Exploration inAlaska up by 19%

A review of exploration activity in Alaska for 1990 shows spending increased 19% to US$56.7 million from the previous year’s US$47.8 million. Three gold projects near Juneau, all in advanced stages of development, accounted for almost half the total 1990 expenditure. These include: the Kensington property jointly owned by Echo Bay Mines (TSE) and Coeur d’Alene Mines (NYSE); the AJ/Treadwell project 85% owned by Echo Bay; and the Jualin project 60% owned by International Curator (VSE) and 40% by Granges (TSE). Placer Development (TSE) is earning a 50% interest in the Jualin project from the two companies.

The Kensington deposit, about 45 miles north of Juneau, has proven and probable reserves of 12.8 million tons grading 0.15 oz. gold per ton and is comprised of a vein system averaging about 50 ft. in thickness over its 1,600-ft. strike length. The deposit extends to a known depth of about 2,800 ft. A formal production decision on the project awaits completion of the permitting process which should be completed by end of 1991.

The capital cost of the project is estimated at US$170-180 million. If all permits are received, it will produce in the order of 200,000 oz. gold per year beginning in mid-1993. Cash production costs at the operations are estimated at about US$225 per oz.

Echo Bay’s 85% owned A-J deposit is under the Gastineau Peaks adjacent to Juneau. The deposit is estimated to contain proven and probable reserves of about 63.5 million tons grading 0.052 oz. gold per ton with reserves in all categories totalling over 100 million tons at a similar grade.

Gold mineralization occurs in a wide zone of narrow vein swarms. The zone varies in width from 70 ft. to 700 ft., extends for a vertical extent of 4,000 ft. and is in excess of one mile in length.

Echo Bay hopes to receive permits for the project by year-end although environmental opposition is strong.

Development plans call for a 22,500-ton-per-day operation with the entire mill facilities contained underground to minimize physical impact. The greatest stumbling block appears to be the tailings disposal.

According to state law, the company cannot use the preferred submarine disposal, the tails would have to be stored on surface which some public groups oppose. Observers point out, however, that the Government of Alaska has generally taken a pro-development stance on mining projects in the state.

Ironically, the city of Juneau’s origins can be traced back to the original mining operations at the A-J. The mine produced over three million ounces gold from 1901 to 1943 at a mining rate of about 13,000 tons per day.

During 1990 Echo Bay also did some deep drilling at the Treadwell mine about 2.5 miles southwest of the A-J. Treadwell, also a former producer, operated from 1886 until a cave-in flooded the mine in 1916. The operation mined 15.2 million tons of rock at an average grade of 0.12 oz. gold per ton during its life.

Echo Bay drilled a 5,000-ft. hole to intersect the Treadwell structure below the deepest workings as well as a number of wedge holes but no results were released. The company said the program was done to meet work commitments on the property and no exploration is planned for the current year.

At the Jualin deposit, a few miles to the southeast of the Kensington, Placer is earning a 50% interest from partners International Curator Resources and Granges by spending a total of $7 million by August, 1992. To date, Placer has spent about US$3.1 million with the primary objective of locating wide, bulk minable mineralized zones similar to the Kensington. Although work to date has primarily encountered narrow, high-grade gold- quartz veins, drilling in 1990 returned a number of low-grade intersections over wide widths on the Empire zone.

Placer is planning a US$625,000 program beginning in May including about 7,000 ft. of diamond drilling designed to test a number of targets identified by magnetic and surface geochemistry programs completed last year.

Development expenditures in Alaska fell in 1990 to US$9.4 million from US$134.3 million in the previous year as a result of both the Red Dog mine and the Greens Creek mine moving from development stages to production.

The Red Dog zinc-lead-silver mine in northwestern Alaska shipped 320,000 tons of concentrates during the year, or about half its design capacity. The mine is owned by the American subsidiary of Cominco (TSE) and the local Native corporation.

The Red Dog mine is a 2.1-million-ton-per-year open pit operation which at full production is expected to produce about 700 million lb. zinc, 180 million lb. lead and 4 million oz . silver per year. Reserves at the mine were last reported at 85 million tons grading 17.1% zinc, 5% lead, and 2.4 oz. silver per ton.

The Greens Creek operation, located on Admiralty Island near Juneau, Alaska, is owned 53% by Kennecott, 28% by Hecla Mining (NYSE), 6% by CS Oil & Gas and 13% by Exalas Resources.

Reserves at Greens Creek were last reported at 2.9 million tons grading 21.4 oz. silver and 0.19 oz. gold, plus 3.4% lead and 8.4% zinc. The mine produced about 7.6 million oz. of silver, 38,000 oz. gold, 37,000 tons zinc and 16,500 tons lead in 1990.

The Fairbanks area in central Alaska was also active during 1990 with two major projects; the Fort Knox project, and to a lesser extent, the Ester Dome. MDBO Fairbanks Gold (VSE), 51% owner of the Fort Knox property, is developing a large low-grade gold deposit with preliminary reserves of 100 million tons grading 0.048 oz. gold per ton at a cutoff grade of 0.02 oz.

Although Fairbanks has its interest in the project up for sale, the company is planning to continue with the development of the project including initiating a full feasibility study this year.

The balance of the Fort Knox property is owned by Ventures Trident II and a private individual. The Ester Dome project is a 80-20 joint venture between a subsidiary of Inco (TSE) and Silverado Mines (VSE).

Ester Dome was in production for a short time in 1985 at about 100 tons per day and again in 1988 but did not prove economic. Gold mineralization on the property occurs in steeply dipping quartz veins as well as in wide low-grade shear zones.

Inco spent about $1.5 million on the property last year drilling 20 holes (including wedges) on each of the O’Dea vein and the Ethel-Elmes structure.

The O’Dea vein is a high-grade, steeply dipping quartz vein, averaging 6-10 ft. in width with recent assays in the 0.5- oz.-per-ton range. The Ethel is a broad, low-grade shear zone where one hole returned a 72-ft. intersection grading 0.069 oz. gold per ton. Full assays from the Ethel have not yet been released and Inco has not announced budget plans for its next phase of exploration.

About 14 miles north of the Red Dog mine, Echo Bay Mines and Moneta Porcupine Mines (TSE) have a 50-50 joint venture on the LIK deposit which has preliminary reserves of 18 million tons grading 10% zinc, 3% lead, and 1.5 oz. silver. Moneta can dilute Echo Bay to a 20% interest by spending US$25 million. The company plans to spend about US$250,000 on the property this year including further metallurgical work and a prefeasibility study. Moneta hopes to have a major mining company as a joint venture partner for the property.

The LIK deposit does extend on to the surrounding ground owned by Cominco but that company does not have any plans to immediately develop the property and is only completing the necessary assessment work to keep its claims in good standing.

Placer mining continues to be a major source of gold production in the state, totalling 192,800 oz. during 1990 from some 216 placer mining operations.