Alaska gold production at its highest since 1916

Record prices have led out-of-state investors to fund drilling projects

Posted: Tuesday, November 10, 2009

ANCHORAGE - Another gold rush seems to be under way in Alaska.

The state's gold production last year - 800,000 ounces - was the highest since 1916. Alaska accounts for nearly 10 percent of U.S. production.

The Anchorage Daily News reported record prices for gold have led out-of-state investors to bankroll drilling projects all over the state. But most of the gold is still coming from two mines - the open pit Fort Knox mine near Fairbanks, and the underground Pogo mine near Delta Junction. Together, they produced 84 percent of the state's gold last year.

"We now have two large gold mines operating. We've never had that before," said Steve Borell, executive director of the Alaska Miners Association.

Juneau's Kensington mine is scheduled to begin production late next year. It would be the state's third-largest. Two smaller gold mines - the Rock Creek mine in Nome, and the Nixon Fork mine in McGrath - hope to reopen sometime soon.

Alaska's smaller placer gold mines, which excavate gold-bearing rock from ancient stream beds, increased production 5 percent to 53,849 ounces last year.

Alaska's biggest mines are tiny compared to two megaprojects being studied in Southwest Alaska: the Donlin and Pebble projects.

If built, the two mines would catapult Alaska into the ranks of the world's largest gold producers. Donlin sits on about 30 million ounces of gold and could produce more than 1 million ounces of gold per year, according to its backers. Pebble is estimated to contain 94 million ounces of gold. Both still need permits.

The increase in mining activity has raised concern among environmentalists and some rural communities. Two lawsuits have been filed in state court seeking to block the Pebble project due to its location near world-class salmon streams.

Gov. Sean Parnell said Friday that the state will "vigorously defend" the permits it grants and its mine-permit process.

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