Alaska 2012 mining industry review.

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

[ILLUSTRATION OMITTED]

The global economic uncertainties that have affected the world s economies hit Alaska full force in 2012, causing widespread budget reductions and outright cancellations on a number of Alaskan mineral projects. The operating mines and major development projects continued with minimal impacts however the early to mid-stage exploration projects took it square in the chin. However, Alaska had its fair share of bright spots over the course of the year. As always, space is so limited, my apologies to those industry players active in 2012 that do not appear below.

WESTERN ALASKA

Teck Resources Limited and partner NANA Regional Corp. announced year-end 2011 and first half 2012 results from its Red Dog mine. During the 2011 the mine produced 572,200 tonnes of zinc m concentrate. Zinc ore grade was 19.1% and mill recoveries were up slightly to 81.5%. The mine also produced 84,000 tonnes of lead in concentrate. Lead ore grade was 4.9% while mill recoveries were 45.9%. The mine posted a $496 million operating profit for the year, down significantly from the $524 million profit in the year previous. The higher costs resulted from producing less oxidized ore from the near-surface portions of the Aqqaluk deposit. During 2011 the mine paid partner NANA Development Inc. and the State of Alaska royalties of $129 million. First-half 2012 results include 257,900 tonnes of zinc in concentrate at a grade of 18.3%. Zinc mill recoveries were 83.1%. The mine also produced 46,800 tonnes of lead at a grade of 4.8%. Lead mill recoveries were 57%%. The mine posted a $110 million operating profit for the first half of 2012. The company plans to ship 1,000,000 tonnes of zinc concentrate and 163,000 tonnes of lead concentrate in 2012.

Zazu Metals Corp. announced 2011 drilling results and its 2012 exploration plans for the Lik base metal project. Significant results from 2011 drilling include hole DDH 210 returned 16.8 meters grading 3.02% lead, 11.2% zinc and 70.1 grams per tonne (gpt) silver and hole 215 which intersected 50.3 meters grading 3.5% lead, 11.4% zinc and 86.4 gpt silver. The 2012 work includes a series of environmental, infrastructure, engineering and mineral processing studies. Lik South contain an Indicated Mineral Resource of 18.74 million tonnes grading 8.08% zinc, 2.62% lead and 52.8 gpt silver; plus an Inferred Mineral Resource of 1.23 million tonnes grading 6.80% zinc, 2.12% lead and 35 gpt silver, at a 5% cut off grade. Lik North contains an additional 5.18 million tonnes of Inferred Resource grading 9.65% zinc, 3.25% lead and 51 gpt silver at a 7% cut off grade.

Fire River Gold Corp. announced an update on its Nixon Fork Mine. Significant recent accomplishments include mining and processing of 25,875 tonnes of ore grading approximately 15.5 gpt gold (12,875 ounces of gold). In addition the mine produced about 175 tonnes of copper-gold concentrate. The company had 14,000 tonnes of broken ore stockpile grading 22 gpt gold outside its newly commissioned 250 ton-per-day mill. The company also reported drilling results from the new 3550 Zone, the down dip extension of the previously mined Hi Grade Recreation Zone. Significant results include hole N11U-226 which returned 3.4 meters grading 93.8 gpt gold, 94.3 gpt silver and 5.8% copper and hole N11U-228 which returned 7.6 meters grading 32.8 gpt gold, 64.6 gpt silver and 2.7% copper. Using a 10 gpt gold cutoff, indicated resources now stand at 129,060 tonnes grading 24.9 gpt gold (103,438 ounces) and inferred resources are 53,980 tonnes grading 28.0 gpt gold (48,545 ounces).

Freegold Ventures Limited announced updated resources at its Vinasale gold project under option from Doyon Ltd. Revised inferred resources now stand at 49.3 million tonnes averaging 1.09 gpt gold for 1,735,000 ounces of gold utilizing a cutoff value of 0.5 gpt gold. Drilling in 2012 (13 holes, 3,425 meters) also indicated that gold mineralization in the widely spaced Northeast zone may contain additional resources.

NovaGold Resources Inc. and partner Barrick Gold Corporation commenced the long-awaited permitting process for their Donlin Creek gold deposit. The $37.2 million 2012 budget followed approval of their recently completed feasibility study. The study indicates that the mine would produce 1.5 million ounces of gold per year in its first five years at a cash cost of $409 per ounce, and an average of 1.1 million ounces of gold per year at a cash cost of $585 per ounce over a 27-year mine life. The study was based on reserves of 33.8 million ounces at an average grade of 2.09 gpt gold. The capital cost was estimated at $6.7 billion, including $834 million for a natural gas pipeline and nearly $1 billion in contingencies. The resultant after-tax net present value using $1,200 per ounce gold price was $547 million using a 5% discount rate. The economic analysis is based on a mill producing 53,500 tonne-per-day from an open pit with a stripping ratio of 5.5 to 1. Average life-of-mine recovery is estimated at 89%. Operating costs are estimated at $5.91 and $38.13 per tonne mined and milled, respectively. Current measured and...