Alaska 2013: mining review.

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

Having enjoyed one of the warmest and driest summers on record, most of Alaska is now paying the piper as unseasonably cold and in many areas, snowy, weather takes hold of Alaska. With the termination dust comes news that is both good and bad, a common theme in what is turning out to be a year of significant cutbacks for exploration, development, and production plans. You will note that many of the projects summarized below were reporting 2012 activity that was released in late 2012 or early 2013, leaving a thundering silence hanging over much of Alaska during 2013. Now that the bulk of the 2013 exploration is completed or in the last stages of being completed, who did what, where, has become clearer. Here is what I can see in the rearview mirror: Of the 49 exploration projects I have been tracking around the state, the two largest (Pebble and Donlin), will account for about one-third of this year's estimated exploration expenditures. The top five projects will account for almost 50% of this year's estimated exploration expenditures. Unfortunately, 30 of the 49 "active" exploration projects look to be on track for spending little or nothing on exploration during 2013. As far as actual dollars into the ground, it is looking like 2013 exploration expenditures are going to be in the $125-150 million range, down ahnost 50% over what we saw in 2012 and only a third of the peak exploration spending levels we saw in 2011.

Western Alaska

Teck Resources Limited and partner NANA Regional Corp. announced year-end 2012 and first-half 2013 results from its Red Dog mine. For 2012 the mine produced 529,100 tonnes of zinc in concentrate. Zinc ore grade for the year was down slightly at 18.2% and mill recoveries were steady at 81.3%. The mine also produced 95,400 tonnes of lead in concentrate for the year. Lead ore grade for the year decreased slightly to 4.6% while mill recoveries increased significantly to 57.7% compared to 45.9% for 2011. Operating profit was $361 million, compared with $496 million in 2011. Revenue and production were down due to lower ore grades from the Aqqaluk pit, higher royalties, and slightly lower mill availability. Mill throughput for 2012 was 3,576,000 tonnes of ore compared to the record 3,673,000 tonnes the previous year. During 2012 the mine paid partner NANA Development, Inc. and the State of Alaska royalties of $137 million versus royalties of $129 million in the year-previous period. In addition, the net profits royalty paid to NANA Development, Inc. increased from 25% to 30% in the fourth quarter of 2012. In the first half of 2013 the mine produced 266,900 tonnes of zinc in concentrate. Ore grades were 17.8% and 16.9%, with mill recoveries of 82.3% and 85% for the first and second quarters, respectively. The mine also produced 47,900 tonnes of lead in concentrate. Lead ore grade were 3.9% while mill recoveries increased to 66.8% and 66.2 for the first and second quarters, respectively. The mine posted a $71 million operating profit for the first quarter and a $56 million profit for the second quarter. Sales during the quarter were up significantly year on year and the mine plans to ship 1,039,000 tonnes of zinc concentrate and 174,000 tons of lead concentrate from the port facility this shipping season.

Zazu Metals Corporation announced that a second Cost Reimbursement Agreement had been signed with Alaska Industrial Development and Export Authority (AIDEA). The focus of this agreement is to evaluate the ore handling potential of AIDEA's haul road and port that currently services Teck's Red Dog mine. A second study will determine if modifications are required for handling Lik concentrate. Current resources at Lik include Lik South with an Indicated Mineral Resource of 18.74 million tonnes grading 8.08% zinc, 2.62% lead, and 52.8 grams of silver per tonne (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% zinc cutoffgrade. Lik North is an additional 5.18 million tonnes grading 9.65% zinc, 3.25% lead, and 51 gpt silver of Inferred Resource at a 7% zinc cutoff-grade.

Graphite One Resources, Inc. pulled off a rare event in December 2012 at its Graphite Creek graphite prospect. After only one year of drilling, they announced the prospect's first industry compliant resource. Using a 3% cut-off, the project has an inferred resource of 107.2 million tonnes grading 5.7% graphitic carbon containing 6,196,160 tonnes of graphite. The 2.2 kilometer long northeast striking, 60-degree northwest-dipping resource remains open along strike and down dip. Significant drill results include hole 12GC010 which intersected 216.67 meters of 3.13% graphitic carbon including 83.55 meters of 6.03% graphitic carbon and 21.55 meters of 11.0% graphitic carbon, hole 12GCH005 which returned 172.79 meters grading 5.39% graphitic carbon, including 54.87 meters grading 10.03%, and 42.0 meters grading 12.01% graphitic carbon, and hole 12GCH008 which returned 177.0 meters grading 3.0% graphitic carbon including 52.0 meters grading 6.02%, and 30.59 meters grading 7.07% graphitic carbon. Initial beneficiation tests demonstrated that a leaching process could produce graphitic carbon from a rough concentrate with a purity of 99.2%. Metallurgical test work is ongoing to develop a simple concentration and leaching process to produce an ultra-high purity (99.9%) graphite product.

NovaGold Resources, Inc. announced that it has completed the sale of the Rock Creek gold project to Bering Straits Native Corporation for $6.265 million. The company also announced that the State of Alaska accepted completion of the initial phase of the Rock Creek closure plan and released $6.8 million of the $20.3 million financial assurance bond. The balance of the financial assurance has been transferred to Bering Straits which has assumed full responsibility and liability for the remainder of the reclamation activities at Rock Creek.

In October 2012 Millrock Resources, Inc. and funding partner Kinross Gold announced results from its 1,242 meter, 9-hole 2012 core drilling program at the Council gold project west of Nome. A new discovery was made at the Elkhorn prospect where hole COU12-023 cut 7.01 meters averaging 2.58 grams of gold per tonne (gpt gold) within a 14.02 meter interval averaging 1.45 gpt gold. The 2012 drilling consisted of seven core holes totaling 942 meters. At the Upper Ophir prospect two core holes totaling 287 meters were drilled with hole COU12025 intercepted 7.62 meters averaging 1.09 gpt gold. Following release of these data, Kinross Gold dropped its option on the Council project.

NovaGold Resources, Inc. reported year-end 2012 results and reported on 2013 progress from its activities at the Donlin Creek project, a 50:50 joint venture with Barrick Gold on lands leased from Calista Corp. The project's expenditures for 2012 came in at $33.6 million. These expenditures were directed primarily at its on-going permitting efforts to complete an Environmental Impact Statement (EIS). The approved budget for 2013 is $30 million for permitting, engineering, environmental, community development, and overhead. During early 2013 the company transitioned into the Preliminary Draft Environmental Impact Statement (PDEIS) phase of permitting. The company has already completed the Donlin Gold Public Scoping component of the NEPA process. The company submitted comprehensive Donlin Gold environmental and social baseline data to the US Army Corps of Engineers to enable preparation of the EIS. Permitting, which commenced in 2012, is expected to take 2 to 3 more years to complete. The partners anticipate that the Corps will draft the PDEIS in preparation for issuance of the draft EIS in 2014.

After struggling to reach designed commercial production levels for much of the last 2 years, Fire River Gold Corp. announced in mid-2013 that it had commenced the process of placing its Nixon Fork gold mine on care and maintenance. Although progress at the mine was made toward reaching commecial production, operations were negatively impacted by continued inclement weather, logistical challenges relating to air deliveries of key production supplies and fuel, and unscheduled downtime for equipment repair and lower than anticipated gold recoveries in the mill.

Freegold Ventures Limited announced results from its 2012 drill program and an updated industry compliant Mineral Resource estimate at its Vinasale gold project near McGrath. A total of 13 holes (3425 meters) were drilled in 2012 on geochemical and geophysical targets in the Northeast and the Central Zones. Significant re sults include 33.7 meters grading 1.09 gpt gold in hole VM1208, 29.3 meters grading 1.63 gpt gold in hole VM1210, and 85.3 meters grading 1.49 gpt gold in hole VM1213. Indicated resources now stand at 3.41 million tonnes averaging 1.48 gpt gold for 162,000 ounces, and inferred resources are 53.25 million tonnes averaging 1.05 gpt gold for 1,799,000 ounces of gold utilizing a cutoff value of 0.5 gpt gold. No drilling was conducted on the project in 2013.

Silver Predator Corp. announced that it has completed an option agreement with privately-held Plan B Minerals Corp. whereby Plan B can earn up to a 100% interest in the Illinois Creek gold-silver property. Under the agreement, Plan B will pay an aggregate $264,500 and a total of 2,000,000 common shares of Plan B through December 2016. Silver Predator will retain a 0.5% net smelter returns royalty in the property, provided a feasibility study establishes a minimum proven resource of 500,000 ounces of gold. The property is centered on a 10-kilometer long east-west striking mineralized zone containing an open pit heap leach gold-silver mine that was productive in the mid-1990s.

The news that has dominated the Alaska scene this fall is not the kind of news our industry was hoping to hear but here it is just the same. Northern Dynasty Minerals Ltd. announced...