Printer Friendly

The latest great Alaska gold rush.

Exciting things are happening in the Alaska gold mining industry. Yet the big excitement may be still to come.

The great Alaska gold rush started as a whisper in the late 1880s, grew to a roar in 1897-98, then gradually dropped back to a whisper in the early part of this century. And it pretty much staved that way until now.

But that's all changing these days as the cry of "Gold!" goes up once again from Southeast Alaska to the Brooks Range, from Northway to Nome.

This time it's being heard somewhere else as well. It's being heard in the halls and board rooms of some of the world's largest international mining companies.

This new interest in Alaska gold is driven, in part, by an increasing world demand for the precious metal. Industrial use is steadily increasing, particularly in the rapidly growing and developing electronics, computer, and communications fields.

It also comes from the Far East and Pacific Rim countries, such as Japan, where domestic demand for jewelry jumped almost 70 percent in the late 1980s, according to Alaska Geographic's recent publication "Rich Earth: Alaska's Mineral Industry."

Also contributing to the world-wide demand, according to John Lutley, president of The Gold Institute, an international trade association representing more than 80 companies in the mining, banking and refining fields, is the continuing development of free market economies in. such highly populated places as India, China and Taiwan.

According to Lutley, as the standard of living rises in these countries it creates a larger middle class with more wealth and disposable income.

"This is wealth and income that they usually convert into gold coins and jewelry because of a lack of confidence in their country's governments and paper money," Lutley continues. "They also have few local banks or savings institutions available to them.

"This trend is probably going to continue into the foreseeable future," says Lutley. "From the world perspective, we are simply going to need more and more gold just as some of our more traditional sources, such as South African gold mines, are going into decline."

CYPRUS-AMAX Fort Knox Mine Interior Alaska

One of the major international mining companies working to help fill this need with Alaska gold is Cyprus-Amax Minerals Co. The company owns 51 percent of Amax Gold Inc., which is developing a giant, world-class, open-pit gold mine in the hills 25 road miles northeast of Fairbanks.

The mine is on the way to becoming the biggest gold mine in North America and is expected to move from construction to production phase late this year. Ken Pohle, the mine's general manager, says the company expects to pour its first gold by November.

The Fort Knox Mine, with proven and probable reserves of more than 4.1 million ounces of gold, is operated by Fairbanks Gold Mining Inc., a subsidiary of Amax Gold Inc. It is expected to produce at least 300,000 ounces of gold annually.

Development spending has jumped from $256 million to $370 million due to higher than anticipated construction costs. Amax is still excited about the mine's future. The company will operate the mine 24 hours a day, year-round, and employ approximately 250 personnel in eight-hour shifts. The company originally predicted a mine life of 12-plus years, but now predicts that it will probably extend well beyond that if new ore reserves are developed as expected.

NEVADA GOLDFIELDS Nixon Fork Mine Interior Alaska

Another Interior gold mine in production on a round-the-clock, year-round operation schedule since late 1995, is Consolidated Nevada Goldfield's Nixon Fork underground hard-rock mine. The company spent $15-plus million in the summer of 1995 airlifting in all the men, materials and machinery to build a modern 50-person camp, support buildings, jaw crusher and ball mill.

The mine is located in the Kuskokwim Mountains northwest of McGrath and has a full-time work force of 50 employees working a four-week-on, two-off schedule. It is designed to crush and process 150 tons of ore daily and produce 60,000 ounces of gold annually.

The mine's potential was recently expanded when Doyon Ltd., the Fairbanks-based Native regional corporation, announced that it had entered into a long-term mining and exploration lease with Nevada Goldfields on 46,000 acres of land adjacent to the current mine site. Nevada Goldfields is spending $1.5 million on further exploration of the new ground this summer.

Doyon President Morals Thompson recently commented, "We look forward to a long and prosperous relationship with Nixon Fork Mining and Nevada Gold fields."

USMX Illinois Creek Interior Alaska

After breaking records for acquiring all of their mining permits in just 16 months, USMX hit the ground running this spring on its Illinois Creek project located in west central Alaska.

USMX bid on and acquired mining rights to a 62,000-acre lease package from North Pacific Mining Corp., a subsidiary of Cook Inlet Region, Inc., another Alaska Native regional corporation. Several years of extensive and expensive exploratory drilling followed in defining the property's proven and probable gold reserves of 412,000 ounces.

By early June, mining equipment and construction materials had been moved by ocean barge to Whittier, rail to Nenana, then by river barge to a staging area at Galena, on the Yukon River.

From there, it was airlifted on Southern Air Transport's four-engine C-130 and C-133 stretch-Hercules aircraft to a newly constructed, 4,500-foot remote gravel airstrip at the mine site. So far, more than 3,500 tons of materials and equipment have been moved to the mine.

Dirt work and construction of the mine's infrastructure, including operational support buildings, a 90-person Atco camp and heap leach ore processing facilities are proceeding on schedule, according to the mine's general manager, Steve Dieker.

"It will take a concerted effort by all to complete this project on time and on budget," Dieker said. "However, based on what this crew has accomplished over the past three months, in less than favorable weather conditions, I believe that we should be able to pour gold in September as planned."

USMX forecasts the production of 20,000 ounces of gold this year and 60,000 ounces per year for at least five to six years.

There is also good potential for finding additional reserves and consequently, expanding the mine's life, according to Donald P. Bellum, USMX's chairman and CEO. In a recent interview, he explained that the company is currently working on only about 2,000 acres of the 62,000-acre property.

Bellum said there are a number of other nearby targets within two or three miles of the mine site that appear to have a lot of potential. If these targets prove up as expected, they could be processed at the existing mine.

USMX Ophir Interior Alaska

In addition to its Illinois Creek project, USMX announced in a July 18 news release that it had been granted an exploration permit by the Alaska Department of Natural Resources, Mental Health Trust Land Unit. The permit gives the company an exclusive right to explore 13,380 acres in the Ophir mining district.

Also located in west central Alaska, approximately 75 miles southeast of Illinois Creek, the Ophir district has produced in excess of 600,000 ounces of placer gold over the years. However, there has been essentially no previous exploration for lode gold.

The Ophir district lies along the same geologic feature which hosts the 3.5- million-ounce gold discovery on Donlin Creek made by Placer Dome U.S. in 1995.

Dennis Lance, vice president of exploration for USMX recently commented that "Our geologists are excited about the lode gold potential of Ophir, and we anticipate field work will be in progress on the property by August 1 of this year."

PLACER DOME U.S. Donlin Creek Interior Alaska

The hot rumor in gold mining circles last year also came out of west central Alaska, when Placer Dome U.S. spent $1.5 million exploring Calista Corp. land on Donlin Creek. In October 1995 the company announced that it had identified an ore body containing possibly more than 3.5 million ounces of gold.

This year the company's drilling budget climbed to $6.5 million and included five core-drill rigs working 24 hours a day, seven days a week. More than 80 people have been at work on the project where they have a winterized, soft-side camp.

"Currently we are drilling other targets separate from the Lewis area from which the current resource number is estimated," says Hugh Leggatt, of Placer Dome's corporate communications in Vancouver, British Columbia.

"These other targets had few or no drill holes and are now producing good results," he continued. "We expect to be drilling through the winter, expanding our known resource and testing new targets."

Mike Neimeyer, vice president of land and natural resources for Calista was also optimistic. "So far, this summer's drilling results have been encouraging. I think our original estimates will hold and maybe get better," he said.

KENNECOTT Greens Creek Mine Admiralty Island

Although it was not, strictly speaking, a gold mine, the Greens Creek mine did produce a significant amount of gold, along with its primary metal-silver - during its short operating life.

The mine was originally explored and developed in the 1980s with production beginning in 1989. It quickly became the largest producer of silver in the United States. However, production was suspended in April 1993 due to low metal prices.

Although production came to a standstill, the mine was not idle. During recent years, more than $87 million of additional exploration and development has been undertaken at the mine in an effort to find additional reserves and improve production.

Now, with additional ore reserves identified and defined and higher prices, the mine is gradually returning to production. Currently, about 100 people are working at the mine, with 250 expected at full production.

Company estimates are that the mine will annually produce about 62,000 ounces of gold, 11 million ounces of silver, 79 million pounds of zinc and 40 million pounds of lead. Mine-life is now estimated to be at least 16 years.

COEUR ALASKA INC. Kensington Mine Southeast Alaska

At the Kensington Gold Mine Project on the east side of Lynn Canal between Juneau and Haines, Coeur has targeted the last of this year for securing all remaining mining permits.

According to Donna Walsh, community affairs coordinator, when all permits are secured Coeur management will make a construction decision. "If everything is a 'go' as expected, construction start-up will commence in the spring of 1997 and employ about 450 workers and support personnel during the 18 month construction phase," she said.

Proven and probable reserves at the Kensington are estimated at almost 2 million ounces of gold, with additional prospects in other nearby veins. The company expects to produce about 200,000 ounces of gold per year and employ approximately 300 full-time workers when the mine is at full production. The operating life of the underground mine is expected to be about 12 years, but could easily expand beyond that, according to company officials.

ECHO BAY Alaska-Juneau Mine Southeast Alaska

It is beginning to look like the reopening of the A.J. Gold mine on the mountainside above Juneau may become a reality after all, according to Echo Bay's Dave Stone.

"We are currently involved in preparing an Environmental Protection Agency directed and completely controlled, supplemental Environmental Impact Statement," Stone said. "We should see a draft of that document by the end of this year.

"We've already spent over $100 million so far on exploration and development, and we're still spending about a half million dollars a month for this supplemental EIS," Stone continued. "Once the EIS is finished and accepted, we hope to secure all our permits in 1997, and then reach a decision on construction startup."

"Construction phase is then expected to take about two years and employ up to 600 people at the peak of that effort. When production begins we will be employing around 400 full-time workers," Stone says.

The mine is expected to pump more than $37 million a year into the Juneau economy once it begins production on the estimated 3.6 million ounces of recoverable gold. The mine will produce approximately 275,000 ounces of gold annually with an operational life of 10 to 12 years. However, according to Stone, that mine life could easily expand if they find expected additional reserves.

Waiting in the Wings

Several other major gold projects with names like Ryan Lode, True North, Too Much Gold, and Golden Summit are being explored and developed by such companies as Newmont Gold, Kennecott Exploration and International Freegold Mineral Development.

Silverado Mines (U.S.) is continuing to explore and develop its claims in the Nolan Creek and Hammond River drainages of the Brooks Range north of Wiseman. It is also continuing to explore and develop its property at the Grant Mine and on Ester Dome in the Fairbanks area.

Any one of these prospects has the potential to become the next Fort Knox, and industry insiders say they would not be surprised to see four or five such gold mining operations built over the next five years or so.

There is little doubt that Alaska is on the verge of something big when it comes to gold mining. All the signs are there for another gold rush. But it won't be the same kind of rush the country experienced 100 years ago when scores of prospectors came north seeking their fortunes.

This time the rush is among large mining companies with the financial and technological resources to go for the gold in a big way. This time, the gold will not be extracted by picks and shovels, but by giant earth-moving machinery capable of reducing mountains to molehills, and then rebuilding them after the gold is extracted.

Yet, for all of that, it's bound to be as exciting as that first gold rush a century ago.
COPYRIGHT 1996 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:gold mining industry
Author:Gudde, Levi
Publication:Alaska Business Monthly
Date:Sep 1, 1996
Previous Article:Where do Alaskans stash their money?
Next Article:The U.S. gold industry.

Related Articles
Gold and government: Fairbanks comes full circle.
Gold fever.
The U.S. gold industry.
The other side of the mountain.
Alaska's next & coming gold rush.
For more than the fun of it.
Gambling at its finest.
Little Exploration Done in Juneau Gold Belt.
Donlin creek gold deposit joins exclusive club: This find ranks as the 22nd largest gold deposit in the world.

Terms of use | Privacy policy | Copyright © 2022 Farlex, Inc. | Feedback | For webmasters |