The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Golden milestones expected for both Manh Choh, Lucky Shot North of 60 Mining News – January 6, 2023
Crews upgrade an existing road connecting the Peak Gold deposits to be mined at Manh Choh to the Alaska Highway.
Contango ORE Inc. Dec. 23 announced that it has raised US$5.6 million through a private placement to help fund the company's 30% interest in the development costs at Manh Choh until it can arrange a larger financing package for advancing the 1-million-ounce gold mine project to production.
This financing involved the issuance of 283,500 shares at US$20.00 each, plus warrants that allow the purchasers to acquire additional shares at $25.00 each.
"This equity capital raise will allow us to continue to advance our 30% interest in the Peak Gold, LLC joint venture (PGJV) while we arrange debt financing to fund the remaining balance of funds necessary to place the Manh Choh project into production," said Contango ORE President and CEO Rick Van Nieuwenhuyse.
Being developed under a JV between Kinross Gold Corp. (70%) and CORE (30%), Manh Choh hosts 3.9 million metric tons of proven and probable reserves averaging 7.88 grams per metric ton (998,000 oz) gold and 13.6 g/t (1.7 million oz) silver.
A feasibility study completed for Kinross around mid-2022 envisions trucking high-grade ore mined at Manh Choh roughly 250 miles to the Fort Knox Mine. This ore is to then be processed through the existing Kinross Alaska mill and the tailings stored on the Fort Knox property.
In July, Kinross decided to move forward with development of a mine at Manh Choh.
The costs to advance the project detailed in the study to production is estimated at $255 million. This includes the development and infrastructure at Manh Choh; modifications to the Fort Knox mill; a fleet of trucks to deliver the ore; and $40 million in contingency.
Based on the Peak Gold JV agreement, Kinross' share of this expense is expected to be roughly $190 million. This leaves roughly $65 million to get to the first gold pour.
"Kinross, the manager, operator and 70% owner of the PGJV has communicated at our last joint venture meeting that the project remains on schedule and on budget," Van Nieuwenhuyse said.
Led by Kinross, the JV began early development work at Manh Choh during the summer, which included the establishment of a camp to support the development and operation, as well as upgrading the road that connects the high-grade deposits to the Alaska Highway.
"The camp facilities located in Tok, Alaska are nearing completion and construction work will continue through the winter months on the development of the Manh Choh project site to ensure that the project remains on schedule for first gold production in the second half of 2024," said Van Nieuwenhuyse.
"I am also happy to report that the project is approaching 50% contracted/committed and is trending on budget – meaning that work is being completed and major contracts are under negotiation for the contract mining and completed as to the contract ore hauling segments of the project which collectively make up over 50% of project development and operating costs," the CORE CEO added.
Having contracts in place will provide potential lender surety in the current inflationary environment.
To provide potential lenders with further details, CORE intends to complete a technical report compliant with SK 1300, a U.S. Securities and Exchange Commission reporting requirement similar to Canada's NI 43-101 system, that details the economics of Manh Choh as it relates to CORE. This report is expected to be finalized once a final toll milling agreement with Kinross Alaska is signed.
Based on Kinross' NI 43-101-compliant feasibility study, the Manh Choh project is expected to produce approximately 225,000 ounces of gold-equivalent, which accounts for the value of the silver that will also be recovered, per year. CORE's share of this production is expected to be around 67,500 oz gold-equivalent per year.
"Since Contango discovered this high-quality ore deposit in 2011, we have worked closely with the Tetlin Tribal Council and now most recently with Kinross to place the project into production," said Van Nieuwenhuyse. "We are excited to see this project come to fruition. Despite the difficult market conditions and current inflationary environment, we are getting it done."
In addition to getting it done at Manh Choh, CORE continues to advance Lucky Shot, a high-grade gold mine project in Southcentral Alaska that could add to the company's annual production in the coming years.
A road-accessible project about 75 miles north of Anchorage, the 8,590-acre Lucky Shot property blankets a large portion of the Willow Creek Mining District, including the pre-World War II Lucky Shot and War Baby mines. It is estimated that from 1918 until being shut down by the federal War Production Board in 1942, these two underground operations produced 250,001 oz of gold from ore averaging around 1.6 oz per metric ton (40 g/t) gold.
A 2016 calculation completed for former operators outlined 206,500 metric tons of what is now being treated as historical measured and indicated resources averaging 18.3 grams per metric ton (121,500 oz) gold and 59,000 metric tons of inferred resource averaging 18.5 g/t (35,150 oz) gold at Lucky Shot.
With its sights set on establishing a large enough resource to support a modern mine at Lucky Shot, CORE rehabilitated and expanded the historical Enserch tunnel at Lucky Shot, which served as a platform for 2022 drilling completed at the high-grade gold project.
"All 29 holes intersected the Lucky Shot vein structure," Van Nieuwenhuyse said.
The company expects to receive all the assays from the 2022 Lucky Shot drilling in January and publish an SK 1300-compliant resource estimate for the gold mine project by the end of the first quarter.
"We look forward to continuing to update our shareholders and investors on our progress at both our Manh Choh and Lucky Shot projects," said Van Nieuwenhuyse. "Management believes that 2023 will be pivotal year for the company with mining activities commencing at Manh Choh and an initial resource estimate at Lucky Shot."
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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