Alaska 2002: mining in review.

• Author: Freeman, Curtis J.

As is usually the case, mineral exploration and development in Alaska saw some properties return the promise of turning into Alaska's next operating mine while others are having their names quietly scribed on the scroll of the dead. This year's exploration landscape was composed of several large projects, like Donlin Creek, Pogo and Pebble, along with lots of smaller ones spread across the state. Several new operators entered Alaska and brought new ideas and new approaches to mineral exploration. New ideas are definitely welcome since new ideas have been largely responsible for Alaska's enviable gold discovery record, which added an average of more than 7 million ounces of gold each year to statewide resources since 1994. The average cost of these resources is an amazing $5 per ounce over that same period. To quote Lee Iacocca, "If you can find a better place to explore, go there"!

WESTERN ALASKA

Teck-Cominco's Red Dog mine continued its record-setting production pace in the first half of 2002, but low zinc prices contributed to a $7 million loss during the period. For the first half of 2002, the world's largest zinc mine generated 277,900 tonnes of zinc and 51,700 tonnes of lead in concentrate and sold 215,500 tonnes of zinc and 16,300 tonnes of lead. For 2001, the mine produced 517,700 tonnes of zinc in concentrate and 95,300 tonnes of lead in concentrate. The mine managed to squeeze out a $4 million operating profit in 2001. The company reduced zinc production worldwide in 2002 in order to dry up supplies and strengthen base prices meaning Red Dog is scheduled to decrease production in 2002 by 60,000 tonnes of concentrate to 1 million tonnes.

Alaska's top news generator for the last year is unquestionably NovaGold Resources and its monstrous Donlin Creek gold project in Southwest Alaska. NovaGold controls the property though an option from Placer Dome and landowner Calista Corp. Following work in 2001, the company announced that Donlin's measured and indicated resources increased by 92 percent to 4.4 million ounces of gold grading 5.1 grams per tonne. In addition, inferred resources have increased 161 percent to 6.2 million ounces of gold grading 5.2 grams per tonne. Total resources ballooned from 13.5 million to 22.9 million ounces of gold at an average grade of just over 3 grams per tonne. Donlin Creek now ranks as the 22nd largest gold deposit on record and it is likely to grow further after the 2002 drilling results are tabulated.

According to preliminary economic studies released in March, NovaGold believes production could reach 1 million ounces/year. Capital costs would range from $380 million to $600 million, with total production costs up to $241 an ounce. The project would have a pretax rate of return of 15-25 percent, based on gold prices up to $350/ounce. Since then NovaGold has completed an additional 27,000 meters of drilling and discovered several new zones: the Akivik Zone returned 16 meters grading 32.95 grams of gold per tonne while the Aurora zone returned 6 meters grading 5.45 grams of gold per tonne and 31.5 meters grading 5.21 grams of gold per tonne. Other significant intercepts came from the Vortex zone (15.2 meters grading 5.71 grams of gold per tonne), step-out drilling at Akivik (17.5 meters grading 6.81 grams of gold per tonne) and North Acma (9.1 meters grading 9.85 grams of gold per tonne). First drilling results from its Far East zone include 12.2 meters grading 7.84 grams of gold per tonne. Elsewhere on the property, infill diamond drilling in the Acma zone has verified grade and continuity of previous holes. The company indicated that results to date suggest that year-end resource updates will significantly increase the size of the Donlin Creek deposit.

Another hot property in Alaska is the Northern Dynasty Minerals' Pebble copper-gold project near Iliamna, where three new discoveries were announced in 2002. Initial drilling was budgeted at 22,000 feet of core in approximately 30 to 40 holes designed to test a series of previously...