One of the most active prospectors in Alaska, Full Metal Minerals Ltd. made progress this summer its Fortymile property.

Located on Native-owned land in eastern Interior Alaska, the company is producing numerous high-grade drill results containing both base and precious metals and working on a new nearby prospect containing porphyry-type of mineralization.

The company also pushed ahead with its underground exploration at the historic Lucky Shot gold mine north of Wasilla, securing state permits in late August to begin an underground bulk sampling program and gravity separation circuit to extract gold from its host rock.

“We call it a discovery, but actually we've stepped out from where the old timers stopped mining but the veins keep on going,” said Rob McLeod, vice president of exploration for the Vancouver, B.C.-based exploration company.

In addition to the Fortymile and the Lucky Shot programs, Full Metal is working on nine other mineral prospects this summer, eight in Alaska and one in the Yukon Territory, with plans to spend more than $17 million on those properties.

Of that 2008 budget, at least $5.2 million will come from the company's various joint venture partners, which include major mining companies Freeport MacMoran, BHP Billiton and Kinross Gold.

The company's largest exploration program this year is on the Fortymile property, where Full Metal expects to spend $6.5 million on drilling and additional exploration on the 235,376-acre property optioned from Doyon Ltd., the Interior Alaska Native regional corporation.

“When Doyon selected the lands for mineral potential, they had some pretty smart people on their team,” McLeod said. “There's a dozen different targets out there.”

In mid-July, Full Metal released initial drill results from this season's diamond core drilling program at the Little White Man target, which indicated long intercept with high grades of zinc, lead and silver, with some copper mineralization.

“The grade there is spectacular,” McLeod said. “In terms of worldwide lead-zinc deposits, it's in the upper 10 percent in terms of grade. That means you don't need a lot of tons to have an economic deposit out there.”

Full Metal is gathering information to produce a new resource estimate for the property and to begin a scoping study. More than 30 people worked on the Fortymile property this summer, McLeod said, with about 40 percent of those employees Native corporation shareholder hires.

Success on the Fortymile encouraged Full Metal to look for mineralization nearby. The company signed an expanded agreement covering Doyon lands to the south, and staked mining claims on state land located on the east side of the Taylor Highway, northeast of Tok.

Full Metal has partnered with BHP Billiton on that land package, which has “excellent copper, molybdenum gold porphyry type of mineralization,” McLeod said.

The partnership plans to spend $1.3 million on that project this year, covering surface exploration and an airborne geophysical survey to identify potential drill targets for next year, he added.

Closer to Anchorage, the Lucky Shot exploration program this year is focused on beginning to take bulk samples from underground mine workings, enabling the company to test potential underground mining techniques, McLeod said.

The work will also help confirm the potential for increased gold recovery by digging out higher-grade material for recovery tests. Previously completed laboratory tests indicate that gold recovery could range from 68 to 78 percent, the company said in a press release.

“Subject to gold recovery, gold grade, continuity of mineralization and mining rates, the gold recovered from the bulk sample could offset the associated costs,” Full Metal said in June.

Earlier this year, the company announced plans to spend a minimum of $2.5 million at Lucky Shot, a property that contains a historical underground mine, mill and camp facilities.

Lucky Shot was one of several gold mines producing in the early part of the 20th century in the Willow Creek Mining District, a region that produced more than 650,000 ounces of gold from 1898 until 1965, Charles Hawley, wrote in his book, “Wesley Earl Dunkle: Alaska's Flying Miner.”

A longtime geologist and mine engineer in Alaska, Dunkle was responsible for the development and underground mining operation at Lucky Shot in the 1930s, where ore averaged well over 2 ounces of gold per ton of rock in 1932, 1933 and 1934.

“More than a ton of gold - 36,194 ounces - was recovered in 1933,” Hawley wrote. “Each day, the little mill produced about 100 ounces of gold from about 40 tons of ore.”

Gold grades dropped in following years and in the spring of 1938, the New York-based operating company decided to pull out of the Lucky Shot mine and Alaska.

Full Metal acquired Lucky Shot in 2004, one of its first exploration projects in Alaska. Drilling work has extended the known continuous gold mineralization to more than 7,870 feet along strike and 2,296 feet down dip, the company said.

Bulk sampling is expected to produce material averaging about 1 ounce of gold per ton of rock, McLeod said.

“To me, it was stunning that no one had drilled the property before,” he said. “If it were to go into operation, it would be the highest grade gold mine in the United States.”

Following the start of the bulk sampling and gold recovery program this fall, Full Metal will evaluate the possibility of beginning the full permitting process to restart commercial gold production at Lucky Shot.