Radford told the Resource Development Council in Anchorage that based on its current reserves, Fort Knox would cease mining in 2010 and continue processing stockpiled ore until 2012. With the new phase, however, mining would continue to 2014 and processing until 2019, Radford said.

If new resources are found, mining and processing could be extended beyond those dates.

Strong gold prices are helping the economics of the expansion projects.

Meanwhile, a heap leach ore processing facility at Fort Knox is expected to be under construction this winter and set for a start of operations in 2009, Radford said. The company has received its state permits for the head leach and is now awaiting the final U.S. Army Corps of Engineers permit.

Fort Knox is a large gold mine with low-grade ore that went into operation in 1996. In 1997 the mine employed 249 with a $14.25 million payroll, but that has now grown to 400 employees with a $39 million payroll, Radford said.

Operating expenses have grown from $65 million in 1997 to $102 million in 2007, Radford said. About $12 million of the increase is in the cost of fuel and power to the mine. Power costs alone have jumped 80 percent since Fort Knox went into operation.

Except for fuel and power costs the company has managed to contain inflationary pressures within reasonable bounds, no small achievement considering the escalation of costs of steel and other materials, Radford told the RDC.

A lot of the containment of escalating costs is due to continuing efficiency improvements at the mine, as well as adoption of new technologies, such as a computerized dispatch system. Operators in the dispatch center now know the location of equipment within a 30-foot area. The accuracy of positions will soon be known down to centimeters.

“The management of equipment fleet seems to work like an air traffic control system,” Radford said.

Another improvement was the addition of a tails wash thickener procedure in 2002 that reduces the volume of chemicals used in gold recovery, including cyanide.

The planned heap leach will also improve the efficiency of Fort Knox in the future because it will enable more processing of low-grade ore.

“Heap leach processing is not new, but it will be new to Fort Knox,” Radford told the RDC.

Heap leach processing involves treating low-grade ore that is otherwise uneconomic with a cyanide solution to extract the gold. Currently the primary means of gold extraction at Fort Knox is a mechanical crushing process.

Heap leach facilities operate as a closed, or zero-discharge, system. All of the processing solution is contained within the pad and pond system and is continually recycled back to the processing facility to recover gold.

The heap, or pad, of stockpiled ore will not freeze even in the frigid winters of Interior Alaska, Radford said. The ore is stacked during summer, when temperatures are warm, and enough warmth is retained in the stockpiled material through the winter to prevent freezing, Radford said.

The circulating fluids will not freeze as long as they are moving, he said.

There are some problem areas at Fort Knox, including shortages of some types of supplies, Radford said. One problem is with rubber tires for large-wheeled equipment.

“There is a large tire crisis hitting every mining operator,” including Fort Knox, he said.

Still, the company is pleased with the performance of the mine. Fort Knox produced 330,000 ounces of gold in 2006, and its mill maintained an availability of 95 percent to 96 percent.

About 140,000 tons of material is moved daily at Fort Knox, and about 40,000 tons of gold ore are processed in the company's mill. Gold recovery from the ore averages 87.3 percent this year, slightly less than the 88.9 percent gold recovery from ore 10 years ago.

The company's environmental and safety records were excellent for 2006, with no notices of violations recorded or spills of a size requiring reporting to federal agencies, Radford told the RDC.

“There was one environmental issue we did encounter. During a routine inspection of the tailings impoundment dam a seep of about 10 gallons per minute was discovered,” Radford told the RDC. “Our seepage interceptor well system captured it, however, and there was no discharge. Our system worked, and we have since made repairs to the dam.”