Homer Alaska - Business

Story last updated at 3:57 PM on Wednesday, March 28, 2012

Miners across Alaska busy with expansions, new projects; seven producing mines in operation



By Tim Bradner
Morris News Service - Alaska

From far Southeast Alaska to the far Northwest reaches of the state, minerals companies are busy with projects. Alaska has seven producing mines now, one more than last year.

The new producing mine is Nixon Fork on the upper Kuskokwim River, a remote location where fuel and supplies must be flown in. Several new mines may move into production in the coming years, all in different parts of the state.

Here's a review of the producing mines and prospects around Alaska:

Southeast

The new Kensington underground gold mine north of Juneau has completed its first year of production. Coeur d'Alene Mines, the owner, has temporarily cut back production this year so that additional capital improvements can be made, essentially to de-bottleneck the production process and increase efficiency.

When those are completed, gold production will resume according to the company's plan.

At the Greens Creek Mine, on Admiralty Island west of Juneau, owner Hecla Mining is engaged in securing permits for an expansion of the tailings storage facility at the mine.

If the plan is approved, Greens Creek will have the capacity to handle tailings for another 30 to 50 years of production. Greens Creek is an underground mine that has been producing a mix of silver, zinc and gold for more than 20 years.

Two potential new mines in Southeast are near Ketchikan. One is the Niblack project, a copper-gold-zinc-silver deposit that would be similar to the Greens Creek Mine if brought into production. Niblack Mining Corp. is the developer.

The second is Bokan Mountain, a rare earths project that has attracted national attention because it has a type of heavy rare earth mineral that is relatively scarce. Rare earths are a type of mineral used widely in high technology applications including defense technology. The developer at Bokan Mountain is Ucorp, a company that specializes in rare earths projects.

Southcentral

Two possible coal projects are in the permitting stage. One is the Chuitna project in the Beluga coalfields where the owners, the Bass-Hunt group, are developing a supplemental environmental impact statement.

This would be a surface mine that would tap large subbituminous coal resources in the Beluga coal fields. Coal would be mined and moved to coal ships loading at a planned new offshore loading terminal in Upper Cook Inlet with a gondola system.

One of the central points of concern at Chuitna is the disruption of several miles of salmon-bearing streams as the coal deposit is mined. The company is working on a mitigation and restoration plan for the salmon streams, but it must have the approval of state agencies.

Another potential coal project in Southcentral is Wishbone Hill north of Palmer that is proposed for development by Usibelli Mine Inc., operator and owner of a larger coalmine at Healy.

Unlike the Healy subbituminous coal and similar coal at Chuitna, Wishbone Hill has high quality bituminous coal that has attracted the attention of a Japanese company as a customer.

Like the present Healy mine and the planned project at Chuitna, Wishbone Hill would be a relatively smaller mine with its coal trucked to facilities where it could be shipped, either to a rail line for shipment to Seward or trucked to the Port Mackenzie dock on Upper Cook Inlet.

Interior

At Healy, on the Parks Highway about 90 miles south of Fairbanks, Usibelli Mines continues to operate the Usibelli mine that has produced coal for decades. There are substantial untapped coal resources near the mine sufficient to allow the mine to produce for decades more.

Usibelli sells to coal-fired power plants in Interior Alaska and also exports coal through Seward to Pacific Rim buyers. The company has recently been setting records for coal exports and increased production. Coal is shipped by rail from Healy to Seward, where it is stored and loaded on ships.

There are two major producing gold mines in Interior Alaska, the Fort Knox Mine northwest of Fairbanks, a surface mine, and Pogo, an underground gold mine northeast of Delta and east of Fairbanks. Sumitomo Heavy Metals, the owner at Pogo, continues to make incremental capital investments to improve efficiencies at the mine, and also has initiated new exploration nearby in an effort to expand resources and extend Pogo's operating life.

The Fort Knox mine has been in production for some years and is now supplementing its producing and processing of conventional gold ore with a heap leach, a process use to extract gold from low-quality ore.

Both Pogo and Fort Knox purchase power through the regional power grid from Golden Valley Electric Association, the Interior electric cooperative, and the large power purchases help stabilize the cost of electricity for residents and businesses in the Fairbanks area.

International Tower Hills, developing its planned new Livengood gold project on the Elliot Highway north of Fairbanks, also plans to purchase power from Golden Valley via a new transmission line that would be built from Fairbanks.

The Livengood project is now at an advanced stage of exploration. It would be a surface mine with low-grade ore, similar to Fort Knox, except that it is likely to be larger. The company additionally plans to mine placer gold deposits near the planned surface mine.

Northwest

The Red Dog lead and zinc mine in the western Brooks Range north of Kotzebue is once again the world's largest zinc producer. Red Dog held that title for many years after its startup in 1989, slipped to second place at one point, but has now reclaimed its title.

Zinc and lead concentrates are made at the mine, which is a surface mine, and shipped by road about 60 miles to a port facility on the Chukchi Sea coast. The concentrates are stored through the winter and shipped during the summer, when the Chukchi Sea is ice-free for three months or so.

NANA Regional Corp. owns the land at the mine, which is operated by Teck. NANA receives 25 percent of the net profits from the mine as a royalty, which will increase in increments over the years until the corporation is receiving 50 percent of the profits.

The land was obtained under the Alaska Native Claims Settlement Act of 1971, so a major percentage of the resource revenues from the mine are shared with other Alaska Native corporations.

More than half of the mine workforce is NANA shareholders, many who live in nearby villages. The corporation also is engaged in several joint-ventures to provide support services to the mine, such as in camp operation and maintenance and transportation of the ore by truck.

Red Dog also was developed in a partnership with the state, where the Alaska Industrial Development and Export Authority, the state development corporation, financed and owns the road and port facility supporting the mine.

Teck pays AIDEA a toll for use of the road and port, and over the years the transportation of ore has been a significant source of income for the state authority.

Teck has continued to make improvements at the mine to increase efficiency and moved to a new mine site last year that is adjacent to the first pit that was mine. This will allow mining to continue for two more decades. For the longer term there are other known lead and zinc deposits nearby that can be developed including one a few miles east that another company, Zazu Minerals, is working to develop. The company also is talking with AIDEA on a plan to finance a road to connect with the mine at Red Dog.

The region is considered to be a major zinc province and will likely see decades of activity.

NANA also is engaged in a new mining venture in the northwest region, in a partnership with NovaCopper, an affiliate company with NovaGold. The companies are working in the Ambler Mining District east of the villages of Ambler and Kobuk, on the upper Kobuk River. The prospect is mainly copper, although there is also gold present.

NovaGold, now NovaCopper, has been working for some time exploring the Arctic deposit, a high-grade copper deposit originally discovered by Kennecott Minerals. NANA meanwhile acquired Bornite, a nearby copper discovery also found originally by Kennecott. The two companies have now formed a joint-venture to explore and possibly develop the projects together.

The state of Alaska also is working on a planned industrial-type road into the area from the Dalton Highway, which would enhance exploration.

Southwest

On the middle Kuskokwim River, a partnership of Barrick Gold and NovaGold Resources are in an advanced stage of planning for a large new surface gold mine at Donlin Creek near Crooked Creek village on the Kuskokwim. DonlinGold, the joint-venture company formed to develop and operate the mine, may be applying for development permits this year.

The landowners are Calista Corp., the Native regional corporation for the Yukon-Kuskokwim delta, which owns the subsurface rights, and the TKC Corp., a company owned by several villages in the Kuskokwim region, owner of surface lands at the mine.

The companies have been working on the project for years and just the exploration work at Donlin Creek has provided significant employment for people in the region, which is one of the most economically depressed parts of Alaska. If the mine is developed it would be a major source of employment in the area.

Interestingly, it was geological work by geologists hired by Calista that resulted in the gold discovery. Calista then worked for several years to bring in mining companies to explore and develop the project.

No review of mining in Alaska would be complete without mentioning Pebble, a very large copper/gold/molybdenum deposit near Iliamna southwest of Anchorage. The mineral ore body has been explored over several years with both a large, deep resource being located that could be mined with an underground mine, and an adjacent deposit at the surface that would be mined with a surface mine.

The developers at Pebble, Anglo American and Northern Dynasty Minerals, have been working on development planning and environmental studies. The Pebble Partnership, the company formed to develop the project, may be applying for permits to build the mine this year after releasing its long-awaited environmental baseline document.

Tim Bradner is a reporter for the Alaska Journal of Commerce.

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