Miners like Alaska’s ‘pro-development’ strategy

After more than 16 years of state government ambivalence on resource development, the Alaska Miners Association is welcoming initiatives by a new “pro-development” administration looking to improve the climate for doing business in the state. During the association’s recent meeting here in the state capital, government officials outlined details of Governor Walter Hickel’s new strategic plan aimed at “positioning Alaska for the 21st century.” It contains measures to promote resource development carried out in an environmentally sound manner, including large-scale mining projects.

Mining companies have found resource development tough going in Alaska in recent years because of government ambivalence, escalating costs of environmental and regulatory compliance, a lack of infrastructure, and a steadily declining land base available for exploration.

The land use issue is a particularly touchy one in that huge portions of the state have been effectively removed from mineral exploration, and preservationist groups are still seeking the creation of additional parks and wilderness areas.

“The Sierra Club thinks it owns Alaska,” said Neil MacKinnon, president of the Alaska Miners Association. “They forget there are people up here trying to make a living.” MacKinnon points out that of Alaska’s total 365.5 million acres, 174.4 million acres are closed to mining, leaving 191.1 million acres open for exploration. Most of the lands were removed by the federal government in the 1970s during Jimmy Carter’s administration.

Federal lands total 215 million acres, with only 49.6 million acres left open to mining. State lands total 104.4 million acres, with 95.9 million acres open to mining. And private lands, including those held by native corporations, total 46.1 million acres, with 45.6 million acres open for mining (native lands are open to mining if leased from native corporations).

MacKinnon thinks, however, that huge land lockups are a thing of the past. He also points out that in contrast to Canada, the uncertainty once created by native land claims has long since been resolved.

Alaska is considered to be underexplored, with potential for grassroots discoveries such as Cominco’s (TSE) impressive Pebble Beach copper-gold deposit near Anchorage. No stranger to Alaska or to its mineral potential, Cominco appears to seeing the glass as half full rather than half empty.

The Alaska Miners Association will also be turning its attention to issues that will enable the mining industry to take root and flourish in the state. Five years ago, MacKinnon notes, Alaska had no major operating mines.

The state currently has two relatively new, sizable producers the Red Dog open pit north of the Arctic Circle and the Greens Creek underground mine near Juneau. Both polymetallic mines are joint ventures developed by major mining companies.

But a number of advanced projects are in the development and permitting phase throughout the state, including several gold projects in the mineral-rich Juneau gold belt.

Former producers in the district have produced more than 6.7 million oz. gold, 3.1 million oz. silver, and 45 million lb. lead. The vast bulk of this production came from the historic Treadwell and Alaska-Juneau mines. Both were the largest and lowest-grade gold mines in the world when they were active.

Current activity along this mineralized trend is largely focused on a number of past gold producers or known showings, but state geologists feel the belt has significant exploration potential for new discoveries that would include a variety of mineral deposit types. (Unfortunately, the Bureau of Mines estimates that one-third of the district is covered by parks, preserves or wilderness areas where mining is prohibited or restricted.) The Juneau belt was an important focus for the mining conference because of its exploration potential and because of several new projects in the mine development stage.

For example, Echo Bay Mines (TSE) is proposing reopening the A-J mine at a rate of 22,500 tons per day using low-cost bulk mining techniques.

The underground operation is targeted to produce 367,000 oz. gold annually from proven and probable reserves totalling 63.6 million tons averaging 0.052 oz. gold. The deposit also contains a further 42.1 million tons averaging 0.05 oz. gold, as well as potential untested by drilling.

Because the mine is just a few miles from Juneau, a “green” community where government (state, federal and local) employs approximately one of every two Juneau workers, there has been some local opposition. But that is slowly being overcome as residents learn more about modern mining practices.

Echo Bay carried out a limited deep drilling program at the nearby Treadwell mine, and it is also operating the more advanced Kensington project north of Juneau, a joint venture with a unit of Coeur d’Alene Mines (AMEX).

The underground deposit has minable reserves reported as totalling 12.5 million tons grading 0.148 oz. gold.

A 4,000-ton-per-day mining and milling operation has been proposed for a production rate of 200,000 oz. gold annually over a minimum 10-year mine life.

The Alaska Mining Association is supportive of Echo Bay’s efforts near Juneau, and is optimistic the company’s success will make it easier for other mining companies to develop projects in the state.

But if the association’s recent conference is any indication, most of the new projects will be developed by well-heeled majors. Both Canadian and U.S. majors appeared to be well represented, but juniors were feeling the pinch of current financing conditions.

A number of the majors were said to be looking for bargain basement-priced silver deposits in Alaska and elsewhere. That surprised some, but not those who remember the same majors buying copper projects in the U.S. when prices for the red metal went into a prolonged slump.

Conference Juneau wasn’t restricted to discussion of Alaskan mining projects. One of the sessions was devoted to Canadian projects in neighboring Yukon and British Columbia.

Noranda’s unique Brewery Creek gold deposit in the Yukon generated plenty of interest, as did Placer Dome’s huge Mt. Milligan gold-copper deposit north of Prince George, B.C.