The number of producing hard rock mines in Alaska may soon double, growing from three to six and bumping up gold production in the state by an estimated 250,000 ounces per year.
That's according to plans outlined Nov. 5 at the Alaska Miners Association's annual convention by developers of the new Rock Creek gold project near Nome, the shuttered underground Nixon Fork gold-copper-silver mine near McGrath and the reopened Kensington gold project north of Juneau.
Of the three projects, metal production may first begin in late 2005 at Nixon Fork, a small, high-grade underground mine shut down since 1999.
Paul Jones, president of Mystery Creek Resources Inc., outlined his company's plans to restart production at the remote facility, located roughly 35 miles northeast of McGrath in western Interior Alaska. The property is accessible by air transportation, although in the future the company is considering a plan to haul out concentrate ore over a winter trail.
Mystery Creek, a wholly owned subsidiary of publicly traded St. Andrew Goldfields Ltd., a Toronto-based mining and exploration firm, acquired the Nixon Fork property and mining claims in February 2003, Jones said.
The company hopes to receive permits and to begin reprocessing tailings from the shuttered operation in 2005, Jones said. "We think there is 30,000 ounces of recoverable gold in the tailings ... a good kick-start for production next year."
In the meantime, Mystery Creek is working to receive regulatory approvals to restart underground mine production and install a new processing method to produce gold-silver ingots, hopefully in 2006. The company plans to split the process circuit, adding a gravity circuit and leaching out the copper mineralization, leaving gold and silver to be poured into bars for shipping. The remaining copper material would be stored for future removal, Jones said.
Previously, Nixon Fork ore was ground up on-site, producing a bulk sulfide concentrate containing copper, gold and silver. That material was shipped in one-ton super sacks by air from Nixon Fork to Palmer, and then to Japan for refining.
Producing gold-silver ingots will provide "better overall economics" for the project, Jones said. "We plan for production in 2005 of about 40,000 ounces and ore production in 2006 of about 50,000 tons, at an average grade of one ounce per ton."
Nixon Fork contains an existing indicated resource of 71,900 ounces, and an inferred resource of 64,400 ounces. Average grade is about one ounce of gold per ton of rock, Jones said. The mine grade during the final year of production averaged 1.3 ounces of gold per ton of rock.
"We are currently working to upgrade most of the indicated (ounces) to reserves and start moving the inferred to indicated, plus adding what we are finding in this year's drilling," Jones said.
Results from recent drilling produced some "pretty nice grades, but the intercepts in these chutes are not as big as we'd like them to be," he said. Bonanza-types of gold grades were reported, including a 1.4 meter interval that assayed 600 grams, Jones said.
Previous Nixon Fork operator Consolidated Nevada Goldfields Inc. started production in 1995, building a 165-ton-per-day ball mill, a 50-person camp and a tailings dam and water containment system. Real del Monte Mining Corp. took over the 60-person operation in 1998. The mine finally shut down in mid-1999.
Kensington awaits final approval
Other gold production may come from the Kensington gold project in Southeast Alaska, about 45 miles north of Juneau. Developer Coeur d'Alene Mines is seeking final regulatory approval to build an underground hard rock gold mine at Kensington and a mill facility capable of processing 100,000 ounces of gold each year for 10 years.
Kensington is an old underground mine that produced earlier this century, but has been closed for years. Coeur's project essentially creates a new mine at the site.
A final regulatory decision from the lead agency, the U.S. Forest Service, is now scheduled to be released Dec. 10. The decision is delayed from a previous mid-November date, according to Tim Arnold, vice president and general manager of Coeur Alaska.
"Once we have a Record of Decision, the company is absolutely committed to this project," Arnold said Nov. 5. "We have the money in hand to start this mine."
The company anticipates construction to take about 18 months, with gold production slated for 2006, he said. "We foresee lots and lots of construction next summer."
Current reserves at Kensington contain about 1 million ounces of gold, with an average grade of .25 ounces of gold per ton of rock. Additional higher grade mineralization has been identified at the underground deposit, a resource estimated 7.3 million tons grading .26 per ounce, or 1.9 million ounces, Arnold said.
The company plans to drive a one-mile-long drift, or underground tunnel, between the Kensington workings and those in the historical Jualin deposit. Mineralization between the two deposits, and that in the Jualin deposit, has not been counted in the mine's current development plans, Arnold said.
Previously released estimates of construction costs are $91.5 million, with projected cash operating costs of $220 per ounce of gold.
Rock Creek may produce by 2006
A third project that may soon produce gold is Rock Creek, located just a few miles north of Nome. NovaGold Resources is developing Rock Creek, estimating annual production of 100,000 ounces of gold. The company spent $5 million on the property this year to advance it to the permitting stage.
Of that, roughly $2 million was for geological work and $3 million for engineering and environmental work, according to Doug Nicholson, NovaGold vice president and Rock Creek project manager.
The company signed a memorandum of understanding with state regulators, formally initiating the permitting process, announced in a Nov. 16 press release. NovaGold anticipates submitting its environmental assessment, plan of operations and reclamation plan before the end of the year, with a feasibility study scheduled to be completed in the first half of 2005. A new resource model and calculation is scheduled to be released early in 2005.
"We hope to be in construction next summer ... and producing in 2006," said John Odden, chief geologist, during his presentation on Rock Creek during the AMA convention.
A preliminary economic assessment study of Rock Creek has identified a potential gold mine that would produce more than 100,000 ounces per year with a total cash cost of about $200 per ounce of gold.
NovaGold anticipates an open-pit, year-round mine and milling operation, processing about 5,000 tons of material a day, with a 4-1 strip ratio. Overall recovery with a gravity floatation plant is projected at 96 percent.
Past exploration has identified a gold resource containing more than 1 million ounces of gold at Rock Creek and the adjacent Saddle deposit. Both deposits are open along strike and down dip.
This year, NovaGold completed 1,000 meters of trenching on the property, as well as nearly 4,000 meters of core drilling and about 1,930 meters of reverse circulation drilling.
The company also completed this summer about 1,355 meters of core and 1,460 meters of reverse circulation drilling on the Big Hurrah property, located about 50 miles east of Nome, a property NovaGold acquired in 2002, Odden said.
This summer's $1.3 million budget for Big Hurrah is NovaGold's first look at the property, Nicholson said. Should a mineable resource be identified, ore could be mined and trucked to Rock Creek processing facilities.
