Majors drive mineral industry revival
Alaska sees front end of supply, demand cycle after four-year downturn in exploration, development slowed pace of new discoveries
Last updated 1/14/2018 at 9:06am
At a recent mining industry panel discussion at the Western States Land Commissioners Association meeting in Anchorage, I was asked if the recent upturn in activity in the Alaska mining industry was a function of commodities prices or a growing worldwide recognition of Alaska's enormous mineral potential. I answered that I thought neither factor was driving the Alaska mineral industry revival: commodities prices have been steady or rising slowly over the last year and Alaska's mineral potential is well recognized across the industry.
I feel the invigorated Alaska mining industry is seeing the front end of a simple supply and demand cycle, driven largely by steady or increased production of commodities that coincides with the four-year exploration and development downturn that has resulted in fewer new deposits discovered, developed and put into the production pipeline. In short, new resources have not been added to the resource pool at anywhere near the rate they are being depleted.
My favorite mineral economist, Richard Schodde of MinEx Consulting, recently quantified these worldwide trends by showing that over the past 20 years, exploration discovery rates have dropped for virtually all commodities. During that same period, major and intermediate producers have refocused their capital on mine and mill plant improvements, cutting exploration budgets to near zero.
As a consequence, the proportion of discoveries made by junior mining companies grew to a whopping 70 percent. However, the capital pool available to junior companies dried up and the total number of discoveries plummeted, both in terms of total resource size and resource quality.
Yeah, yeah, yeah, so what does this have to do with Alaska's mineral industry revival?! A quick look at who is doing the exploring in Alaska this summer will answer the question: more than 60 percent of the announced exploration budgets for Alaska for 2017 are being contributed by major producing companies. At the same time, major and intermediate producing companies are actively seeking new acquisitions in Alaska, several of which will likely become public before the end of the year. Junior exploration company expenditures remain down or flat relative to the past several years.
It seems clear that both major and intermediate producers have recognized that the shovel-ready deposits that junior explorers use to discover and advance to the acquisition phase are simply not being discovered or developed. The producers have been forced to conduct their own generative exploration and/or acquire existing prospects at an earlier stage than has been the norm in the past.
Macro-economics 101: often ignored but always in play!
Solitario Exploration & Royalty Corp. announced that it has completed its acquisition of Zazu Metals Corp. and with it, the Lik lead-zinc-silver deposit near Red Dog.
Solitario acts as the project manager.
At a 5 percent cut-off grade, indicated open pit resources at South Lik stand at 16.85 million metric tons grading 8.0 percent zinc, 2.7 percent lead and 50 grams-per-metric-ton silver.
Indicated open pit resources at North Lik stand at 0.44 million metric tons grading 10.0 percent zinc, 2.8 percent lead and 59 g/t silver.
At a 7 percent cut-off grade, indicated underground resources at South and North Lik stand at 17.29 million metric tons grading 8.1 percent zinc, 2.7 percent lead and 50 g/t silver.
At a 5 percent cut-off grade, inferred open pit resources at South Lik stand at 0.74 million metric tons grading 7.7 percent zinc, 1.9 percent lead and 13 g/t silver.
Inferred open pit resources at North Lik stand at 2.13 million metric tons grading 8.9 percent zinc, 2.9 percent lead and 46 g/t silver.
At a 7 percent cut-off grade, inferred underground resources at South and North Lik stand at 5.34 million metric tons grading 8.7 percent zinc, 2.7 percent lead and 38 g/t silver.
Quaterra Resources Inc. announced that it has commenced a core drilling program of between two and four holes at the Groundhog copper prospect, a 40,000-acre property situated in an established copper porphyry belt 200 miles southwest of Anchorage.
Quaterra has an option to purchase a 90 percent interest in Groundhog.
The program is operated by Chuchuna Minerals Co., an Alaska company jointly owned by Kijik Corporation, the Alaska Native village corporation for the community of Nondalton, and Alaska Earth Sciences, an Anchorage-based mineral exploration company.
Holes will be sited to test several shallow IP anomalies identified by historic surveys and 16.5 kilometers of new induced polarization geophysical surveys during late June and July.
The holes are widely spaced across the property forming an equilateral triangle with sides of about 4.5 kilometers.
Two of the holes will test anomalies under shallow Tertiary volcanic cover and one hole will test an anomaly under glacial till.
These are the first holes drilled in the area.
The property is located on State of Alaska claims covering the northern extension of a 10-kilometer (six miles) wide north-northeast trending structural zone that hosts a number of porphyry copper-gold prospects, including the Pebble porphyry copper, gold and molybdenum project, which is about three miles south of the Groundhog claim boundary.
Regional magnetic data suggest that geology similar to that at Pebble extends under cover for an additional 30 kilometers (18.6 miles) northeast from the Pebble deposit.
CopperBank Resources Corp. announced that a second drill rig has been added to the diamond drilling program being conducted on its 100 percent controlled Pyramid project located on Aleut Native Corporation lands on the Alaska Peninsula. The addition of a second rig will significantly increase the previously planned 1,500-meter drill program planned for the project and will allow one rig to focus on each of the two main zones of mineralization, the North and South zones.
Freegold Ventures Ltd. announced additional results from its 27-hole oxide-zone core drilling program north of the current resource area at its Golden Summit gold project in the Fairbanks District. Significant results include 67.5 meters grading 0.41 grams-per-metric-ton gold in hole GSDL17-23 and 70.5 meters grading 0.82 g/t gold in hole GSDL17-26. The 50-meter spaced drilling was designed to test the upper 70 meters of ground north of current resources. In addition to drilling, an induced polarization geophysical survey was completed to the west of current resources, defining a 1,500-meter-by-300-meter resistivity anomaly associated with anomalous gold, bismuth and tungsten in soils.
Freegold Ventures Ltd. also announced commencement of a core drilling program at its Shorty Creek copper-gold project in the Livengood District.
The Hill 1835 prospect, discovered in 1985 but on which limited drilling was done in 1989-1990, was drilled in 2015 and 2016.
Significant results include hole SC 16-01 intersected 434.5 meters grading 0.36 percent copper including 207 meters grading 0.45 percent copper and hole SC 16-02 which intercepted 409.6 meters grading 0.29 percent copper including 93.5 meters grading 0.38 percent copper with both holes ending in mineralization.
The 2016 drill program successfully confirmed the presence of a copper-gold-molybdenum porphyry system at Shorty Creek, with an alteration/mineralization footprint that covers an area of about 10 kilometers (six miles) in diameter.
The airborne and ground magnetic surveys have identified a number of magnetic highs, which appear to be coincident with copper mineralization.
Mineralization on Hill 1835 was intersected in drill holes to a minimum depth of 500 meters and remains open in all directions.
Mineralization consists of sulfide-bearing quartz stockwork veining and disseminated sulfide within strong secondary biotite alteration and anhydrite primarily situated within a flysch unit intruded by quartz feldspar porphyry sills and/or dykes.
Disseminated and fracture-controlled pyrite, pyrrhotite, chalcopyrite, arsenopyrite and bornite have been identified (along with numerous secondary oxide minerals) in drill core.
Four additional targets (Hill 1890, Hill 1870, Steel Creek and Quarry) were identified by airborne magnetics and electromagnetic geophysics, ground induced polarization geophysics and soil sampling.
The 2017 program will focus on further expanding the mineralization at Hill 1835 and initial drill testing of the Steel Creek and Quarry targets.
Additional ground magnetic and geochemical surveys were undertaken at Steel Creek in 2016.
The Steel Creek anomaly measures 700 meters by 2,000 meters and is associated with a strong magnetic signature similar to Hill 1835.
At the Quarry prospect, located roughly five kilometers, three miles) east of Hill 1835, a 10 kilometer long northeast trending airborne magnetic high is associated with stockwork veined quartz-feldspar porphyry.
Ground magnetics and soil geochemistry were completed over a small portion of the 1,000-meter-by-10,000-meter anomaly and soil geochemistry returned both strong copper and molybdenum values.
Millrock Resources Inc. announced that it has commenced a field program at its Liberty Bell project, located in the Bonnifield Mining District. The program is funded by a subsidiary of Kinross Gold Corp. The project targets distal skarn gold deposits and possibly porphyry copper-gold deposits. Geology and setting of a small known gold deposit at Liberty Bell are similar to the recently discovered Peak gold deposit near Tok, Alaska. The field program will consist of 16 sampling days with 10 soil samplers and geologists collecting a target of 5,000 soil samples to characterize the surface geochemistry, in addition to mapping and prospecting.
The mill processed 163,163 tons of ore, a slight increase over the year-previous period.
The mine produced 26,424 ounces of gold grading 0.17 oz. per ton gold with an average recovery of 93.2 percent, a significant grade decrease over the year-previous period, primarily because of lower head grades in the current second quarter due to mine sequencing.
Higher grades, recoveries and production are anticipated for the remainder of 2017.
The company also indicated that development of the decline into the high-grade Jualin deposit is progressing with initial production from Jualin anticipated for late 2017.
The company indicated that it expects full-year 2017 production from the mine to total 120,000 to 125,000 ounces of gold.