Alaska 2004: mining in review: exploration, development and production are going strong around the state, promising new jobs and revenue for Alaska.

One of the most bizarre years in Alaska's recent mining history is in full swing and only the snows of winter are likely to slow the pace of exploration, development and production around the state. In addition to the usual problems of who's AWOL after the 4th of July break, how come the drill didn't hit ore and what needs fixed in the mill now, Alaska also has been struggling with raging fires that have consumed over 5 1/2 million acres of land, including at least one mineral exploration field camp. The fires also slowed mine construction, shut down more than one mining operation, commandeered helicopters from field programs and limited fixed wing traffic due to poor visibility. The fires were fueled by an unusually dry and warm summer for virtually all of the state and resulted in water shortages in places like normally soggy Ketchikan and Petersburg. Add to that the unusual problems of limited drill and helicopter availability and chronic manpower shortages and you have some idea just how odd high summer has been in the Great Land. Exploration hot spots for 2004 include Southwest Alaska, Interior Alaska, Central Alaska Range and Southeast Alaska. Several Brooks Range projects re-opened interest in this long ignored part of Alaska. Commodities of interest in Alaska include gold, silver, copper, lead, zinc, molybdenum, nickel, diamonds, platinum and palladium. With sustained strong metals prices, Alaska's operating mines are enjoying a long overdue period of strong cash flow, much of which will be ploughed back into mine and mill plant upgrades and mine-site exploration efforts. Several new major and junior mining companies have added Alaska properties to their portfolios and six de posits (Pogo, Donlin Creek, Rock Creek, Pebble, Nixon Fork and Kensington) are in various stages of development, promising new jobs and revenue for Alaska in the near future.

WESTERN ALASKA

Teck-Cominco's Red Dog mine has enjoyed both higher zinc and lead prices and higher ore grades in the first half of 2004 on its way to a first half profit of $48 million. For the first half of 2004, the mine generated 269,200 tonnes of zinc in concentrate and 52,100 tonnes of lead in concentrate. Zinc prices average 48 cents per pound, up 33 percent over a year ago. Aver age zinc and lead grades mined were 22.5 percent and 5.9 percent. Mill throughput was lower than anticipated due to excessive scaling in the mill piping circuitry. These problems were resolved and second half mill throughput is expected to return to normal.

NovaGold Resources announced that the final feasibility study has been initiated at its Rock Creek gold project near Nome. In addition, with one year's worth of environmental baseline data in hand, the mine permitting process began. The company completed additional in-fill drilling and metallurgical test work as part of the $5 million final feasibility study. Approximately 1,650 meters triple tube diamond drilling in 20 holes has been completed along with a 1,000 meter trenching program across the main mineralized zone. In lieu of a bulk sample effort, a drill hole twinning program using improved reverse circulation drilling also has been initiated. In a related program, NovaGold is planning a 2,900-meter RC and core drilling program at the nearby Big Hurrah property in the Solomon District to test for near surface gold resources. Historic work on the property has identified multiple shallow mineralized zones grading as much as 10 grams of gold per tonne with similar characteristics to mineralization at Rock Creek.

NovaGold Resources and joint venture partner Placer Dome are in the midst of a $6 million program of environmental and engineering studies at their 27.8 million ounce Donlin Creek project. Ongoing studies have identified feasible alternatives for project access and power supply. Drilling activities related to engineering studies also occurred on the project.

Early in the year, Northern Dynasty Minerals announced revised mineral resource estimates for its Pebble property copper gold project near Iliamna. The resource estimate indicates that the Pebble deposit contains 26.5 million ounces of gold and 16.5 billion pounds of copper within an Inferred Mineral Resource of 2.74 billion tonnes grading 0.30 grams gold per tonne, 0.27 percent copper and 0.015 percent molybdenum above a cut-off grade of 0.30 percent copper equivalent. Perhaps more significantly, the estimate has significantly expanded the higher-grade resources at Pebble to 435 million tonnes grading 0.49 grams gold per tonne, 0.42 percent copper and 0.021 percent molybdenum, or 0.84 percent copper-equivalent above a cut-off grade of 0.70 percent copper-equivalent. Pebble ranks as the world's third largest deposit, close behind Australia's giant Telfer deposit and the galaxy class Grasberg deposit in Indonesia. Eager to continue their efforts, the company began drilling in 2004 before the snows were gone in an effort to complete a $33.5 million program consisting of 130,000 feet of diamond drilling, advanced project engineering and environmental and socioeconomic studies.

Oddly enough, just a few days be tore the new Pebble resources were released, Alaska newcomer Liberty Star Gold Corp. announced that it had acquired what ranks as another Alaska superlative--the largest single claim block (237 square miles) staked at one time in Alaska history. The Big Chunk project as it is known is adjacent to the Pebble deposit and was driven by research, which indicated that Pebble was part of a much larger volcanic caldera, a favorable location for porphyry, copper-gold-molybdenum deposits. The company completed approximately 18,099 line kilometers of airborne magnetics in the spring and followed with collection of approximately 3,500 vegetation, soil, water, stream sediment and rock samples during the early summer. Limited drilling of several promising targets is planned for September.

Full Metal Minerals announced that exploration efforts had commenced on its Pebble South gold project in the busy Iliamna district. The prospect occurs at the intersection of three major structural trends that are coupled with favorable airborne magnetic anomalies. The company completed reconnaissance mapping, sampling and regional stream sampling and collected 1,200 samples to date. Over 35 line kilometers of induced polarization geophysics are planned and drilling remains a fall possibility.

Full Metal Minerals also conducted exploration on its Ganes Creek gold project in the Ophir district. Initial work included prospecting, detailed geo logical mapping, detailed soil sampling, mechanical trenching and 1,000 meters of diamond drilling. A drill program is planned to test the drill targets identified in this year's program. The primary target of the 2004 efforts will be delineation of the source of extremely high-grade coarse placer gold for which the Ganes Creek drainage is well known.

St. Andrew Goldfields continued underground exploration at its Nixon Fork project as plans to bring this property back into production move closer to reality. Recent results from the C3000 Chute Zone included hole N04U011, which returned 3 meters grading 46.9 grams of gold per tonne and 2.2 meters grading 51.5 grams of gold per tonne. Results from the C-3300 Chute Zone has indicated a larger and higher grade zone of interred mineralization with the mineralization splitting into more than one mineralized zone. A total of 73 holes have been drilled to date to test this zone. Assays to date have returned high-grade mineralization in 36 holes showing good continuity over a vertical length of over 180 meters. Results from high grade intersections include hole N04U030, which returned 11 meters grading 79.3 grams of gold per tonne; hole N04U036, which returned 5.5 meters grading 299.5 grams of gold per tonne; hole N04U043, which returned 4.4 meters grading 71.6 grams of gold per tonne; hole N04U049, which returned 10.1 meters grading 74.5 grams of gold per tonne; hole N04U056, which returned 10.4 meters grading 69.4 grams of gold per tonne; hole DH 72, which returned 4.6 meters grading 162.5 grams of gold per tonne; hole DH 76, which returned 2.3 meters grading 50.9 grams of gold per tonne; and hole DH 77, which returned 4.3 meters grading 44.5 grams of gold per tonne.

EASTERN INTERIOR

Kinross Gold continued open-pit mining at its Fort Knox-True North operations in the Fairbanks District. For the first half of the year, the mine recovered 154,987 ounces of gold at cash costs of $274 per ounce. The lower production compared to 2003 (192,639 ounces) were the result primarily of temporary suspension of mining at True North and lower mill feed grades, which average 0.90 grams gold per tonne. Rising fuel and energy costs and lower production contributed to the increase in total cash costs. Mill feed grades are expected to improve in the second half of 2004 due to improved grade at Fort Knox and the resumption of mining at True North. Projected production for 2004, from the combined Fort Knox and True North open pits, is 340,000 ounces of gold. On the exploration front, hole FC 716 drilled in the east-central portion of the Fort Knox pit to test the extension of mineralization beneath the current ultimate pit, cut two strong zones of mineralization grading 0.316 ounces of gold per tonne over 65 feet followed by 0.273 ounces of gold per tonne over 35 feet.

Freegold Ventures Limited announced that it had entered into a joint venture agreement with Alaska newcomer Meridian Gold on Freegold's Golden Summit project in the Fairbanks District. The companies also announced initial drilling results from the Cleary Hill mine prospect. The six hole diamond drill program intersected the Cleary Hill vein 125 meters below the previously mined workings and indicated the presence of additional mineralized zones above and below the projection of the Cleary Hill vein. Drilling confirmed that the old mine longitudinal sections from the 1940s accurately portray the trend of high grade mineralization associated with the high grade Bankers Stope ore chute on the Cleary Hill vein. Drilling results included 6 feet grading 0.283 ounces of gold per ton in hole CHD0401, 10.5 feet grading 0.449 ounces of gold per ton in hole CHD0403, including 6.5 feet grading 0.546 ounces of gold per ton, 2 feet grading 0.968 ounces of gold per ton in hole CHD0404, 3 feet grading 0.344 ounces of gold per ton in hole CHD0405 and 5 feet grading 0.128 ounces of gold per ton in hole CHD0406. Freegold has drilled below the old Cleary Hill mine workings along a 240-meter strike length. Underground workings extend over 800 meters along strike of the Cleary Hill vein. A significant number of other mineralized veins and structures were intercepted in the hanging wall (south) of the Cleary Hill vein. Gold mineralization in the 2004 Phase 1 drill holes was in the form of fine grained and visible free gold associated with quartz veins, stockworks and quartz rich shear zones containing between 1 percent to 3 percent pyrite, arsenopyrite and jamesonite.

Teryl Resources Corp. and joint venture operator Kinross Gold announced results from the Gil project in the Fairbanks District. The 2003 exploration program consisted of 127 reverse-circulation drill holes totaling 28,000 feet, 31 core holes totaling 8,917 feet, four trenches totaling 1,150 feet, and 358 rock samples collected from surface exposures. Drilling results included 30 feet grading 0.143 ounces of gold per ton in hole GVR03 393, 135 feet grading 0.087 ounces of gold per ton in hole GVR03 398, 40 feet grading 0.126 ounces of gold per ton in hole GVR03-403, 45 feet grading 0.053 ounces of gold per ton in hole GVR03-407, 40 feet grading 0.126 ounces of gold per ton in hole GVR03-403, 40 feet grading 0.149 ounces of gold per ton in hole GVR03-464, and 105 feet grading 0.170 ounces of gold per ton in hole GVR03-465. This work succeeded in increased confidence of grade and continuity at both the Main and North Gil deposits. Exploration efforts in 2004 have been focused on the nearby Sourdough Ridge prospect where fieldwork outlined two significant calc-silicate units that crop out on surface for approximately 300 feet in a northeast-southwest trend and remain open to the northeast.

Teryl Resources Corp. also announced results from phase one reverse circulation drilling on its West Ridge gold project in the Fairbanks District. The company reported 2,6,50 feet of drilling was completed in six reverse circulation drill holes in the Old Glory prospect area where previous soil, rock and trench results had revealed the presence of significant gold mineralization. All of the holes encountered anomalous gold mineralization with hole WR0404 returning 3.5 feet grading 1.68 grams of gold per tonne including a 20 foot section that returned 2.2 grams gold per tonne. Gold mineralization is preferentially hosted in quartzite and quartz mica schist and consists of brecciated zones containing sulfides and polyphase quartz veining. Mineralization is open to expansion in all directions.

Perhaps the most significant single event to occur so far in 2004 was completion of permitting and construction start-up at the 5.6 million-ounce Pogo gold deposit in the Goodpaster District. The project was the center of some unique dramas ranging from a disputed EPA discharge permit in May (quickly settled in the mine's favor) to curtailed construction in June and July due to raging wildfires that approached to within a half mile of the mine site. Joint venture partners Teck Cominco Limited, Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. contemplate initial gold production in March 2006. Production is expected to ramp up to commercial production rates of 460,000 ounces per year by the end of August 2006. The $250 million construction project will utilize up to 700 people with a total work force after start up of 385 employees.

Rimfire Minerals and joint venture partner AngloGold USA continued their joint efforts on the ER, Beverly and Eagle projects in the Goodpaster District. Soil sampling at Eagle outlined gold-arsenic-bismuth soil geochemical anomalies covering 1.6 by 1.2 kilometers and 0.3 by 0.8 kilometers in the Central and NE zones, respectively. The Central anomaly is defined by a core area with gold values greater than 185 parts per billion and measuring 0.2 kilometers by 0.5 kilometers. A significant proportion of the granitic rock chips collected with soil samples were altered and in some cases contained sulfide-bearing quartz veins. Two rock samples returned 1,845 and 8,080 parts per billion gold. Associated anomalous elements included arsenic, bismuth and tellurium. Additional soil sampling and diamond drilling are slated for the project in 2004.

ALASKA RANGE

Nevada Star Resources came in with much anticipated news by announcing that mining giant Anglo American Exploration (Canada) has exercised its option to enter into a joint venture on Nevada Star's MAN nickel-copper-platinum group element project in the Delta District. The companies initiated a $600,000 exploration program focused on the Fish Lake and Dunite Hill areas on the southern half of the MAN project. Work being performed includes 2,500 line kilometers of airborne magnetics and electromagnetics utilizing Anglo's proprietary Spectrem geophysical technology along with geological mapping, prospecting, geochemical sampling and ground geophysics. Data from the airborne survey will be combined with existing data from previous exploration programs and used to guide the ground program with the goal of identifying drill targets for a winter drilling program.

Nevada Star Resources also announced that a 2,000 meter reverse-circulation drilling program was initiated on its Canwell mafic-ultramafic complex on the eastern end of its MAN project. The drilling program is targeting several conductors identified from exploration work completed on the Canwell intrusion earlier this summer that included three dimensional magnetic inversion processing, University of Toronto Electro-Magnetometer data interpretation, Max-min electromagnetic geophysical surveys, gravity work and rock and soil sampling. The results from this work and other data were used to identify tour primary drill targets. Results are pending.

Alaska newcomer MAX Resource Corp. announced that seven diamond drill holes have been completed at its Gold Hill project in the Valdez Creek District. The initial phase of the diamond drilling tested high-grade mineralization encountered in prior drilling by Amax and General Crude Oil that included 1.5 meters of 15 grams gold per tonne, 1.5 meters of 8 grams gold per tonne, 1.5 meters of 22.9 grams gold per tonne, 1.2 meters of 15.6 grams gold per tonne, and 1.10 meters of 5,1.3 grams gold per tonne. Analytical results are pending on the drilling.

Full Metal Minerals Ltd. announced that drilling had begun at its Gunsite copper gold project in the Talkeetna Mountains. Four to six diamond drill holes totaling 750 meters are planned as an initial phase. Underlain by a Cretaceous dioritic batholith, the property hosts spectacular intrusive hosted copper-gold mineralization in subhorizontal fractures and veins over an area of at least four square miles. Two of these zones, Prescott Point and Prescott West, will be drill tested. The Prescott Point showing consists of up to 10 percent disseminated bornite and chalcopyrite in diorite. Twelve samples taken by previous operators across a width of 7.4 meters averaged 1.5 percent copper and 3.4 grams of gold per tonne. The Prescott West showing occurs approximately 300 meters west of the Prescott Point showing and extends to the west for an additional 1,400 feet. A 60 meter-high cliff face exposes the highest density of mineralized fractures and quartz veins found on the property and is commonly stained green from malachite mineralization. A grab sample taken from an 8 inch quartz vein in this area assayed 2.81 percent copper and 3 grams of gold per tonne.

NORTHERN ALASKA

In a breath from the past, NovaGold Resources announced that it had acquired an option from Kennecott Exploration Co. to explore and develop the Ambler project in the southern Brooks Range. For those of you still wet behind the ears, the Ambler project contains several known volcanogenic massive sulfide occurrences discovered in the 1960s and '70s, but not significantly explored in well over a decade. The most advanced target on the property is the Arctic deposit, which has an inferred resource of 36.3 million tonnes with precious metals grading 0.7 grams of gold per tonne and 54.9 grams of silver per tonne and base metals wading 4 percent copper, 5.5 percent zinc and 0.8 percent lead. The contained precious metals in this resource total 817,000 ounces of gold and 62.1 million ounces of silver and the base metals total 3.2 billion pounds of copper, 4.2 billion pounds of zinc and 640 million pounds of lead. This estimate was based on 70 wide-spaced drill holes and ranks the deposit as one of the largest volcanogenic massive sulfides in the world. The company initiated its first drilling program on the project in August, which will focus on developing an updated geologic model for the project through detailed relogging of the existing core, and an initial 2,000 meters of new core drilling.

Little Squaw Mining Co. announced the results of a geological evaluation of the property that indicated that the Mikado, Eneveloe, Summit and Little Squaw veins are parallel, low sulfide orogenic quartz vein deposits that have potential to host significant high-grade gold resources. In addition, more than 20 other poorly explored gold prospects exist on the project. The veins are up to 4 miles longs and up to 400 feet wide. The report also recommended that potential for up to 300,000 ounces of placer gold exist in lower Big Creek and Little Squaw Creek.

SOUTHEAST ALASKA

Kennecott (70.3 percent) and Hecla (29.7 percent) announced second quarter 2004 production from the Greens Creek mine on Admiralty Island. The total cash cost per ounce of silver at Greens Creek for the quarter was 67 cents, a 27 cent-per-ounce decrease, compared to the second quarter of 2003. The average grade of ore mined during the quarter was 16.33 ounces per ton, down significantly from the 19.11 ounces of silver per ton averaged in the same period in 2003. During the second quarter, the mine produced 2.3 million ounces of silver, 22,798 ounces of gold, 6,770 tons of lead and 18,162 tons of zinc. Total production costs for the quarter were $3.55 per ounce of silver produced, a slight decrease over year previous figures. The company also initiated a $1.9 million, 40,000-foot surface exploration drilling program, most of it in prospective areas west of the mine. An additional 40,000 feet of drilling, budgeted at $2 million, will be drilled from existing underground workings.

Coeur d'Alene Mines announced the issuance of the draft supplemental environmental impact statement at its Kensington gold project in the Berners Bay District in Southeast Alaska. A final pre-feasibility study completed in late 2003 identified significant capital and operating costs savings over previously completed feasibility studies. The company estimates production averaging 100,000 ounces of gold per year at an average cash operating cost of approximately $195 per ounce. The company expects to receive all major permits by June 2004, followed by a construction decision. Mine construction would take 18 months, with potential production startup as soon as 2006. The Kensington deposit contains 1.8 million ounces of proven and probable gold reserves and 1.4 million ounces of resources. The company believes that significant exploration potential exists at Kensington that could materially in crease the project's total resources.

Freegold Ventures and Pacific North West Capital announced that Lonmin Plc has elected to proceed with the 2004 exploration program at the Union Bay platinum project north of Ketchikan. The 2004 exploration budget is set at $1.2 million and will be 100 percent funded by Lonmin Plc. Exploration commenced in early June with a detailed geological mapping and sampling program and an airborne magnetic and electromagnetic survey. A 9,000-foot drill program commenced in mid-June. The initial drill program targeted the Continental zone where rock sampling in 2003 returned values ranging from 1 gram to 14 grams platinum per tonne. In addition, a separate zone of copper, platinum and palladium bearing sulfides was discovered at Cannery Creek on the western side of the project. The zone remains open to the north and east.

Bravo Venture Group Inc. announced drilling results from its Woewodski Island project in Southwest Alaska. The company completed its initial 1,557-meter, nine-hole drill program. Assay results at the Mad Dog target include 5.3 meters grading 437 grams of silver per tonne, 3.79 percent lead and 18.4,5 percent zinc in hole MD04-01, 17 meters grading 223 grams of silver per tonne, 0.97 percent lead and 11.27 percent zinc also in hole MD04-01, 2.3 meters grading 131 grams of silver per tonne, 0.59 percent lead and 15.98 percent zinc in hole MD04-02 and 1.8 meters grading 361 grams of silver per tonne, 3.78 percent lead and 10.95 percent zinc in hole MD04-03. Geologic interpretation suggests that MD04-01 drilled very close to a vent area, with MD04-04 (assays pending) intersecting an up-thrown block on the west. Assay results from the Lost Lake prospect include 1.3 meters grading 70 grams of silver per tonne and 13.6 percent zinc in hole LL04-02, 5.9 meters grading 21 grams of silver per tonne and 4.5 percent zinc in hole LL04-02 and 0.9 meters grading 82 grams of silver per tonne and 9.5 percent zinc in hole LL04-03. Drilling has now doubled the strike length of known mineralization to 800 meters. At the East Lake prospect, 2004 drilling intercepted 1.8 meters grading 2 grams of gold per tonne, 6 grams of silver per tonne and 3.3 percent zinc in hole EL04-01. Massive sulfide mineralization was hosted in fragmental volcanic rocks, which included one 0.5 meter interval of delicately banded massive sphalerite and galena that suggests gold-enriched, high-grade mineralization may exist nearby along this horizon. The company indicated that it plans to conduct additional gravity surveys and drilling in August and September that will focus on off-setting the high-grade Mad Dog prospect intercepts down plunge and testing several targets in the East Lake and Brushy Creek areas.

Curtis J. Freeman is president of Avalon Development Corp., a consulting mineral exploration firm based in Fairbanks. Freeman earned bachelor's and master's degrees in economic geology, the latter from University of Alaska Fairbanks, and has been employed in the minerals industry in Alaska, the western United States, Central America, South America, New Zealand and Africa for the past 24 years. Freeman is a U.S.-certified professional geologist and is a licensed geologist in the state of Alaska. Freeman is a member and/or serves on the board of a number of professional organizations in Canada and the US.