Alaska 2007: mining in review: a statewide look at Alaska's rich resource.

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

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Even though the year is not yet completed, it seems a safe bet to say that 2007 will go down in the books as one of the most exciting and productive years in Alaska mining history. Mineral exploration at Alaska mines has reached new levels of productivity and efficiency. Development projects brought two new mines to the commercial production stage while two others are nearing start-up. Several advanced-stage exploration projects are planning to bring on some of the largest mines ever envisioned for Alaska, while a large stable of quality exploration targets were investigated in 2007 over the length and breadth of Alaska. The highlights presented will give you some idea of how busy 2007 has been and how much more exciting 2008 promises to be.

WESTERN ALASKA

Teck-Cominco's Red Dog mine turned in a stellar performance in 2006 and saw continued strong operating profits in the second half of 2007. For 2006, the mine produced 557,500 tonnes of zinc in concentrate from ore grading decreased to 19.9 percent. The mine also produced 123,500 tonnes of lead from ore grading 5.7 percent. The mine posted a whopping $1.079 billion (yes, Dorothy, billion) operating profit for 2006. For the first half of 2007, the mine generated 287,000 tonnes of zinc and 64,000 tonnes of lead in concentrate. Operating profit in the first half of 2007 rose to $265 million, versus an operating profit of $240 million in the same period in 2006. Average zinc and lead grade mined was 20.6 percent and 6.0 percent, versus 22.2 percent. Mill throughput of 1,687,000 tonnes in the first half of 2007 was significantly up from the 1,539,000 tonnes milled in the first half of 2006. The first concentrate shipment left the Red Dog mine on July 5, 2007, 19 days earlier than in 2006. Total shipments for the 2007 shipping season are expected to be approximately 1 million tonnes of zinc concentrate and 260,000 tonnes of lead concentrate.

NovaGold Resources Inc. announced that JV partner Barrick Gold Corp. has budgeted $87 million for the 80,000 meter Donlin Creek project drill campaign for 2007. The focus of this work will be on converting Inferred Resources to the Measured and Indicated category. Project operator Barrick Gold continues to work toward completion of a pre-feasibility and first feasibility study for the project and has indicated it will not submit the draft applications to begin the permitting and environmental approval process until 2008.

Northern Dynasty announced a new resource estimate for its already giant but growing Pebble porphyry copper-gold-molybdenum deposit. At a 0.60 percent copper equivalent cut-off, the estimated inferred mineral resources in the Pebble East deposit are 3.379 billion tonnes grading 0.57 percent copper, 0.36 grams of gold per tonne and 0.036 percent molybdenum, which is equivalent to a 1 percent copper equivalent grade containing 42.6 billion pounds of copper, 39.6 million ounces of gold, and 2.7 billion pounds of molybdenum. The 2006 drilling program at Pebble East expanded the north-south length of the deposit to greater than 7,000 feet. The deposit remains open to the north and south. In August, Northern Dynasty announced that it had joint ventured the project with mining giant Anglo American plc. Under terms of the deal Anglo can become a 50 percent partner in Pebble by making staged cash investments of $1.425 billion. Anglo's staged investment includes a committed expenditure of $125 million to complete a pre-feasibility study targeted at the end of 2008. After the completion of the pre-feasibility study, Anglo must elect to commit to a further $325 million for a feasibility study, the completion and approval of which is targeted for 2011. Upon the decision to develop a mine, Anglo must elect to commit to the next $975 million of expenditures to retain its 50 percent interest, completion of which will meet the $1.425 billion requirement. Thereafter, any further expenditure will be funded on a 50/50 basis. If the feasibility study is completed after 2011, Anglo's overall funding requirement increases to $1.5 billion. Northern Dynasty will assess its 50 percent share of any project debt financing when a production decision is made. Not sure about this but I think the $1.425 billion earn-in is the largest joint-venture earn-in amount in Alaska mining history. Anybody out there know if this is the case?

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St. Andrew Goldfields announced first and second quarter production results from its Nixon Fork gold-copper mine near McGrath. During the first quarter, the mine processed 8,198 tonnes of ore with an average grading of 21.8 grams of gold per tonne, resulting in production of 3,374 ounces of gold and 37,623 pounds of copper. During the second quarter, the mine processed 7,433 tonnes of ore with a head grade of 16.0 grams of gold per tonne. Mill recovery rate for the second quarter averaged 70.5 percent-producing 2,661 ounces of gold. The company planned to shut down the mill for about 6 weeks recently to allow for the planned installation of tailings filtration equipment and the integration of the dry stack tailings facility at the mine. Mining and development operations will continue and ore will be stockpiled at the mill. Proven reserves at the mine currently stand at 47,000 tonnes grading, 34.05 grams of gold per tonne (51,500 ounces). Probable reserves stand at 137,500 tonnes grading, 18.6 grams of gold per tonne (82,230 ounces). Measured resources total 23,400 tonnes grading, 36.8 grams of gold per tonne (27,700 ounces). Probable resources total 126,000 tonnes grading, 21.6 grams of gold per tonne (87,700 ounces), while possible resources total 93,000 tonnes grading, 15.5 grams of gold per tonne (46,300 ounces).

Geoinformatics Exploration announced that it had acquired the Whistler copper-gold porphyry project in the western Alaska Range from Kennecott Exploration. Terms of the deal require Geoinformatics to expend at least $2.5 million in exploration work in both 2007 and 2008 to earn 100 percent interest in the project, subject to previously agreed terms of an Alliance Agreement between the two parties. Total approved 2007 exploration is expected to be approximately $3.2 million. The project hosts a partially defined gold-copper porphyry system, which comes to surface with a mineralized envelope confirmed over an area of 760 by 230 meters and to a depth of 570 meters and which is open to the north and at depth. Significant intervals from past drilling include 290.3 meters of 1.15 grams of gold per tonne and 0.23 percent copper in hole 04-DD-WH-01, 219.4 meters of 1.49 grams of gold per tonne and 0.33 percent copper in hole 04-DD-WH-05 and 91.9 meters of 1.13 grams of gold per tonne and 0.23 percent copper in hole 05-DD-WH-12. Drilling in 2007 is expected to include the drilling of the Muddy Creek Prospect, an irregular L-shaped area approximately 3.2 km by 2.5 km within which 150 rock-chip samples returned gold grades as high as 111 grams of gold per tonne with an average grade of 4.72 grams of gold per tonne.

Full Metal Minerals and joint-venture partner Triex Minerals Corp. announced plans to conduct a $1.5 million uranium exploration program at their Boulder Creek uranium project north of Elim. The program will include approximately 3,000 meters of core drilling, testing multiple targets on both the Boulder Creek and McCarthy Marsh prospects. Half of the drilling will be directed toward delineation of known mineralized zones including the Main Zone, 990 Hill and Carbon Creek zones. The second component of program will include drilling of regional targets on the McCarthy Marsh claims. This work is a follow up of 1,841 line-kilometers of airborne radiometrics flown in 2006 that resulted in identification of 53 high priority anomalies. A total of 300 rock, soil and biogeochemical samples also were collected and resulted in coincident uranium and molybdenum anomalies in five areas. Tertiary sediments at McCarthy Marsh occur adjacent to radioactive syenite intrusions on the western flank of the Darby Mountains. The McCarthy Marsh basin is approximately 35 kilometers across.

Full Metal Minerals also announced that it had optioned the Inmachuck project to Alaska-newcomer Millrock Resources Inc. To earn a 60 percent interest in the property, Millrock must incur $2.5 million in exploration expenditures, issue 600,000 shares and pay Full Metal $90,000 cash. The companies are planning a mechanical trenching and 1,300 meter diamond drilling program that will commence in June. Work completed in 2006 included collection of 267 soil samples on 100 by 300 meter grid, followed by infill soil sampling on a 100 by 150 meter grid. Soil results range from trace to 735 parts per billion gold with an average of 28 parts per billion gold. Of these, 22 samples assayed more than 50 parts per billion gold and eight assayed more than 100 parts per billion gold. In addition to gold exploration, two significant base metal enriched carbonate-replacement zones have been identified at Hannum and Harry's Creek. The occurrences are 1,300 meters apart and appear to be at the same stratigraphic level. The Hannum Creek prospect is characterized by an extensive surface gossan. Previous channel samples collected from trenches completed by Bunker Hill Mining Co. in the 1960s include 15 percent lead, 1.5 percent zinc, 2.2 ounces of silver per ton, and 0.23 percent antimony over a 51-foot width. The Bunker Hill soil program identified an anomalous area about 1,500 meters east-west by 500 meters north-south in which soils returned values greater than 250 parts per million lead and 500 parts per million zinc. In 1966, Bunker Hill completed 15 diamond core holes totaling 608 meters (the deepest hole was only 75 meters deep). Work completed by Full Metal...