Alaska 2016--mining in review.

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

Trying to summarize Alaska's mining industry over the last year is relatively easy: we started the year flat out on the canvas, on figurative life support, but as I write this summary, the industry has staggered back on its feet and is in the midst of a remarkable recovery after over four years of depressed everything. The hard thing to explain is just why this Phoenix has risen from the ashes, and why now? Those given to conspiracy theories, which I am decidedly not, will say it is because "they" have determined it is time for resource markets to rebound. Such theories rely on a remarkably secretive cabal pulling levers behind the curtain, but I rather think Ben Franklin was right when he said, "Three can keep a secret, if two of them are dead." It is far more likely that simple supply and demand, albeit on a global scale and in their own good time, have once again imposed order on chaos, clarity on uncertainty. This magical change has been predicted for several years but nobody knew just when the magic would take effect. For Alaska it took place somewhere during the period March through May of this year, when several companies discussed in the following paragraphs either began new mineral ventures in Alaska or increased budgets and scopes of work on existing ventures. Motivations driving these new and renewed efforts varied and included the need to replace depleting resources, the drive to move a development project toward production, and the desire to find Alaska's next new ore body. Regardless of the motivation, Alaska's mineral industry is looking forward to an exciting 2017.

Western Alaska

* Teck Resources Ltd. and partner NANA Regional Corporation, Inc. announced year-end 2015 and first-half 2016 results from its Red Dog mine. For all of 2015 the mine produced 567,000 tonnes of zinc in concentrate. Zinc ore grade for the year was steady at 16.7% and mill recoveries were up slightly to 84.2%. The mine also produced 117,600 tonnes lead in concentrate in 2015. Lead ore grade for the year increased to 4.8% while mill recoveries decreased to 60.7%. Gross operating profit for the year was $557 million, compared with $574 million in 2014. Mill throughput for 2015 was down significantly to 4,026,000 tonnes, due in part to extended annual mill maintenance shutdown. During 2015 the mine paid partner NANA Regional Corp. Inc. and the State of Alaska royalties of $178 million versus royalties of $215 million in the year-previous period. For the first half of 2016 the mine produced 310,000 tonnes of zinc in concentrate. Zinc ore grade was 17.4% with recoveries at 83.3%. The mine also produced 59,400 tonnes of lead in concentrate at a grade of 4.9% with mill recoveries at 56.6%. The mine posted a $135 million operating profit for the first half of 2016, down significantly from the $192 million profit in the year previous period. Royalty costs for the first half of 2016 were $20 million versus $42 million in the year previous period. For 2016 mine zinc production is expected to be 570,000 tonnes.

* Graphite One Resources Inc. announced the results from the initial performance tests on coin cells manufactured with the company's premium grade, coated spheroidized graphite from the Graphite Creek project. The benchmark test results show that the application of a coating produces little change in the important reversible discharge capacity of the coin cells. Discharge capacity is a measure of a battery's energy storage capability once charged. Coin cell 1220 successfully completed three charge/discharge cycles, the second and third discharge curves show almost complete overlap with the first discharge curve, attesting to repeatability in performance across subsequent charge/ discharge cycles. The next product development test phase will use representative graphite from the project to compare with the test results and generation of additional sample product for interested third parties. The test results will be used in the company's Preliminary Economic Analysis, expected in the 3rd quarter of 2016.

* NovaGold Resources Inc. and partner Barrick Gold announced yearend 2105 milestones and completion of the draft environmental impact statement (DEIS) public comment period for its Donlin gold project. Calista Corporation, owner of the minerals, and The Kuskokwim Corporation, owner of the surface lands, both welcomed the publication and comment period relating to the DEIS, the culmination of twenty years of effort since the project was first leased by Placer Dome U.S. As lead permitting agency, the US Army Corps of Engineers will review submitted comments and create a final EIS, expected in 2017. Meanwhile, work continued with State and Federal agencies to advance other required permits, including the air quality, pipeline authorizations, water use and fish habitat permits, and land and shoreline lease and right-of-way approvals. More than one hundred permits will be required to reach production. The partners also continued evaluating alternatives to reduce initial capital costs through third-party owner-operator agreements including a Request for Expression of Interest for third-party participation in the proposed natural gas pipeline to the project. During 2016, the partners anticipate spending $18 million to fund expenditures at Donlin and an additional $2 million for joint project technical studies.

* Northern Dynasty Minerals Ltd. announced plans for the company's Pebble copper-molybdenum-gold deposit. Amount the items the company intends to work on include the US Environment Protection Agency's proposed pre-emptive regulatory action under the US Clean Water Act and preparation of the project's initiate federal and state permitting under the US National Environmental Policy Act. The company also indicated it was continuing efforts to find a partner to aid in advancement of the project.

* Redstar Gold Corp. announced completion of its exploration program at its Unga gold project near Sand Point. The company focused its efforts on delineation of new drill targets at the Shumagin, Empire Ridge, and Apollo-Sitka Mine prospects. The company collected 272 soil/ talus and 325 rock samples over exposed bodies of silicification at Orange Mountain, silicified and mineralized structures located between Orange Mountain and Shuma gin, and exposures of multi-phase breccias and additional structures at Shumagin. The Shumagin prospect is characterized by multi-episodic gold-silver bearing quartz-adularia-rhodochrosite breccia bodies that occur within structurally controlled dilation zones along the +1,200-meter long Shumagin Scarp. High-grade gold-silver mineralization is open at depth within the main breccia body at Shumagin. Multiple dilation zones and coincident gold-silver bearing breccia bodies exist along strike of the Shumagin Scarp and remain untested. At Empire Ridge, the southwest extension of the historic Apollo gold mine, the company plans to conduct detailed structural mapping and drill targeting.

Interior Alaska

* Kinross Gold announced year-end 2015 and second half 2016 results from the Fort Knox mine near Fairbanks. For 2015 the mine produced 401,553 ounces of gold at a cost of $629 per ounce. The mill processed 13,446,000 tonnes of ore ranging in grade from grading 0.64 to 0.87 grams of gold per tonne (gpt gold). Mill recoveries averaged 83%. During 2015 the mine placed 25,218,000 tonnes of ore ranging in grade from 0.26 to 0.29 gpt gold on the valley leach facility. The mine also announced year-end revised resources, including proven and probable reserves of 147,318,000 tonnes grading 0.40 gpt gold (2,022,000 ounces). Measured and indicated resources were 95,822,000 tonnes grading 0.50 gpt gold (1,423,000 ounces). Inferred mineral resources were 14,824,000 tonnes grading 0.50 gpt gold (221,000 ounces). For the first half of 2016, the mine produced 185,021 ounces of gold at a cost of $753 per ounce. Production increased in the second quarter of 2016 compared with the first quarter as a result of higher mill throughput and recoveries. Cost per ounce in the second quarter of 2016 increased compared with first quarter 2016 and second quarter 2015 primarily due to higher costs associated with waste mining. Overshadowing these operational results was the July 23, 2016, pouring of the mine's 7 millionth ounce of gold. The mine poured its first ounces in 1996 after going to production with a resource of just over 4 million...