Northern Star investing in Pogo future
Extensive exploration adding high-grade gold to mine plan Mining Explorers 2019 – Published Nov. 1, 2019
Last updated 8/14/2020 at 9:30am
Since its founding in 2010, Northern Star Resources Ltd. has built a multi-billion-dollar mining company by breathing new life into aging underground gold mines in Australia. Now, the Perth-based company is applying the same strategy that has proven so successful at home to its newly acquired Pogo gold mine in Interior Alaska.
This strategy includes making large investments into the exploration, underground mine development and equipment needed to turn Pogo into a tier-one asset that rivals Jundee and Kalgoorlie, the company's other high-grade underground gold mines in Western Australia.
The previous Pogo owner, a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent), produced nearly 4 million ounces of gold at Pogo before selling the mine to Northern Star in September 2018.
In the years leading up to this acquisition, however, gold reserves and production at the mine had been dwindling. This was largely due to the availability of less ore to feed the mill.
Northern Star's team saw plenty of opportunities to expand the gold reserves at Pogo and knew this Alaska mine held the potential to be a third pillar of its growing portfolio and a vanguard to further expansion in North America.
"Some of our geologists are looking at it and saying it is about five times the size of Jundee, which is running at about 300,000 oz (of gold annually), with a 10-year mine-life. So, it has the potential to be a huge mine for us," Northern Star Pogo General Manager Shaun McLoughney said during an April presentation in Fairbanks, Alaska.
To realize this potential, the Australian miner is investing roughly US$50 million into exploration and US$35 million on a state-of-the-art mining fleet that arrived at Pogo this summer.
Including the US$260 million paid to buy Pogo, Northern Star is investing nearly $485 million Australian dollars to elevate its new Alaska gold mine to tier-one status, which the company defines as having the ability to produce at least 300,000 ounces of gold annually for at least 10 years.
The Pogo purchase and the work being done there earned Northern Star the coveted Dealer of the Year Award at Diggers & Dealers, an annual mining convention in Kalgoorlie, Western Australia.
"The honor reflected the ability of your team to identify a great opportunity, the world-class nature of the Pogo mine and its ability to generate superior returns for Northern Star shareholders," Northern Star Executive Chairman Bill Beament said in August.
Simple philosophy – drill
Much of Northern Star's success over the past decade is built off of the company's willingness to invest into the needed exploration.
"If you don't drill you don't find and if you don't find you don't mine – it's a very simple philosophy," Beament said.
And, the drills are finding the gold to mine at Pogo.
"We've got 12 diamond drill rigs spinning on the property at the moment and it is fair to say it is popping up a lot of extra gold in that mine plan," the Northern Star Chairman said in May.
This gold popped up in the first Australian Joint Ore Reserves Committee- (JORC) compliant reserves calculated for Pogo.
According to a calculation published on Aug. 1, Pogo now hosts 6.1 million metric tons of proven and probable reserves averaging 7.5 g/t (1.5 million oz) gold.
These reserves are included in 19.3 million metric tons of JORC resources – measured, indicated and inferred – averaging 9.6 g/t (5.95 million oz) gold.
This is a 43 percent increase over a resource calculated shortly after Northern Star acquired Pogo and the largest in the history of the Interior Alaska mine.
Northern expansion targets
Roughly 500,000 oz of the gold in the updated Pogo resource is found in the Central Veins, discovery made by the Perth-based miner made north of the underground workings last year.
"That is really one of the most exciting prospects we have going forward," McLoughney said of the Central Veins discovery.
That it is only about 800 meters away from the areas currently being mined at Pogo makes this discovery even more enticing.
Significant intersections from Central Veins surface drilling include:
• two meters (1.2 meters true-width) averaging 175.3 g/t gold;
• 3.6 meters (2.6 meters true-width) averaging 50.6 g/t gold;
• 14.3 meters (10.9 meters true-width) averaging 6.1 g/t gold;
• two meters (1.8 meters true-width) averaging 35.1 g/t gold; and
• 3.4 meters (2.2 meters true-width) averaging 26.8 g/t gold.
The Pogo manager said grades like these, which are much higher than anything the company is seeing at its Australia operations, has Northern Star geologists smiling.
While spectacular grades have been encountered in individual intercepts, the average resource grade is 7.9 g/t gold, which is comparable to the reserve grade for the zones currently being mined.
About 800 meters further north lies Goodpaster, a discovery made by the Sumitomo Metal Mining team about a year before Northern Star bought Pogo.
The Goodpaster discovery hole, drilled in 2017, cut 6.9 meters averaging 3.2 g/t per ton gold. A second hole drilled that year cut 5.3 meters averaging 54.1 g/t (1.739 ounces per metric ton) gold.
Core from these mineralized intercepts at Goodpaster looks identical to Liese, providing evidence that the two zones, along with the Central Veins in between, may have once been contiguous and have since been separated by a fault that runs between them along the Goodpaster River and geophysics indicates that this mineralization could extend off the Pogo property to the west.
Northern Star continues to drill Goodpaster as it continues to expand Pogo mineralization to the north.
"The world-class nature of Pogo is demonstrated by the huge exploration success we have enjoyed in such a short time," Beament said.
Good stretch of geology to the south
The Australian miner is also finding more gold to the south.
This includes establishing reserves at Pogo South, which is a southern extension of the Liese veins, which hosted the original reserves mined at Pogo and continue to contribute ore to the mill today.
Roughly two miles further southeast, Northern Star has established a 500,000-oz gold resource at Hill 4021 in material that averages 8.2 g/t gold.
This deposit, which was explored before Northern Star bought Pogo, provides evidence of further gold potential trending south from the gold reserves and resources established at and around the mining infrastructure.
Star Ridge and Star Vein are two other target areas identified between Pogo South and Hill 4021. There are also prospects further southeast that could represent further future expansions.
In fact, there seems to be no shortage of Pogo-style high-grade and bulk tonnage gold mineralization in the Goodpaster district and Northern Star has already picked up some exploration properties to the east and southeast of the Pogo property.
In addition to its work on the immediate Pogo property, Northern Star has acquired Stone Boy, a group of four earlier staged gold properties in the Goodpaster Mining District where its Alaska mine is located.
The Ink claims, located about 20 miles (32 kilometers) southeast of Pogo, was the primary focus of exploration carried out by Stone Boy over the years, including a US$1.3 million program completed in 2013.
Yuki Beppu, the geologist in charge of Sumitomo Metal Mining America's exploration in Alaska at the time, said much of the exploration at Ink focused on the Brink core zone, a bulk-tonnage gold deposit more akin to Fort Knox than the high-grade Pogo Mine.
At the time, Stone Boy had drilled 29 drill holes (8,903 meters) over a 500- by 1,700-meter area at Brink. The best hole, DH13-30, cut 514.4 meters averaging 0.427 g/t gold.
The Stone Boy properties also include Fog, immediately north of Ink, Skippy, adjacent to the east side of the Pogo property, and Shaw, which is west of the Pogo claim block.
"Another great stretch of country in a very good stretch of geology across Alaska," Beament said in May, referring to the Stone Boy claims.
Not letting up on exploration
Northern Star does not plan to let its foot off the throttle when it comes to expanding gold resources and reserves at Pogo in the coming year.
The company has budgeted A$64 million (approximately US$44 million) on exploration and expansion activities at Pogo during fiscal year 2020.
This includes A$20 million (roughly US$14 million) on exploration aimed at upgrading the 12.1 million metric tons of inferred resources on the property averaging 9.5 g/t (3.7 million oz) gold to higher confidence categories.
The balance will be invested into developing and bringing new mining areas into the Pogo mine plan, as well as about A$7 million (approximately US$5 million) on removing bottlenecks ahead of the mill to increase capacity.
Expanding the resource at Central Veins and growing Pogo reserves are expected to be high-priority targets of the drilling in the coming year.
"We are confident that with the operational gains we are making and the outstanding reserve and resource position we have established, Pogo is well on its way towards returning to its historical status as a tier-one asset," said Beament.