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Mining jewels, gems, and ore: it's 'lode' out time for the Diamond Gold Corporation.

Mining in Alaska can have huge payouts, but every operation starts with a potential discovery and a lot of work. Anyone with the determination and knowledge can try to make a go of mining in Alaska, much like Ed and Ann Ellis are doing at North Yenlo Hills in the Yentna Mining District.

The Yentna Mining District is located approximately forty miles west of the Parks Highway south of the Alaska Range, eighty-five miles northwest of Anchorage. Looking north from the property, one can see Mount McKinley approximately sixty miles away.

Diamond Gold Corporation has more than 3,000 acres of minable ground in increments of 40 to 160 acres each in an area between the Kahiltna River and the Yenlo Hills. It operates two mines, manages a milling site, and is building a town site. The two mines are Fire Brick Mine and Sable Elegance Mine, which are approximately seven miles apart.

Fire Brick Mine

Diamond Gold announced the opening of Fire Brick Mine, a hard rock lode deposit in the Yenlo Hills, this last March. It's an underground gold, silver, and copper mine. In March, an upper adit at an elevation of 2,489 feet was driven into the vein using overhand stoping methods.

"This year we opened up a lower level following the vein system; that's at a lower elevation so we can have access to it all winter," Diamond Gold Secretary/ Treasurer Ann Ellis says.

That area of Southcentral has a high level of snow up in the hills, so the lower elevation equates to less snowfall, easing access to the mine.

Ed Ellis, president, says, "The Fire Brick veins averages 0.0875 opt [ounces per tonne] gold, 21 ppm [parts per million] silver, and 3 pounds copper per tonne. The upper vein runs a high-grade zone: 0.338 opt gold, 2 opt silver, and 3 pounds copper per tonne. Cobalt and bismuth occur in the veins, and elevated bismuth tracks closely with high gold assays. Sulfide stringers in the rock below veins carry palladium values."

Fire Brick is estimated to contain a total of 107 million tons of sulfide ore; 2 million ounces of gold; 50 million ounces of silver; 300 million pounds of copper, and palladium at an undisclosed amount.

For now, the ore from Fire Brick is being stockpiled, waiting completion of the mill facilities. Ann estimates that the mill site construction will be completed and milling will begin in the winter of 2014-2015. The mill site is approximately three quarters of a mile from the Fire Brick mine.

The initial milling process will incorporate "fine grinding and gravity separation, after which the sulfide minerals will be collected, dried, and bagged for shipment," Ann says. In time, she says, Fire Brick will "ramp up" to using flotation cells as well. Diamond Gold will also produce gold and silver dore bars. The company is currently soliciting buyers for the bagged sulfide copper ore concentrates.

Sable Elegance, Phase I and II

The second mine is the Sable Elegance Mine, or as Ed refers to it, a "world-class gem field." Operations at Sable Elegance include Phase I and Phase II.

"Phase I is placer mining Sable Creek gem gravels," Ed says. According to the 2007 Mine Plan submitted for the Sable Elegance mine, mining will begin at the lowest one mile of Sable Creek, a section which "contains a measureable proven placer reserve of 350,000 cubic yards of gem gravels grading six carat per cubic yard of color gemstone and diamond."

Ann says that the Yentna Gem field deposit in which the Sable Elegance project is located contains an estimated 375 million rough carats colored gemstone and diamond in approximately 75 million cubic yards of placer gem gravels. The placer colored gemstone resource is valued at more than $6 billion; the cut-gem value exceeds $32 billion.

Gemstones in the deposit include facet-able opal, sapphire, ruby, garnet, and diamond. "Stones cut in cabochon are opal, emerald, agate, jade, red and green jasper, and opalized wood," according to the 2010 report "Alaska's Yentna Country Gemstone Deposits."

Phase II of Sable Elegance will take place at the completion of Phase I, which Ann estimates will take five years. Ed says Phase II is "hard rock mining of the Sable diamond pipe." The expected life of Sable Elegance is approximately fifty years. The Sable Elegance phases will have a byproduct of gold concentrates. In addition, the mine will produce rare earth oxide sands and industrial abrasives, "which are emery, garnet, and diamond dust. There is an industrial use beside the gem use," Ann says.

Powering the Mine

One obstacle every remote mine faces is how to get power. Diamond Gold has several solutions to that problem. It mapped coal seams near Skwentna in 1998. Ed and Ann have discovered and mapped other coal seems with the hopes of being able to mine them, providing power to Fire Brick, Sable Elegance, and the town site.

Alternatively, Diamond Gold may purchase coal from Usibelli and is exploring alternative energy options such as hydroelectric from Sable, Kimberly, or perhaps Crystal Creek. They estimate that they will need to produce 5 megawatts of power to operate the mill and camp at Sable Elegance mine.

They are currently using portable diesel generators, which require on-site fuel storage of thirty thousand gallons of diesel.

Setting up Camp

Right now, Ann and Ed are the miners, the marketers, the road and runway builders, and the surveyors for Diamond Gold. "Right at this time were using our mining tools, which are just hand tools," Ann says. "It's all pretty much done by hand at this stage." While Diamond Gold has had industrial equipment in to work the mine in the past, road access issues have made it difficult to have such equipment as a consistent resource.

With that in mind, the amount of work that Ann and Ed have accomplished is a little staggering. "[In the Fire Brick area] we have a little cabin; we have a helicopter pad; we've hand built a road ... it's four wheel able--a little dangerous, but you know how it goes. We did make it in," Ann laughs.

Last year Ann and Ed completed a seven-mile road between Fire Brick and the Sable Elegance mine, which was also done by hand and can be accessed by four wheelers.

"Because of the lack of road access, we are currently maintaining two runways: one at our Kahiltna Camp, which is where we are processing gems, and at the Sable town site," Ann says.

They are currently building the Sable town site, which is located between the two mines. It's intended to house miners and their families, an issue Ann is passionate about.

"Our whole objective of setting up this corporation was to provide Alaskans with jobs ... [where] their families can be with them," she says. "I'm tired of families being separated all the time for a workforce in Alaska. That's our goal and we're sticking to it."

In the town site, Ed has already surveyed out fourteen lots which are 50 feet by 150 feet and are located on the east side of the 1,500-foot runway. Those lots "will be for employee housing with water and sewer service," Ann says.

They currently have several wood structures with tarp walls which will receive plywood walls as soon as possible. The current runway will be expanded to a final paved size of 5,500 feet by 500 feet, a goal of Ed's, Ann says.

Diamond Gold is planning an estimated workforce of three hundred employees with a collective annual payroll of $28 million a year.

While the Ellises are the driving force behind the company, they aren't the only ones involved. "Right now we have a 'support force,"' Ann says. "They help me in town, they help me with various stages--it's not twenty-four/seven and it's not eight hours a day--when Ed and I need a little help, we can get it."

Ann feels strongly about the responsibility to ensure that lands leased for mining are being productive. "I'm not to just take land and tie it up," she says. "This is the right time, the right location, the right mine."

Tasha Anderson is the Editorial Assistant for Alaska Business Monthly.
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Title Annotation:SPECIAL SECTION: Mining
Comment:Mining jewels, gems, and ore: it's 'lode' out time for the Diamond Gold Corporation.(SPECIAL SECTION: Mining)
Author:Anderson, Tasha
Publication:Alaska Business Monthly
Geographic Code:1U9AK
Date:Nov 1, 2014
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