Alaska 2010--mining in review.

• Author: Freeman, Curtis J.
• Position: SPECIAL SECTION: MINING

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Sherlock Holmes said "it is a capital mistake to theorize before one has data" but we now have the past year's data on the world's and Alaska's mining industry so we can now look back with clarity and perhaps theorize a bit looking forward. As 2009 came to a close, worldwide exploration spending was off a whopping 42 percent over the year previous.

However, by early 2010, exploration spending was on the upswing and we will likely see mine-site, late-stage and grass-roots exploration spending all up significantly over 2009. With the exception of gold, commodities prices showed the same sort of trend with strongly depressed prices in 2009, followed by a slow but steady recovery to levels near and in some cases above all-time highs. And these increased commodity prices are being felt in villages, towns and cities across Alaska. In fact, here are some factoids from a recent Alaska Miners Association report: in 2009 the Red Dog mine paid the Northwest Arctic Borough $7.8 in property taxes, representing 100 percent (that's right Dorothy, 100 percent) of the Borough's tax revenue. The Fort Knox mine was the largest Fairbanks North Star Borough taxpayer in 2009, shelling out $2.8 million in property taxes while the Greens Creek mine was the largest City and Borough of Juneau taxpayer, contributing $1.4 million in property taxes. When the Kensington mine reaches full production, Greens Creek will fall to second place as the City and Borough of Juneau's largest taxpayer.

Another barometer of the rebound in the mining industry in the last year is the number of firms who acquired their first mineral interest in Alaska, a tally which stands at 12 new companies at last count. While mining's impact on Alaska is both demonstrable and significant, just where Alaska's mining industry fits into this global supply and demand puzzle is anything but clear. Professors, prognosticators and pundits have all weighed in with forecasts on the future of Alaska's mineral industry. Unfortunately, all such forecasts seem to be couched in Nostradamus-like jargon that makes it hard for the rest of us to understand what's being said, and equally hard for us to prove that the prognosticators were dead wrong! There is one thing even Sherlock Holmes would feel justified in theorizing: Alaska will continue to play a vital role in supplying the world's growing demand for minerals.

WESTERN ALASKA

Teck Resources Ltd. and partner NANA Regional Corp. announced year-end 2009 and first half 2010 results from its Red Dog mine. For 2009, the mine produced 582,500 tonnes of zinc in concentrate from ore grading 20.9 percent while mill recoveries decreased slightly to 82.4 percent. The mine also produced 131,500 tonnes of lead in concentrate from ore grading 5.9 percent while mill recoveries decreased slightly to 65.9 percent. These 2009 production figures records for the mine. The mine posted a $399 million operating profit during 2009 versus a $171 million operating annual profit for 2008. The mine shipped 1.020 million tonnes of zinc concentrate and 220,000 tonnes of lead concentrate during the 2009 shipping season. During 2009, the mine paid partner NANA Inc. and the State of Alaska royalties of $144 million versus royalties of $111 million in the year-previous period. During the first half of 2010, the mine produced 270,800 tonnes of zinc in concentrate from ore grading 18.5 percent while mill recoveries dropped slightly to 82.4 percent. The mine also produced 66,300 tonnes of lead in concentrate from ore grading 5.8 percent while mill recoveries remained steady at 64.3 percent. The mine posted a $94 million operating profit for the quarter, down significantly from the $61 million profit in the year's previous period. The mine plans to ship 1.025 million tonnes of zinc concentrate and 235,000 tons of lead concentrate from the port facility this shipping season. Eleventh-hour efforts finally brought resolution to the mine's water-discharge-permit issues and production from the Aqqaluk deposit commenced in late May as planned.

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NovaGold Resources also announced year end 2009 results and 2010 plans for its Rock Creek gold project near Nome. During 2009, expenditures at the project totaled approximately $27.7 million. NovaGold worked to improve the project's water management structures and action plan to ensure the project remains in compliance with all environmental regulations. The company has budgeted $19.1 million for 2010, primarily for water management and completing a detailed review to determine future developments at the project.

Zazu Metals Corp. announced completion of a Preliminary Assessment study on its Lik South deposit. The study considered both Indicated and Inferred Mineral Resources in Lik South deposit amenable to open-pit mining. The life of mine open-pit production plan includes the production of 16 million tonnes grading 8.08 percent zinc, 2.57 percent lead and 47.9 grams of silver per tonne. The pre-production capital cost estimate was $352 million including 22 percent contingency for a 5,500 tonne per day mine and mill with an eight year mine life. The estimated life of mine operating costs were $75 per tonne. The operation demonstrated a pre-tax internal rate of return of 9 percent. This work was based on zinc recovery of 85 percent with silica levels less than 5 percent through standard froth floatation recovery.

TintinaGold Resources also announced 2009 and initial 2010 exploration results at its Kugruk copper-gold-iron project on the Seward Peninsula. The property consists of a 15-kilometer-long magnetic high along the eastern margin of the Kugruk pluton where limited historic drilling returned magnetite with associated chalcopyrite and pyrite. Further east, a halo of silver-lead-zinc prospects occurs and further outboard gold prospects ring the intrusive system. Activities in 2009 included 16.4 line kilometers of IP geophysics and 11 gravity profiles which helped target initial drilling at the Billiken prospect, a 3-kilometer-long magnetic anomaly with coincident high gravity, low resistivity, and high-induced polarization anomalies. Drilling encountered massive magnetite and copper-sulfide mineralization within prograde garnet-pyroxene exoskarn, actinolite-chlorite retrograde alteration, endoskarn, and variably altered granodiorite dikes. Significant drilling results include 22 meters grading 0.065 parts per million gold, 2.6 parts per million silver, 0.44 percent copper and 48.8 percent iron...