Mining in 2019: The Year in Review: Success, results, and what's next for Alaska's mining industry.

• Author: Freeman, Curtis J.

Curtis Freeman is the owner and president of Fairbanks-based Avalon Development Corporation. He may be contacted via phone at 907-457-5159; email at avalon0avalonalaska.com, or online at avalonalaska.com.

Following a year when metal prices were both up and down--sometimes dramatically; when international trade squabbles spooked investors to both enter and exit the metals markets; and when mining companies started the year cautiously bullish but ended it cautious bearish, those involved in Alaska mineral exploration, development, and production are once again asking themselves: "Where did we succeed, where did we fail, and where do we go from here?" As is always the case, high quality projects get funded and get the attention they need. But in a trend that we see both worldwide and at the Alaska level, early-stage projects, those that could become deposits and mines, are getting a smaller and smaller piece of the funding pie. Both demand for and production of metals continue to increase as advancing economies around the world demand more metals for more of what modern society is offering. Even with better recycling systems and smarter technologies, there are more and more consumers asking for metals that are unlikely to be discovered with smaller and smaller exploration budgets. One has to ask: "From where will we get all this metal?"

WESTERN ALASKA

Teck Resources and partner NANA Regional Corporation announced year-end 2018 and first-half 2019 results from the Red Dog mine. For 2018 the mine produced 583,200 tonnes of zinc in concentrate from ore grading 15.7% with mill recoveries at 83.9%. The mine also produced 98,400 tonnes of lead in concentrate from ore grading 4.4% with mill recoveries of 50.2%. Gross operating profit for 2018 was $864 million, compared with $874 million in 2017. Mill throughput for 2018 was up significantly to 4,429,000 tonnes compared to 4,270,000 tonnes in 2017 For the first half of 2019 the mine produced 268,200 tonnes of zinc in concentrate from ore grading 15.3% with mill recoveries at 84%. The mine also produced 47,900 tonnes of lead in concentrate from ore grading 4.2% with mill recoveries of 54.8%. Gross operating profit for the first half of 2019 was $291 million, compared with $342 million in same period of 2018. Mill throughput for the first half of 2019 was 2,084,000 tonnes compared to 2,025,000 tonnes in same period of 2018. Mine profits have been significantly impacted by the falling price of zinc, partially offset by higher mill throughput and better mill recoveries. Royalty costs for the first half of 2019 were $94 million versus $96 million in the year previous period. Full year 2019 production estimates have been increased to 535,000 to 560,000 tonnes of zinc.

Graphite One Resources announced commencement of an 800 meter drilling program at its Graphite Creek deposit. Drilling efforts will also provide geotechnical information for open-pit mine design and to determine ground conditions in proposed infrastructure sites. The company also shipped 12,000 pounds of raw graphitic material to its US-based industrial partner for processing into advanced graphite materials. The pilot program is expected to produce data for the company's Preliminary Feasibility Study, due for completion in early 2020, that will outline mining, processing, and production of graphite products. At a 5% cut-off grade, the deposit contains 10.95 million tonnes of measured and indicated resources averaging 7.8% carbon as graphite, plus 91.89 million tonnes of inferred resource averaging 8% carbon as graphite.

NovaGold Resources released its year-end 2018 and first-half 2019 financial results and project updates for its flagship Donlin Gold project, owned 50% with Barrick Gold. The project is on land owned by mineral estate owner Calista Corporation and surface estate owner The Kuskokwim Corporation In the last year the partners received numerous permits from state and federal agencies, including a permit from the Alaska Department of Natural Resources Division of Mining, Land, and Water, which issued preliminary land use decisions for the project's transportation corridor, including the access road and related material sites, airstrip, and upriver Jungjuk Port. In addition, the Alaska Department of Natural Resources Division of Oil and Gas, State Pipeline Coordinator's Section issued a preliminary decision to authorize the sections of the pipeline proposed for state lands. Geotechnical field work was conducted this summer to support the Alaska Department of Natural Resources' approval of the Alaska Dam Safety certificates for the tailings storage facility and water retention dams. This work consisted of drilling and field testing with installation of monitoring instruments, a pumping test program at the tailings storage facility, excavation of test pits, geophysical surveys, and laboratory testing. This work will help advance the engineering from feasibility level to the final construction packages. The partners also signed a wetlands mitigation agreement on approximately 2,800 acres of wetlands that could be impacted. Such impacts must either be reclaimed or replaced, so an agreement was signed with the Alaska Mental Health Trust Authority to protect some of the Trust's wetlands in the Cook Inlet area. Donlin also signed an agreement with Tyonek Native Corporation for a conservation easement on 4,000 acres of land and it plans to sign another agreement with the Great Land Trust to purchase nine credits, the equivalent of nine acres, to protect 4.5 acres of wetlands in the Mat-Su Borough. The company indicated that cost estimates for the project for 2019 remain unchanged at $26 million.

Northern Dynasty Minerals reported that the US Environmental Protection Agency (EPA) has taken action to withdraw a Proposed Determination affecting the Pebble copper-molybdenum-gold project initiated in 2014. The EPA had attempted an unprecedented preemptive veto of the project before it received the required regulatory review under NEPA and Section 404(c) of the Clean Water Act. Vacating this proposed determination has removed any cloud lingering over the Environmental Impact Statement (EIS) and federal permitting process for the project which have been advancing since early 2019 under NEPA. Lead agency US Army Corps of Engineers published a timeline that indicates it expects to finalize the Pebble Project EIS in early 2020 and issue a final Record of Decision by the middle of 2020. According to the EIS now under review, the project would include development of the open pit mine, with associated infrastructure to include a 270-megawatt power generating plant. A 188-mile natural gas pipeline from the Kenai Peninsula across Cook Inlet to the mine site is proposed as the energy source for the mine. The transportation corridor includes mine and port access roads, an 18-mile crossing of lliamna Lake, and an Amakdedori Port facility on the western shore of Cook Inlet. The full document can be found at pebbleprojecteis.com.

In mid-2019 Constantine Metal Resources finalized its lease agreement with Cook Inlet Region, Inc. on the 20,942 acre Johnson Tract project. Shortly afterwards, Constantine spun the Johnson Tract out into a new public company, HighGold Mining, which then closed $7.65 million in financing and initiated a planned eight-to ten-hole, 2,000 meter diamond drill program at the project. These new data along with historic drilling data will be used to generate the first industry compliant mineral resource for the project. Additional work planned on the project includes geologic mapping, prospecting, and soil and rock sampling at other prospect areas. The prospect hosts a gold-silver-zinc-copper-lead deposit where historic discovery drilling reported 102.6 meters grading 10.94 grams per ton (gpt) gold, 8.01% zinc, 0.75% copper, 2.13% lead, and 8.5 gpt silver, including 50 meters grading 20 gpt gold, 9.4% zinc, 1% copper, 2.8% lead, and 12.7 gpt silver. The discovery was followed by near-continuous exploration over a thirteen-year period, including identification of other prospects over a 12 kilometer strike length.

INTERIOR ALASKA

Kinross Gold announced year-end 2018 and...