2011 Alaska mining review: operating at full throttle.

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

Despite shaky economic conditions in parts of the globe, Alaska's mining industry operated full throttle in 2011, enjoying strong metals prices and relatively stable goods and services costs. The operating mines and major development projects steal the show in the following paragraphs, but dozens of other projects were active during 2011 with a wide range of commodities under scrutiny including rare earth metals, platinum group metals, nickel, copper, lead, zinc, silver and gold. With my original draft running to five times the size of this summary and space limited, my apologies to those who do not appear below, some of whom will be next-generation mines in Alaska.

WESTERN ALASKA

Teck Resources Ltd. and NANA Regional Corp. announced 2010 and first-half 2011 results from its Red Dog mine. For 2010, the mine produced 538,000 tonnes of zinc from ore grading 18.2 percent along with 109,900 tonnes of lead from ore grading 5.4 percent. Mill recoveries were 82.8 percent for zinc and 57 percent for lead. Operating profit was $548 million. In 2010 the mine shipped 1.04 million tonnes of zinc concentrate and 235,000 tonnes of lead concentrate. During the first half of 2011 the mine produced 285,800 tonnes of zinc from ore grading 18.7 percent along with 42,500 tonnes of lead in concentrate from ore grading 4.8 percent. Mill recoveries were 82.1 percent for zinc and 47.6 percent for lead. Weathered ore from the newly opened Aqqaluk pit negatively impacted the recovery of lead in the mill. The mine posted a $139 million operating profit for the first six months of 2011. The mine plans to ship 990,000 tonnes of zinc concentrate and 135,000 tonnes of lead concentrate from the port facility this shipping season. The mine paid partner NANA Inc. and the State of Alaska royalties of $197 million during 2010 and $21 million in the first half of 2011.

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NovaGold Resources and Barrick Gold are expected to complete a revised feasibility study for the Donlin Gold project in the second half of 2011. The study will include the use of natural gas, which would provide a lower-cost fuel source for on-site power generation. The natural gas option would require building a 315-mile-long 12inch buried pipeline from Cook Inlet to the mine site. The partners then plan to prepare and file construction and operations permit applications for the project, now estimated to carry a capital cost of about $6 billion. The proven and probable reserves at the project now stand at 33.59 million ounces in 467.7 million tonnes grading 2.23 grams per tonne (gpt) gold. Additional measured and indicated resources include 4.29 million ounces in 39.8 million tonnes grading 3.36 gpt gold and an additional inferred resource of 4.41 million ounces in 58.4 million tonnes grading 2.35 gpt gold. Let me save you the trouble: total Donlin Creek resources in all categories tally up to a galaxy-class 42.29 million ounces.

Fire River Gold Corp. announced results from preliminary economic assessments and began limited operations at its Nixon Fork gold project. The gravity and flotation circuits began operating again on July 4. By late August the mine had shipped more than 30 tonnes of copper concentrate containing 18 percent copper, 779 gpt gold, and 398 gpt silver. Gravity separation has recovered approximately 500 additional ounces of gold. Total gold recovery has averaged 78 percent. Underground mining operations currently are producing approximately 170 tonnes per day at a grade of 18 gpt gold. The mine and mill should be fully operational and near capacity at 150 tons per day by the end of October. Other activities underground include extending the Crystal Ramp to access the down-dip extensions of 3000 and 3300 zones and a shallow ramp is being driven from the Crystal Mine to the Mystery Mine. Significant 2011 development drilling results from the 3300 zone included hole NllU-038 with 17.56 gpt gold over 4.18 meters, hole NllU-041 with 28.92 gpt gold over 3.14 meters, hole N11U-052 with 107.13 gpt gold and 36.26 gpt silver over 8.42 meters,

Freegold Ventures Ltd. announced updated mineral resources for its Vinasale gold project under option from Doyon Ltd. At cutoff value of 0.5 grams of tonne per tonne, the project contains inferred resources of 37.3 million tonnes averaging 1.11 gpt gold, or 1.33 million ounces of gold. The resource is based on 72 drill holes containing 8,711 gold assays within the Central, Northeast and South Zones. Gold assays were capped at 22 gpt gold. To date, mineralization in the Central Zone extends over a strike length of 400 meters and remains open to the north, south and at depth. These resources were based in part on late 2010 drilling that included 71.3 meters grading 1.52 gpt gold in hole VM10-01 and 56.1 meters grading 2.58 gpt gold in hole VM 10-02. In 2011 the company completed an induced polarization geophysical survey and recently finished a diamond drilling program aimed at both upgrading and expanding the current resource.

Earlier in 2011 Northern Dynasty Minerals...