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Mineral exploration over the border.

Hot mining prospects in British Columbia could bring profits to Alaska and Canada -- if a proposed road gets built to bring the resources to market.

Mining companies have been active in the Tulsequah-Taku district of northwestern British Columbia, about 45 miles northeast of Juneau, Alaska. Two of the properties, the Tulsequah Chief and the Polaris-Taku sites, are now in an advanced exploration stage and could be close to a development decision within the next two to three years. Exploration to date shows that both properties rank among Canada's largest undeveloped mineral deposits.

TAPPING THE TULSEQUAH CHIEF

The Tulsequah Chief property, 100 percent owned by Vancouver-based Redfern Resources, is the farthest advanced of the two projects. The property contains two former mines, the Tulsequah Chief and the Big Bull. Both of these deposits are similar to the Greens Creek mine in southeast Alaska.

Drilling at the Tulsequah Chief mine has found nearly 10 million tons of rock containing 1.48 percent copper, 1.17 percent lead, 6.85 percent zinc, 0.07 troy ounces of gold and 2.72 troy ounces of silver per ton. John Greig, president of Redfern Resources, estimates that current mineable reserves are 7.7 million tons, all in the Tulsequah Chief deposit. The site remains open at depth and along strike, upping the probability of increasing current reserves. Redfern Resources plans to complete 25,000 feet of definition drilling on the Tulsequah Chief deposit this year.

Based on drill-indicated reserves at the end of 1992, a study on a mine producing 2,480 tons per day from the Tulsequah Chief deposit indicates that the operation would be profitable. Estimated capital costs for developing the mine and building a road through the Taku River corridor to tidewater are $130 million over the mine's nine year life. Recent studies also indicate that mining conditions are good, and recovery of metal-bearing minerals from raw ore, as well as the grade of the resulting concentrate, are high.

The odds of finding additional economic deposits in the Tulsequah area are very high since deposits like the Tulsequah Chief often occur in clusters. Besides the Big Bull deposit, Redfern has identified four high-priority targets on the property and is currently conducting geological mapping and geophysical surveys to define additional targets. Al Clough, a geologist with the Alaska Department of Commerce and Economic Development, believes that a reasonable chance exists to double the property's current reserves.

Discovery of additional economic deposits would significantly enhance the profitability of the proposed mine. Another nearby deposit containing 4.4 million tons would support a daily production rate of 3,850 tons from the property and nearly double the net present value of the mine. Redfern expects to complete approximately 15,000 feet of exploratory drilling on the Big Bull and other targets this year.

POLARIS-TAKU PRIZES

The Polaris-Taku property is located along the Tulsequah River, five miles north of its confluence with the Taku River. A former gold mine on the property produced 231,000 troy ounces of gold from three mineral rich vein systems.

Canarc Resource Corp. and Suntac Minerals Corp., both Vancouver-based companies, began exploration on the Polaris-Taku property in 1988. The companies recently reported that drilling had outlined a geological reserve exceeding 2.8 million tons, containing 0.425 troy ounces of gold per ton, a total of about 1.2 million troy ounces of gold.

The likelihood of increasing reserve on the Polaris-Taku property is high since the limits of mineralization have not been determined in the three gold-bearing vein systems. Bradley Aelicks, vice president of Canarc Resource Corp., says the overall geological potential of the Polaris-Taku property could be from 3 million to 5 million troy ounces of gold.

According to Aelicks, a recent pre-feasibility study evaluating a mine producing 600 tons per day is encouraging. If gold reserves on the Polaris-Taku property can be increased to 1.5 million troy ounces, then a daily production rate of 1,200 tons could be supported.

The ore at Polaris-Taku is high in arsenic, which could be an obstacle to development. In some cases, gold cannot be recovered from high-arsenic ores without violating air quality standards. However, an environmentally acceptable extraction method for high-arsenic ores is currently used at gold mines in northern Ontario and Nevada. This method recovers the gold and extracts the arsenic as part of a solid compound which can be disposed of in an environmentally safe manner. If this process does not work on Polaris-Taku ores, then a concentrate would have to be shipped to a smelter able to process high arsenic gold ores.

ROAD TO RICHES

Both the Polaris-Taku and Tulsequah Chief properties are within 10 miles of the Alaska-British Columbia border and within six miles of the proposed route of a road connecting Juneau with Atlin, British Columbia. This road is one of four options for improving access to Juneau that the Alaska Department of Transportation and Public Facilities (DOT/PF) is now evaluating.

The Juneau-Atlin road would extend from Juneau, up the Taku River corridor to the border, then northeast to Atlin, where it would connect with existing roads. This 130-mile-long route does not pose any extraordinary construction difficulties relative to other northern road-building projects, nor does it present any insurmountable environmental problems. Crossing the Taku probably presents the greatest challenge.

The cost of constructing the Taku corridor road has not been accurately estimated, but Ira Rosen, project director for the DOT/PF Juneau access improvement study, believes that it will probably range from $100 million to $200 million, depending on the cost of crossing the Taku.

Mining developments in the Tulsequah-Taku district may offer an excellent opportunity to involve private industry in the construction of the Taku corridor road since the mines will require road access to tidewater in order to ship mineral concentrates to market.

Clough proposes a three-phase schedule. Phase one would build the road from tidewater to the international boundary. During phase two, construction would bring a segment of the road from the border to Atlin, British Columbia, while phase three would complete the road from tidewater to Juneau.

Clough suggests that phase one could be funded through the Alaska Industrial Development and Export Authority (AIDEA) utilizing an arrangement similar to the Red Dog port and road or the rebuilding of the Skagway ore terminal, both of which were financed by AIDEA. Mining activity would provide for much of the initial road development and construction, and the other segments could be added as funding is available.

DOT/PF asked the British Columbia government for permission to perform aerial reconnaissance of the Taku corridor and to conduct visits to critical sites. British Columbia's Minister of Transportation and Highways, the Honorable Art Charbonneau, refused this request, stating, "It is the province's position that the impacts of such a route present insurmountable obstacles to the extent that we cannot contemplate a development of this nature."

No further reasons have been given for refusal, and the source of the opposition is uncertain. DOT/PF's Rosen said that the Taku River First Nation Tlingits, based in Atlin, were opposed to construction of the Taku corridor road because they feel it would have a detrimental impact on their traditional activities and disturb some burial grounds. The extent of influence on the British Columbia government's decision caused by Tlingit opposition is not known.

BIG BENEFITS FROM BORDER ROAD

John Greig of Redfern Resources says that Taku River corridor road access is critical to development of the northwestern British Columbia mining industry. Besides opening the Tulsequah-Taku district, the road would cross several remote geological terranes which have high mineral potential. Statistically, it is almost certain that other economic mineral deposits would be discovered and developed as a result of exploration in these formerly remote areas.

Aelicks, of Canarc Resource Corp., agrees that the Juneau-Atlin road would stimulate development of the mining industry in northwestern British Columbia. He says that the road will allow access to a deep sea port for shipping concentrate and heavy equipment, allow purchase of Alaska power, and provide access to cheaper goods and services. Aelicks points out that the Tulsequah Valley is a historic mining area with at least five old mines. These mines used the Taku corridor as a transportation route to a deep water port.

Mining activities in the Tulsequah-Taku area would also create jobs in Juneau. The city would become the logistical center for the mines, and employees and employers would buy many of their supplies and services in Juneau.

The Juneau-Atlin road would provide other economic benefits to both British Columbia and Alaska. Overall, the road will provide improved movement of people and goods, thereby lowering living costs in the region. The road will also encourage expansion of tourism and recreation, providing more diversity to local economies.

Northern British Columbia presently faces a tough economic environment since mines in the region have restricted production due to low metal prices. In addition, about 450 people lost their jobs in 1992 when the Cassiar asbestos mine closed permanently. Nothing currently on the horizon will significantly improve northern British Columbia's economy. The road will also achieve a long-sought goal for Alaska: road access to the state capital.

In September, state Transportation Commissioner Bruce Campbell said the plan was still on the board, although he admitted it was not especially promising. But Ira Rosen, project manager for DOT/PF, said, "It's possible the Canadian government could change its mind, so we haven't dropped out yet."

Construction of the Juneau-Atlin road could become a win-win situation for both Alaska and British Columbia. However, unless the British Columbia government reconsiders its refusal to allow planning studies in the Taku corridor, DOT/PF will be forced to exclude the road as an alternative for improved access to Juneau. Before rejecting the proposed Juneau-Atlin road, the economic benefits that this road could provide to the region should be determined.
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Author:Rishel, John
Publication:Alaska Business Monthly
Date:Nov 1, 1993
Words:1649
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