Gold mines lead in price and production: mining projects throughout the state boost economy.

• Author: Stricker, Julie
• Position: MINING

With gold prices continuing to hover around $1,600 per ounce, 2013 is shaping up to be a stellar year for Alaska gold miners. It could be one of the biggest years in terms of production since 1916, with output forecast to top 1 million ounces.

In Alaska, gold traditionally has made the headlines, but the state also has large reserves of base metals such as copper, lead and zinc, as well as rare earth minerals, according to Tom Crafford, large mine coordinator for the Alaska Department of Natural Resources.

Trends overall show a slowing investment climate in mining exploration, he says.

"I think in general, the investment climate or the availability of investment dollars has declined with the slowing of Asian economies, or at least the pace of growth of those economies," Crafford says. "The amount of money that was flowing into the exploration efforts has waned so it's more difficult to raise money now than it had been two years ago. That translates into a reduced level of exploration.

"Nevertheless, things are good, generally speaking," he adds. "Commodity prices aren't bad, they're good, but they're not as great as they have been for awhile." Except for gold, which is still at near-record levels. Production is also rising.

Busy Gold Mines

In 2012, the state's five large gold mines produced about 870,000 ounces of gold, the bulk of which came from the huge open pit Fort Knox mine near Fairbanks and the underground Pogo gold mine 38 miles northeast of Delta Junction.

Fort Knox, a subsidiary of Kinross Gold, produced almost 360,000 ounces of gold in 2012. It expects to produce 425,000 ounces of gold in 2013, with much of the increase coming from its expanded Walter Creek Heap Leach Facility.

It's one example of how high gold prices benefit the producers, Crafford says.

The heap leach is a system in which lower grade ore is stacked and bathed in a cyanide solution that binds the gold, which is later extracted. The cyanide solution is then re-used on the closed-circuit system.

The heap leach facility was constructed in 2009 and has undergone several expansions. The mill at Fort Knox is expected to continue operations through 2017, with the heap leach adding another few years of production.

"Mining projects--they're constantly looking at their economics and how they can shave pennies a ton off their hauling and transportation costs," Crafford says. "The more you can cut your costs, it lowers the cut-even grade. If you can mine or process more cheaply, what hasn't been ore can become ore."

Of course, finding another big ore body is another way to lengthen mine life, which is what happened at the Pogo, owned by Sumitomo Metal Mining. In 2012, Pogo announced the discovery of a new deposit, called Deep East, about 1,000 feet northeast of the main ore body. Deep East contains an estimated 1.2 million ounces of gold, but workers are still mapping to find the true extent of the ore body, and mine officials are optimistic they will find more. The...