Greens Creek, Kensington mines expanding production

Minerals prices are still low but Alaska’s producing mines are doing well, for the most part.

Two underground mines near Juneau, the Greens Creek Mine on northern Admiralty Island and the Kensington Mine at Berner’s Bay north of the capital city, both showed increases in production and improved efficiency.

Hecla Mining Co., which owns Greens Creek, said production of silver at the mine was up 10 percent in the second quarter of 2015 compared with the same period of 2014.

Gold production dropped at the mine but silver is the more important metal in the ore being mined. Greens Creek also produces zinc and lead. A key element in the higher silver output was improved recovery of the metal in the Greens Creek process mill, the company said.

“Higher grades and recoveries at Greens Creek during the quarter continued to improve the mine’s already strong performance,” said Hecla President and CEO Philips Baker Jr. in a statement issued with the quarterly report.

Mike Sarte, Hecla’s manager of Alaska external relations, said the improved recovery is a “game changer” for Greens Creek.

“This is very significant. Historically most mines produce higher grades first and then the grade trends lower,” as lower-quality ore zones are tapped, he said. “In this case, while we can’t control the grade of the ore we can control how we process it. Changes in the mill process have increased silver recovery.”

In another development at Greens Creek, Hecla has started work on the long-planned expansion of its tailings storage facility. All permits are now in hand for the expansion and SeCon, a Southeast Alaska construction company, has been contracted to do the work and removal of surface overburden is now underway.

The $44 million expansion, which will cover 18 acres, will take three years to complete. The larger tailings facility will be sufficient to support Greens Creek until 2027 to 2028, and Hecla has already started discussions on another expansion after that, which would further extend the life of the mine.

Greens Creek now employs about 413 workers, most who live in Juneau, with a $62 million annual payroll.

At the Kensington Mine, which produces gold, the volume of ore mined averaged 170,649 tons in the second quarter of 2015, up from 163,749 tons in second quarter 2014, and gold production increased to 29,845 ounces compared with 28,089 ounces in second quarter 2014.

The average gold grade was the same in both periods, at 0.18 ounce per ton, but the gold recovery rate, in the process mill at the mine, improved slightly to 94.9 percent in second quarter this year from 94.5 percent in the same period of 2015.

The big news for Kensington is that the mine is expanding into the nearby Jualin deposit, with work on access the deposit beginning in July. When mining from Jualin is fully ramped up in 2018 the total Kensington gold production is expected to reach 149,000 ounces annually, up 26 percent.

Operations at the underground Pogo gold mine near Delta, in Interior Alaska, are proceeding normally this year except for challenges with forest fires this summer, which blanketed much of the Interior with smoke.

“In some weeks we had smoke at the mine no matter which way the wind was blowing,” said Lorna Shaw, spokeswoman for Sumitomo Metal Mining, the owner and operator of Pogo.

One fire broke out five miles from the mine and grew to 1,000 acres until being controlled by state Department of Natural Resources crews with the assistance of Pogo staff. The fire did not threaten mine operations, however.

Pogo is approaching two important milestones. The mine will reach the 3-million ounce production threshold late this summer, and is also close to operating for two years without a lost-time accident, Shaw said.

“This achievement will be a first for Pogo and it takes dedication and hard work from every single employee to make sure we achieve it,” she said.

The mine employs about 315 workers directly as well as another 150-plus contractor employees, Shaw said.

At the Fort Knox gold mine near Fairbanks, Kinross Gold, the owner and operator, is on track for 2015 production at about the same level as 2014, according to spokeswoman Anna Atchison. The mine currently employs about 660, she said.

Milestones for this year include the company’s purchase of two new 793F haul trucks in the first quarter of the year. Fort Knox is also investing in improvements of its ore process streams to include construction of a new process solution booster pump station, she said.

“As part of our overall drive for further efficiencies and cost reductions in a tight gold price environment, we recently increased haul truck payloads by 7 percent and cut shift change times by an impressive 23 percent in the first quarter alone,” Atchison said.

“At the Usibelli coal mine near Healy, production is down this year because of slipping export sales of coal, but sales of coal within Alaska, the bulk of it for power generation, remain strong.

Total coal production for 2015 is expected be approximately 1.4 million tons for but it could still be a bit higher, Usibelli Coal Mine, Inc. spokeswoman Lorali Simon said. “We’re still working to do more export sales.”

The domestic Alaska coal market appears stable at about 1 million tons per year but exports in 2015 may slip from about 600,000 tons in 2014 to 400,000 tons this year, she said. The strong U.S. dollar makes Alaska exports expensive and is hurting export sales, she said.

Other factors include the opening of a new coal mine in Chile that is cutting in that market for Alaska and South Korea’s imposition of an import tax on coal for utilities in that nation. South Korea has been a traditional customer for Usibelli.

The company employs about 115 full-time workers at its mine near Healy, Simon said.

In a new development, a state administrative appeals officer has sided with the Department of Natural Resources in awarding Usibelli renewals on coal mining leases at the Wishbone Hill coal deposit near Palmer, which the company hopes to develop. Opponents of the mine may file a lawsuit, however.

If Wishbone Hill is developed it would produce about 500,000 tons per year and employ 75 to 125 people.

09/23/2015 - 3:28pm