Alaska mining traces erratic global trend
Predictably unpredictable global mining markets often leave the greedy without a chair when the capital raising music stops North of 60 Mining News – October 1, 2019
Last updated 9/26/2020 at 5:48am
If you have watched the metals markets over the last month, you know why Alaska's mineral industry has surged, stalled, swerved, swooped, slowed, shelved and stuttered, sometimes all at the same time! Gold has gone above US$1,500 per ounce; copper pundits are predicting an increasingly dour future; zinc markets are looking to dive below $1.00 per pound; tin markets have marched strongly upward due to supply disruptions; and silver bulls are calling for annual worldwide production to top 1 billion oz by 2023, from its current level in the low 900,000-oz-per-year range.
S&P Global Market Intelligence tries to quantify these predictably unpredictable market moves by following a number of indexes that monitor the health of the mining industry. For example, S&P tracks significant financings; metals prices; drilling activity; initial resource announcements; and positive project milestones and creates indices of each to help compare and contrast past activities and hopefully prognosticate future ones.
For the second quarter of 2019, the exploration (metals) price index showed increases for gold, zinc and platinum balancing declines for copper, nickel, silver, molybdenum and cobalt. However, just one month later, that same index showed increases for gold, silver, nickel, copper and platinum and decreases for zinc, cobalt and molybdenum.
Clearly, it's not easy to predict where metal prices are going to be, even one month out. And the tale of significant financings supports this conclusion. S&P Global reported 180 significant July financings versus 174 in June. Sounds like things are heating up, right? Not so fast – the dollar value raised in July was only US$524 million, 33 percent less than the US$787 million raised in June and a full US$2 billion (yes Dorothy, billion) less than that raised in April 2019. So, average financed amounts were down a whopping 35 percent in just one month!
What does this mean for those of us peering into Alaska's mineral industry crystal ball? Well, for one thing, flitting from one hot metal du jour to the next is not likely to put long-term smiles on anyone's face. For another, trying to squeeze the last nickel from a buyer or a seller often leaves the greedy without a chair when the music stops.
Perhaps investment guru Jim Cramer's favorite saying summarizes things best: "Bulls make money, bears make money and pigs get slaughtered".
HighGold Mining Inc., announced that it has begun trading on the TSX Venture Exchange and closed a C$7.65 million financing to be used in part to fund exploration of its Johnson Tract polymetallic project located near tidewater 125 miles southwest of Anchorage. Included in the who's who of new investors in the company are Rob McEwen, a partnership managed by an affiliate of the Sprott Group and an unnamed senior North American gold producer, who on closing of the financing own 10.1 percent, 14.4 percent and 6.6 percent, respectively, of HighGold's outstanding shares. In late August, the company initiated a planned eight- to 10-hole, 2,000-meter diamond drill program to confirm, define and expand mineralization previously drilled at Johnson Tract from 1982 to 1993. The new data along with historic drilling data will be used to generate the first industry compliant mineral resource for the project. Additional work planned on the project includes geologic mapping, prospecting and soil and rock sampling at other prospect areas.
Graphite One Inc. announced that it has entered into a US$4.8 million unsecured loan agreement with Taiga Mining Company Inc., a controlling shareholder of the company. Taiga and its associates currently hold about 34 percent of the outstanding common shares of the company. Proceeds from the loan are expected to fund the company through completion of a preliminary feasibility study at its Graphite Creek graphite project north of Nome. The loan bears interest at 12 percent per year, compounded annually, and is repayable in two years, with the company having the option to extend the loan for an additional 12 months with 30 days advance notice. The expected completion of the preliminary feasibility study is second quarter 2020.
Redstar Gold Corp. announced the start of 2019 exploration on its Unga epithermal gold-silver project on Unga and Popof Islands. The company is conducting detailed structural mapping as well as selective geophysical and geochemical surveys to support the mapping campaign with the object of targeting high grade gold bearing targets for the next phase of drilling. The 1,700-meter-long Shumagin zone, within the 9.5-kilometer- (six miles) long Shumagin Trend, remains at the heart of exploration activity. The exploration program encompasses several objectives including: infill drilling and extension of the Shumagin zone located east of Orange Mountain, where previous drilling has found high grade mineralization between Bunker Hill, Main Breccia and Rhodo Breccia; an area west of the Shumagin zone towards Orange Mountain where the main structure of the Shumagin Trend goes under-cover; Aquila zone, which lies diametrically opposite the Shumagin Zone at the west end of the Shumagin Trend and where a 1980s drill hole was stopped short in an assay interval of 0.43 meters grading 94 grams of gold per metric ton at the bottom of the hole – neither this prospect nor the nearby Normandy vein, which returned assays from grab sampling including 9.4 percent zinc, 3.7 percent lead, 0.3 percent copper and 170 g/t silver, and one sample containing 2.6 g/t gold have been comprehensively tested; Bloomer Ridge, which has never been drilled and outcrops less than 1,000 meters southeast and more than 200 meters higher elevation than the outcropping, high-grade mineralization in the Shumagin zone; Empire Ridge and California prospects, which lie immediately southwest of the original Apollo gold mine and where surface geochemistry indicates the southwestern extension of the Apollo-Sitka Trend; the Propalof structure on neighboring Popof Island, which has year-round access; the Centennial prospect, flat-lying, near surface mineralization where infill and induced polarization anomalies have defined a potential high-grade feeder zone; and the Suzy Rhodo Vein on neighboring Popof Island close to the port at Sand Point.
Freegold Ventures Ltd. announced drilling plans for its Golden Summit project near Fairbanks. A preliminary economic assessment was completed on the project in early 2016, which envisioned a 24-year two-phase oxide and sulfide operation. The plan requires both the oxide and the sulfide material to be developed in order to return an after-tax internal rate of return of 19.6 percent and a net present value of $188 million over a 24-year life of mine using a US$1,300 gold price. Drilling planned for 2019 is based on desktop efforts that suggest potential for higher-grade mineralization in a previously undrilled area that extends west from the old Cleary Hill Mine workings. As the district's highest grade historical underground mine, Cleary Hill produced 281,000 ounces of gold at an average grade of 1.3 oz per ton before production ceased in 1942. The potential for higher grade resources could potentially increase the overall resource grade used in the preliminary economic assessment.
Northern Star Resources Ltd. announced exploration results and plans to expand milling capacity at it Pogo gold mine near Delta Junction. Under the US$30 million expansion plan, the throughput capacity of the Pogo plant will be increased from 1 million metric tons to 1.3 million metric tons per year. The company expects to invest US$10 million in the expansion project this financial year, with the remaining US$20 million during fiscal year 2021. The company's confidence in the mine is underpinned by the strong exploration results being generated from recent drilling, including at the Goodpaster prospect located roughly 1,000 meters from the existing mine workings. Initially intersected in late 2017, the discovery hole 17-041 cut four meters grading 64.5 grams of gold per metric ton. The Goodpaster prospect is considered the continuation of the main Pogo mineralized trend across a major northeast-trending fault system broadly coincident with the Goodpaster River valley. To date, exploration drilling in the initial Goodpaster area has expanded mineralization over a strike distance of 2,300 meters, to a depth of 500 meters and mineralization remains open in every direction. Gold mineralization occurs in a series of stacked flat-dipping (Liese-type) and steeply dipping (North Zone-type) vein structures. Significant new results include hole 18-050, which intersected 2.1 meters grading 44.5 g/t gold; hole 18-052, which intersected 2.2 meters grading 28.1 g/t gold; hole 18-058, which intersected 0.6 meters grading 100.1 g/t gold; hole 19-080, which intersected 0.3 meters grading 129 g/t gold; hole 19-084, which intersected 1.3 meters grading 27.5 g/t gold and 1.8 meters grading 13.2 g/t gold; hole 18-051, which intersected 5.2 meters grading 15.7 g/t gold; hole 18-057, which intersected 8.1 meters grading 5 g/t gold; hole 18-069 which intersected 0.3 meters grading 170.2 g/t gold; hole 19-083, which intersected 5.2 meters grading 9.5 g/t gold, including 2.4 meters grading 18.1 g/t gold; and hole 19-101, which intersected 1.7 meters grading 19.4 g/t gold. Surface drilling is continuing with four road and helicopter-supported diamond drill rigs with a significant number of assay results still pending for the current program. The company also indicated that permitting has been established to allow the development of initial underground access into the Central Veins and potentially the Goodpaster prospect area for further exploration and pre-development activities.
Alaska newcomer Northway Resources Corp. announced that it raised gross proceeds of C$1.85 million via its initial public offering. The company's principal property is the Healy gold project in the eastern Goodpaster District. The prospect was leased from Newmont Mining and was originally identified as a multi-catchment gold anomaly through Newmont's proprietary bulk leach extractable gold (BLEG) stream sediment sampling techniques that were applied during a regional survey of Eastern Interior Alaska. The project was staked in 2012 and has seen only limited early stage exploration including ridge-and-spur and grid soil sampling, geologic mapping and prospecting, and four shallow Shaw back-pack drill holes. Northway began exploration work in 2018, with the compilation and interpretation of geological and geochemical data, and the collection of additional soil and rock samples. The results of this work have led to definition of multiple large-scale coincident gold, arsenic and antimony soil geochemical anomalies which have never been tested by reverse circulation or diamond drilling. Results are pending for a planned 12-hole, $360,000 reverse circulation drilling program. Welcome to Alaska Northway Resources!
Contango ORE Inc. provided an exploration update for the Peak gold-silver-copper project, a joint venture with its partner Royal Alaska, LLC, a wholly owned subsidiary of Royal Gold Inc. The partners drilled exploration holes on the East Peak prospect, which has been interpreted as an extension of the previously identified Main Peak resource. This prospect is based on new induced polarization geophysical data acquired in the early stages of the 2019 exploration program. The company also reported that in the summer of 2017 they completed stream sediment and pan concentrate sampling of streams on the Hona prospect, located on Alaska State mining claims 16 kilometers (10 miles) west of the Main and North Peak deposits. The pan concentrate sampling identified anomalous gold, copper and arsenic in drainages in the area. This season, surface sampling and mapping was carried out above the drainages with anomalous pan concentrate values. Surface sampling has identified rock outcrops with gold values greater than 1 gram per metric ton over an area 2,500 meters long. Following receipt of results of the initial drill holes at East Peak and Hona, the partners will prioritize the remainder of their 2019 exploration program, including drill-ready porphyry and skarn type prospects elsewhere on the project. The company also noted that is has continued to gather baseline data to support permitting activities and metallurgical studies. This work included drilling of eight water wells for ongoing ground water hydrology studies. The partners also continued to test a floatation process that allows for the recovery of copper that was not previously included in the project's economic analysis.
Millrock Resources Inc. announced that it signed a binding letter of agreement whereby First Quantum Minerals Limited has been granted the exclusive right to enter an option agreement on Millrock's 9,600-acre Dragonslayer porphyry copper-gold project in eastern Alaska. To earn the right, First Quantum is funding geochemical surveys, mapping, and prospecting to a value of C$100,000. This work is focused on a geophysical anomaly located in a belt of Cretaceous-aged rocks that have demonstrated potential for copper porphyry deposits. The geophysical anomaly consists of a conductive zone surrounding a magnetic high in a low-lying area with little outcrop exposure. The target was detected using an airborne ZTEM electromagnetics and magnetic susceptibility survey. Once data from these efforts are in hand, First Quantum will have until Dec. 31 to exercise its exclusive right to enter an option to enter into a joint venture agreement to earn 51 percent interest by spending C$6 million on exploration and making cash payments of C$700,000 over four years. First Quantum can increase its interest to 70 percent by defining and publishing an industry compliant inferred resource of at least 1 million metric tons of contained copper equivalent. It can further increase its interest to 80 percent by funding the project through permitting and construction until commercial production is achieved. All funding advanced during permitting and construction by First Quantum on behalf of Millrock will be repayable by Millrock with proceeds from production.
White Rock Minerals Ltd. and its joint venture partner Sandfire Resources NL announced an exploration update for its Red Mountain volcanogenic massive sulfide (VMS) project in the Bonnifield District. During the latter half of the 2019 field season drilling has focused on three new target areas identified along the Glacier Trend, including the Arete, Smog South and Sheep-Rogers prospects. The Arete and Sheep-Rogers target areas include multiple prospective occurrences containing sulfide accumulations over 10 kilometers (six miles) of strike. Chert and iron formations also have been identified, suggesting proximity to horizons prospective for base metal rich massive sulfides along strike and down dip. The Smog South prospect is a large isolated target area further east along the Glacier Trend also with extensive alteration, anomalous geochemistry plus surface base metal mineralization within a volcanogenic massive sulfide horizon at the silver-rich Smog prospect to the north. A total of 11 diamond drill holes have been completed to date in the 2019 program. The four new diamond drill holes at Arete (GC19-05), Smog South (GC19-06), Dry Creek (DC19-95) and Sheep-Rogers (GC19-07), provided important stratigraphic information but failed to intersect significant mineralization associated with the target horizons. At Dry Creek, drilling is now targeting the down-dip projection of mineralization 200 meters deeper than previously drilled. The first drill hole (DC19-95) was abandoned in a fault zone above the target horizon. The drill rig has now returned to drill a second hole (DC19-96) at Dry Creek. Further target areas yet to be drilled include Artesia, Irish Knob, Black Top, Grizzly, Kettle and Glacier Creek East. All target areas, including those drilled recently, contain numerous prospective horizons, geochemical anomalies and electromagnetic conductivity features to be drill tested. The company also acquired new regional surface geochemistry across its expanded claim package and the intervening prospective stratigraphic package to the south and west. Over 1,000 stream sediment samples were collected over the 800-square-kilometer- (309 square miles) area extending from Sheep Creek in the west through to Anderson Mountain in the south and West Fork to the east. This area hosts numerous historical VMS occurrences, and these were the reason the company expanded its land position in late-2018. Reconnaissance geological mapping and sampling of historical VMS occurrences has also been completed with the Cirque prospect, originally discovered in 1976. Previous sampling reported massive sulfide float blocks up to two meters thick within 300 meters of mineralized calc-schist and carbonate outcrop. Assays for 18 samples averaged 5.6 percent zinc, 1.7 percent lead, 49 grams of silver per metric ton and 0.5 percent copper. A surface geophysics crew has completed a fixed loop electromagnetic survey across two horizons of massive sulfide that extend east under glacial till cover. Two low-conductance anomalies were identified that are consistent with zinc-rich massive sulfide horizons. The depth to the top of the larger, northern anomaly models at 150 meters. Additional geophysics will be required to better define the target at Cirque.
Nova Minerals Ltd. announced an initial inferred resource at the Oxide Korbel deposit on their Estelle gold project in the western Alaska Range. Using a cut-off grade of 0.18 grams of gold per metric ton, inferred resources include 181.29 million metric tons grading 0.43 g/t gold containing 2.5 million ounces of gold. The resource was based on three diamond core holes and 18 reverse circulation drill holes in two resource blocks that are thought to be fault offset from each other. Average drill spacing was approximately 150 meters. Resource Block A trends northwest, measures 700 meters by 200 meter in plan and has been projected to a vertical depth of about 585 meters. This resource block is interpreted to be constrained by parallel bounding faults. Resource Block B measures 500 meters by 500 meters in plan and has been projected to a maximum depth of about 280 meters below surface. The entire block model is constrained and enveloped by a more extensive induced polarization chargeability anomaly. The Mount Estelle composite pluton is the southern-most pluton in the Yentna trend and has isotopic ages ranging from 68 – 78 million years with many crystallization ages averaging 70 million years. The Mount Estelle pluton is zoned from a granite core to more mafic marginal phase. Sheeted joint sets and unusual spherical, onion-skin-like features occur in core areas of the pluton. Adjacent to the Mount Estelle pluton, the country rock is hornfelsed and locally exhibits red staining and sericite-clay alteration, and pyrite in disseminations and along fractures. At the property scale the structural pattern is dominated by an orthogonal set of northwest and northeast trending faults that are interpreted to have originated above the rising Estelle pluton. The northwest faults are interpreted to truncate the earlier northeast fractures but are themselves cut by a later set of northeast trending minor faults. The northwest trending structures are inferred to have an extensional component. The alteration is characterized by a quartz-sericite-pyrite assemblage with minor to trace amounts of biotite, kaolinite and potassium feldspar. The alteration is most commonly observed in the alaskite intrusive phase and in the enveloping quartz monzonite intrusive rocks. Sulfide mineralization occurs as blebs within millimeter-scale sheeted quartz vein arrays, sulfide coatings on joint and fracture surfaces, sulfide blebs within hydrothermally altered quartz-carbonate infillings and, finely disseminated sulfides in bleached altered intrusive rock. Multiple vein sets have been identified, including Type 1 quartz-only veins that commonly have sinuous contacts with the host rock locally sheeted Type 2 quartz-sulfide-gold-feldspar veins are associated with albite-sericite alteration selvages and contain pyrite, pyrrhotite, and arsenopyrite. Type 3 quartz-sulfide-gold-chlorite veins, appear to host most of the gold at the Estelle property, with chlorite-sericite alteration selvages. Type 3 veins are polymetallic with coexisting chalcopyrite, pyrrhotite, and arsenopyrite forming the most common sulfides with lesser galena, argentiferous galena, and bismuthiferous galena. Type 4 veins are calcite-only veins that are the youngest vein set and are typically branching in nature, fine to coarsely crystalline, and iron-oxide stained. The company also reported that diamond drill hole SE12-008, completed in 2012, was re-sampled by the company as part of its 2019 field program. This drill hole is located at the RPM prospect, approximately 25 kilometers (16 miles) south of the Oxide Korbel deposit. Re-assay results from SE12-008 returned 177.39 meters grading 0.79 g/t gold starting at a dept of 4.27 meters, including 120.4 meters grading 1.02 g/t gold starting at 26 meters. Additional work is planned at RPM prospect in 2020.
In late August Alaska Governor Michael Dunleavy submitted a nomination letter to the White House Council of Environmental Quality recommending that Ucore Rare Metals' Bokan-Dotson Ridge rare earth project be designated a High Priority Infrastructure Project (HPIP). The HPIP program was instituted by the Trump Administration in 2017 as a means of expediting the permitting approval process for projects of key strategic importance to the United States. The company indicated that an HPIP designation has the potential to reduce lead-time to development of a fully permitted project, prospectively moving the project to construction commencement in just over two years. Shortly afterward, the company announced plans to raise up to $28.41 million via rights offering and it plans to move the project forward via its mine to metal to market or "M Cubed" plan. The mine portion of this plan includes advancing the rare earth metal deposit at the Bokan-Dotson Ridge project to shovel-ready status. The metal component of the plan calls for developing the associated engineering for the Alaska Strategic Metals Complex, an individual rare earth element and co-products processing and separation plant, using a Solvent Extraction platform, complemented by commercially proven nanotechnology. The market leg of the process includes North American and Western World market development of the customer base for non-Chinese rare earth element products.
In a move that took some by surprise, Trilogy Metals Inc. President Rick Van Nieuwenhuyse announced his resignation in early September. Rick will remain as a consultant to the company until Jan. 31, 2020 and will assist with transitional matters and with advancing the company's interests in Alaska. James Gowans has been appointed interim CEO and President. Rick's involvement in the Ambler District, where the company's primary assets lie, dates back to the 1980s but really took hold in 2004 when he engineered the acquisition of Kennecott Copper's Ambler District holdings. Since then, the Ambler District has steadily grown as one of Alaska's premier mining districts, with the Draft Environmental Impact Statement on a road to the district currently under public comment. Don't expect to see moss growing on Rick's six, we will no doubt see and hear his unpronounceable name again!
Trilogy Metals Inc. and funding partner South32 Ltd. announced drilling results for its Bornite copper-cobalt deposit and the Sunshine volcanogenic massive sulfide prospect at their Upper Kobuk Mineral Projects, a business relationship owned and controlled by Trilogy and NANA Regional Corporation, Inc. For 2019, exploration drilling included 10 holes (7,610 meters) drilled at Bornite, 11 holes drilled at Arctic (2,405 meters) and six holes (1,357 meters) drilled at the Sunshine prospect. Based on the VTEM airborne geophysical survey that was completed this past spring over the Ambler volcanogenic massive sulfide belt and from historical drilling, drilling targeted the Sunshine prospect, located 13 kilometers (eight miles) from the Arctic deposit. At a cutoff grade of 1.5 percent copper equivalent, the four previously known and one newly discovered zones at Sunshine returned significant copper mineralization from hole SC19-019, the only assay results currently available. Significant intercepts including 9.1 meters grading 3.02 percent copper, 1.42 percent zinc, 0.27 percent lead, 0.14 grams of gold per metric ton and 24.65 g/t silver; 3.3 meters grading 1.68 percent copper, 1.77 percent zinc, 0.47 percent lead, 0.12 g/t gold and 27.57 g/t silver; 3.7 meters of 4.74 percent copper, 0.97 percent zinc, 0.13 percent lead, 0.15 g/t gold and 28.96 g/t silver; three meters grading 0.75 percent copper, 1.40 percent zinc, 0.35 percent lead, 0.08 g/t gold and 21.02 g/t silver; and 7.88 meters grading 2.23 percent copper, 5.62 percent zinc, 1.1 percent lead, 0.18 g/t gold and 46.95 g/t silver. Mineralization was discovered at Sunshine by Bear Creek Mining Company in 1969 and is hosted in rocks that are typical of the Ambler Schist sequence that hosts the Arctic deposit, including quartz and/or feldspar and chlorite schist, graphitic and quartz graphitic schist, marble, and calcareous schist. Massive and semi-massive sulfide mineralization, consisting of chalcopyrite, sphalerite, galena, and tetrahedrite/tennantite, occurs in 0.1- to eight-meter bands generally at a contact between graphitic and calcareous schist. Three mineralized horizons, each consisting of two sulfide layers, are limbs of recumbent synformal and antiformal fold systems with the antiformal fold nose eroded away to the northeast and the fold opening to the southwest. Additional assay results from Sunshine are pending. Preliminary drill results from the Bornite deposit include both infill and step out drilling from four holes. At a cutoff grade of 0.5 percent copper, significant drill results include hole RC19-257, which intersected three mineralized intervals including 3.7 meters averaging 1.32 percent copper and 4.4 meters averaging 2.6 percent copper; hole RC19-258, which was drilled outside the current resource footprint and intersected three mineralized intervals including 23.2 meters averaging 0.76 percent copper; hole RC19-259, which intersected seven mineralized intervals including 56.1 meters averaging 1.81 percent copper; and hole RC19-261, which intersected six significant mineralized intervals including 2.9 meters averaging 2.63 percent copper, 35 meters averaging 1.98 percent copper, 16 meters averaging 2.02 percent copper, 54.1 meters averaging 1.11 percent copper, 3.1 meters averaging 1.84 percent copper and 29 meters averaging 1.47 percent copper. Additional assay results from Bornite are pending.
Curtis J. Freeman CPG #6901
Avalon Development Corp.
P.O. Box 80268
Fairbanks, AK 99708