Northern Dynasty eyes Alaskan porphyry

Vancouver — Major copper-gold porphyries typically occur in clusters and Northern Dynasty Minerals (NDM-V) is hoping that the area around its newly acquired Pebble Beach deposit in Alaska is no exception.

Lying some 380 km southwest of Anchorage, the Pebble deposit was discovered by Cominco, now Teck-Cominco (TEK-T) in the late 1980’s. Completely overburden covered, the grass roots find occurs in an area where no previously known mineral occurrences were known. The major started its exploration efforts in the region by targeting gold-bearing quartz veins several kilometres away from the eventual discovery. The gold showing was drilled by two holes in 1988, but failed to show the size and continuity required by the company. In keeping with Cominco’s practice at the time, geological examinations were carried outward from the prospect, which led to the discovery of other areas of weak silicification and iron alteration to the north. Rock debris sampling and wide interval geochemical sampling for gold were deemed disappointing. A review of regional geochemical results indicated nearby copper values in soils. An induced polarization geophysical survey subsequently outlined an anomaly indicative of a potential porphyry. Although no outcrops were found, sulphide mineralization was discovered in a few frost boils. In 1989, the last drill hole of the program cut copper-gold mineralization.

“This entirely new discovery was made through sound grassroots exploration and exploration geologists are to be congratulated for their efforts,” said Cominco’s vice president of exploration at the time, Owen Owens.

Attracted by the moderate terrain and reasonable access only about 95 km from Alaskan coastal waters, Cominco forged ahead with a widely spaced drill program over the pebble prospect from 1990 and 1992. Based on the encouraging results, preliminary metallurgical test work was initiated and the results showed typical copper-gold porphyry recovery rates of up to 94% for copper, 84% for gold and 78% for molybdenum. The mineralization is amenable to conventional floatation processing. The company then went on to complete preliminary design and engineering work that included identifying sites for processing facilities, accommodation, tailings storage, as well as evaluating power requirements, with adequate supplies of natural gas and coal available nearby.

In 1993, the company drilled four holes some 6 km south of the Pebble Beach prospect cutting wide spread porphyry-style alteration. By 1997, the major extended its geophysical survey outlining a large 55-sq-km anomaly and established an inferred resource for the pebble deposit of 1 billion tonnes grading 0.3% copper and 0.34 gram gold per tonne, based on 110 drill holes. Within the deposit is a higher-grade core containing 54 million tonnes grading 0.54% copper and 0.46 gram gold.

“We are interested in the core zone of the Pebble deposits,” Says Robert Dickinson, Co-Chairman of the Hunter Dickinson group, which inked a purchase agreement over the Pebble deposit earlier this year, “but really our focus is finding new deposits down the belt within the extensive geophysical anomaly.”

Excited by the size of the alteration system, HD staked additional ground southwest of the original claims and extended the geophysical anomaly to 89 sq. km. Evaluating the geochemical data in unison with the new geophysical survey, the company’s geologists defined 6 separate target areas over the 258-sq.-km project.

With the ground tied up and the targets in place, HD assigned the project to Northern Dynasty earlier this month.

Under the deal, Northern Dynasty can purchase the 36 claims covering the Pebble deposit by paying Teck Cominco US$10 million in cash or stock by Nov. 30, 2003, and purchasing HD’s 20% interest in shares at its independently appraised value. The first payment of US$250,000, plus 500,000 two-year warrants exercisable at 75 each, is due to the major by the end of the year. Once the purchase is complete, the junior has the rights to earn a 50% stake in the surrounding property by completing 18,290 metres of drilling before Nov. 30, 2004. A two-year extension is available at a cost of 100,000 shares per year. At that time, Teck Cominco can elect to enter into a 50-50 joint venture or sell its remaining 50% stake to Northern Dynasty for US$4 million and a 5% net profits interest.