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Southeast mining boom.

For years Southeast Alaska has been considered filled with promise as far as supporting major mineral development. While some of that promise turned to reality during the past year with the increasingly successful production from the Greens Creek multi-mineral mine outside of juneau, there's still far more Panhandle mining projects in the exploration than development stages.

Within another year, however, that could change, as Juneau is on the threshold of dethroning Fairbanks for the title of mining capital of the state. Southeast, in general, is on the verge of living up to industry scuttlebutt that currently pegs it as the nation's hottest exploration prospect.

"There is no question that the exploration community is excited about Southeast. It is one of the hottest prospects in the North American minerals industry today," says Al Clough, a geologist for the U.S. Bureau of Mines based in Juneau.

'Even with gold and silver prices being down, the exploration interest is holding its own on the Pandhandle,' adds James Deagan, mineral development specialist for the state's Department of Commerce and economic Development. "Everyone still recognizes that Southeast holds tremendous promise for minerals development."

After 14 years in the making, the Greens Creek mine on Admiralty Island, 15 miles west of juneau, shifted into full production last summer. Although plagued by normal startup bugs in its mining and milling process during its first year - reportedly not breaking into the profitable ranks until this summer - it still turned out 5.2 million ounces of silver, 23,530 ounces of gold, 19,843 metric tons of zinc and 9,585 metric tons of lead in 1989. That output made Greens Creek the largest underground (lode) silver mine in North America and one of the largest underground multi-mineral mines in the nation.

The 1,000-ton-per-day, $114 million Greens Creek project, however, could pale by next year in comparison to the 22,500- ton-per-day, $270 million proposal to reopen the giant Alaska-Juneau gold mine in downtown Juneau or by the 4,000ton-per-day, $150 million proposal to reopen the historic Kensington gold mine, north of Juneau.

But besides these projects, firms have moved into the permitting process to win approval to build two other mines on the Canadian side of the border, the Windy Craggy copper mine north of Haines (see Alaska Business Monthly, August 1990) and the Eskay Creek gold mine outside of Wrangell which just recently a Canadian firm moved for regulatory approval to open. Eskay Creek could be the second or third mine to open in what Canadian geologists describe as their Golden Triangle.'

On the exploration scene, work continued this summer on proving the feasibility of reopening the Jualin gold mine, north of Juneau, the next most likely mine to come into production on the Alaska side of the border. Exploration officials this summer, meanwhile, were busy drilling core samples at at least another four sites, while basic exploration/ rock sampling was occurring on a score of the Panhandle's other more than 150 knovm mineral prospects.

The Bureau of Mines'Clough says Southeast is enjoying renewed popularity with mining firms because it is a region that contains proven mineralization. The Juneau Gold Belt, which runs from north of Berners Bay to Windham Bay, in the early 1900s supported dozens of mines that produced six million ounces of gold and one million ounces of silver worth $3 billion at today's prices.

The region is currently very inviting because of its proximity to the coast and cheap water transport and because the geology tends to produce big ore deposits. Also mineral firms can be in the field for eight months of the year in Southeast, compared to half that for the Interior. It is recognized as an increasingly acceptable place to explore,' says Clough.

In 1989 companies spent $47.8 million on exploration efforts in the state - the lion's share in Southeast compared to $45.5 million in 1988 and just $15.7 million in 1987, according to the state's Department of Commerce and Economic Development. Greens Creek. One reason for the boom was that the Greens Creek mine was able to begin operations, even though it is surrounded by the wilderness of the Admiralty Island National Monument. The mine last summer was taken overby Kennecott Inc., the American subsidiary of the world giant RTZ Inc., after being sold by British Petroleum Minerals.

Cliff Davis, general manager of Greens Creek, says the company's ability to survive the regulatory battles and open a highly technological mine 1,000 miles from other existing mining districts has given a psychological lift to the mineral industry's attitude about development in Southeast. The fact that we've been able to launch a viable long-term operation in Southeast certainly helps the whole industry," explains Davis, a former mine manager in Portugal who arrived in Juneau last fall to help work out the bugs that had plagued the Admiralty Island mine complex in its infancy.

Initially, the mine had problems making its milling process work smoothly. Utilizing European technology, the mine dewaters its tailings in giant accordion-like pressers and then disposes of most of the tailings by using the material as backfill in mined-outtunnels. Last year, when the mine shifted from its startup to production phase, the pressers couldn't dry enough tailings to keep up with processing demands, while the automatic 'sling trucks that were to redeposit the tailings back into the mine evenly just didn't work in Southeast's damp climate.

James Sanwick, manager of human resources for Greens Creek, says that Davis' experience with the dewatering presses - plus bigger motors - helped to iron out the problems with the presses and improve the efficiency of the mill. As for the sling trucks, they now only haul the backfill into the tunnels.

Once returned, a bulldozer packs the tailings back into the drifts and shafts - a process that allows the mine to have a relatively small 35-acre surface tailing disposal area overlooking the creek and Hawk Inlet, about eight miles from the mine's main porthole.

In spring of 1989 the mine tackled two other problems. The largest was sulfide dust emissions that resulted in damage to mine ventilation equipment and minor injury to several miners. An investigation determined that the secondary explosions occurred because of the dust given off by massive sulfide rock formations in scattered parts of the mine. The problem was brought under control by miners wetting down problem areas in the mine and adding moisture to the air before blasting.

Another problem showed itself last fall when Southeast's heavy rainfall caused the runoff from the surrounding muskeg soils to turn more acid in nature. That in turn upset the acid balance in the settling pond and caused minerals that had been separated during the settling process to turn back into solid metals, which caused the mine to be accused of exceeding its permit level for discharges into Hawk Inlet.

We initially had some trouble with our metallurgy, but we straightened that out and we were meeting all pollution standards when our tailings left our mill. Then we realized that depending on the time of the year the water runoff into the tailngs area would change significantly,'says Sanwick.

The company last fall installed a cyanide destruct system to guarantee that cyanide from the milling process could not get into the environment (although tests later showed that none had). And it agreed to install a second water treatment plant at the end of the tailings area to treat any surface water that would accumulate before the water flows into Hawk Inlet. The $750,000 facility, slated to be on line next month, should solve any lingering water quality issues at the mine.

While the company says it strongly believes that it had never violated its water quality permits, the company in July agreed to end the dispute with the U.S. Environimental Protection Agency by agreeing to pay a $50,000 fine arising from the water quality incidents. Tests in Hawk Inlet show that there has been no negative effects on marine life in the bay on the western side of Admiralty Island.

Although the mine last year met its initial estimates of ore production, the process was hard work. The Greens Creek veins, located in a highly faulted area, twist and turn radically, making it difficult for miners to follow them. To improve mining efficiency, additional geologists have been hired to study the ore zones more carefully. Also this past summer the company continued additional exploration projects, taking more drilling samples in areas about to be mined to gain a better understanding of where the ore veins are heading.

The mine this summer spent additional money on capital improvements. The company decided to build more roofs around mill buildings and the access to ore tailing disposal areas to fight the negative effects of Southeast's considerable rain on the mining process.

Spending at Green's Creek already has been a benefit to Juneau's economy. This summer the mine was employing 285 people - 250 on the payroll year-round. The company estimates its annual payroll at just under $15 million.

While Greens Creek has about worked its way into normal operations, it still faces abnormal attention on the political front in coming weeks. The congressional attention will come as Congress decides later this fall on a proposed land trade on Admiralty Island. As part of the Alaska Lands Act of a decade ago, the mine was not permitted to fully patent all of its potential ore reserves, an undetermined amount slipping into the surrounding wilderness land classification. Currently, the company estimates it has mineable reserves available for another 10 to 13 years of operations.

As part of the debate over passage of the revisions to management of the Tongass National Forest, Congress this summer began for a third time to debate a land trade that would give subsurface rights around Greens Creek to Southeast's Sealaska Native regional corporation. The trade, if approved, would allow Kennecott at least to attempt to work out an agreement with Sealaska to gain access to the future reserves.

The trade as of July was being opposed mightily by Ohio Sen. Howard Metzenbaum, setting up a likely battle this fall between Metzenbaum and Alaska Sen. Ted Stevens. Company officials for their part declined comment on the trade saying the mine's future was not dependent on the outcome. Other Mines. Besides Greens Creek there was only one other mine that was operating in the Southeast region this year, and it has now suspended operations. Officials of Skyline Explorations Ltd. spent $20 million in 1988 to open 200ton-per- day johnny Mountain gold mine in the Iskut River Valley east of Wrangell. The isolated mine site, however, required the mine's gold to be flown to Wrangell for transshipment, hiking expenses.

The company in july announced it was suspending operations and concentrating in the short run on exploration of additional prospects in the river valley, at least until transportation access could be improved. The Canadian government is considering building a road to the budding mining district, and Alaska last year also started an environmental impact statement on the feasibility of a possible toll road up Bradfield Canal to give all the mines in the district access to tidewater, south of Wrangell. Work on the toll road proposal, however, also may be on hold for the rest of the year, after Gov. Steve Cowper July 1 1 vetoed $70,000 from this year's capital budget needed to fund the required environmental impact statement for the road corridor.

Canada's Cominco Ltd., owner of the giant Red Dog zinc mine outside of Kotzebue, reportedly is on the verge of starting development of a proposed 500-ton-per-day underground gold mine at the Snip deposit, next to Johnny Mountain. Down the valley, plans were submitted in June to U.S. resource agencies for development of the Eskay Creek gold mine.

On the Alaska side of the border, in addition to efforts at A-J and Kensington, ore sampling was continuing this summer at the Jualin Mine, located just to the south of the Kensington. Juneau's Hyak Mining Co. leased its 4,000-acre property to Curator American, a Denver-based mining company, in 1988. But Curator largely turned over development of the mine last year to Placer Dome, which is revamping the proposed mining plan and considering a downgrading of the size of the proposed mine. A decision on mine development is now probably more than a year away.

Significant drilling was under way this summer on three other prospects in the Juneau area. Up the Taku River, inside Canada, Cominco Ltd. and Redfern Mining Co. of Canada were continuing their drilling program to decide whether to reopen the Tulsequah Chief mine. The old gold, silver, copper, lead and zinc mine formerly was supplied out of Juneau, when it last operated in the 1950s.

So far, drilling has upped ore reserves to 2.38 million tons at grades of 0.07 ounces of gold and 2.9 ounces of silver per ton, with 1.3 percent copper, 1.6 percent lead and 8.0 percent zinc - all healthy grades. Work also is continuing by Suntax Minerals of Vancouver, B.C., on new exploration at the neighboring PolarisTaku mine.

On the west side of Lynn Canal, north of Juneau, helicopter drilling was investigating the Dream claims, a mineral zone staked by Juneau prospector Dale Henkins and originally sold to Curator American in 1988. Helicopter drilling also was occurring on Douglas Island outside of Downtown Juneau in the former Nevada Creek and Red Diamond claims, plus other properties.

Exploration has slowed during the past year on a proposal to mine gold from the Treasure Hill claims in Juneau's Spaulding Meadows and from in front of Juneau's Herbert Glacier. Efforts to reopen the Chichagof and Hirst-Chichagof mines north of Sitka collapsed during the past year when tragedy struck the effort. Several miners were killed in a boating accident. The accident had been preceded by a fire that swept through the old mine's work camp. Also, after promising initial ore finds, reserve bore holes found an unexpected fault with no ore on the far side.

Activity has picked up on southern Prince of Wales Island, the hottest current exploration zone on the Panhandle outside of the Juneau area. Sealaska Corp during the past year found a partner to help explore its eight major mineral deposits in the region. Several companies, including Cominco, Placer Dome and WGM Inc., a partner with Echo Bay on the A-J, are conducting general exploration work.

Also, a subsidiary of Galactic Resources Ltd. last year conducted drilling on the nickel, copper and cobalt claims at Mirror Bay on Yakobi Island, plus in the Bohemia Basin on the island. Drilling also occurred in 1989 on the Niblack and Ruby Tuesday precious metals deposit on Prince of Wales and on the Kaigani polymetallic find on Dall Island. Other work during the past year has continued on Woewodski and Zarembo Islands.

Still more work was continuing, according to a publication last year by several state agencies, on the Salt Chuck, Rush and Brown mine properties on Prince of Wales.

Says the Bureau of Mines'Clough, None of the Prince of Wales efforts have yet come together and none of the projects are near production decisions. But still a lot of exploration is taking place in the very promising region. There is no question that a wide range of minerals are there, the only question is whether any given deposit can be mined profitably. The odds are always against development of any project, no matter how good its prospects."

In a region that sports the world's largest molybdenum find, the U.S. Borax deposit at Quartz Hill, one of the world's richest nickel deposits, the Brady Glacier deposit inside Glacier Bay National Park, and everything from gold and silver to platinum deposits, there is no question that Mother Nature has spread plenty of minerals around. The only question is whether they can profitably be picked up and whether they will be allowed to be produced, given environmental concerns. 411
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Author:Kleeschulte, Chuck
Publication:Alaska Business Monthly
Date:Sep 1, 1990
Previous Article:Promise and peril mark the start of a boom decade.
Next Article:Polishing plans: two Southeast gold mines await verdicts on development.

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