Production keeps expanding at Fort Knox

The life of the big Fort Knox gold mine northeast of Fairbanks keeps getting extended as its owner and operator, Fairbanks Gold Mining Inc., finds ways to increase productivity at the mine by profitably extracting lower grades of ore.

Fairbanks Gold Mining Inc. is a subsidiary of Toronto-based Kinross Gold.

Fort Knox is a large conventional surface mine now in its seventh phase of expansion, and the mine operators are continuing exploration for future expansion. Fort Knox is expanding its capacity in several ways, including a project in 2013 to raise the level of the mine’s tailings storage dam by 25 feet.

There have been several expansions of the height of the dam in the years since production started, most of them in increments of 30 feet to 50 feet. The inert rock material left after gold has been extracted, the tailings, are stored behind a large containment dam.

An achievement for the mine operators is that the efficiency and productivity of the Fort Knox heap leach facility — designed to process very low grades of ore — has exceeded expectations.

The company’s original plan was to deliver 14 million tons per year of low-grade ore to be stacked on the heap leach for processing, but this year about 31 million tons will be placed, according to Eric Hill, operations manager at Fort Knox.

With the expanded volumes of ore being placed, Fairbanks Gold is also planning to double the capacity of the fluid circulation system in the heap leach from 8,000 gallons per minute to 16,000 gallons per minute, Hill said. The expansion will be done by late summer in 2013.

The heap leach is a facility where a cyanide solution is circulated through the stacked low-grade ore in a closed circuit. At the end of the process gold is extracted from the solution, which is then reused to extract more gold.

This is a supplement to the ore processing mill at Fort Knox, where ore of a higher quality in gold content is crushed and ground mechanically so that the gold can be separated. The mechanical grinding reduces the ore to a powder with the consistency of table salt before the gold is extracted using a chemical leaching process.

Higher grades of ore are processed in the mill and lower grades are sent to the heap leach, which are not economic to process in a mill.

The heap leach is designed to contain 160 million tons, and so far about 53 million tons of ore have been placed, Hill said.

The mine operators are always looking for ways to increase efficiency.

“As the cost of energy remains high we are constantly relooking at what we are doing,” in an effort to fine-tune operations, said Anna Atchison, the mine’s community and government relations manager.

There is no well-defined limit to the edge or depth of the ore body, but rather changes in the grade of the ore as the extremities are reached. What can be mined is determined by a combination of gold prices and costs, and if prices are high, as they are now, ore of a lower-quality can be mined, Atchison said.

Costs are also part of the equation, however, and those are rising, particularly for electricity to power the process facilities and fuel for the fleet of shovels, loaders and large trucks used in mining.

Electricity is the mine’s second largest operating cost, next to wages and benefits Atchison said, with $39.9 million paid in 2011 to Golden Valley Electric Assoc., the Interior electric co-op.

Fort Knox produced 358,000 ounces of gold last year. Typically the mine has produced 300,000 to 350,000 ounces per year since production started.

The mine is an important part of the Fairbanks North Star Borough economy, employing 560 with an average annual wage of $92,000, twice the average annual wage in the borough. The annual payroll, in wages and benefits, is about $68 million per year.

“Energy is the number one concern of businesses in the Interior, including ours. It is a top concern of our employees as well,” she said.

Kinross supports all of the initiatives under way to bring lower-cost energy to the Interior, including the various gas pipeline options and a proposed plan to truck liquefied natural gas from the North Slope, Atchison said. The LNG trucking option is being studied by GVEA, the electric co-op, and Flint Hills Resources, which operates a crude oil refinery at North Pole, east of Fairbanks.

The Fish Creek area, where Fort Knox is located, has been mined for years by placer miners who knew of the presence of the large, low-grade ore body, but lacked the technology to develop it. Recent development efforts began in the mid-1980s, and construction of the mine began in 1995, followed by the first pour of gold in December 1996.

In April 2011, the mine achieved 5 million ounces of production.

Fort Knox is now expected to continue mining until 2018 with the processing of ore, mainly at the heap leach, to continue until 2022. However, Kinross is exploring ways to extend the mine’s life.