Alaska's prospectors cut back: statewide mineral exploration anticipated to decline.

• Author: Liles, Patricia
• Position: MINING

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Alaska's mineral exploration industry will likely reduce its annual investment this year in the Last Frontier following two years of record spending racked up mostly by prospectors working on large-scale projects like the Pebble Project and Donlin Creek in Southwest.

Spending this year at both mineral projects is expected to decline from 2008 levels, but for different reasons. At Donlin Creek, developers are preparing to submit to State and federal regulatory agencies their plans to build and operate a large-scale, open-pit gold mine in the hills near the Kuskokwim River village of Crooked Creek.

Shifting from advanced exploration to the permitting stage will require a change in the scope and type of work, according to Doug Nicholson, president and general manager of Donlin Creek LLC. That means less field work at the remote site, which has employed as many as 240 people at the peak of the summer season.

"Those big programs will be curtailed for a while," Nicholson said. "We've spent 13 years exploring, planning and conducting engineering. Now is the time to see if we can actually permit something."

At Pebble, a copper-gold-molybdenum prospect with potential for both open-pit and underground mining, exploration spending is expected to be reduced this year from the $140 million invested in 2008.

"We're still working on what exactly our footprint will look like in 2009, but it will not look like 2008," said Mike Heatwole, vice president for public affairs at the Pebble Partnership. "It is fair to say that there will be a pretty significant investment by the partnership, a pretty aggressive field program and a lot of environmental and engineering studies."

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GOLD IS STILL THE STANDARD

Both large-scale projects in Alaska contain significant amounts of gold, the metal that will likely receive the bulk of exploration investment in 2009, thanks to the sustained strong market price.

In the early part of 2009, gold prices remained at or above $900 per ounce, approaching the record price of $1,030 per ounce of gold, set in March 2008. Continued strong gold market prices appear to be translating into increased investor interest, and availability of financing, for gold-exploration projects.

"We've certainly seen the market turn in respect to the gold sector," said Jeff Pontius, president and CEO of International Tower Hill Mines, a Denver-based exploration company working in the historic mining community of Livengood in the Interior. "Money is coming back into the investment...