Metals prices low, but mining projects still see progress

Progress is being made on several Alaska mining projects despite low metals prices.

In Southwest Alaska, a summer drilling program at the large Donlin Creek gold project has confirmed more high-grade gold resources, and Novagold Resources Inc., of San Jose, Calif., says the information will allow it to develop gold resource estimates as well as a pre-feasibility development scoping study this winter.

Both will be done by mid-March 2002, the company said. The scoping study could lead to an engineering pre-feasibility study, an important step in the development of the project.

In Southeast Alaska, Coeur Alaska Inc. officials have told Juneau community leaders they intend to initiate a permit effort for the Kensington Mine redevelopment, a major gold project on Berners Bay north of Juneau.

Kensington had been approved by federal, state and local agencies, but the permits issued are for a development plan that requires onshore tailings disposal and storage that would be too costly under low gold prices.

Coeur, the project developer, has a new, lower-cost alternative tailings disposal plan, but it will require new permits. Juneau Mayor Sally Smith said she has been told the company will file for a supplementary environmental impact study in mid-November.

In eastern Interior Alaska, Ventures Resource Corp., a mining exploration company, announced finding significant base metals mineralization in ore samples from two properties in the Fortymile River area, the Fish and Little Whiteman prospects.

Twenty samples taken at Fish show zinc values of more than 6 percent, with five samples exceeding 20 percent and three others between 10 percent and 20 percent.

In contrast, the Red Dog Mine in northwest Alaska produces ore that is 18 percent to 20 percent zinc, which is considered a good grade, according to independent geologists.

Samples taken at Little Whiteman showed lead-zinc values ranged from 6 percent to 40 percent and silver values ranging to 13 ounces per ton.

The company said it is preparing a drill program for both prospects for the 2002 season and is soliciting partners in the project.

Independent geologists cautioned that while the prospect deserves further work, a few high-value samples dont indicate an economic mine by themselves. What is important is determining the extent of the mineralization and the range of ore grades extending through the area.

Donlin Creek, meanwhile, is of great significance for its landowner, Calista Corp., the Alaska Native regional corporation for Southwest Alaska. With gold resources estimated at more than 10 million ounces, the mine would be one of the largest gold mines developed in the state if it went into production.

Novagold took over as operator last year from Placer Dome, which holds the lease on the property with Calista. Novagolds strategy in its 2001 exploration program was to drill and expand the gold resource at a known high-grade zone in the ore body.

Novagold announced results from its 2001 drilling in midsummer and again on Oct. 25. Both reports confirmed the presence of high-grade ore.

The hope is that even with gold prices low, the high-grade zone may support a small-scale development that would ultimately expand once the mine was in production, according to Jeff Foley, a minerals geologist with Calista.

Donlin Creek faces other challenges, however. The ore process that will be needed requires large amounts of electricity.

A Calista subsidiary is working on a regional power development plan that would include coal-fueled power plants generating electricity, including one near Donlin Creek.

Donlin Creek could be a major employer in the Calista region, an economically depressed part of the state. Since 70 percent of Native corporation mineral royalties are shared with other Native regional corporations, all Alaska Natives would benefit from Donlin Creek development.

The Kensington Mine near Juneau would also become a significant local employer if the mine is developed. Estimates are that more than 200 production jobs would be created by the mine.

The development plan approved under current permits provide for onshore storage of tailings behind a large earth retaining structure. The capital cost required for this makes the mine uneconomic under current gold prices, company officials said.

The companys new plan involves tailings disposal in a small nearby lake and is considerably less expensive. That, along with efficiencies in operations, means the mine could be economic even with gold markets at relatively low levels.

11/04/2001 - 8:00pm