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Drilling increases estimates of Pebble ore reserves

Posted: Wednesday, February 27, 2008

ANCHORAGE - Estimates of copper and gold reserves of a proposed southwest Alaska mine have grown again.

According to 2007 drill results released Monday, the value of minerals discovered so far at Pebble is between $345 billion and $500 billion.

Drilling last year at the deposit north of Iliamna added billions of pounds of copper and millions of ounces of gold, an increase valued at $11 billion to $35.4 billion.

The companies exploring Pebble say converting the minerals into dollars at this point is somewhat misleading.

"It's highly unlikely that we'll seek to develop the entirety of the (deposit)," said Sean Magee, spokesman for the Pebble Partnership, the joint venture exploring Pebble.

The partnership includes one of the world's largest mining companies, London-based Anglo American, and the junior mining company, Northern Dynasty Minerals Ltd., based in Vancouver, British Columbia.

The size of a possible Pebble mine could be curtailed by economics and by feedback from Bristol Bay communities, Magee said.

Strong opposition has formed to the proposed mine because of the prospect's location in the headwaters of two of the five major river drainages that supply Bristol Bay's world-class salmon runs.

The estimate Monday does not take into account the cost of building and operating a mine, or future changes in the price of copper or gold, Magee said. Building Pebble could cost up to $5 billion and annual operations could cost hundreds of millions, he said.

The new drilling results show copper is still the dominant metal in volume and potential value.

The updated estimate showed 51.7 billion to 73.7 billion pounds of copper, worth up to $280 billion, plus 66.1 million to 87 million ounces of gold, worth up to $82 billion.

It also estimated 2.6 billion to 4.2 billion pounds of molybdenum, worth up to $139 billion.

The reason for the range in the volume of metal is the use of different "cut-off values," which set different criteria for the grades at which copper and gold would be mined.

Mining experts said Monday that they prefer using more conservative "cut-off" values, which correspond to richer grades.

"If the price of metals went down, you could still mine it," said David Szumigala, a geologist with the state Division of Geological and Geophysical Surveys.

Drilling at Pebble last year helped develop more confidence for the exploring companies about the amount of metal in the deposit. Drilling planned this year will further define it, Magee said.

The mining companies will use drilling results to prepare a pre-feasibility study, an internal document that they will consult when deciding whether to propose building a mine to their boards, he said.

Anglo American will decide whether to invest more money in Pebble based on the outcome of the study, Magee said.

If the companies decide to pursue a mine, they would likely apply for permits in 2009, and could start producing metal in 2015, according to Northern Dynasty officials.



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