During a recent investor seminar,
While exploring a porphyry prospect near Rainy Pass, 120 km northwest of Anchorage, Alaska, Kennecott Exploration, a division of the London-based major, uncovered two stages of copper-gold mineralization — one lower-grade and the other of “quite attractive” grade.
“We’re finding a lot of the lower-grade material,” said Tom Albanese, Rio Tinto’s chief executive of the copper group and head of exploration. “We’re now following areas of higher grade and determining how much of this we have on the Whistler prospect.”
Kennecott has drilled 12 holes to date into what Albanese describes as a deposit. He told analysts that each of these holes has intersected broad intervals of copper and gold. Preliminary metallurgical work shows much of the gold reports to a copper concentrate. Minor amounts of silver and molybdenum are present.
“A high-value product can easily and readily be produced,” Albanese said, adding that it is free of deleterious metals, such as arsenic, antimony, bismuth and lead.
The Whistler prospect is a Tertiary-Cretaceous age porphyritic andesite, which intrudes sedimentary rocks of the Mesozoic Kahiltna terrain. According to a 2004 year-end information circular published by the Alaska Division of Geological & Geophysical Surveys, mineralization had been previously identified as “stockwork chalcopyrite-magnetite quartz veinlets, with elevated gold values; vein and joint- controlled sulphide-barite-quartz mineralization; and chalcopyrite, with minor sphalerite, in silicified andesite.”
Kennecott has also defined eight other targets similar to the Whistler deposit in the surrounding district, which covers about 200 sq. km. Of the four targets so far tested, three have revealed copper-gold mineralization.
“If this project continues to develop, it will benefit from an attractive location not far from potential infrastructure, given the vastness of Alaska,” Albanese said.
Rio Tinto spends US$100 million annually on grassroots or greenfield exploration around the world.
“The primary objective of Rio Tinto’s exploration group is to make world-class mineral deposit discoveries,” Albanese said. “Our exploration targeting is very simple, we’re looking for long-life, premier-quality ore deposits, which can complement our existing businesses and create options for new businesses.”
The company is spending an additional US$40 million in 2005 on evaluating the feasibility of a number of projects, including the Rio Colorado potash project in Argentina, Resolution copper in Arizona and the Simandou iron ore project in Guinea, West Africa. Another US$55 million is earmarked for brownfield exploration. Recent accelerated field activities at the Pilbara-based iron ore mines, Kennecott Utah Copper, and other key operations account for the spending level.
By commodity, the two highest levels of expenditures are directed at copper and iron ore, accounting for 30% and 24%, respectively, of the total US$195 million being spent this year on exploration and evaluation. At a 14% share, diamonds come in third.
“There is no guarantee of success in exploration,” Albanese noted. “The business of exploration lies in selecting the right projects to be pursued at the right time.”
He added that another part of Rio Tinto’s growth strategy, and “successful exploration” in general, is “the creation of economic value, versus just the transfer of that value to a seller.”
Rio Tinto actively works with junior exploration partners. This “external collaboration,” Albanese said, results in exposure to new ideas, access to new ground, and allows the company to participate in the success of others. One such joint venture, with
At one prospect, drilling has defined a 1,500 by 250-metre open-ended zone of secondary enrichment overlying a lower-grade, copper-molybdenum-and-gold-mineralized porphyry. One of the better holes on the Kizilviran prospect returned 43 metres of enriched mineralization averaging 1.2% copper, 0.01% molybdenum and 0.18 gram gold per tonne. Recent mapping indicates the structurally controlled zone of secondary copper may extend for a further 1.5 km towards the southeast where alteration outcrops on a prominent ridge.
Resolution
Over the past five years, Albanese notes that Rio’s exploration division has had unrivalled success spanning a wide range of product sectors.
“I think we do a pretty good job in delivering value to Rio Tinto,” Albanese said.
The Resolution project in Arizona is one of the most significant copper discoveries in recent years. Exploration drilling conducted by Kennecott in 2001-2003 outlined a deep copper-and-molybdenum-mineralized porphyry deposit beneath the underground workings of the old Superior mine. Estimated to contain a preliminary resource of at least 1 billion tons averaging more than 1.5% copper, it may be one of the largest copper resources ever found in North America and possibly the world.
Resolution Copper, a subsidiary of Rio Tinto, became manager of the project in May 2004, after spending US$25 million in exploration to earn a 55% stake from
The Superior mine site is 80 km southeast of Phoenix, and 5 km east of the town of Superior. BHP acquired the historic producer through the takeover of Magma Copper in early 1996. The underground copper sulphide mine ceased operations later that year after reserves were depleted. The Magma mine and concentrator had originally reopened in 1990 (after being closed for about eight years) based on a revised mining plan of 1,500 tonnes per day, that used a much-reduced workforce to exploit 1.8 million tons of high-grade reserves averaging 6.87% copper.
In July 2001, Kennecott started a surface drill exploration program southeast of the Superior mine’s no. 9 shaft, the last production shaft before operations ceased in 1996. There had been earlier indications of significant grade intercepts based on old drilling done during the days of Magma from the underground workings.
Over a 20-month exploration period, Rio Tinto drilled 17 holes from five sites, at a cost of US$500,000 per hole. Holes were initially drilled with a rotary rig to a depth of 900 metres, followed by another 900 to 1,200 metres of core drilling. At each site, off-setting holes were wedged using a directional drill.
The new Resolution deposit is deep, sitting at more than 2,000 metres below surface, or 300 metres below sea level. As it stands, the deposit measures 1,800 metres long, 1,500 metres wide and 200-450 metres thick.
The geology of the Resolution deposit is consistent with high copper grades and shares features with some of the largest copper deposits in the world (such as Butte and Chuquicamata), according to a technical paper submitted by Sandra Troutman at the Society for Mining, Metallurgy and Exploration (SME) in 2002. The paper says: “The upper kilometre of the deposit, pervasively sericitized and with abundant pyrite and later bornite-chalcocite, is overprinted by advanced argillic alteration with kaolinite, dickite, and less alunite, topaz, pyrophyllite and zunyite. The vein-controlled, high sulphidation assemblage pyrite + chalcocite correlate most strongly with advanced argillic alteration and copper grades greater than 10%.”
Adds the report: “The discovery of this style of porphyry ore in the southwestern U.S. should serve as an incentive for renewed exploration efforts there.”
As part of a comprehensive 5-year, US$200-million feasibility study, a second phase of core drilling began in February of this year. Using two rigs, the focus is on gaining additional data on the grade and distribution of mineralization, and evaluating potential sites for a new shaft.
Albanese say
s the company hopes to open one of the old shafts next year and start construction of a second shaft.
The Resolution project faces several technical challenges. Where the deposit is deeper, temperatures are very hot (up to 170 Fahrenheit) and ground pressure exceeds rock strength creating a high stress environment.
“All of these factors have been mastered elsewhere in the mining industry, but not all three at once,” said Bruno Hegner, vice-president and general manager of Resolution in Rio Tinto’s June Review publication. “Plus we have to be able to bring the ore to surface at the rate we need in order to make the project viable.”
Underground block caving is considered to be the only viable mining option.
At the old Superior mine site, Magma is said to have installed the first underground air refrigeration plant in the U.S. to cool workers because of geothermal hot spots.
Conceptual studies suggest the Resolution project could produce more than 400,000 tons copper annually during an expected lifespan of at least 25 years. If the mine is developed, costs are expected to exceed US$1.5 billion. There are no plans for on-site smelting. The Resolution project is still in the early stages of evaluation; should the project prove viable, production is not expected to start before 2014.
There are also conflicting land use issues, which Resolution Copper hopes to have resolved to the satisfaction of all stakeholders. The former mine site and the town of Superior are nestled in the uplands beside the protected Tonto National Forest. Rio Tinto and its predecessors currently own private land in the immediate and surrounding areas of the proposed mine development. In addition, the company has filed and maintained numerous mining claims dating back to 1917.
Resolution Copper hopes to trade more than 19 sq. km it owns or controls, some of higher conservation value and better suited to recreation, in exchange for 13 sq. km of federal lands the company needs to move forward with the feasibility studies.
The proposed underground mining activities could conflict with recreational uses of the surface lands. The joint venture is working with local communities to reach agreed objectives. In addition, the company is working with recreational and other user groups to address their needs and ensure they have opportunities to enjoy the outdoors.
Environmental baseline studies have been under way for the past several years and are ongoing.
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