Mines in Southeast Alaska: struggling through financial, regulatory challenges.

• Author: Liles, Patricia
• Position: MINING

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Two years ago, mineral industry development spending in Southeast Alaska was greater than in any other region in the state, thanks to construction of the Kensington underground gold mine and continued development of the long-producing Greens Creek polymetallic mine.

Together, development spending at those two properties neared $150 million in 2007, according to the annual Alaska Mineral Industry report. This year, though, development spending in Southeast Alaska will be significantly reduced, with most major construction activities now complete at Kensington, which remains shuttered due to continued permitting challenges.

At Greens Creek, capital budgets for 2009 will decline due to companywide cost savings efforts, as a result of volatile metal prices and challenges in global financial markets.

Continued development of the Tulsequah Chief mine just across the border, in northwestern British Columbia, remains uncertain due to financial struggles of its operator, Redfern Resources Ltd., which sought court protection in early March from creditors under Canadian financial regulations.

In mid-February, Redfern's parent company, Redcorp, announced construction activities at Tulsequah would remain suspended because of uncertainty related to estimated costs to complete development at the historic polymetallic mine.

One bright spot in Southeast Alaska's mineral industry is the Niblack underground exploration project, currently held by CBR Gold Corp., formerly Committee Bay Resources.

The company closed on its acquisition of Niblack Mining last fall, while exploration crews completed underground drilling work. Since then, CBR Gold Corp. has calculated and released an expanded resource estimate for Niblack, located southwest of Ketchikan on Prince of Wales Island.

"Since we took over the project, we've really advanced it significantly, with a resource upgrade following exciting drill results at the end of the season last year," said John Williamson, president of Edmonton-based CBR Gold Corp. "Niblack is looking very attractive."

Another underground drilling program at Niblack is being planned for this summer, Williamson said, with an estimated budget ranging from $2 million to $5 million.

"You can't be nearsighted and be gloomy about today, as it takes time to put mines into production. You have to have a longer-term approach," Williamson said. "Right now, in the market for financing, everybody has kind of flocked to near-term...