons grading 0.517 oz. /ton gold (15,000 oz.) at Raven and an additional 289,000 tons grading 0.619 oz. /ton gold (179,000 oz.) at Jualin.
All-in, that is 1,767,000 total oz. in all categories.
Constantine Metal Resources Ltd. announced that it has received a $250,000 option payment from Dowa Metals & Mining Co., Ltd., its partner at the Palmer volcanogenic massive sulfide project. This fourth payment brings the total payments received from Dowa to date to $1,250,000. To the end of 2015, Dowa has spent about $16 million on the project. The partners currently are working to finalize plans and program scope for 2016.
Ucore Rare Metals Inc. provided an update on the preparations for utilizing their rare earth separation pilot plant using raw ore from their Bokan-Dotson rare earth element project.
Roughly 40 metric tons of material from the property were processed in Germany utilizing the company's preferred ore-sorting technology, resulting in about 19 metric tons of sorted rare earth bearing material containing 96 percent of the rare earth metals.
A three-metric-ton bulk sample was split from the sorted material and has been shipped to SGS Lakefield Research Ltd. in Ontario to process through the circuit developed for the company's preliminary economic assessment which includes crushing, grinding and magnetic separation, followed by a nitric acid leach, to yield about 500 gallons of pregnant leach solution.
In addition to delivering a solution suitable for separation in the pilot facility, the SGS work will provide further independent confirmation of the process flowsheet proposed in the company's preliminary economic assessment.
The company's SuperLig®-One pilot facility, currently being constructed by IBC Advanced Technologies, Inc. near Salt Lake City is expected to be completed and ready for initial fluid testing in March.
Upon receipt from SGS, the Bokan pregnant leach solution will undergo an initial test run followed by a production run commencing before the end of March.
The initial output product from the SuperLig®-One pilot program, scheduled for delivery in the second quarter of 2016, will contain heavy rare earth elements in the form of metal carbonates of dysprosium, terbium) and europium).