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By Shane Lasley
Mining News 

Fort Knox gold mine extended to 2030

Kinross' greenlight of Gilmore project great news for Alaska

 

Last updated 6/22/2018 at 4:19am

Gilmore project expansion at Fort Knox gold mine, Fairbanks, Interior Alaska

Kinross Gold Corp.

A view over the Walter Creek Heap Leach pad, which has produced more than 1 million ounces of gold since it was put into operation at the Fort Knox Mine in 2009.

The Fort Knox Mine will continue churning out gold until at least 2030, thanks to Kinross Gold Corp.'s decision to move ahead with the development of Gilmore, an expansion project immediately west of the open-pit mine that has provide ore to the Interior Alaska operation for 22 years.

"This go-ahead decision for Gilmore represents collaboration, hard work and dedication coming to fruition, and it wouldn't have been possible without the contributions of many," said Fort Knox General Manager Eric Hill. "Being able to extend mine life is great news for our site, and the communities and stakeholders who benefit from our operations."

This initial phase of expansion into the Gilmore project area is expected to add roughly 1.5 million ounces of gold production from Fort Knox by extending mining by six years to 2027 and gold recovery from heap leaching to 2030.

"We are pleased to proceed with the initial Fort Knox Gilmore project, a low-risk, low-cost brownfield expansion that is expected to extend mine life to 2030 at one of our top performing operations and contribute 1.5 million gold-equivalent ounces to strengthen our long-term U.S. production profile," said Kinross President and CEO J. Paul Rollinson.

And Kinross seems confident that further expansion into Gilmore and development of other areas across the greater Fort Knox property will further extend this important source of high paying jobs and tax revenue a few miles north of Fairbanks.

Gilmore transfer

Kinross has long viewed Gilmore as an area that could extend the life of the Fort Knox Mine. This potential expansion area, however, was on National Oceanic and Atmospheric Administration land that hosts the Fairbanks Command and Data Acquisition Station, a facility about three miles southwest of the Fort Knox property more commonly known as the Gilmore Creek Satellite Tracking Station.

In 2014, the U.S. Bureau of Land Management authorized Kinross to carry out exploration on this 709-acre prospective parcel just west of the pit.

While the drilling carried out over the ensuing years confirmed that Gilmore hosts potentially ore grade gold, this area was not open for mining.

In 2017, NOAA turned over this golden parcel of land to the state of Alaska, which made it available for mining.

"This is a significant development for Alaska's economy, and was made possible by our administration, federal agencies, and our congressional delegation cooperating to transfer these lands from federal ownership to state of Alaska ownership," said Alaska Gov. Bill Walker.

New heap leach pad

Kinross, which has the state mining claims over the new state lands, completed a feasibility study that contemplates the first two phases of a potential multi-phase layback of the existing Fort Knox pit into the Gilmore project area and construction of a new heap leach pad to process most of the ore mined there.

This study contemplates that nearly all of the gold mined from Gilmore will be recovered via heap leaching, a process that involves stacking the ore on a lined pad and using a mildly acidic leaching agent trickled over the ore to dissolve the gold into a solution that is pumped through a facility that recovers the gold.

Though considered better suited for warmer climates, heap leach gold recovery at Fort Knox over the past nine years has demonstrated that with the right engineering this technique can be applied to even the coldest northern climates.

In fact, the Walter Creek Arctic Heap Leach facility at Fort Knox has been churning out roughly 125,000 oz of gold annually and crossed the 1 million oz threshold early this year.

"The company expects to continue leveraging its extensive experience and knowledge operating cold weather, sub-arctic heap leaching, having successfully operated Fort Knox's current heap leach during the past 10 years," Kinross penned in a statement.

Over that time, lower grade ore from the Fort Knox pit was stacked on the heap leach pad and the higher grade material was processed through the mill.

The mill at Fort Knox, however, is currently slated to be phased out by the end of 2020, according to the Gilmore project feasibility study.

To accommodate the ore mined from Gilmore, Kinross is about to break ground on the Barnes Creek Heap Leach Pad.

Initial production from Gilmore is expected in early 2020, with roughly 5 percent of Gilmore ore expected to be stacked on the existing pad and the balance to be stacked on the new heap leach pad, beginning in late 2020.

With the project team in place, contracting underway and engineering largely complete, construction of the new heap leach pad is expected to begin in the coming weeks.

Attractive economics

Considering the 1.5 million oz of gold Gilmore contributes to the Fort Knox operation, the roughly US$100 million price tag to develop the expansion project is a bargain for Kinross.

At a conservative US$1,200/oz gold price, the Gilmore project is expected to generate an after-tax internal rate of return of 17 percent and net present value (5 percent discount) of US$130 million. At US$1,300/oz, roughly the current price of the precious metal, the after-tax IRR increases to 26 percent and the NPV jumps to US$239 million.

"The Gilmore project offers an attractive IRR and NPV and adds to our suite of quality development projects at Tasiast, Round Mountain, Bald Mountain and Kupol to enhance our globally diverse portfolio," said Rollinson. "The project's low initial capital cost is expected to be funded by Fort Knox's cash flow, helping preserve our strong balance sheet and financial flexibility."

More workers needed

The expansion is also a good deal for the 630 Fort Knox employees and 150 contract workers who take home healthy paychecks from working at the mine, and the Fairbanks North Star Borough, which benefits from the tax revenue this long-lived gold operation generates.

"Expanding the Fort Knox Mine will be good for the local economy and shows that the state of Alaska is a good partner in responsible mining projects," said Rep. Scott Kawasaki, D-Fairbanks. "The Fort Knox Mine is one of the safest mines on earth and is a shining example of how to do it right in a challenging environment."

While Kinross is currently hammering out the details of the workforce requirements for the Gilmore project, it is expected there will be an influx of contract workers needed over the next couple of years.

"During the next phase of construction, which is expected to extend through 2019, we will be working with additional contractors and as always, we will prioritize work with local suppliers and contractors where possible," Anna Atchison, Fort Knox's external affairs manager, told Mining News. "After 2019, the average number of contractors will be consistent with historical averages at Fort Knox."

She added that Fort Knox will support the mill workers who could be phased out by the end of 2020.

Then again, they could be operating the mill further into the next decade.

Atchison said Kinross "will look for ways to continue optimizing our mine plan in an effort to extend mill life."

Gilmore project expansion map Fort Knox gold mine, Fairbanks, Interior Alaska

Kinross Gold Corp.

This could come from ongoing exploration of the upside potential around the current Fort Knox pit. Kinross said this "orebody has not yet been delineated to the west, south and east."

On top of testing expansion of the current pit, further drilling is expected to be conducted on the Gilmore property in 2019, including infill drilling to potentially add to the mine's estimated mineral reserves.

"With additional upside potential at Gilmore and beyond, Fort Knox is a significant asset in our portfolio located in an excellent mining jurisdiction," Kinross CEO Rollinson said. "The Gilmore project and the addition of estimated mineral resources improves value and is expected to be a key contributor to the future growth of our company."

 

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