Pogo still state's top gold mine, boosting Interior economy

Photos/Judy Patrick/Sumitomo Metal Mining Co.

The Pogo mine near Delta, east of Fairbanks, is still Alaska’s top gold producer, and has also become an important stimulus to the Interior Alaska economy.

In 2012 the mine, owned by Sumitomo Metal Mining Co., employed 329 workers not including contractor employees on site, and paid a $38.5 million payroll. The company also spent $127.2 million with Alaska vendors and suppliers.

The figures comes from a newly-completed study by McDowell Group, the Juneau-based economic consulting firm. The Alaska spending for supplies and services represented 50 percent of Pogo’s overall spending for support in 2012.

Lorna Shaw, Pogo’s public affairs manager, presented details of the study to the Delta Junction Chamber of Commerce Aug. 15.

Pogo is about 85 miles southeast of Fairbanks and 38 miles northwest of Delta. The mine is an underground mining operation.

McDowell Group found the bulk of Pogos’s spending with vendors and suppliers, about 65 percent, was in the Fairbanks North Star Borough and in Delta, the nearest community to the mine, according to the McDowell Group study. Eight percent of the vendor and supplier spending, or $10.1 million, was in Delta. “That’s pretty significant for Delta, which isn’t very big,” said Shaw.  About 57 percent, or $72.6 million, was spent with other suppliers in the Fairbanks North Star Borough, McDowell Group said in the study.

Also, 34 percent of the mine’s spending, or $43.5 million, went to suppliers in Anchorage.

The mine paid top wages, too. Average annual pay per worker at Pogo was $116,916 per employee, McDowell Group said in the study. That is over twice the statewide average income of $50,100 per year and the $47,616 average income per year for the Fairbanks North Star Borough, the study said.

It is in the range of what other mines in Alaska pay their workers, however.

Meanwhile, the total employment and payroll effect of the mine is greater than that of the people employed directly in the mine because of the indirect effects of employment, through the spending of wages in the state’s economy. McDowell Group estimated an additional 215 jobs and $18 million in additional payroll were created indirectly.

In payments to government, Pogo paid $24.2 million in taxes and fees and an additional $4.8 million in mine royalties to state government in 2012, as well as corporate tax payments, the study said.

Pogo is still new as Alaska mines go. Exploration began in 1990 and production started in 2006. By 2008 the mine had became the state’s top gold producer with annual production of about 340,000 ounces of gold.

Production so far in 2013 is slightly ahead of the amount planned, Shaw said in an interview, with about 208,000 ounces produced through the end of July.

Reserves and resources at the mine are currently estimated at 4.973 million ounces of gold in 13.5 million tons of ore, with an average grade of 0.366 ounces per ton. The company is exploring potential new gold resources, which are likely to extend the mine life beyond 2019 and there are a number of untested prospects in Pogo’s block of mining claims, which covers about 85 square miles.

Shaw said Pogo is currently producing from its main deposit, the Liese deposit, but that new resources have been found in East Deep, a separate deposit about 1,000 feet northwest of the Liese. Development and permitting for East Deep have now started following the mining of a test batch of ore for testing, and drilling programs in 2013, operating from April through November, are testing for extensions of the East Deep mineralization to the northeast, north and west of the prospect now identified.

Tim Bradner can be reached at [email protected].

09/19/2013 - 10:37am