Mining at Ambler district advances, as does road

  • Trilogy Metals Inc., formerly NovaCopper, is moving toward engineering and permitting at the Arctic deposit in Northwest Alaska. (Photo/Courtesy/Trilogy Metals Inc.

After a brief timeout in 2015 for monetary considerations, progress is being made on both ends towards development of the metal-rich Ambler mining district.

Trilogy Metals Inc., formerly NovaCopper Inc., is in the midst of evaluating the results from its $5.5 million 2016 summer drilling program at its Northwest Alaska prospect.

While any drilling that contacts the metal veins helps further define the resource base, Trilogy Metals CEO Rick Van Nieuwenhuyse said in an interview that the recent work focused on gathering pre-permitting environmental and engineering data.

“It’s all geotechnical (drilling) for pit slope stability, hydrology and metallurgy, and then the fourth component is what we call waste rock characterization,” Van Nieuwenhuyse said. “We spent many, many years now studying the ore and now we have to study the rest of the rock.”

Vancouver-based Trilogy Metals changed its name in September from NovaCopper to more accurately reflect the multi-metal resource it is pursuing, according to a company statement.

The recoverable value is mostly in copper, at about 65 percent, but about a quarter of the resource value is in zinc and another 15 percent is precious metals — silver and gold — with very small amount of lead, Van Nieuwenhuyse described.

For more than a decade the company has focused its work on the Arctic deposit, one of several prospects in the broader Ambler mining district, which stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage.

The well-defined Arctic deposit holds more than 1.7 billion pounds of indicated copper at an average resource grade of nearly 3.3 percent. It also has 2.3 billion pounds of zinc at 4.4 percent, 40.8 million ounces of silver and 550,000 ounces of gold, according to Trilogy Metals. If developed, it would be an open-pit mine with an initial 12-year life and a startup cost approaching $720 million based on preliminary estimates.

Van Nieuwenhuyse said the company is pushing to develop Arctic first, but it also has another highly prospective deposit, known as Bornite, not far to the south.

Trilogy Metals will “definitely be out in the field next year,” he added, but what exactly the work program will entail still needs to be hashed out by the company’s board of directors sometime in the first quarter of 2017.

“We’ve only drilled three years there and in that three years we’ve outlined over 6 billion pounds of copper with not a lot of drill holes,” Van Nieuwenhuyse said of Bornite.

The Arctic work is leading up to a multi-year pre-feasibility study and permitting process, the plans for which should also be clearer as spring approaches, he said.

Ambler road

Building any mine in the Ambler corridor is contingent upon also building a road to get to it in one of the most remote parts of the state, a task that has been left to the state’s Alaska Industrial Development and Export Authority.

AIDEA’s current plan is to construct a 220-mile gravel industrial access road that would skirt the southern edge of the Brooks Range and connect to the Dalton Highway east of the Ambler area. Use of the road would mostly be restricted to mining activity, but it could also help provide lower-cost energy and other goods to villages clustered near both ends of the proposed route, proponents note.

To date, the State of Alaska has spent $26.2 million studying the project, money approved in capital budgets since 2011. The “Ambler road” was a large part of former Gov. Sean Parnell’s statewide Roads to Resources initiative.

Critics of the project contend the state shouldn’t be spending public money on what would ostensibly be a private road.

Additionally, residents of the villages near the route have been vocal opponents — more so of the road than mines — arguing it would impact caribou herds that migrate through the area and are a vital subsistence food source.

While state general funds have supported the project to this point, money for actual construction, which AIDEA estimates at between $305 million and $346 million, would be financed by the authority and recouped through tolls paid by Trilogy Metals or any other companies that develop resources in the area.

The plan is very similar to the Red Dog mine-DeLong Mountain Transportation System operation that development proponents have touted should be a model for other isolated resource prospects in the road-scarce state.

AIDEA anticipates it would net up to $150 million from an Ambler toll road even after accounting for another $270 million in maintenance costs over the 30-year life of the road — on the expectation Trilogy’s 12-year Arctic deposit would be one of several mines to spring up after the road was built.

AIDEA spokesman Karsten Rodvik said the authority filed its EIS application with the Bureau of Land Management earlier this year. The application was deemed complete in September and the state and federal agencies are in the process of revising the scope of work for the broad permitting document, according to Rodvik.

Concurrently, the National Park Service will be leading an environmental and economic analysis.

The vast majority of the road corridor is on state and Alaska Native corporation land, but it would also have to cut through a small portion of Gates of the Arctic National Park and Preserve. Long eyed for its mineral potential, a right-of-way to the Ambler mining district through the federal park was included in the Alaska National Interest Lands Conservation Act, or ANILCA, passed by Congress in 1980.

The actual Ambler mine prospects are on state and NANA Regional Corp. property.

In October 2015 Gov. Bill Walker approved AIDEA to spend $3.6 million left from the prior capital appropriations to the Ambler road after “pausing” it and other large projects the state had undertaken to review their necessity and financial viability while the state is mired in $3 billion-plus annual budget deficits.

AIDEA has said it would likely need another $6.8 million to finish the EIS, but given the state’s financials it’s hard to envision another capital appropriation to get the money.

Those opposed to the state spending more on the project have said Trilogy Metals should pay for the rest of the work, but the company has declined to commit to the obligation. Van Nieuwenhuyse has said Trilogy Metals would contribute through the tolls, also noting the company doesn’t want to pay to permit the road that could be used by other companies in the future.

The company is happy with the path AIDEA is on now, he said.

A source close to the project said AIDEA is tentatively planning to self-finance the rest of the EIS with its own funding mechanisms.

Rodvik said the $6.8 million figure “is relevant, but that can change pending the scoping outcome.” He added, “We will look at potential funding next steps once the scoping portion of the EIS process is completed.”

12/22/2016 - 10:53am