Major mines advance toward development
Despite the fluttering of metal prices, particularly gold, several significant Alaska mining projects continue to advance although the Livengood project near Fairbanks just received a disappointing feasibility study.
One of the largest, the Donlin Gold project at Donlin Creek near the Kuskokwim River, will soon be in the second year of a projected four-year permitting period.
The company, a joint-venture of Barrick Gold and NovaGold Resources, completed “scoping” sessions for a federal environmental impact statement, or EIS, for the mine last March and recently submitted environmental and social baseline data to the U.S. Army Corps of Engineers for preparation of the draft EIS.
The baseline data adds to the work the corps has already started on the draft EIS.
The joint-venture company is also due to report on cost reduction possibilities in December, according to NovaGold’s second quarter financial statement issued July 10.
The mine is now projected to cost $6 billion and one of its owners, Barrick, has indicated that the project may not be economically feasible. The cost-reduction study is an effort to identify potential savings.
In its financial statement NovaGold said it isn’t concerned for now with how the recent downturn in gold prices might affect the project.
“We view the current phenomenon as a short-term swing in a well-established multi-decade secular bull market in gold. Great mines easily absorb these swings during their long lives of operation,” NovaGold said in its statement.
“They also benefit from price upswings, which places Donlin Gold, with its projected average life-of-mine average cash cost of less than $600 per ounce, in the unique category of assets positioned to deliver substantial value to all of its stakeholders,” the company said in its statement.
The Donlin Creek deposit has an estimated 239 million ounces of measured and indicated gold resources at a grade of 2.2 grams per tonne, and an estimated 33.8 million ounces of proven and probable reserves at 2.1 grams per tonne, and another 6 million ounces of inferred resources at 2 grams per tonne.
The proposed mine is about 300 miles west of Anchorage and is the largest gold project in the world in the development stage. If developed it would be the world’s largest gold-producing mine, NovaGold said in its 2012 annual report.
Another significant gold project in development is the Livengood gold project on the Elliot Highway 70 miles north of Fairbanks. It is in an advanced stage of planning and yet not yet finalized its mine plan, or filed for development permits.
International Tower Hills Mines, the owner, said that its preliminary feasibility study indicates the mine may not be economic, at least at current gold prices of about $1,340 per ounce. A break-even gold price of about $1,500 per ounce is need, the study said.
Project manager Tom Irwin said high energy costs, environmental protection measures and the need to build a worker housing complex at the mine contributed to problems. The capital cost was estimated at $2.79 billion in the study.
The company will continue work on permitting and engineering, Irwin said. International Tower Hills has spent about $250 million to date in exploration, environmental work and pre-development planning.
The latest resource estimate for the project, published in an August 2011 preliminary economic assessment, is 16.5 million ounces in measured and indicated resources with an additional 4.1 million ounces in inferred resources.
In March, ITH said that it has completed a mine design and production schedule and alternatives, with equipment specifications and bids from suppliers.
The mill process design has also been completed and would be similar to that used at the Fort Knox mine, an operating mine northeast of Fairbanks on the Steese Highway.
An important aspect of the Livengood project is that it is located on an all-weather paved highway, which makes the area very accessible. However, infrastructure for power would have to be built. The company’s current plan is to purchase power from Golden Valley Electric Association, the regional utility. Power transmission lines would have to be built to the mine from the Fairbanks area.
In Southeast Alaska, the proposed Bokan Mountain–Dotson Ridge rare earth mine on Prince of Wales Island, near Ketchikan, is making progress.
Ucore Rare Earth Metals, the company developing the project, announced July 16 that its had retained three contractors to develop an initial plan of operations, an important step prior to the development of permit applications.
Knight Piesold Ltd. and Tetra-Tech Inc. of Vancouver, B.C., and the Juneau office of PND Engineering will develop engineering schematics for the mine portal, the mill facility including the ore crushing, screening and sorting plant, the separation facility and the aggregate storage stockpile.
The engineering designs are needed to support the federal environmental impact statement for the mine.
Ucore also has environmental field programs underway in 2013, including stream and groundwater water quality as well as fish habitats and wetlands.
In a related development, Ucore has also completed a second bulk testing of a unique ore sorting technology that will reduce waste rock and the environmental footprint of the mine. A 20-ton bulk sample, obtained from three separate locations in the ore body, was sent to West Germany for tests with a large-scale x-ray transmission sorter.
In 2012, three one-ton samples were tested with the technique. A 30-ton bulk sample is now being prepared for further testing.
The technique, used in diamond and tungsten mining, has never before been used in a rare earths mine. It allows for the sorting out of low-grade material prior to processing, which allows for a smaller processing plant, less environmental “footprint” and lower costs, Ucore said in a statement issued in June.
“The use of ore-sorting and a cemented-paste backfill will allow for all of the milled tailings to be placed back underground once the project is In full production. As a result, no permanent tailings disposal facility will be required for the project,” according to the Ucore. The project is about 40 miles southwest of Ketchikan.
Another project moving slowly forward in Southeast Alaska in Niblack, a potential multi-metal underground mine being developed by Healtherdale Resources, also of Vancouver.
Niblack is in a quiet phase with work mainly focused on engineering studies related to a pre-feasibility study that will be done in 2014, said Patrick Smith, Heatherdale’s manager of the project.
In mining projects, the pre-feasibility study is a crucial benchmark that tests a project’s viability. The feasibility study, which ultimately follows, is done as a near-final step just before the owners authorize the construction investment.
One important decision that will be concluded in the pre-feasibility study for Niblack is whether to locate the mill at Gravina Island near Ketchikan or at the mine site. A Gravina location for the mill would have the facility built at the former site of a lumber mill, an area used previously for industry, which would simplify permitting.
It would make Ketchikan’s cheaper hydropower available for the mill.
Without the mill, permitting of the mine will be simplified because there is already a 3,300-foot section of underground tunnels, 1.5 miles of road, a dock and barge camp at the mine site.
If the Gravina Island site was selected it would involve barging raw ore from the mine to Ketchikan.
“We believe Gravina Island would be a wonderful site for the mill and we’re grateful for strong community support for the idea,” Smith said. “We can’t be firm in the decision, however, until the pre-feasibility study is done.”
Niblack’s ore holds copper, gold, zinc and silver on 6,200 acres of federal and state mining claims and 250 acres of patented claims that are essentially private lands owned now by Heatherdale. So far the company has defined 5.6 million tonnes of ore in indicated resouces and an additional 3.4 million tonnes of inferred resources.
The area is a historic mining district, with underground mines operating there from 1905 to 1908.
Tim Bradner can be reached at [email protected].