Pogo Developers Plan Construction Despite Low Gold Prices.

• Author: JONES, PATRICIA
• Position: Teck Resources, Sumitomo Metal Mining submit plan to build mine near Delta Junction, Alaska - Statistical Data Included

Sumitomo Metal Mining and Teck Resources are going full-steam ahead with Pogo development.

Three years ago, operators of the Pogo gold exploration project first released their best guess of the amount of precious metal contained in granite rock buried deep in the hills surrounding the Goodpaster River in Interior Alaska.

News of that recently discovered 5-million-plus-ounce gold deposit sparked a flurry of claim staking on state-owned ground in the surrounding area, despite record low market prices for the metal.

Since then, as geologists have continued to churn out evidence about the remote, high-grade gold deposit, the Pogo project has been viewed as the next best chance for a new hard-rock gold mine to be built in Alaska.

And now, after spending about $50 million in the last three years on the exploration property, Pogo's operators have taken the leap-submitting to state and federal agencies a plan to build and operate a hard-rock mine at the deposit, located 38 miles northeast of Delta Junction.

Vancouver, B.C.-based Teck Resources, which partnered with Sumitomo Metal Mining back in mid-1997 to further explore Pogo, has estimated construction costs for an underground mine system and a hilltop mill complex to be $250 million.

"That's why we've turned in the permit application and intend to be into production as soon as possible," said Karl Hanneman, Alaska regional manager for Teck. "That kind of expense can't continue to be justified without some kind of return."

1,300 Ounces Per Day

The rewards from Pogo could be substantial. The operating plan estimates that 2,500 tons to 3,500 tons of the gold-bearing rock will pass through the mill each day. With an average gold grade slightly higher than a half-ounce per ton, that means that Pogo could produce more than 1,300 ounces of gold each day.

"The only thing that makes sense in this economic market are the high grade things like Pogo, which looks good even at $270 per ounce for gold," said Curt Freeman, a Fairbanks-based consulting geologist who has staked claims for clients near Pogo.

Hanneman said that the company has started "aggressively proceeding" with Pogo's development. "The current price environment justifies doing this project."

Teck's development goal, outlined in a time schedule included in the permit application, is to obtain alt necessary state and federal approvals by early 2002. That would allow crews to move construction supplies into the remote area using a winter road...