3 fire river shutters nixon fork arctic open-pit mine ... · revised operating plan has been...
TRANSCRIPT
ROSE RAGSDALE PHOTO
Julia Lane, B.SC., GIT, senior project geologist in charge of Atac Resources Ltd.’s2013 exploration program at the Rackla Project in east-central Yukon Territory,explains to visitors some of the characteristics of mineralization found in recentholes drilled in the Nadaleen Trend, the eastern-most part of the 1,700-square-kilometer (656 square miles) property. Atac has drilled more than 60,000 metersof core at Rackla since 2010 and made a half-dozen discoveries of deposits withCarlin-style gold mineralization.
A special supplement to Petroleum NewsWEEK OF
August 28, 2013
3 Fire River shutters Nixon Fork Strapped miner will likely lose high-grade Alaska gold mine to lenders
5 Arctic open-pit mine passes test Increased production offsets high strip ratio at NovaCopper’s VMS deposit
13 Innovative ground-truthing tools Renowned prospector Shawn Ryan launches drones, ‘GeoProbes’ over Yukon
By SHANE LASLEYMining News
Fire River Gold Corp. has dug a deephole at Nixon Fork– not only a drift to
the high-grade gold for which the mine isknown but also a more perilous financialdeficit that could result in the VancouverB.C.-based junior losing the remoteAlaska operation.
Laden by heavy debt and unable toreach commercial production Fire River,in late June, said it was placing NixonFork on care and maintenance “until arevised operating plan has been developedand market conditions improve.” Whilethis is not good news for the strugglingoperation, the worst was yet to come.
In August, the company revealed that itmissed a C$796,875 principal paymentdue to Waterton Global Value LimitedPartnership, a fund managed by WatertonGlobal Resource Management. The pay-ment is related to a US$12.75 milliongold-backed credit facility that is securedby a lien and a first priority security inter-est in substantially all of Fire River Gold’sassets, including the Nixon Fork Mine.
Waterton, which structures and man-ages investments in the precious metalssector, has an in-house mine developmentand operations team that has held high-level positions with the world’s top goldmining companies.
Although Fire River said it is workingwith Waterton to come up with a plan tosettle the debt, the transfer of Nixon Forkto the resource-investment fund is theonly potential solution put forward.
Sweet dealFire River purchased the Nixon Fork
project in 2009 for US$500,000 in cashand 6.4 million shares of the company. Atthat time, the deal, worth roughly C$3million, was considered a bargain thatwould catapult Fire River from a newly-formed junior exploration company to agold miner producing upwards of 50,000ounces of gold per year.
With the purchase of Nixon Fork,located some 35 miles (56 kilometers)northeast of the mining town of McGrath,Fire River Gold could boast of owning aturn-key gold mine. Over the ninedecades prior to Fire River, various oper-ators had recovered 125,591 ounces ofgold from about 106,137 metric tons ofore. In addition to the gold, at least 19,566
ounces of silver and 1.27 million poundsof copper were recovered during the sameperiod.
The last of these former operators, StAndrew Goldfields Ltd., invested roughlyUS$54 million on upgrades and newequipment after purchasing the under-ground gold mine in 2003. St Andrew putNixon Fork in limited production in 2007,but due to economic challenges, theToronto-based company shuttered themine and put it up for sale.
Pacific North West Capital bought thedefunct mine for US$500,000 and turnedaround and sold it to Fire River Gold, asister company formed for the purpose ofputting the mine back into operation.
Fire River received a mine completewith a 200-metric-ton-per-day mill; agravity gold separation circuit; a sulfideflotation circuit; and a delivered, but notyet installed carbon-in-leach circuit; afleet of mining vehicles; diesel generatorswith plenty of capacity to power the oper-ation; maintenance facilities; an 85-per-son camp; fuel storage; and a 5,000-foot-(1,500 meters) long airstrip.
The purchase also included a US$3.5million bond posted to the State of Alaskaand the permits needed to move the proj-ect quickly back into production.
And, if the deal didn’t seem like itcould get any sweeter, Fire River recov-ered 900 ounces of gold from behind theliners of the ball mills while refurbishing
them in 2010.
Reaching the apexThe pleasant surprise of finding more
than US$1 million of gold while gettingNixon Fork ready to resume operationsmay have been the apex of Fire River’sownership of the mine.
To avoid the pitfalls related to miningcomplex high-grade gold system at Nixon
Fork, Fire River invested time and moneyin gaining a better understand of the geol-ogy.
To this end the company spent 18months poring over documents left behindby two previous operators, re-logged sev-eral thousand meters of drill core andassessed the condition of the mill andmining equipment; a process that culmi-nated in two preliminary economicassessments. The first, released in 2010evaluated the viability of reprocessingtailings left behind by previous operatorsof the high-grade gold mine. The second,finished in early 2011, investigates theresumption of underground mining atNixon Fork.
Both studies returned positive econom-ic results, and Fire River gold pursued ahybrid operation that it felt could produceup to 50,000 ounces of gold per year.
Implementing its carefully laid plan,the company resumed operations at theNixon Fork in July 2011.
Roughly half of the revenue-streamfrom Nixon Fork was expected to comefrom the sale of 1,000-ounce doré con-taining 60 percent gold and 30 percent sil-ver; the remainder from the sale of a gold-rich copper concentrate. The companyshipped the first batch of this concentratein mid-September 2011. The US$1.8 mil-lion advanced payment for this 42.6-met-
� A L A S K A
Fire River shutters Alaska gold mineOut of money and deep in debt, the junior that aspired to be a gold miner faces the likelihood of losing Nixon Fork to lenders
3NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
North of 60 Mining News is a monthly supplement of the weeklynewspaper, Petroleum News. It will be published in the fourth orfifth week of every month.
Shane Lasley PUBLISHER & NEWS EDITOR
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Alaska Analytical Laboratory is an environmental lab perfomingthe following services: soil analyses for Gasoline Range Organics(GRO), BTEX (Bezene, Toluene, Ethylbenzene, and Xylene); DieselRange Organics (DRO) and Residual Range Organics (RRO) following the SW-846 EPA/Alaska Methods.
1956 Richardson HighwayNorth Pole, Alaska 99705Phone: (907) 687-7394
Email: [email protected]
see NIXON FORK page 4
SHA
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Fire River Gold recovered 900 ounces of gold while refurbishing the mill after purchasing theNixon Fork Mine in 2009. The surprise discovery that added roughly US$1 million to compa-ny coffers was a high-point of Fire River’s tenure at Nixon Fork.
ric-ton shipment marked the first paymentfrom the renewed operations at NixonFork.
Although Fire River was beginning toproduce gold from Nixon Fork, the ramp-up to commercial production was behindschedule, and costs were higher thananticipated. Toward the end of 2011, thecompany reported that operating costswere about C$2.6 million per month andcapital expenditures, at roughlyC$594,000 per month, continued to behigher than expected.
To help finance operations until NixonFork reached its commercial capacity, FireRiver took out a C$7.5-million loan withSprott Resource Lending Partnership inNovember 2011.
Downhill slideThe challenges of operating a small
mine in this remote region of westernAlaska cropped up during the depths ofwinter. In December 2011, Fire Riverannounced that it was forced to shut downthe mine and mill for four days due to
inclement weather that prevented aircraftfrom delivering fuel to Nixon Fork.
In addition to the delay of fuel and sup-plies, the company encountered severalother problems in its attempt to ramp upto commercial production. Among thesedifficulties was the transitioning from dis-posing of tailings in the existing storagepond to placing the tailings in a newlyconstructed dry-stack facility.
“Most of the downtime was caused bythe commissioning of the Larox filter,which dries the final tails just prior to dis-posal,” Fire River explained in its quarter-ly report.
Likely as a result of these difficulties,Fire River reported an overflow of the tail-ings pond to the Bureau of LandManagement in March 2012. Upon con-ducting an inspection, the federal agencyissued a non-compliance order to thecompany for failing to stick to theapproved plan of operation. BLM alsoupped the reclamation bond for the proj-ect to US$6 million from the previousUS$3.5 million.
The good news was the carbon-in-leach circuit was completed and ready forcommissioning. This not only was expect-ed to boost gold recoveries to around 90percent, the company could reprocesssome 100 tpd of the tailings, which runbetween 7 and 8 g/t gold – bolstering FireRiver’s gold recoveries while removingtailings from the brimming pond.
Digging deeperWith the CIL recovery circuit online,
Fire River took out the $12.75 millionloan from Waterton. A portion of thefunds were used to pay off the Sprott loan,the balance was used to pay the reclama-tion bond and continue operations atNixon Fork.
Cheryl Brandon, portfolio manager atWaterton Global said, “We look forwardto working with Fire River Gold to pro-vide the additional capital required forcommissioning. In addition, we have pro-vided Fire River access to our in-housetechnical team to further expand theNixon Fork Gold mining operations inAlaska. The Waterton Global facility willallow Fire River to carry out furtherunderground development, commissionthe CIL circuit to improve gold recoveriesand execute their production growth strat-egy.”
The Waterton loan has a fixed rate of 5percent per year, with the first paymentdue at the end of July. The loan was to berepaid, at Waterton’s option, in either cashor ounces of gold at 78 percent of the thenprevailing gold price.
As part of the transaction, Fire Riveralso agreed to sell to Waterton all of thegold and silver produced from the CILcircuit through April 2014.
Bringing the CIL circuit online provid-ed its own set of challenges.
“The addition of leaching as the thirdrecovery process in April 2012 alsoimposed a conversion of the mill to azero-discharge facility. These processchanges resulted in numerous commis-sioning issues and downtime from varioussources, including the mechanical relia-bility of the final tailings filter, maintain-ing clear water overflow from the tailingsthickener, and upgrading key transferpumps resulting in an average process rateof 92 metric tons per day so far in 2012,”Fire River President Richard Goodwinexplained during a May update on opera-tions.
Goodwin, Fire River COO TimothySmith and two board members turned intheir resignations in June. Following theexodus, Waterton loaned Fire River anadditional US$1.5 million. Blane Wilson
4NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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continued from page 3
NIXON FORK
see NIXON FORK page 5
SHA
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An aerial view of the tailings pond below the Nixon Fork Mill and camp. In March 2012, FireRiver Gold reported an overflow of the tailings pond to the Bureau of Land Management.
By SHANE LASLEYMining News
A new preliminary economic assess-ment has stripped away the idea of
underground mining as the only means torecover the copper, zinc, lead, silver andgold from the volcanogenic massive sulfidedeposit at the Arctic deposit. Instead, thescoping study has encouraged NovaCopperInc. to favor an open-pit mine scenario as itadvances the Northwest Alaska projecttowards a pre-feasibility study.
“We think this (PEA) demonstrates thatthe open-pit is a viable alternative; and Ithink with further study as we work towarda feasibility study, we will hone in on thatdecision,” NovaCopper President and CEORick Van Nieuwenhuyse explained during aJuly 30 presentation on the Arctic PEA.
At an 8.4:1 strip ratio, the amount ofwaste material that needs to be removedtacks on a substantial expense, but once thehigh-grade VMS mineralization is reached,the increased milling rate and mining sim-plicity helps offset the added mining costs.
The open-pit scenario produces a netpresent value for Arctic topping US$537million and is likely to fit well with thepotential future development of Bornite, acopper-rich carbonate-replacement depositsituated about 17 miles (27 kilometers)southwest of Arctic.
Arctic and Bornite are united under theUpper Kobuk Mineral Projects, a partner-ship between NovaCopper and NANACorp., the Alaska Native regional corpora-tion that represents the Inupiat people ofNorthwest Alaska.
The alliance provides NANA with theopportunity to benefit from the explorationand potential development of the Arcticdeposit and VMS prospects across the 70-mile (110 kilometers) blanketed byNovaCopper’s 90,624 acres of state, federaland patented mining claims.
In return, NovaCopper is afforded theopportunity to investigate Bornite andexplore other prospects across a copper-cobalt belt that is hosted primarily on landsowned by NANA.
In early August, NANA andNovaCopper met at the Upper KobukMineral Projects to discuss the best path toadvance Arctic as a project and the Upper
Kobuk as a district.
Open-pit scenarioThe PEA for the Arctic VMS deposit is
based on a conventional truck-and-shovelmine, feeding a 10,000-metric-ton-per-daymill that produces three concentrates – cop-per, zinc and lead.
An updated resource prepared for theopen-pit scenario estimates Arctic has anindicated resource of 23.85 million metrictons averaging 3.26 percent (1.71 billionpounds) copper, 4.45 percent (2.34 billionlbs.) zinc, 0.76 percent (400 million lbs.)lead, 0.71 grams per metric ton (550,000ounces) gold, and 53.2 g/t (40.8 millionounces) silver. Additionally, Arctic has aninferred resource of 3.63 million metric tonsaveraging 3.22 percent (239 million lbs.)copper, 3.84 percent (285 million lbs.) zinc,0.58 percent (43.2 million lbs.) lead, 0.59 g/t(60,000 ounces) gold.
To get to this rich layer of VMS mineral-ization, roughly 300 million metric tons ofwaste material would be removed; includingnearly 50 million metric tons of waste thatwould need to be mined prior to milling.
“We are looking at a series of flat ore-zones, they are polymetallic deposits, theyare 100 to 200 meters below the surface,”
explained Van Nieuwenhuyse.“At the very early stages of the mine-life
you are dealing with a fairly narrow zone ofmineralization and you really don’t get intothe guts of the deposit until about year-four,” he added.
Mining costs are estimated at US$3.02per metric ton of material mined, orUS$28.40 per metric ton of ore fed into themill.
When queried about the per-ton miningcosts, Erin Workman, director technical
services, said Red Dog and other northernlatitude mines were used as a benchmark.
“Tetra Tech was our PEA consultant,and they looked a series of projects inAlaska that are in operation or studies thatthey have recently completed and producedin the last year, and combined them to comeup with our aggregated result,” sheexplained.
Due to the high strip ratio the operationis not expected to generate cash flow untilthe second year of operation.
“We have a slow ramp-up of ore-tonnesdelivered to the mill in the early years due tothe overall deposit geometry. This is some-thing we certainly will be looking at to per-haps use larger equipment in the strippingof the waste to see if we can improve pay-back and IRR of the project,” explained VanNieuwenhuyse.
The mill is envisioned to be located atthe upper end of the valley to the northwestof the Arctic deposit and a tailing pondwould stretch out in the valley below themill, pit and non-acid-generating wastestockpile. Potential acid-generating wasteand tailings would be stored in the tailingsfacility.
This set-up provides the 90-ton trucksenvisioned in the PEA with a downhill haulduring the first eight years of operation; it isnot until year nine that the material wouldneed to be lifted out of a pit.
Based on preliminary metallurgical
� A L A S K A
Arctic open-pit mine looks positiveAssessment demonstrates robust economics for open-cast mining of copper-rich VMS deposit; NovaCopper eyes synergies with Bornite
5NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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filled the president and CEO positions atFire River in July 2012.
The company then raised C$13.9 mil-lion by issuing 213.7 million shares toBayFront Capital Partners Ltd. for C6.5cents per share; each share came with afull warrant exercisable at C10 cents forfive years.
With the plant availability, head gradesand plant recoveries all running lowerthan expected, roughly 8,800 ounces ofNixon Fork gold was sold during 2012,substantially less than the 30,000 ouncesthe company had forecast.
With the challenges that plaguedNixon Fork carrying over into 2013, thelower-than-projected gold recoveries con-tinued.
“In particular, the company’s millingthroughput for February and March hasbeen negatively impacted by continuedinclement weather, logistical challenges
relating to air deliveries of key productionsupplies and fuel, and unscheduled down-time for equipment repair of the Larox fil-ter, secondary cone crusher and ball millmotor,” the company explained during itsfirst quarter financial report.
Gold production at Nixon Fork peakedat 2,032 oz in January, dropping to 1,153oz for the first 26 days of March.
At the end of April, Fire River Goldreported assets, including C$5.83 millionfor the Nixon Fork property and equip-ment, of C$10.44 million; versus liabili-ties, including C$22.27 million in loansand advances, of $32.07 million. Thecompany’s cash had dwindled toC$157,762, according to the quarterlystatement.
Out of cash and weighted down bydebt, the junior that aspired to be a minerwas forced to shut down Nixon Fork. FireRiver now faces the likelihood of joiningthe procession of historic miners of thehigh-grade but exceedingly complex golddeposit in Interior Alaska. �
continued from page 4
NIXON FORK
see ARCTIC DEPOSIT page 7
NO
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ER I
NC
.
At an 8.4:1 strip ratio, the amount of waste material that needs to be removed tacks on asubstantial expense to the cost of reaching the copper-rich volcanogenic massive sulfidezones at Arctic with an open-pit mine. But once the high-grade mineralization is reached, anincreased milling rate and mining simplicity helps offset the added costs.
By CURT FREEMANFor Mining News
This month’s mining news is a smor-gasbord to delight the appetites of
explorers, developers and miners alike.We had quarterly reports out from
Teck, Kinross, Hecla and Coeur d’Alenediscussing their respective results fromoperating mines around the state. We hadone preliminary economic analysis byNovaCopper on its Arctic massive sul-fide project and one feasibility studyannounced by International Tower HillMines Ltd. on its Livengood gold proj-ect. We had Freegold and Constantineannounce 2013 drilling results from theirGolden Summit and Palmer projects,respectively, and we had a new agree-ment signed between explorer MillrockResources and a company to be namedlater on the former’s Stellar project (I amsure my 7th grade English teacher wouldbe choking over the construction of thislast sentence, but you get the drift). Onthe regulatory front, U.S. Rep. DonYoung, R-Alaska, is pushing the U.S.Forest Service to approve a new road inthe Tongass National Forest to supportproposed activities at the Niblack mas-sive sulfide deposit and the BokanMountain rare earth element project.
Western AlaskaTECK RESOURCES LTD. and partner
NANA INC. announced second quarterresults from its Red Dog mine. Duringthe quarter the mine produced 138,700tonnes of zinc in concentrate. Zinc oregrade decreased slightly to 16.9 percentwhile mill recoveries were up slightly to85 percent. The mine also produced24,900 tonnes of lead in concentrate.Lead ore grade decreased to 3.9 percentwhile mill recoveries increased signifi-cantly to 66.2 percent. The mine posted a$56 million operating profit for the quar-ter, up significantly from the $46 millionprofit in the year previous period as aresult of increased mill throughput andincreased grades, offset by lower averagezinc and lead grades. Sales during thequarter were up significantly year onyear and the mine plans to ship1,039,000 tonnes of zinc concentrate and174,000 tons of lead concentrate fromthe port facility this shipping season.
Interior AlaskaKINROSS GOLD announced second
quarter results from the Fort Knox minenear Fairbanks. The mine produced102,740 ounces of gold at a cost of $575per ounce in the third quarter versus71,952 oz gold at a cost of $757/oz inthe year previous period. During thequarter the mine milled 3,231,000 metric
tons of ore grading 0.80 grams per met-ric ton gold and processed via valleyleach an additional 10,261,000 metrictons of ore grading 0.30 g/t gold. Goldrecovery in the mill averaged 84 percent.Gold recovery on the heap leach pad wasnot released.
FREEGOLD VENTURES LTD.announced initial drilling results from itssummer – 2103 infill and expansiondrilling program at the Dolphin – ClearyHill deposit on its Golden Summit proj-ect. Significant results include 574.2meters grading 0.82 g/t gold in holeGSDL1311, including 31.7 meters grad-ing 1.48 g/t gold and an additional179.67 meters grading 1.13 g/t gold.Hole GSDL1311 demonstrates thepotential for higher grade near-surfacemineralization. Additional results fromthis program are pending.
The most surprising news of themonth was the results of the feasibilitystudy released by INTERNATIONALTOWER HILL MINES on its Livengoodgold project. The study evaluated a100,000 tons per day milling project thatwould produce 8 million ounces of goldover 14 years. Using the trailing three-year gold price of $1,500 per ounce, theproject did not generate a significantpositive return. The study utilized provenreserves of 434 million metric tons at anaverage grade of 0.69 g/t gold (9.6 mil-lion oz) and probable reserves of 20 mil-lion metric tons at an average grade of0.70 g/t gold (454,000 oz). The mineplan provides sufficient ore to support anannual production rate of about 577,600oz over an estimated 14-year mine life.Gold recovery is estimated at 80.3 per-cent. The design specifications include aconventional, owner-operated surfacemine in a blast/load/haul operation withan average waste-to-ore stripping ratio of1.34:1. Ore would be processed in a100,000 tpd comminution circuit consist-ing of a primary gyratory crusher, wetgrinding in a single semi-autogenous
mill and two ball mills, followed by agravity gold circuit and a conventionalcarbon in leach circuit. Infrastructurecosts came in at US$708 million andincluded a lined tailings impoundment,two water reservoirs, an administrationoffice/shop/warehouse complex and a440-person camp. Project costs includeconstruction of a US$129 million, 50-mile electrical transmission line connect-ed to the existing power grid nearFairbanks, Alaska. Initial capital costsclocked in at US$2.79 billion with anadditional US$667 million in sustainingcapital. Using the above parameters atthe US$1,500/oz average gold price, theaverage life of mine pre-tax costs,including capital and operating costs,was US$1,447/oz with a net presentvalue of negative US$440 million at 5percent discount rate, an internal rate orreturn on capital of 1.7 percent and a10.8-year payback period. The companyindicated that it is investigating areaswhere per-ounce cost reduction can beachieved.
Alaska RangeMILLROCK RESOURCES INC.
announced that it had entered into a let-ter agreement with a major internationalmining company whereby Millrock willgrant a right of first refusal to the thirdparty to enter into an option and jointventure agreement concerning the StellarProject. The third party will fund an ini-tial exploration program estimated tocost US$200,000. The program will con-sist of regional geochemical sampling,geological mapping and prospecting,which will be carried out in August. Theminer will have an option to earn up toan 80 percent interest in the project if itexercises its right of first refusal.
Northern AlaskaNOVACOPPER INC. announced the
results of a preliminary economic assess-ment at its Arctic massive sulfidedeposit, part of the larger UKMP projectin the Ambler District. Highlights of thePEA study include an initial capitalexpenditure of US$717.7 million andsustaining capital of US$164.4 millionfor total estimated capital expendituresof US$882.1 million over the estimated12-year mine life. In addition, closureand reclamation costs are estimated at$81.6 million. Pre-tax net present valueat 8 percent was estimated at US$927.7million calculated at the beginning of thetwo-year construction period and aninternal rate of return of 22.8 percent forthe base case. The after-tax net presentvalue was US$537.2 million and theafter-tax internal rate of return was 17.9percent. Estimated, pre-tax, payback ofinitial capital was 4.6 years and 5.0 yearsafter-tax. A minimum 12-year mine lifeis envisioned, supporting a maximum10,000-metric-tons-per-day conventional
grinding mill-and-flotation circuit to pro-duce copper, zinc and lead concentratescontaining significant gold and silver by-products. The life of mine strip ratio was8.39 to 1. The average annual payableproduction was projected to be 125 mil-lion pounds of copper, 152 million lbs ofzinc, 24 million lbs of lead, 29,000ounces of gold and 2.5 million oz of sil-ver for life of mine. The estimated cashcosts of copper came in at US62 centsper lb. Total “all-in” cash costs clockedin at US$1.26/lb copper. The project willrequire 15 megawatts of peak load elec-trical power for the 10,000 tpd operationenvisioned. Power will be generated on-site using diesel generators with an esti-mated power cost of US32.2 cents perkilowatt-hour. Access to the project isproposed to be via a road about 340kilometers (211 miles) long, extendingwest from the Dalton Highway to theproject. While the actual cost of thisroad remains unknown, the preliminaryeconomic analysis assumed that a tollwould be paid based on a $150-million,30-year bond at a 5 percent interest rate,which would result in the project payingabout US$9.7 million each year for its12-year mine life. The company plans tocontinue refining economic and operat-ing parameters as it advances the projectto the preliminary feasibility and feasi-bility stages.
Southeastern AlaskaHECLA MINING CO. announced sec-
ond quarter 2013 production results fromthe Greens Creek mine on AdmiraltyIsland. The total cash cost per ounce ofsilver produced at Greens Creek for thequarter was US$2.71/oz versusUS$1.03/oz in the year-previous period.Mining and milling costs per tonincreased compared to the same periodin 2012, primarily because of lower aver-age head grades and increased use of on-site diesel generated power due to limit-ed availability of hydroelectric power.The average grade of ore mined duringthe quarter was 13.72 oz/t silver, up sig-nificantly from the average grade of 9.57oz/t silver mined in the second quarter of2012. In the second quarter, GreensCreek produced 2,018,961 oz of silver,15,486 oz of gold, 5,778 tons of lead and15,538 tons of zinc. The mill processed211,755 tons of ore during the quarter.In addition to production, explorationand definition drilling continued duringthe second quarter. The company contin-ued to define the three stacked high-grade folds that comprise the mineraliza-tion at 200 South. This resource has beendrilled for more than 700 feet of strikelength and is open down dip and to thesouthwest along strike. Significant inter-sections include 32.4 oz/t silver, 0.57oz/t gold, 4.3 percent zinc and 2.4 per-cent lead over 10.8 feet; 47.4 oz/t silver,
� C O L U M N
Alaska mining spans spectrum in AugustNew developments at mines and projects provide a smorgasbord to delight the appetites of explorers, developers and miners alike
6NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
TheauthorThe author
Curt Freeman,CPG #6901, is awell-known geol-ogist who lives inFairbanks. He pre-pared this column CURT FREEMANAug. 19. Freeman can be reached bymail at P.O. Box 80268, Fairbanks, AK99708. His work phone number atAvalon Development is (907) 457-5159and his fax is (907) 455-8069. His emailis [email protected] and his website iswww.avalonalaska.com.
see FREEMAN page 8
7NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
work, the mill is currently anticipated torecover 87.1 percent of the copper, 86.8 per-cent of the zinc, 74 percent of the lead, 80.4percent of the silver and 64.7 percent of thegold. Most of the precious metals will reportto the copper and lead concentrates.
Over the 12-year mine-life contemplatedin the PEA, Arctic’s annual payable produc-tion is projected to be 125 million pounds ofcopper, 152 million lbs of zinc, 24 millionlbs of lead, 29,000 ounces of gold and 2.5million oz of silver. This comes to a total of1.5 million lbs of copper, 1.8 million lbs. ofzinc, 289,000 lbs of lead, 30.5 million oz ofsilver and 349,000 oz of gold.
Copper accounts for 60 percent of the netrevenues, zinc and lead account for 25 per-cent, silver and gold make up the remaining15 percent.
“We think there is significant value inthese precious metal streams,” mentionedVan Nieuwenhuyse.
Positive economicsThe initial capital expenditures to devel-
op a mine at Arctic are estimated to runUS$717.7 million. Adding in sustainingcapital of US$164.4 million, the total esti-mated capital expenditures over the 12-yearmine life are anticipated to total US$882.1million.
The base case scenario for the PEA uti-lizes long-term metal prices of US$2.90/lbfor copper, US85 cents/lb for zinc, US90cents/lb for lead, US$22.70/oz for silver andUS$1,300/oz for gold.
Based on these pricing assumptions, itthe C1 cash costs of producing a pound ofcopper at Arctic is estimated to run C62c e n t s .This includes on-site mining and process-
ing costs, road tolls, transport, royalties andis net of by-product credits. When the capi-tal costs are included, the all-in cost to minea pound of copper at Arctic is US$1.26.
The PEA estimates the open-pit minescenario would produce an after-tax netpresent value (8.0 percent discount) ofUS$537.2 million; an after-tax internal rateof return of 17.9 percent; and an after-taxpayback of 5.0 years.
“The results of the PEA show that theArctic deposit has positive economics evenin today’s low metal price environment. The
project has excellent margins with annualaverage payable production of about 125million pounds of copper at an average cashcost of US62 cents per pound of copper netof by-product credits. On that basis, once inproduction as contemplated by the PEA,Arctic would be in the lowest quartileamong copper producers in terms of cashcosts,” said Van Nieuwenhuyse.
The PEA was prepared on a 100 percentownership basis.
Under the agreement betweenNovaCopper and NANA, the Native corpo-ration has the right, following a constructiondecision, to elect to purchase a 16 percent to25 percent direct interest in the project orreceive a 15 percent net proceeds royalty.Whether NANA chooses direct ownershipor NPR, it receives an additional 1 percentnet smelter royalty in exchange for a surfaceuse agreement.
“While the economics of the project arepositive, I believe that some of the projectparameters, such as metallurgical recover-ies, capital and operating costs, can beimproved, and we will continue to focus onthese aspects going forward,” explains VanNieuwenhuyse.
Bornite synergiesAside from further refining the project
parameters, one of the most advantageousblue-sky prospects for the economics ofmining the Arctic deposit may it the fact thatit may not be the largest of the copper-richUpper Kobuk Minerals Projects to be devel-oped. Bornite, an exploration-stage projectlocated 16 miles (26 kilometers) southwestof Arctic, may bolster the economics ofdeveloping the VMS deposit.
“Right now we have not incorporatedany potential synergies with Bornite. We dothink that is one of the upsides that we willbe taking a look at as time goes forward,”explained Van Nieuwenhuyse.
Bornite has two copper-rich zones, RubyCreek and South Reef, separated by a majornortheast-trending fault known as IronMountain.
Ruby Creek is a near-surface zone withan indicated resource of 6.8 million metrictons averaging 1.19 percent (179 millionlbs) copper and an inferred resource of 47.7million metric tons averaging 0.84 percent(883 million lbs) copper. South Reef, a rich-er but deeper zone, has an inferred resourceof 43.1 million metric tons averaging 2.54
percent (2.4 billion lbs) copper.NovaCopper’s 2013 exploration program
focused on expanding and upgrading theseadjacent copper-rich zones.
“We just finished up drilling on-site –this year’s drilling was all focused onBornite,” Van Nieuwenhuyse explained.
With assay results from the drill programstill pending, the NovaCopper CEO wasrestrained from talking too much about theexploration potential for Bornite. One com-ment, though, indicates that the companyhasn’t found the boundaries of the deposits.
“We are still finding more and more cop-per at Bornite, so we are still trying to sizeand scale the system there,” said VanNieuwenhuyse.
If Bornite follows Arctic toward develop-ment, it may enhance the prospect of puttingmore equipment to work stripping the wasterock off the VMS deposit.
“We are going to look at an opportunityto increase the mining of the waste rockmaterial (at Arctic) to remove it quicker. Italso may include stockpiling in those earlyyears,” said Van Nieuwenhuyse.
If the extra trucks, shovels and otherequipment needed to speed up the removalof the waste rock at Arctic could be utilizedto mine the Ruby Creek zone at Bornite,then the economics of both operations couldbe enhanced through this cooperation.
Ambler road One of the biggest synergies for the
Upper Kobuk Mineral Projects is the sharedinfrastructure. While these copper-richdeposits have been known for decades, theyhave remained un-mined primarily becausethey are isolated in Alaska’s Arctic. Multipleprojects in this remote region would helpensure the repayment of building a 211-mile- (340 kilometers) long road, extendingwest from the Dalton Highway to the proj-ect area.
In recent years, the State of Alaska hasinvested nearly US$10 million towardsdefining an optimal corridor to the AmblerMining District; establishing a right-of-way;and beginning the environmental and per-mitting work to build the road to Ambler.The 2014 state budget includes anotherUS$8.5 million to continue this work.
Unlike previous funding for the AmblerMining District Road, where the funds wereappropriated to the Department ofTransportation, this year’s budget is desig-
nated for the Alaska Industrial Developmentand Export Authority, a state-owned agencythat provides various means of financingand investment to promote economicgrowth and diversification in Alaska.
In April, NovaCopper and AIDEAentered into a memorandum of understand-ing that formalizes the roles of each party asthey relate to permitting the Ambler MiningDistrict Industrial Access Road and devel-oping one or more mines at the UpperKobuk Mineral Projects.
“The completion of the MOU withNovaCopper is beneficial, not just forNovaCopper, but for all Alaskans becausethe development of the Ambler mining dis-trict is expected to produce significant eco-nomic benefits for the state and, mostimportantly, for the communities ofNorthwest Alaska,” said AIDEA ExecutiveDirector Ted Leonard.
The MOU also allows AIDEA to investi-gate various ways to fund the constructionand maintenance of the Ambler Road.
“The next step is the commencement ofthe permitting process for the AmblerMining District Industrial Access Road,which we expect will be initiated beforeyear’s end,” Van Nieuwenhuyse said uponsigning the MOU.
The working assumption in the Arcticopen-pit PEA study is that AIDEA wouldarrange financing in the form of a public-private partnership to construct and main-tain the road to Ambler. AIDEA wouldcharge a toll to multiple mining and indus-trial users (including NovaCopper’s ArcticProject) in order to pay back the costs offinancing the road to Ambler.
AIDEA formed a similar public-privatepartnership with Teck Resources Ltd. tobuild the Delong Mountain TransportationSystem, a 52-mile- (84 kilometers) longroad, storage and port facilities used to shipzinc and lead concentrates from the RedDog Mine in Northwest Alaska to worldmarkets.
Although the capital costs of the roadhave not been finalized, discussions withAIDEA have provided NovaCopper with asense of the costs for using the road.
The amount paid in tolls by any user ofthe road to the Ambler mining district willbe affected by the cost of the road, itsfinancing structure, and the number ofmines that would use the road to ship con-
continued from page 5
ARCTIC DEPOSIT
see ARCTIC DEPOSIT page 19
NO
VAC
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.
In April, NovaCopper and Alaska Industrial Development and Export Authority entered into a memorandum of understanding that formalizes the roles of each party as they relate to permittingthe 211-mile- (340 kilometers) long Ambler Mining District Industrial Access Road and developing one or more mines at the Upper Kobuk Mineral Projects at the western end of the route.
0.12 oz/t gold, 16.4 percent zinc and 7.5percent lead over 7.5 feet; 41.1 oz/t sil-ver, 0.08 oz/t gold, 11.2 percent zinc and12.9 percent lead over 7.0 feet; and 43.0oz/t silver, 0.09 oz/t gold, 8.3 percentzinc and 3.5 percent lead over 3.5 feet.Surface drilling is being conducted onthe Killer Creek area, which is about 1.5miles west-northwest of the mine portal.The five completed holes show broadzones up to 400 feet with stringer veins
containing copper, zinc, lead and silvermineralization in the footwall rocks. Ingeneral, the northern holes are more cop-per-rich with veins up to seven feet wide.
COEUR D’ALENE MINES announcedsecond-quarter 2013 production resultsfrom its Kensington gold mine, includingproduction of 23,162 ounces of gold, oran 8 percent decrease from results in thefirst quarter of 2013. Cash operatingcosts per ounce were US$1,115, com-pared with US$1,055/oz in the first quar-ter 2013. Total production costs wereUS$1,687/oz, a reduction of overUS$100/oz from the year-previous peri-
od. Average mill head grade of 0.18 oz/tgold fell 10 percent from first-quarterresults due to the processing of lower-grade stockpile ore. Average recoverywas 98.2 percent. The gold grade isexpected to gradually improve during thesecond half of 2013 as higher-gradestopes are mined and processed, whichCoeur d’Alene expects will lower unitoperating costs 20 percent when com-pared with the first half of the year.Additional cost reductions targeted forthe second half of the year includereductions in contract services and lowerunderground backfill costs due to lowerprices for backfill material. Capitalexpenditures of $7.4 million in the sec-ond quarter were spent primarily onunderground capital development andreserve category drilling. Explorationduring the second quarter included sur-face drilling on the Jualin area wheredrilling targeted the No. 4 vein, a zone ofauriferous quartz and sulfide veining sit-uated about 1,500 feet due south of themill facility. Targets selected to discoverand define new mineralization are focus-ing on those, like Jualin and Raven, withthe potential to be higher-grade than thecurrent reserves. Resource expansionexploration was conducted on the south-ern margins of lower Zone 10 and Zone50 in the main Kensington deposit areaas well as the northern extent of lowerZone 10. Initial results from widely-spaced drilling have shown new goldmineralization extends more than 200feet from the south limits of the currentmineral reserves. In addition, under-ground drilling was conducted on theAnn target and the upper extension ofZone 10 at main Kensington. Estimated2013 total production from Kensington is108,000-114,000 oz of gold.
CONSTANTINE METALRESOURCES LTD. and funding partnerDOWA METALS & MINING CO.,announced initial results for the first fourholes of a 4000 meter drill program onits Palmer volcanogenic massive sulfidedeposit near Haines. Drilling is focusedon expanding the South Wall and RWZones and the first 4 holes represent 35to 100 meter step-outs from known min-eralization. Significant results include10.63 meters grading 1.77 percent cop-per, 0.27 percent zinc, <0.01 percentlead, 13.8 grams per metric ton silverand 0.15 g/t gold in hole CMR13-43,21.71 meters grading 2.36 percent cop-per, 9.06 percent zinc, 0.13 percent lead,28.8 g/t silver and 0.33 g/t gold in hole
CMR13-45, 12.9 meters grading 0.83percent copper, 10.26 percent zinc, 0.37percent lead, 63.3 g/t silver and 0.44 g/tgold in hole CMR13-46. Hole CMR13-43 intersected strong chalcopyritestringer-style mineralization and repre-sents an approximately 35-meter down-dip step-out on Zone I. This hole wasdrilled on an oblique angle and stayed infootwall mineralization and alterationand did not penetrate the main massivesulfide-bearing horizon. Hole CMR13-45 is a 65-meter up-dip step-out onSouth Wall Zone I and intersected athick zone of massive sulfides. HoleCMR13-46 intersected South Wall ZoneII massive sulfide mineralization about50 meters west and 50 meters up dip ofprevious drilling. This intersection sig-nificantly expands an area of thick ZoneII mineralization, and opens the potentialto add additional tons between the baseof Zone I and the currently defined topof Zone II. Based on a revised geologicalmodel, South Wall Zone II is interpretedto represent the faulted offset of SouthWall Zone 1. The company also reportedthat on initial metallurgical test results.The work is being performed on a com-posite of 212 assay sample rejects frompast drilling. The composite has respond-ed well to flotation with the initial seriesof rougher and cleaner tests yieldinghigh grade copper and zinc concentrates.Based on these results a conventionalcopper-zinc sequential flotation flow-sheet has been developed for lockedcycle test work.
The U.S. HOUSE NATURALRESOURCES SUBCOMMITTEE ONPUBLIC LANDS recently held a legisla-tive hearing on H.R. 587, the Niblack andBokan Mountain Mining Area RoadsAuthorization Act, introduced earlier thisyear by U.S. Rep. Don Young, R-Alaska.The legislation would require theSecretary of Agriculture to establish tworoad corridors to connect the Prince ofWales Island road system with theNiblack and Bokan Mountain miningsites on the southeast side of Prince ofWales Island. While U.S. Forest ServiceDeputy Chief of the National ForestSystem Leslie Weldon agreed with Youngthat developing the rare earth metalsfound at the Bokan mine are in thenational interest, he said the ForestService preferred to see mine workers andsupplies by boat only, which is a danger-ous, costly and unreliable alternative toroad access. Keep your eye on this one! �
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continued from page 6
FREEMAN
By J.P. TANGENFor Mining News
Tom Kizzia has written a biographi-cal account of the life and times of
Robert Hale, who some folks will recallwas a high-profile figure in the fight ofin-holders to secure their statutory rightto access their property in the middle ofthe past decade. Although the relevanceof Hale to the history of Alaska was hisconflict with the National Park Servicein the Wrangell-Saint Elias NationalPark, Kizzia, unfortunately, takes thereader on a long and torturous frolic anddetour into the sociopathic characteris-tics of the notorious “Papa Pilgrim.”
In the spirit of full disclosure, I needto state that I was engaged by the PacificLegal Foundation to assist in asserting
Hale’s claims before the U.S. DistrictCourt in Alaska. It is not my intention inreviewing Kizzia’s book to suggest thatthe book is poorly done or even wrongin any specific particulars, only that
given the availability of the subject mat-ter, the coverage of the central issue isdisappointing. It is commonly said thatinside every journalist there is a novelwaiting to be written, and I supposeKizzia is no exception. “Pilgrim’sWilderness” is not a novel because pur-portedly, at least, most of the factual rep-resentations are true. On the other hand,it is fairly inadequate as an historicalaccount because most of the facts are notdocumented.
Candidly, I don’t take much pleasurein reading reports of people beating uptheir spouses or children, nor do I findthe intricate details of amanic/depressive particularly entertain-ing. Kizzia is a journalist, and as such,understandably he focuses on the lascivi-ous, because it is axiomatic in the trade
that sex sells. My personal preferencewould have been a more scholarly offer-ing.
In the United States, we have beenblessed with huge tracts of public land asthe result of purchases, such as theLouisiana Purchase, the GadsdenPurchase and the Purchase of Alaska.We have had separate nations, such asTexas, California and Hawaii, swell ournational acreage and we have even goneto war over some land, such as NewMexico and other lands in theSouthwest, as well as Indian lands. Itwas our Manifest Destiny for America toextend from sea to shining sea. A typicalmotive for acquiring additional territorywas to enhance commerce by settling
� C O L U M N
Reporter offers disappointing biography Newsman Tom Kizzia details the background of Papa Pilgrim, once the poster child for Alaskans seeking access in the New Parks
Mining & thelaw
The author,J.P. Tangen hasbeen practicingmining law in J.P. TANGENAlaska since 1975. He can be reached [email protected] or visit his Web site atwww.jptangen.com. His opinions do notnecessarily reflect those of the publishersof Mining News and Petroleum News.
see TANGEN page 9
remote areas for resource development.The national policy was (and theoreti-
cally remains today) for Americans to goupon the unreserved public land anddevelop the abundant resources such astimber and minerals. The mining law of1872 is an excellent illustration of thatpolicy. The government says to everycitizen: “go upon the public domain andlook for gold and silver and lead andzinc and many, many other valuable min-erals; and, if you do, you can keep andsell what you find.”
We, as a nation, also invited home-steaders, entrepreneurs, farmers, and vet-erans among others to populate and set-tle the public land. Slowly, that policy isfalling from fashion, probably becausewe are evolving from a society of makersto a society of servers. However, the ven-erable policies when in vogue carriedwith them certain guarantees, amongwhich were the right to use the land forthe proposed purpose and the right toaccess that land for that purpose. Whenthe United States granted someone apatent to land, the reservations andexceptions were detailed in the con-veyance document.
In 1980, a strange piece of legislationwas enacted at the instance of theEnvironmental Conflicts Industry. TheAlaska National Interest LandsConservation Act — ANILCA — wassigned into law, and that law, amongother things, doubled the size of theNational Park System by establishing anumber of new park units in Alaska.The Act assured Alaskans that existinguses and access would not be compro-mised; however, the National ParkService, aided and abetted by the review-ing courts, has found those promises tobe not binding.
One of the parks – the largest of all –was the Wrangell Saint Elias NationalPark, which was and is chock full of in-holders who want to get to their land anduse it. Such was the case of Robert Hale.
Hale wanted to reconstruct a washed-outmining road to his patents nearMcCarthy. This caused the NPS to moveheaven and earth to stop him. At onepoint, they ran up a half-million-dollarbill with the expectation that they wouldsaddle Hale with it for reclaiming a criti-cally-needed way to get to his land.
In all fairness, Kizzia makes note inpassing of the access story and the disap-pointing result; however, he does so insuch a fashion as to make it clear that hisbias is not supportive of Hale and hisfamily. The book is a good read if youare morbidly curious about eccentricpeople – Hale certainly qualifies – but it
is a waste of $25 American to buy thebook if you want some insight into whatwas possibly going through the heads ofthe myopic bureaucrats in charge whenthey chose to send rangers in flak jacketsto remote Alaska in order to conduct asimple survey. �
9NORTH OF 60 MINING
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By ROSE RAGSDALEFor Mining News
A substantial amount of mining activitycontinued apace in Yukon Territory
this season even though most mining com-panies are shying away from the anorexiccapital markets.
Many exploration companies raisedfunds in other ways, turning out their pock-ets to return to Yukon in 2013 to explore forCarlin-style gold mineralization in the east-central region of the territory, for moregold-bearing structures in the White Goldand Klondike districts to the west and forother styles and types of mineralizationelsewhere in the territory.
In fact, business was as usual for someYukon prospectors, especially those whohave made discoveries in recent years.
“I’m just as busy as ever this year. A lotof people say it’s slow for them, but I’veactually turned down stuff this year,” Yukonprospector Jean Pautler confided to MiningNews at the annual Dawson Rocks eventheld Aug. 7 in Dawson City.
Pautler discovered significant gold min-eralization in 2012 on Comstock Metals
Ltd.’s QV Property located in the WhiteGold district.
Placer miners are also pressing forwardat numerous small installations throughoutcentral and southern Yukon, clearly recog-nizing that US$1,300-per-ounce gold canstill be quite lucrative to operators accus-tomed to prices closer to US$300/oz.
But vacancy signs posted at lodgingsthroughout Dawson City at the height of themining and tourist seasons in early August,along with the sparse turnout (about 40 reg-istrants) at Dawson Rocks told a differentstory.
Mining, mine development and mineralexploration activity in Yukon is quite sub-dued in 2013, compared to levels of similaractivities in recent years.
Yukon officials estimate that the territo-ry will attract about C$40 million in miner-al exploration investment in 2013, orroughly half of the C$80 million-plus spentin 2012.
“There is not a single new project inYukon this year,” observed Patrick Sack, ageologist with the Yukon Geological
� Y U K O N T E R R I T O R Y
Quiet season eclipses hectic activityMining industry reacts to low prices and capital drought by cutting budgets and operations, laying off workers and staying home
see QUIET SEASON page 10
continued from page 8
TANGEN
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Duncan McBean, P.Geo., vice president exploration for Comstock Metals Ltd. , describes fea-tures of a map showing geophysical anomalies that the junior has identified since gold wasdiscovered in 2012 on the QV Property in the White Gold district.
Survey.“In the last rush, everyone did a back-
wards approach. They staked as big a prop-erty as they could, and now they are lookingat what they have and picking and choosingwhere to explore,” Sack told Mining NewsAug. 4.
About a quarter million mining claimshave been staked in Yukon Territory, includ-ing some 200,000 staked since 2009 whendiscovery of the 1.1-million-ounce-plusGolden Saddle deposit in the White Golddistrict ignited a modern staking rush thatextended into 2010 and 2011 after the sub-sequent discovery of Carlin-style gold atAtac Resources Ltd.’s Rackla Project. Therecent stampede kicked up a lot more dustthan the previous one, in which about58,000 claims were staked in the FinlaysonDistrict in southeastern Yukon in the 1990s.
Today, about 88-90 percent of mineralexploration claims in the Yukon remains tobe staked.
Sack said many companies that rushedto the Yukon in recent years have spentrecent months renegotiating their optionagreements, while others have releasedtheir options, altogether. Some propertieshave quickly changed hands, with large andsmall companies snatching up hotprospects.
Gold Fields Ltd., for example, hasacquired the Oro Property, which isprospective for Carlin-style mineralization,from Colorado Resources Ltd., a juniornow focused on promising claims in north-western British Columbia.
Likewise, Pacific Ridge ExplorationLtd. grabbed the King Solomon DomeProperty, when another junior relinquishedits option and returned the claims toprospector Shawn Ryan.
Ongoing mining challengesOf the territory’s three operating mines,
only Capstone Mining Corp.’s high-gradeMinto copper-gold mine is forging aheadwith construction of a new undergroundadit aimed at reaching mineral-rich ore inArea 2A and Area 118, while continuingextensive open-pit operations aboveground.
Minto Mine Manager S. D. “Sebastian”Tolgyesi said one of the toughest challengeshe has faced since moving to Whitehorsefrom Nunavut and joining Minto’s manage-
ment team two years ago is finding a sys-tem that provides reliable telecommunica-tion services for the mine’s workers and forits rapidly developing underground opera-tions.
The territory’s other two mines, AlexcoResource Corp.’s Bellekeno and YukonZinc Corp.’s Wolverine, are braking inresponse to dropping silver prices and dis-appointing production rates, respectively.Alexco reported that it will shut downBellekeno for the winter months, beginningin September in hopes of waiting outslumping silver prices.
Yukon Zinc effectively reduced its oper-ations at the silver-rich volcanogenic mas-sive sulphide mine to 60 percent output dur-ing the first half of July. As a result, themine’s work force was decreased by 30 per-cent of both Yukon and non-Yukon staff andcontractors to meet production levels. AtJuly 31, Yukon residents comprised nearly20 percent of the mine’s 249-member workforce, and this includes Kaska First Nationmembers.
“The underground mine operations areexceeding the 950 (metric tons) per day tar-get to feed the mill ore for processing, orstockpile it for upcoming use,” WolverineMine General Manager Floyd Varley toldMining News in an email Aug. 20. “Themill is operating on a two-week per four-week period and has been efficiently pro-cessing 1,900 tpd on average, 150 tpd abovethe continuous operations target, with theability to add extra production shifts tomeet concentrate sales demand.”
Varley said Yukon Zinc remains focusedon safely maintaining production, whilemaximizing head grades in the mine andconcentrate recovery and quality in the mill.
Quiet times at Eagle GoldAt the Eagle Gold Project, the camp was
closed for the season, but Victoria GoldCorp. President and CEO John McDonnellgreeted a group of reporters at the site Aug.5 and provided an update on the advanceddevelopment project.
McConnell, who moved to Whitehorsefrom Toronto two years ago, said Victoriawas awaiting a quartz mining license in thethird quarter, which will enable the compa-ny to begin construction of a planned heapleach gold mine on the property. Yukon reg-ulators also are expected to issue a waterlicense, which would give the green lightfor production, in 2014.
While awaiting these permits, Victoriahas focused in recent months on findingsources of capital to ease the burden ofbringing the 260,000-ounce-per-year intooperation by in 2016. The project hasproven and probable gold reserves totaling2.3 million ounces, or 92 million metrictons grading 0.78 grams per metric ton.
Construction and working capital forEagle Gold will require an estimatedC$430 million in capital, of which Victoriahas identified funding for roughly C$350million. The remaining C$80 million willcome from debt, royalties or a joint venturepartner, McConnell said.
A new area of investigation is the poten-tial of undertaking placer mining on theproperty to quickly generated revenuethrough the sale of placer gold. The EagleGold area on the Dublin Gulch propertyonce was among the top 10 placer miningcenters in the Yukon.
While awaiting improvement in the cap-ital markets, Victoria is spending $3 millionto $4 million at a rate of C$1 million toC$1.5 million per month this summer ondetailed engineering based on results of abankable feasibility study completed in2012.
McConnell said Victoria Gold currentlyhas about $30 million in receivables andenough ready cash to wait out the poor cap-ital markets. The company has raised morethan $70 million by selling its assets inNevada and refrained from trying to raiseadditional capital in the markets for morethan two years.
McConnell, a mining engineer creditedwith leading development of the Nanisivikzinc-lead mine on Baffin Island in Nunavutin the 1970s and recently the Snap LakeDiamond Mine in Northwest Territories,said the company chose to put on holdexploration drilling in 2013 near the Eagledeposit, including in the promising PotatoHills Trend which he said could contain
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QUIET SEASON
see QUIET SEASON page 11
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An aerial view of the mineral-rich tailings of the historic Whitehorse Copper Mine, where Eagle Whitehorse LLC plans to extract up to350,000 metric tons per year of magnetite ore and ship it to market via the Skagway Ore Terminal in Alaska.
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“another Eagle deposit or two.”“One of the most difficult things to do is to take your
foot off the gas, and that’s what we’ve done in the past fourmonths,” he explained. Part of throttling back the momen-tum was laying off about 30 percent of the company’s proj-ect team.
But this doesn’t mean Victoria has turned its back on thefuture, even temporarily. The company is planning to con-duct an extensive prospecting and sampling program on thevast Category B claims located to the west and south of theDublin Gulch property later this season.
The company signed an agreement in 2012 with theNacho Nyak Dun First Nation that will allow mineralexploration on the Category B lands for the first time in 30-40 years, McConnell said. Both Dublin Gulch and theCategory B lands are part of the Nacho Nyak Dun’s tradi-tional territory. Victoria has signed cooperative benefitsagreements with the First Nation that allows for mineralexploration and mining in exchange for consideration suchas preferential employment, training and education assis-tance.
Hunt for Carlin-style goldExplorers seeking Carlin-style gold in east-central
Yukon this season include privately held Cantex, whichbought Atac’s old exploration camp near the Rackla Projectair strip; privately held Goldstrike Resources Inc., which isdrilling this year at its Plateau North and South projects andGoldfields on the Oro Property.
Yukon officials say Barrick Gold Corp. and NewmontMining Corp. also have made their presence known,though little has been reported about their activities in thearea this year.
At Anthill Resources Ltd.’s Einarson Project a programof stream sediment sampling, prospecting, silt samplingand a little grid work is underway.
Anthill reported the Venus discovery in 2012 with 38meters of 9.6 g/t gold in near-surface mineralization whereseven holes were drilled as well as four holes in the MarsTrend for a total of 1,800 meters in 2012.
This year, the privately held junior is drilling 5,000
meters, including 10 holes at Venus and three holes at Marsthat already have been completed, with another 8-10 holesto finish the season. In addition the company will carry outa 20,000-plus soil sample survey to follow up on drillresults at Venus and Mars.
The Einarson Property, located a stone’s throw from theYukon-Northwest Territories border, covers about 1,100square kilometers due east of ATAC’s better known RacklaProject. Anthill optioned the property from longtime Yukonprospector Ron Berdahl, who discovered Einarson whileexploring the area and finding Carlin-style pathfinder min-erals such as realgar, orpiment and zebra dolostone in thearea.
After reading up on the Carlin Gold District in Nevada,
Berdahl felt the pieces fit for Carlin-style mineralization inthe area’s mountainous terrain.
“It was kind of a big gamble. We put all of our moneyinto staking these properties,” said Steve Berdahl, explo-ration geologist at 18526 Yukon Inc. and Ron Berdahl’sson.
Most of the claims that the Berdahls staked in the areahave been optioned to Anthill, which now holds a 30 per-cent interest in the Einarson property along with an optionto acquire up to a 100 percent interest. However, theBerdahls held on to a small area south of Einarson near theMars Trend. The father-son duo returned to the area in 2011
continued from page 10
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see QUIET SEASON page 12
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A view of the portal to the new underground adit at Capstone Mining Corp.’s high-grade Minto copper-gold mine nowunder construction to reach mineral-rich ore in Area 2A and Area 118. Current developments plans include construction ofup to two more underground adits at Minto to access other deposits on the property.
12NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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and staked additional ground near thisacreage. The work led them to make anadditional realgar discovery (the F-2 Target)in 2012, two years after the area’s record-setting staking rush in 2010.
Aside from a find near the Great Wall ofChina, Yukon Territory hosts the onlyknown examples of Carlin-style mineral-ization outside of Nevada.
Jeff Cary, a geologist who has workedon Carlin Trend projects in Nevada for mostof his career prior to relocating to YukonTerritory in 2010, said one of the most com-pelling parts of the whole exploration storyin East Yukon is the sheer size of the areawith signs of Carlin-style mineralization.
“You could fit the whole North CarlinTrend, which had 100 million ounces ofgold when it was all mined, between the F-2 Target and the Venus Trend,” said Cary,who joined the Anthill project team in July.
“Within our target areas (at Einarson),we’re putting money and manpower intounderstanding the geology,” Cary toldMining News Aug. 5.
Sunrise brightens outlookAt the nearby Rackla Project, Atac has
drilled more than 60,000 meters of coresince 2010, following up on geochemicalsampling that sought pathfinder elementsin a series of carbonate horizons in the east-ern-most part of the 1,700-square-kilome-ter (656 square miles) property known asthe Nadaleen Trend. The work has paid offwith a growing list of discoveries, includingthe Sunrise Zone, which was initially iden-tified by a road-building contractor on theside of a mountain 300 meters east theOsiris Zone in last October. Atac reportedresults Aug. 14 from the first seven dia-mond drill holes completed at Sunrise,including confirmation that the Sunrise andOsiris zones coalesce into a larger, near-sur-face gold zone.
Sunrise is located upslope of a stronggold-in-soil geochemical anomaly that hadnot been previously drill-tested.Mineralization at Sunrise occurs as sub-parallel tabular bodies that dip steeplysouth. The 2012 discovery was intersectedat the top of hole OS-12-173 where intense-ly decalcified limestone is adjacent to asteeply dipping fault that separates theOsiris carbonate sequence from overlyingshale. The hole was collared directly withinmineralization and returned 14.86 meters of10.54 grams-per-metric-ton gold. Drillingto the east and west of the discovery hole in2013 has extended the strike length of min-eralization or the characteristic alteration inthe case of holes with assays pending, to200 meters and tested it to a depth of 250meters from surface.
“2013 drilling at the Sunrise zone hasconfirmed grade and continuity of goldmineralization westward where it becomesthe down dip extension of the Osiris zone,”said Atac CEO Graham Downs in a state-ment.
“We are very excited about the expan-sion of the Sunrise zone and resulting con-vergence of both zones into a larger near-surface gold zone. Results from additionalSunrise Zone step-out holes drilled towardand down dip of Osiris will be reportedonce received and compiled,” he added.
Yet Atac’s geologists say they may bemore intrigued by the Conrad Zone, whichwas discovered in 2010 along with Osirisand Isis, but may be masked by mudstoneand potentially larger than the Osiris andIsis discoveries, together.
Atac is also conducting a geochemicalsampling program over 100 kilometers (62miles) in the Nadaleen Trend.
The company said regional exploration
is proceeding this season with workfocused on the Anubis area, which is locat-ed 10 kilometers (6.2 miles) to the west ofthe Osiris cluster of gold zones. Follow-upexploration consisting of geochemistry sur-veys, prospecting or hand pitting has beenconducted at all of the nine Tier 1 anom-alies identified in 2012. A small excavatorhas recently been mobilized to the Anubisarea to more effectively test priority targetsand, if warranted, prepare drill sites.
Noting that Carlin-style mineralizationis very erratic, Atac President Rob Carnesaid his exploration team is taking the timein 2013 during the current down capitalmarkets to really understand the fairly com-plex system of Carlin-style mineralizationon the property. Whether it’s the 10-kilome-ter (6.2 miles) long anomaly to the westdubbed Anubis or the equally excitingAnubis and Pharoah discoveries, thereremains an abundance of discoveries andnew targets to investigate on the Racklaproperty.
Carne said Atac also embarked in Julyon a program of detailed soil sampling andprospecting, geochemical sampling andsignificant test pitting.
“We are two-thirds of the way through aresource definition for the property,” headded.
Progress at CoffeeKaminak Gold Corp. Aug. 8 reported
results for 54 drill holes from its ongoing2013 drilling campaign at the Coffee GoldProject in west-central Yukon. The juniorsaid drilling successfully identified shallow,predominately oxidized gold-bearing struc-tures within the Supremo-Latte-DoubleDouble area, which is host to a majority ofthe 3.2-million-ounce inferred mineralresource estimated in late 2012 for Coffeethat consists of 64 million metric tons aver-aging 1.56 grams per metric ton gold at abase case cut-off of 0.5 g/t gold for oxideand transitional material and a 1 g/t goldcut-off for sulphide mineralization. The lat-est drill results are presented from SupremoT1-T7, Connector and Latte zones fromdrill campaigns that extended the knownzones of mineralization along strike, acrossstrike and to depth.
Among highlights of the results: Drillingcontinued to successfully extend additional,near-surface oxide gold mineralization inSupremo’s ‘T’ structures, including 3.53 g/tgold over 18.28 metres from 158.50 metresdownhole in T2; 9.84 g/t gold over 6.10
meters from 134.11 meters in T5; 8.68 g/tgold over 4.57 meters from 35.05 meters inT3; 2.06 g/t gold over 6.10 meters from68.58 meters in T7; and 2.69 g/t gold over44 meters from 6 meters in T1.5 (drilledobliquely down-dip).
Drill results in multiple oxide gold-bear-ing structures intersected within a complexfracture zone marking the intersection pointbetween the Supremo and Latte mineral-ized structures include: 5.67 g/t gold over16 meters from 95 meters depth.
Step-out drilling west along strikebeyond the existing Latte zone extended theLatte mineralized structure for an addition-al 300 meters. The total strike length ofLatte is now in excess of 2 kilometers andstill open. Results include 2.91 g/t goldover 6 meters from 95 meters.
2013 drilling at Coffee is ongoing andhas now surpassed 40,000 meters whileremaining on schedule and within a phase 1budget of C$11 million. In addition to thedrill program, which will be incorporatedinto an updated resource estimate later thisyear, collection of metallurgical, geotechni-cal, hydrogeological and environmentaldata is ongoing with the objective to sup-port a preliminary economic assessment tobe formally commenced in early2014. Also, an extensive soil sampling cam-paign that includes 5,026 samples wasrecently completed with the objective ofidentifying future drill targets. Kaminak isdebt-free and fully financed to complete its2013 objectives and launch a 2014 explo-ration program.
“While we have yet to define the limitsof this extensive, structurally controlled,hydrothermal gold system, where aninferred NI 43-101 resource of 3.2 millionounces was established in 2012, drilling thisyear has so far demonstrated good continu-ity and connectivity between the deposits,”Kaminak President and CEO Eira Thomassaid in a statement. “Further, we have con-tinued to delineate near-surface, potentiallyheap leachable, high-grade zones that couldrepresent accessible, early-stage miningopportunities. Indeed, the presence of con-siderable shallow, high-grade ounces withinthe block model is a distinct advantage forthe project as we begin to investigate futuremining scenarios that take a disciplinedapproach towards capital investment andwork to maximize margins.”
Kaminak also has made considerableprogress in establishing low-cost infrastruc-ture to support exploration. This includes
construction of a commercial barge landingsite on the property and building a 23-kilo-meter (14.5 miles) access road from theYukon River to the property’s gold depositsat a cost of about C$50,000 per kilometer.
Thomas, who joined Kaminak March 1,told reporters visiting the Coffee ProjectAug. 8 that she believes the property is sit-uated “in area that eventually will be minedfor a very long time.”
She observed that Coffee is still an earlystage exploration project that is alreadydemonstrating district-scale potential, giventhat only 20 percent of the property hasbeen explored.
“Part of our goals in 2014 will be to getout and test the rest of the ridge and spuranomalies on the property that are equallycompelling,” she said.
The junior, meanwhile, is positioningCoffee for possible early development of itshigh-grade areas in a scalable project thatcan be built over time. Because a large per-centage of mineralization uncovered so faron the property is oxide and transitionalmaterial, the company is cheered by theprospect of constructing a heap leach mine.
Early metallurgical tests show that thefine-grained gold mineralization at Coffeeis amenable to heap leaching with 90.4 per-cent gold recovery over 80 days and 83.2percent recovered in the first 15 days.
Silver and iron projectsYGS geologist Sack said that in addition
to gold projects, Yukon attracted a sprin-kling of other types of mine projects thisseason.
Silver Range Resources Ltd., for exam-ple, is continued to explore its Keg Propertylocated near Faro and about 20 kilometers(12.4 miles) from the territory’s electricalgrid. Silver Range released a NI 43-101-compliant inferred resource estimate of 40million ounces silver at Keg in 2012.
“It’s a large property that has piles oftop-tier targets,” Sack said. “Silver Rangewent from having a soil anomaly in 2010 toa reporting a resource in 2012. That has gotto be one of the fastest turnarounds inrecent memory.”
Sack said the junior would like to minethe Keg Property, “but they are not surehow. The transition from junior to miner ispretty hard,” he added.
A new magnetite mining operation inWhitehorse, meanwhile, could become thefirst-ever iron mine in Yukon. The mineral-ization would come from tailings left fromyears of copper and then gold production atthe Whitehorse Copper Mine.
Developer Chuck Eaton’s EagleWhitehorse, LLC recently inked an agree-ment with the Alaska IndustrialDevelopment and Export Authority tostockpile, load and ship magnetite concen-trate from the Skagway Ore Terminal toAsia markets. Construction on theUS$7.5 million expansion project willbegin late this summer, with project com-pletion expected in the first quarter of2014.
The unit of Eagle Industrial MineralsCorp. intends to process 12,000 tpd forsix to seven months during the snow-freeseason, producing 250,000-350,000 met-ric tons per year magnetite over six toseven years and employing up to 20 peo-ple. The venture will involve running thetailings through a slurry to produceenough magnetite ore to fill an oceango-ing barge every month.
Sack said another local entrepreneur,Jim Coates of Kryotek, is also investigat-ing the potential of adding a gold circuitto the magnetite operation in hopes ofrecovering the remaining 0.5 g/t gold inthe iron-rich tailings. �
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Kaminak Gold Corp. geologist James Scott shows off a chunk of brittle rock found in one ofthe gold-rich trenches on the T structures of the Supremo Zone at the Coffee Project in theWhite Gold district of Yukon Territory. Kaminak hopes to update a 3.1-million-ounce inferredgold resource calculated in 2012 for Coffee later this year, even though only 20 percent ofthe property has been explored to date.
13NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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By ROSE RAGSDALEFor Mining News
While explorers in eastern Yukon Territory were tak-ing time to understand their properties this season,
the few companies working projects in the White Gold andKlondike districts to the west seemed to be pursuing theirtargets with the same urgency as companies exhibited inprior years.
This year, however, the juniors chasing gold prospects inthe area were trying to get as much done as possible whilespending the least amount of money.
Hampered by a prolonged capital drought in the indus-try, most of these companies eagerly augmented modestexploration budgets with mining incentives provided by theGovernment of Yukon. In fact, the Yukon Mining IncentivesProgram has awarded a record C$1.1 million in 2013 tosome 80 prospecting and exploration ventures throughoutthe territory.
The biggest surprise of the season, however, came notfrom a government program but rather from a local entre-preneur who has developed two new devices aimed at help-ing explorers achieve their goals more effectively and at lesscost.
Comstock Metals Ltd., Pacific Ridge Exploration Ltd.and Taku Gold Corp. are among the select few who returnedto Yukon in 2013 to chase targets across their properties.With the help of celebrated Yukon prospector Shawn Ryan,whom many credit with igniting the modern-day Yukongold rush in 2009, their tasks may get a little easier.
Ryan and his company, Groundtruth Exploration, has inrecent months developed two new exploration tools, seem-ingly tailor-made for grassroots explorers working in theWhite Gold district.
New sampling techniqueMining News caught up with one of the tools, the
GeoProbe, at the King Solomon Gold Property in theKlondike district after visiting the QV Project whereComstock Vice President of Exploration Duncan McBeansang the device’s praises.
The QV project is located across the Yukon River andupstream from Kinross Gold Corp.’s 1.2-million-ounceWhite Gold Project, which hosts the Golden Saddle Depositdiscovered in 2009.
McBean said the remote-controlled GeoProbe enabledthe company to quickly and economically explore severaltargets on the steep slopes of the property without having tospend a boatload of money. Moreover, the diminutivedrilling unit is mounted on tracks, enabling it to maneuvereasily through the dense alders and brush that blanket thesteep-sided peaks of the region.
Specifically, the GeoProbe technique involves taking asample from 2.5 meters (10-12 feet) below surface; retriev-ing 10-16 centimeters of soil and pebbles in the top layer ofbedrock; sieving it for rocks, both large and small; and put-ting one of the rocks taken through Delta XRF analysisusing three types of radiation. The balance of the sample,except for one rock sent to the client, is packed and sent toa laboratory for additional analysis.
In a typical hole, the GeoProbe delivers results as accu-rate as those obtained from trenching at a fraction of thecost and without the need for costly reclamation, its propo-nents say. In fact, the 2.5-inch diameter drill leaves a foot-print so tiny that it is often difficult to find traces of thecompleted hole once the drill has moved on to another loca-tion.
A remarkably maneuverable device, the GeoProberequires a three- person crew – one technician to operate thedrill rig, another to perform the XRF analysis, and a thirdtech to prepare the rock chip samples for the lab. All three
workers help with moving the tiny tent and other equipmentthat comprises their mobile camp as the GeoProbe travers-es a property.
At the QV property, the GeoProbe completed seven linesof samples earlier this summer that will help Comstockdevelop new targets for a phase 2 in late August, McBeansaid. In addition to targets near the VG Zone where the ini-tial gold discovery was made in 2012, the junior has out-lined an area to the west called the Shadow Zone, to followup with additional exploration.
Early in the season, Comstock completed 2,080 metersof drilling in phase 1, following up on hole 12-04 whichreturned 85 meters with good intercepts including 25-30meters of 1.41 g/t gold.
McBean said that hole was drilled down dip, meaningthe uncommon length of mineralization was likely mislead-ing. Comstock geologists believe QV mineralization gener-ally ranges between 25 and 30 meters in thickness.
� Y U K O N T E R R I T O R Y
Juniors tackle projects with new toolsInnovative remote-controlled devices aid mineral explorers in White Gold district with rock chip sampling, aerial photography
see NEW TOOLS page 15
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The remote-controlled GeoProbe drills holes about 2.5 meters deep to obtain rock-chip samples from the top layer ofbedrock in the unglaciated White Gold and Klondike districts of Yukon Territory. The brainchild of prospector/entrepreneurShawn Ryan, the GeoProbe offers companies an economical exploration tool in an era of scarce capital.
By SHANE LASLEYMining News
Building and operating a mine at the 20-million-ounce Livengood gold project would lose money at
today’s US$1,300-per-ounce gold price, according to theresults of a feasibility study published July 23 byInternational Tower Hill Mines Ltd. In fact, the 100,000-ton-per-day mine outlined in the study does not breakeven until the gold price approaches US$1,500/oz.
International Tower Hill management, though,remains optimistic that developing the multimillion-ounce gold deposit which lies alongside a paved highwayin the heart of Alaska’s gold country will become eco-nomic.
“While the study results are not economically feasiblein today’s specific gold market, the Livengood projectremains a very significant gold deposit in one of themost favorable geopolitical jurisdictions in the world;and we believe the project will be economically viable inan acceptable timeframe, when considering the timelinesfor permitting and development,” explained InternationalTower Hill Mines CEO Don Ewigleben.
If the gold price returned to its 2011 peak ofUS$1,900 per ounce, the after-tax net present value (5.0percent discount) for Livengood is projected to beUS$1.1 billion, the internal rate of return would be 12percent and the payback period would be 5.2 years,according to the feasibility study.
International Tower Hill is not resting the fate of theproject solely on a rising gold price. The Livengooddevelopment team has identified multiple opportunitiesto improve the economics of the operation detailed in thefeasibility study and is pursuing scenarios which wouldrequire less upfront capital to develop the mine as well asways to reduce the operating costs.
With potential opportunities to increase the feasibili-ty of mining the gold at Livengood left on the table,some are questioning the reasoning for releasing the fea-sibility study prior to pursuing these measures.
In response to one such query by an analyst,Ewigleben explained. “We have to be realistic aboutwhat we have done. We spent our shareholders’ moneycompleting a feasibility study that took us over a year;and it took us from the PEA and pre-feasibility stageusing the same 100,000-ton-per-day case. That may notbe the case that we are going to use going forward, butwe felt it had to be mentioned to our shareholders so thatthey understand the setting that we are working with.”
Tom Irwin, Tower Hill’s vice president, Alaska, put itmore succinctly, “We, as an industry, and certainly we, asa company, have to be honest.”
Level of detailThe 100,000 tpd operation proposed in the feasibility
study would make Livengood more than twice the size ofKinross Gold Corp.’s Fort Knox Mine, located about 45miles (72 kilometers) to the southeast.
“This scenario was chosen to take advantage of theeconomies of scale and maximize the production of goldand value to the investor,” explained Ewigleben.
Using a cutoff grade of 0.3 grams per metric ton, theLivengood project hosts a measured and indicatedresource of 15.7 million ounces of gold; plus an inferredresource of 4.4 million ounces of gold.
At a US$1,500/oz gold price, roughly half of this goldreported to the reserves. The feasibility study includesproven reserves of 434 million metric tons averaging0.69 g/t (9.6 million ounces) gold and probable reservesof 20 million metric tons averaging 0.70 g/t (454,000ounces) gold.
Utilizing these reserves, the mine plan provides suffi-cient ore to support an operation that averages 577,600ounces annually, or 8.1 million ounces over the 14-yearmine-life anticipated in the feasibility study. During thefirst five years, the 100,000-metric-ton-per-day opera-tion anticipated in the study would average 698,500ounces of gold per year.
The initial capital expenditures to build a mine of thisscale at Livengood are estimated to be US$2.8 billion, a75 percent increase over the US$1.6 billion of capitalexpenditures anticipated in a 2011 preliminary econom-ic assessment for a similar scale operation at the Interior
Alaska project.An additional US$667 million of sustaining capital
would be needed over the life of the operation.International Tower Hill management attributes the
cost increases to the level of detail Samuel EngineeringInc. and AMEC Environment & Infrastructure Inc. pre-sented in the feasibility study and additional infrastruc-ture components not anticipated by the PEA.
“The main difference in these two projects is the ideaof trust,” Ewigleben explained. “We all know in thisindustry … several companies have underestimated thecost of a project. We have made sure, to the best of ourability, that we have defined every potential cost andused those conservative numbers to avoid that trap.”
In addition to the high level of detail, the feasibilitystudy includes a couple of high-priced items not consid-ered in the PEA.
“We need to line the tailings facility; that is a sizablecost, sizable amount of work,” Irwin explained. “Thiscompany is credible, we understand the permit processup here, and we thought it would be foolish to proceedwithout lining the tailings facility.”
The other expense not included in the PEA is a 440-worker camp. Though Livengood is only 70 paved roadmiles from Fairbanks, an excellent hub for skilled min-ing labor, the wintertime commute along the two-lanehighway could become dangerous for workers and trou-blesome for the operation.
“We had no camp plans early on, and we are a com-pany that believes in making sure we have shareholdervalue and employee safety,” explained Irwin.
ITH goes all-inIn its pursuit of honesty, International Tower Hill
Mines incorporated an all-inclusive metric for reportingthe costs to mine an ounce of gold into the feasibilitystudy.
“If we had continued on without allowing our share-holders to understand the leverage to gold price on thisproject, it would potentially be deceitful; we simply donot want that, we wanted transparency. That is also whywe used the World Gold Council’s ‘all-in’ accountingmethodologies that all of the other miners are going to beusing on a cost-per-ounce basis.”
This “all-in costs” metric was developed by the WorldGold Council to more accurately illustrate the costs tomine an ounce of gold. The all-in cost includes both cap-ital and operating expenses when considering the per-gold-ounce mining costs of a project. Though this extratransparency is not required by law, a number of globalgold miners are reporting it alongside the traditional cashcosts.
The all-in costs to mine an ounce of gold atLivengood with the operation described in the feasibilitystudy are estimated to be US$1,474. This includesUS$987/oz of operating, royalty and smelting costs;US$416/oz to payback capital expenditures; US$43/ozfor reclamation; and US$27/oz for taxes.
The Livengood development team is now tasked withfinding ways to reduce the estimated all-in costs andimprove the feasibility of the mine project.
Tower Hill believes that mill throughput and produc-tion schedule optimization studies may provide opportu-nities to reduce project capital costs. A lower millthroughput may offer an opportunity to enhance millhead grades in early years by a more aggressive stockpilemanagement strategy than is assumed in the feasibilitystudy.
The on-site mine operating costs of US$933/oz, orUS$7.5 billion over the proposed 14-year life of themine, is a key area in which the company sees an oppor-tunity to lower costs.
“There are multiple places we believe we can savemoney, but I will tell you that we will concentrate strong-ly on our operating activities because some of the areasthat were identified as opportunities seemed to move thedial the most,” Ewigleben said.
Expensive powerFinding ways to lower the presumed electrical costs is
one area to directly dial back the operating expenditureside of the all-in metric.
“If we can reduce our power costs, we can reduce thesignificant op-ex related to mining 100,000 tons perday,” explained Ewigleben.
Electricity rates in Interior Alaska are notoriouslyhigh compared to other parts of the United States or eventhe more populous south-central region of Alaska.
As an example, Kinross Gold spent roughly US$40million, or about US$110,000 per day, in 2012 to powerits Fort Knox Mine, situated about 26 miles (42 kilome-ters) north of Fairbanks.
“When I am paying 78 percent more for the same unitcost of power than my sister mine in Washington and 68percent more than they are in Nevada, I struggle withthat,” Fort Knox General Manager Dan Snodgress grum-bled during a presentation at the 2012 Alaska MinersAssociation annual convention. “If this mine was locatednear Anchorage, near Southcentral, versus the Interior ofAlaska, the cost differential of power is substantial.”
Snodgress said lowering power costs in the Fairbanksregion is not only important to the bottom line at FortKnox but is imperative to developing new mines, such asLivengood, in this gold-rich region of Alaska.
“Mining in the Interior is expensive and if we aregoing to develop new mines, we are going to have to fig-ure out how we reduce the power rate,” he told the min-ing community.
To get this high-priced electricity to Livengood,International Tower Hill would need to build 50 miles oftransmission line from the existing grid north ofFairbanks to the mine site. The feasibility study includescapital expenditures of US$129 million to build the 50miles (80 kilometers) of transmission line needed to linkthe Livengood project to the existing power grid north of
14NORTH OF 60 MINING
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� A L A S K A
Livengood goes back on the drawing boardTower Hill development team pursues opportunities to reduce US$1,474/oz ‘all-in’ gold mining costs; queues up potential partners
see LIVENGOOD page 15
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The 20-million-ounce gold deposit at Livengood lies under the prominent hill beyond International Tower Hill Mines’ explo-ration camp, Trans-Alaska Pipeline System and the Elliot Highway. A feasibility study released at the end of July anticipatesbuilding a 440-person camp to be used during operations.
Fairbanks.Snodgress at Fort Knox suggests trucking liquefied
natural gas down from the North Slope to fuel InteriorAlaska power plants as one way to reduce power costs.
Senate Bill 23, which received unanimous approvalin the Senate and House in April, aims to do just that byauthorizing the Alaska Industrial Development andExport Authority to provide up to US$275 million infinancing for a natural gas liquefaction plant on theNorth Slope and a liquefied natural gas distributionsystem in the Fairbanks region.
SB 23 is part of a comprehensive financial packagerelating to Alaska Gov. Sean Parnell’s Interior EnergyPlan.
“For too long, Interior and rural Alaskans have beensuffering from skyrocketing energy costs,” Gov. Parnellsaid. “I am pleased the Legislature worked quickly toaddress this issue and provide the necessary frameworkto reduce energy costs for Alaskans.”
In current scenarios, trucks delivering LNG fromAlaska’s North Slope would skirt the Livengood proj-ect on their way to Fairbanks.
Preserving cashAdditional drilling to convert a larger portion of the
in-pit resource into reserves would bring down the all-in costs by spreading the capital expenditures overmore ounces of gold. There is also substantial potentialto expand the near-pit resource at depth and to the
southwest with additional drilling; and multiple explo-ration targets have been identified across the 48-square-mile (125 square kilometers) Livengood landpackage.
When an investor asked if International Tower Hillplans to complete additional exploration, Ewiglebenreplied, “We must conserve our existing cash. In thispresent price-environment, one of the most importantaspects here is preserving the asset, and we have beenin a cash-containment mode since the beginning of theyear to try and do just that. Unfortunately, that meanswe will not be doing any further exploration drilling.”
“When you have 20 million ounces (gold), this isabout finding the most optimized program for getting itout of the ground, economically,” he added.
Tower Hill plans to continue to advance Livengoodwithin the limitations of its on-hand working capital,while safeguarding the asset for development in thefuture. As of June 30, the company had about US$19.9million, enough cash to last until 2015.
International Tower Hill will focus this cash on opti-mizing the feasibility study and continuing the fiveyears of environmental baseline studies completed atLivengood.
“We will continue to review opportunities that wereidentified in the feasibility study for cost reduction,while we preserve our cash and, most importantly,while we preserve the asset. We will do this while wewait for an inevitable better economic environment forgold,” Ewigleben explained.
Potential partnersWhile the results of the feasibility study may have
turned away some investors, the 20 million ounces ofgold at Livengood continues to attract the attention ofpotential partners. The company said multiple large andmid-tier mining companies will be reviewing the finalfeasibility study for Livengood under confidentialityagreements.
“While this does not create a robust project rightnow, we strongly believe in the potential of the projectwhen, and we do believe it is when, gold prices increaseto levels we experienced in the last three years. We arenot the only ones with this belief; and we have beenspeaking with various potential joint venture projectsand strategic alliance investors regarding participationand funding for further development of the Livengoodproject,” touted Ewigleben.
The International Tower Hill CEO said the feasibili-ty study was completed to a level that would stand upto the scrutiny of the strong technical teams of the min-ing companies eyeing the Livengood project.
“The quality of the people doing our work, the out-siders we used, are definitely A-team feasibility studypeople because we wanted to attract larger miners tolook at this project,” he said.
Confident that one of these larger miners will decideto take advantage of the leverage to gold price that the20-million-ounce Livengood project offers, Ewiglebenconcluded the feasibility study presentation with, “Thefuture is very bright for the Livengood project. It isgold-price dependent, but we wouldn’t be in this busi-ness if we didn’t think the gold price will return toprices that we have seen in recent times and bring thisproject forward.” �
15NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF AUGUST 25, 2013
continued from page 14
LIVENGOOD
“We hit anomalous gold numbers on the south end of thefirst line, and we followed up and got good gold numbers inthe GeoProbe lines east of the VG Zone,” he said.
Comstock also dug a traditional trench for more than 80meters and hit rock grading less than 1 g/t gold but didn’thit the end of the mineralization. “So we want to extend itout. It is lower grade mineralization, but it’s very extensive,”McBean explained.
At the 6,000-hectare (14,826 acres) King SolomonDome Property, Pacific Ridge Exploration was busy Aug. 6with the GeoProbe and its crew punching some 25-30 drillholes per day across a grid with five-meter spacing. InJanuary, Pacific Ridge snagged the property, which coversthe highest point in the Klondike District, when its formerowner dropped its option with Shawn Ryan.
“We had been looking for drill targets using geophysicalsurveys, and now we are using Shawn’s technique to surveythe property,” said Pacific Ridge Vice President ofExploration Gerald Carlson.
He observed that no exploration permit is needed to usethe GeoProbe, which can be leased for about C$3,000/day.
No panaceaIn fact, using the GeoProbe has only one drawback,
according to the explorers, is the inability of its operators toeyeball the mineralization in place.
“It’s really slick, and one thing I like about it is that it’sreal-time information.” said Taku Gold Director MarkFekete. “Used in concert with XRF, it’s really reliable forpathfinder elements.”
“But you get a lot more information with trenching – youget to see the structures,” he said. Moreover, if reclamationis done in concert with traditional trenching, Fekete saidoverall trenching costs can be roughly comparable to thoseincurred using the GeoProbe.”
With eight properties covering 67,448 hectares (166,766acres), Taku is currently one of the largest stakeholders inthe White Gold District, and many of the junior’s holdingneighbor properties that have demonstrate major resources.The junior said the terrain on its White Gold properties fea-tures prospective rock types and structures similar to thosefound at Golden Saddle, QV and Kaminak Gold Corp.’sCoffee Property.
Extensive geophysical and soil sampling surveys, alongwith trenching and some conventional drilling on the prop-erties resulted in the discovery in 2012 of seven significantgold anomalies, including the very large Hudbay andNorwest Gold zones located on the Rosebute property.
Taku President Zack Dingsdale told Mining News thatthe company has narrowed its focus for future explorationto two of the anomalies, including one measuring 2,000
meters by 500 meters on the Rosebute property.“It’s bigger than the anomalies that led to the Coffee and
Comstock discoveries,” he said, after observing that theanomaly started out as two soil samples averaging 98 parts-per-billion gold and 110 ppb gold. “They weren’t huge butthey were together.
Using trenching and drilling, Taku has identified twogold zones at Rosebute ranging over five kilometers with upto 3.4 grams per metric ton (3.400 ppb) gold in soils.
“One thing we’ve learned is that you have to really devel-op these targets,” Dingsdale said. “This season are focusingon increasing the size of the anomalies. We decided to savedrilling for next season.”
The Taku executives said they are further encouraged byrecent results reported by Metals Creek Resources., a juniorexploring on trend to the north of Rosebute. Metals CreekAug. 6 reported the discovery by trenching of a new goldoccurrence on the Squid East project in the Matson Creekarea. Chip sampling at the newly discovered “ExploitsZone” from recently completed trench E4-3 returned 1.96g/t gold over the entire 22-meter trench length, including afour-meter interval of 6.39 g/t gold and two-meter-long chipsamples ranging up to 8.55 g/t gold.
He said the junior also has met all of the obligations of
its option agreements on the White Gold properties, spend-ing a total of C$8 million, and still has C$1.2 million in thebank.
Stealth technology for YukonRyan, meanwhile, has been busy developing another
exploration tool, called simply “The Drone.” Using stealth technology developed by the Swiss, he has
crafted a custom-designed computer controlled, airbornephotography system that enables a user to create a digitalimage of the topography of a parcel of land, complete withindications of elevation, infrastructure and other details,with accuracy to within 5 meters.
The US$40,000 hardware package includes a digitalcamera mounted in the belly of a black Styrofoam body thatresembles a toy airplane complete with movable wing flapsand aileron. Operated with a laptop by a technician on theground, the device resembles a large raven once it is air-borne. In fact, its appearance is so realistic, several ravensflew over to investigate the intruder as it soared on ther-mals for 10 minutes before being recalled to land in pre-cisely the spot from which it was launched.
Ryan and co-developer, Tao Henderson, demonstratedthe use of the device to a crowd of geologists, miningexecutives and reporters at Dawson Rocks Aug. 7. �
continued from page 13
NEW TOOLSR
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Sampling technician Ross Reed prepares a rock-chip sampleobtained by the GeoProbe, a remote-controlled miniaturedrill rig designed to aid mining companies in conductinggeochemical surveys of their mineral properties in YukonTerritory. Reed, a college student, is one of a three-personcrew that can drill 25-30 holes a day with the GeoProbe.
Yukon prospector Shawn Ryan shows off a new remote-controlled aerial photography drone that he has developedto assist mining companies and other businesses in captur-ing inexpensive digital topographical images of their prop-erties and merging them into a single photograph.
Mining Companies
Kinross Fort Knox/Fairbanks Gold Mining Inc.Fairbanks, AK 99707Contact: Anna Atchison, Manager, Community and Government RelationsPhone: (907) 490-2218 Fax: (907) 490-2290E-mail: [email protected]: www.kinross.comLocated 25 miles northeast of Fairbanks, Fort Knox isAlaska’s largest producing gold mine; during 2011,Fort Knox achieved 5 million ounces of gold pro-duced, a modern record in Alaska mining.
Usibelli Coal MineFairbanks, AK 99701Contact: Bill Brophy, VP Customer RelationsPhone: (907) 452-2625Fax: (907) 451-6543Email: [email protected]: www.usibelli.comOther OfficePO Box 1000Healy, AK 99743Phone: (907) 683-2226Usibelli Coal Mine is headquartered in Healy, Alaskaand has 700 million tons of coal reserves. UCM pro-duces an average of 2 million tons of sub-bituminouscoal each year.
Service, Supply & Equipment
Alaska Air Cargo • Horizon Air CargoP.O. Box 68900 SEAFZSeattle, WA 98168Contact: Joe Sprague, Vice President of CargoPhone: (206) 392-2705 or 800-2ALASKA
Fax: (206) 392-2641E-mail: [email protected]: www.alaskacargo.comAward winning cargo services to more places, moreoften, with more lift to, from, and within the stateof Alaska.
Alaska Analytical Laboratory1956 Richardson HighwayNorth Pole, AK 99705Phone: (907) 488-1266 • Fax: (907) 488-077E-mail: [email protected] analytical soil testing for GRO, DRO,RRO, and UTEX. Field screening and phase 1 and 2site assessments also available.
Alaska Earth SciencesAnchorage, AK 99515Contact: Bill Ellis, Rob Retherford, ownersPhone: (907) 522-4664 • Fax: (907) 349-3557E-mail: [email protected] full service exploration group that applies earthsciences for the mining and petroleum industries pro-viding prospect generation, evaluation and valua-tion, exploration concepts, project management,geographic information systems and data manage-ment. We also provide camp support and logistics,geologic, geochemical and geophysical surveys.
Alaska Frontier ConstructorsP.O. Box 224889Anchorage, AK 99522-4889Contact: John Ellsworth or Chris LedgerwoodPhone: (907) 562-5303Fax: (907) 562-5309E-mail: [email protected]: akfrontier.comAlaskan heavy civil construction company specializing
in Arctic and remote site development with theexperience, equipment and personnel to safely andefficiently complete your project.
Alaska Steel Co.1200 W. DowlingAnchorage, AK 99518Contact: Joe Pavlas, outside sales managerPhone: (907) 561-1188Toll free: (800) 770-0969 (AK only)Fax: (907) 561-2935E-mail: [email protected] Fairbanks Office:2800 South CushmanContact: Dan Socha, branch mgr.Phone: (907) 456-2719 • Fax: (907) 451-0449Kenai Office:205 Trading Bay Rd.Contact: Will Bolz, branch mgr.Phone: (907) 283-3880 • Fax: (907) 283-3759Rebar Division1200 W. DowlingAnchorage, AK 99518Contact: Mike Galyon, rebar mgr.Phone: (907) 561-1188 • Fax: (907) 562-7518Full-line steel, aluminum, and rebar distributor.Complete processing capabilities, statewide service.Specializing in low temperature steel and wear plate.
Arctic FoundationsAnchorage, AK 99518-1667Contact: Ed YarmakPhone: (907) 562-2741 • Fax: (907) 562-0153Email: [email protected]: www.arcticfoundations.comSoil stabilization – frozen barrier and frozen coredams to control hazardous waste and water move-
Companies involved in Alaska andnorthwestern Canada’s mining industry
D I R E C T O R Y
The Red Dog mine in northwest Alaska.
17NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF AUGUST 25, 2013
ment. Foundations – maintain permafrost for durablehigh capacity foundations.
Austin Powder CompanyP.O. Box 8236Ketchikan, AK 99901Contact: Tony Barajas, Alaska managerPhone: (907) 225-8236 • Fax: (907) 225-8237E-mail: [email protected] site: www.austinpowder.comIn business since 1833, Austin Powder providesstatewide prepackaged and onsite manufacturedexplosives and drilling supplies with a commitmentto safety and unmatched customer service.
Calista Corp.301 Calista Court, Suite AAnchorage, AK 99518Phone: (907) 279-5516 • Fax: (907) 272-5060Web site: www.calistacorp.com
Construction Machinery Industrial, LLC5400 Homer DriveAnchorage, AK 99518Contact: Robert Fairbanks, Sales ManagerPhone: (907) 563-3822Fax: (907) 563-1381Email: [email protected]: www.cmiak.com
ERA Helicopter6160 Carl Brady DriveAnchorage, AK 99502Contact: David Sell, Business Development AlaskaPhone: (907) 550-8607Fax: (907) 550-8608E-mail: [email protected]: www.erahelicopters.comHelicopter charters, flight-seeing tours, aerial pho-tography, oil and gas support, mineral exploration,construction, seismic remote site work, internal andexternal load, heli-hiking and sled-dog adventures.
GCI Industrial TelecomAnchorage:11260 Old Seward Highway Ste. 105Anchorage, AK 99515Phone: (907) 868-0400Fax: (907) 868-9528Toll free: (877) 411-1484Web site: www.GCI-IndustrialTelecom.comRick Hansen, [email protected] Johnson, Business Development [email protected]:Aurora Hotel #205Deadhorse, Alaska 99734Phone: (907) 771-1090Mike Stanford, Senior Manager North [email protected], Texas:8588 Katy Freeway, Suite 226Houston, Texas 77024Phone: (713) 589-4456Hillary McIntosh, Account [email protected] Industrial Telecom provides innovative solutionsto the most complex communication issues facingindustrial clientele. We deliver competitive services,reputable expertise and safely operate under themost severe working conditions for the oil, gas andnatural resource industries. GCI-your best choice forfull life cycle, expert, proven, industrial communica-tions.
Global Equipment Services Inc. 3820 Schact St. Fairbanks, AK 99701Contact: Jeff Dahl, General ManagerPhone (425) 531-1854Email: [email protected]: www.GESequipment.comGlobal Equipment Services Inc. purchases, sells andrents high quality heavy equipment worldwide witha strong emphasis on high quality work readyCaterpillar Track type tractors.
HDR Alaska Inc. 2525 C St., Ste 305Anchorage, AK 99503Contact: Jaci Mellott, Marketing CoordinatorPhone: (907) 644-2091Fax: (907) 644-2022Email: [email protected]: www.hdrinc.comHDR Alaska provides engineering, environmental,planning, and consultation services for mining andmineral exploration clients. Services include: biologicalstudies; cultural resources; project permitting; NEPA;stakeholder outreach; agency consultation; and envi-ronmental, civil, transportation, energy, and heavystructural engineering.
Jackovich Industrial & Construction SupplyFairbanks, AK 99707Contact: Buz Jackovich
Phone: (907) 456-4414 • Fax: (907) 452-4846Anchorage officePhone: (907) 277-1406 • Fax: (907) 258-170024- hour emergency service. With 30 years of experi-ence, we’re experts on arctic conditions and extremeweather.
Judy Patrick Photography511 W. 41st Ave, Suite 101Anchorage, AK 99503Contact: Judy PatrickPhone: (907) 258-4704Fax: (907) 258-4706E-mail: [email protected]: www.judypatrickphotography.comCreative images for the resource development indus-try.
Keller Williams Commercial101 West Benson, Ste. 503Contact: Stewart Smith, Associate BrokerAnchorage, AK 99503Phone: (907) 865-6505Cell: (907) 727-8686Email: [email protected]: Ryan Mae Lucas, AssociateCell: (907) 360-7135Email: [email protected]: www.stusell.com;www.AKMiningClaims.comMining Claims to buy, sell, or lease, call the Alaskaprofessionals. We provide real estate brokerage serv-ice to the mining industry, with over 35 years of com-mercial experience. Call for a list of our featuredproperties.
Last Frontier Air Ventures39901 N. Glenn Hwy. Sutton, AK 99674Contact: Dave King, ownerPhone: (907) 745-5701Fax: (907) 745-5711E-mail: [email protected] Base (907) 272-8300Web site: www.LFAV.comHelicopter support statewide for mineral exploration,survey research and development, slung cargo,video/film projects, telecom support, tours, crewtransport, heli skiing. Short and long term contracts.
LyndenAlaska Marine Lines • Alaska Railbelt MarineAlaska West Express • Lynden Air CargoLynden Air Freight • Lynden InternationalLynden Logistics • Lynden TransportAnchorage, AK 99502Contact: Jeanine St. JohnPhone: (907) 245-1544 • Fax: (907) 245-1744Email: [email protected] combined scope of the Lynden companiesincludes truckload and less-than-truckload highwayconnections, scheduled barges, intermodal bulk
chemical hauls, scheduled and chartered airfreighters, domestic and international air forwardingand international sea forwarding services.
Northern Air Cargo3900 W. International Airport Rd. Anchorage, AK 99502Contact: Mark Liland, acct. mgr. Anch./Prudhoe BayPhone: (907) 249-5149 • Fax: (907) 249-5194Email: [email protected] • Website: www.nac.aeroServing the aviation needs of rural Alaska for almost50 years, NAC is the states largest all cargo carriermoving nearly 100 million pounds of cargo on sched-uled flights to 17 of Alaska’s busiest airports. NAC’sfleet of DC-6, B-727, and ATR-42 aircraft are availablefor charters to remote sites and flag stops to 44 addi-tional communities.
Pacific Rim Geological ConsultingFairbanks, AK 99708Contact: Thomas Bundtzen, presidentPhone: (907) 458-8951Fax: (907) 458-8511Email: [email protected] mapping, metallic minerals exploration andindustrial minerals analysis or assessment.
Pebble Partnership3201 C St., Suite 604Anchorage, AK 99503Phone: 907-339-2600www.pebblepartnership.com
PND Engineers Inc.1506 W. 36th Ave. Anchorage, AK 99503Phone: (907) 561-1011Fax: (907) 563-4220Website: www.pndengineers.comFull-service engineering firm providing civil, structur-al, and geotechnical engineering, including miningsupport, resource development, permitting, marineand coastal engineering, transportation engineering,hydrology, site remediation, and project manage-ment.
TTT Environmental LLC 4201 “B” St.Anchorage, AK 99503Contact: Tom Tompkins, general managerPhone: 907-770-9041 • Fax: 907-770-9046Email: [email protected]: www.tttenviro.comAlaska’s preferred source for instrument rentals,sales, service and supplies. We supply equipment forair monitoring, water sampling, field screening, PPEand more.
Taiga Ventures2700 S. CushmanFairbanks, AK 99701Mike Tolbert - presidentPhone: 907-452-6631 • Fax: 907-451-8632Other offices:Airport Business Park2000 W. International Airport Rd, #D-2Anchorage, AK 99502Phone: 907-245-3123Email: [email protected] site: www.taigaventures.comRemote site logistics firm specializing in turnkeyportable shelter camps – all seasons.
Total Safety U.S. Inc.209 E. 51st Ave.Anchorage, AK 99503Contact: Tyler Zollinger, District Manager.Phone: (907) 743-9871Fax: (907) 743-9872E-mail: [email protected]: www.totalsafety.comA full service safety company specializing in RemoteMedical Services, H2S Services, Industrial Hygiene,and Safety Consultants. Total Safety provides Service,Rental, or Sales of Safe Breathing Air, Gas Detection,and Technical Safety Equipment.
URS Corp.700 G Street, Suite 500Anchorage, AK 99501Contact: Joe Hegna, Alaska Vice President/AlaskaOperations ManagerPhone: (907) 562-3366 • Fax: (907) 562-1297E-mail: [email protected]: www.urscorp.comProvide engineering, construction and technical serv-ices with capabilities to support all stages of projectlife cycle. We offer a full range of program manage-ment; planning, design and engineering; constructionand construction management; operations and main-tenance; and decommissioning and closure services.
Advertiser IndexAlaska Airlines CargoAlaska Analytical Laboratory. . . . . . . . . . . . . . . . . . 3Alaska DreamsAlaska Earth Sciences . . . . . . . . . . . . . . . . . . . . . . . 13Alaska Frontier ConstructorsAlaska Steel Co.Arctic FoundationsAustin Powder Co.Calista Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Constantine Metal ResourcesConstruction Machinery . . . . . . . . . . . . . . . . . . . . . 20Fairbanks Gold Mining/Fort Knox Gold MineGCI Industrial Telecom . . . . . . . . . . . . . . . . . . . . . . 18General Refining Corp.Global Equipment Services . . . . . . . . . . . . . . . . . . 10Greer Tank Inc.IFR Workwear Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Jackovich Industrial & Construction Supply. . . . . 19Judy Patrick Photography . . . . . . . . . . . . . . . . . . . 11Keller Williams CommercialLast Frontier Air Ventures. . . . . . . . . . . . . . . . . . . . . 6Lynden. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Nature Conservancy, TheNorthern Air CargoPacific Rim Geological Consulting . . . . . . . . . . . . . . 6Pebble Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . 4PND Engineers Inc.Salt+Light CreativeSourdough Express Inc.Taiga Ventures/PacWest Drilling Supply . . . . . . . 13Total SafetyURS Corp.Usibelli Coal Mine
By ROSE RAGSDALEFor Mining News
TMAC Resources Inc. is poised toenter the final stretch for develop-
ment of its recently acquired Hope Baygold project in northern Nunavut.
Working with a timetable aimed at ini-tiating gold production from the project’sDoris North deposit in the fall of 2015,the company is focused this summer oncompleting a prefeasibility study begunin July, a surface exploration programundertake for 2013 and a sealift to theproject site of main supplies for2013/2014, equipment, materials andcamp return as well as undergroundequipment.
The project’s most recent milestonewas a public hearing regarding a waterlicense renewal and amendment for theproject, which wrapped up July 17 with-out opposition. The hearing involvedwritten testimony only, meaning interest-ed parties were invited to submit com-ments to the Nunavut Water Board forconsideration. No responses were submit-ted by communities or members of thepublic.
TMAC seeks to amend the project’swater license to allow for ocean dischargeof Tail Lake water instead of in DorisCreek. The operator also wants to amendand extend terms on the Windy/Patchtype B water license to 10 years and toreactivate a phase 2 application toNunavut Impact Review Board.
The Kitikmeot Inuit Association andAboriginal Affairs and NorthernDevelopment Canada were the only com-menters on the water license applicationand its submissions were made during apre-conference hearing phase in earlierweeks.
“The KIA has no concerns withaspects of the application for the amend-ment and renewal of the captioned type Awater license for Doris North which seeksa 10-year term,” stated the association’ssenior Hope Bay project officer JohnRoesch. “KIA respectfully requests thatthe TMAC license be issued subject to the
requirement to address the KIA issueslisted (in this letter).”
The association’s concerns reportedlyfocused on potential reporting and moni-toring deficiencies.
Aboriginal Affairs and NorthernDevelopment Canada makes recommen-dations on similar topics.
“We concur with the (AboriginalAffairs and Northern Development) com-ments and would like to thank AANDCstaff for working through the process withus,” TMAC Resources CEO CatharineFarrow told the board in a July 8 letter.
“TMAC will continue to involve theKitikmeot Inuit Association in the reviewprocess for updating plans associatedwith the three Hope Bay water licensesgoing forward. The company has a pro-ductive dialogue with KIA on a numberof issues related to surface land manage-ment of the (Inuit-owned lands), which
forms the vast majority of the Hope Baysurface regime,” Farrow added.
Doris North is one of three depositsidentified along the 80-kilometer- (50miles) long by 20 kilometer- (12.4 miles)wide Hope Bay Green Stone Belt and themost developed within TMAC’s project.The large land package currently has a NI43-101-compliant mineral resource of10.6 million ounces estimated for HopeBay’s previous owner, Miramar Ltd., in2006.
Once the hearings closed, a three-per-son panel from the Water Board took onthe task of making a decision on thelicense, which is expected to be issued inSeptember. The Nunavut Water Boardwill then submit a decision report to theAANDC Minister. The report will containa draft license if the panel decides torenew the license.
Hope Bay Mining Ltd., the site’s pre-
vious owner and a subsidiary ofNewmont Mining Corp., had started therenewal and amendment process inSeptember. TMAC Resources, a minecompany specializing in narrow-veingold mining, bought the project fromNewmont in March. The Nunavut WaterBoard had determined in October that afull environmental review of the applica-tion was necessary under the NunavutWaters and Nunavut Surface RightsTribunal Act.
Busy summer/fall scheduleFarrow told participants in the
Nunavut Mining Symposium held inIqaluit in April that privately held TMAChad an extensive to-do list for 2013. Thetasks included completing negotiationswith KIA for renewal of a commercialland lease for Hope Bay, due inSeptember; and beginning the environ-mental impact statement process forHope Bay’s Madrid, Patch, Bostondeposits and for the core infrastructure inthe southern portion of the belt.
The company also planned to carry outin initial public offering in September orOctober, she said.
Currently, TMAC is controlled by agroup of former FNX Mining executives,including Executive Chairman TerryMacGibbon, following successful com-pletion of a private placement in Marchwith Newmont consisting of 1,276,259flow-through common shares at a price ofC$3.40 per share and some 10.22 millioncommon shares at a price of C$3.00 pershare for aggregate gross proceeds ofC$35 million in March. At the same time,TMAC entered into a C$15 million cred-it facility with Newmont.
The major retained a 1 percent netsmelter returns royalty on the project, andproceeds from the deal are being used forproject development.
After the IPO is completed, Farrowsaid Newmont is expected to own about a40 percent interest in the junior.
Describing TMAC’s efforts as “not justbuilding a mine but Canada’s next goldmining district,” Farrow said the junior
� N U N A V U T
Junior pursues bold strategy at Hope BayTMAC Resources targets fall 2015 for startup of gold production from Doris North deposit; plans IPO in September/October timeframe
18NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
HoMAC(T
Baype oces)ResourC
see HOPE BAY page 19
centrates to a port in Alaska. For the pur-poses of this PEA study it has been assumedthat a toll would be paid based on aUS$150-million 30-year bond at a 5 percentinterest rate, which would result in theArctic open pit project paying approximate-ly US$9.7 million each year for its 12-yearmine life. The toll payments are assumed inthe PEA to commence when the project hasreached commercial production.
“AIDEA is the lead proponent for thepermitting, financing and construction of anindustrial access road to the Ambler miningdistrict and the completion of this PEA pro-vides further impetus for AIDEA to moveforward on the permitting and constructionof the Ambler access road,” said VanNieuwenhuyse.
North Slope LNGThe Ambler access road is not the only
AIDEA project that could benefit the eco-nomics of Arctic and other Upper KobukMineral Projects. A liquefied natural gasfacility currently under review by the devel-opment agency could provide the projectwith less expensive fuel.
The LNG facility is part of the InteriorEnergy Project, a plan introduced by AlaskaGov. Sean Parnell to lower the notoriouslyhigh heating and electricity costs in theFairbanks region of Interior Alaska. SenateBill 23, which provides AIDEA the abilityto finance up to US$275 million of the proj-ect, received unanimous approval in boththe Senate and House in April.
Open-pit mining of the Arctic deposit isprojected to require 15 megawatts of peakload power. The PEA assumes five 3.6 MWdiesel generators will provide this electrici-ty. Onsite power costs using diesel are esti-mated to be US32.2 cents/kWh, assuming adiesel price of US$4.47 per gallon.
“Nearly half of our costs are related topower generation and the base caseassumes that we will deliver diesel fuel tosite from Fairbanks. We think there is areal upside here, because AIDEA is alsoworking on construction of an LNG (liq-uefied natural gas) plant on the North
Slope and if they actually complete thatwe are looking at buying LNG and con-verting that to gas. We think that will belower costs and lower emissions,” VanNieuwenhuyse explained.
Taking the proposed road to Ambler,the 450 miles to deliver North Slope LNGto the Arctic project would be a slightlyshorter trip than trucking gas toFairbanks.
AIDEA is targeting the delivery ofLNG to Fairbanks by the fall of 2015,making the fuel source a viable contenderto be included in the feasibility study forthe Arctic project, which is expected to becomplete by 2016. �
19NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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We were there at the beginning.
intends to take advantage of the pro-ject’s tremendous infrastructure andwill build on the previous work ofHope Bay’s former owners, includingBHP Billiton Ltd., Miramar and
Newmont. With “step by step” devel-opment of the green belt, the junioraims to mine higher grade ore bodies,while preserving the ability to minelower grade ore at a later date.
She also said the company will usecash flow from initial mines to developand explore for significant additionalbelt-wide mineralization. �
continued from page 7
ARCTIC DEPOSIT
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continued from page 18
HOPE BAY
Above: Due to the topography and thegeometry of the deposit, the 90-ton trucksenvisioned in the preliminary economicassessment will have a downhill haul duringthe first eight years of operation; it is notuntil year nine that the material would needto be lifted out of a pit.
The mill is envisioned to be located at the upper end of the valley to the northwest of theArctic deposit and a tailing pond would stretch out in the valley below the mill, pit and non-acid-generating waste stockpile.
20 NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF AUGUST 25, 2013
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