Teck Corp.: Developing Pogo.

• Author: ANTONIONI, PAUL

Pogo sits in what is now one of the hottest gold plays in the world. But getting to that gold takes work.

New mines are not just found--new mines are built with talent and experience. Mining for gold has changed dramatically in the last few decades, and taking a deposit of ore from promising drill core samples to developing a producing gold mine requires a new sophistication that relies heavily on technical expertise, and a strong dose of financial know-how.

Old-time prospectors have been replaced by trained geologists and engineers, and the building of a new mine into a producing operation requires new skills and expertise. Fluctuating gold prices, and increasingly stringent environmental and regulatory measures, add to the risks of developing a new property. The high risks are mitigated by partnerships of mining companies that bring strong financial capabilities and unique technical and operating expertise developed at other mining operations. Technology developed over the last three decades is helping to build mines from deposits that were previously unfeasible.

Pogo Explored

Teck Corp. is working on turning the Pogo discovery into the next major gold mine in Alaska. In 1997 Teck joint-ventured with subsidiaries of Sumitomo, the holder of the claims, to conduct a feasibility study leading to a production decision. Teck, who is the operator of the project, can earn a 40 percent interest in the Pogo project by spending $28 million and completing a feasibility study. Teck is also responsible for the initial $33 million of development costs.

Located about 40 miles northeast of Delta Junction on state land, Pogo is a high-grade gold deposit that is buried deep inside a mountain with no obvious indications from the surface that its wealth exists. Regional exploration in the early 1980s identified chemical anomalies in local stream and soil samples, indicating that something was different than what was naturally expected in the area, and provided an invitation to geologists to look closer.

WGM Inc. assembled the original exploration package, and several major mining companies reviewed the area, but none proceeded with drilling. Sumitomo remained interested and in 1994 discovered the first gold mineralization. It was only after the 1997 drilling program that Sumitomo-Teck announced the significance of Pogo. This started a claim staking rush in Alaska's eastern Interior, now considered one of the hottest gold plays in the world, with various...