Alaska miners talk of new projects, expansions to come

Posted: Monday, November 15, 2010

Alaska miners crowded into the Anchorage Sheraton Hotel for their annual convention Nov. 1 to Nov. 7, and the mood was buoyant, with gold prices surpassing $1,300 an ounce and prices up for base metals like zinc.

Steve Borell, executive director of the Alaska Miners Association, said there was a record turnout for the group's annual convention and trade show.

"We had booths and exhibits crammed into every nook we could find on the main floors of the hotel," Borell said.

Borell said there were encouraging reports on several new projects, including Usibelli Coal Mine, Inc.'s new development at Wishbone Hill, a bituminous coal deposit north of Palmer, and progress being made at the Chuitna coal project in the large sub-bituminous coal deposits in the Beluga fields west of Anchorage.

Producing mines reported progress in adding reserves and expanding operations, too.

Kinross Gold continues to develop the big Fort Knox gold mine northeast of Fairbanks. The company employs about 500 workers in its operations and an additional 300 this year in construction related to several expansion projects, according to Eric Hill, engineering manager for the mine.

In the 14 years since production started, Fort Knox has produced 4.8 million ounces of gold from 200 million tons of ore processed at the mill and 600 million tons mined.

Construction projects include the expansion of the heap leach facility that is now operating at the mine and the raising of the impoundment dam. The base of the dam was expanded this year with a plan to raise it 27 feet in 2011 and another 25 feet in 2012.

Kinross also has expanded the mining pit into a new "phase seven" area and is exploring gold resources in adjacent ground that could be mined in the future in a phase eight.

Hill said the new heap leach is working well, with about 14 million tons of ore placed there for processing in 2010, about the same amount of ore that will be processed this year in the mill.

Hill said Kinross is proud of several efficiencies achieved at the mine including upgrades to the mill that is resulting in savings of about $900,000 per year in electricity costs, and other modifications that resulted in an approximate 1.5 percent improvement in gold recovery from the ore.

Another improvement, done over several years, is the adoption of a sophisticated vehicle management system in loading and moving ore to the mill using precision Geographic Position Systems.

At the Red Dog Mine north of Kotzebue, mine operator Teck Alaska is now mining at its new Aqqaluk deposit, which is adjacent to the mine's main pit that is now nearing depletion, according to Tom Farr, Red Dog's chief mining engineer.

Securing government approvals for Aqqaluk was a long process. The permits were applied for in 2007 and finally granted in early 2010. Teck's board gave its final approval to the project last May.

Within a month, the mine operations workers had completed drainage control systems, removed and stockpiled wetlands material for future re-vegetation and established access roads for the 100-ton ore trucks that will be used in the mining.

Processing of ore from the new deposit began Aug. 10, and on Sept. 17 the first zinc and lead concentrate from Aqqaluk was loaded at the Red Dog port and shipped to customers in Europe, Farr said.

The project is critical to the future of the mine because mineable ore reserves in the main pit will be exhausted in 2011.

There are now about 3.2 million tons of mineable ore left in the main deposit. The estimated reserve at Aqqaluk, where the ore grade is slightly lower, is 53.9 million tons.

Despite the lower ore grade Aqqaluk production will allow Red Dog to continue in operation until 2031, Farr said, with about the same amount of zinc and lead concentrate production as now. After Aqqaluk, there are several other known nearby ore deposits that could be developed, including one that may require underground mining.

Kensington, Alaska's newest gold mine began gold production in June ahead of schedule and shipped its first gold concentrate in July. The mine is owned and operated by Coeur Alaska Inc., a subsidiary of Idaho-based Coeur d'Alene Mines.

"We were very lucky with a low snow year last winter," which enabled construction workers to speed final construction of the mine's waste disposal facility, the only part of the mine that was not finished due to litigation.

Kensington is currently processing about 1,200 tons per day of ore at the mill and employs 200 employees and contractor workers, Kensington general manager Tom Henderson told miners at the convention.

A 120-man camp has been built at the mine although most Kensington employees live in Juneau and commute daily from the city to the mine. Goldbelt Inc. of Juneau operates the marine shuttle service, with about 11 round trips a day moving people and supplies, Henderson said.

Since production started, there have been eight shipments of gold concentrates to buyers in China and Germany, he said.

Kensington has a long history in its battle to secure government permits and clear litigation brought by environmental groups. Coeur began exploration in 1987 with a partner, Echo Bay Mines, which was bought out by Coeur in 1995. The company secured permits to develop the mine in 2005, but was stopped by an injunction issued by the 9th Circuit Court of Appeals in 2006.

Coeur appealed the 9th Circuit decision to the U.S. Supreme Court and won in a January 2009 decision by the high court. In June the injunction was lifted and Coeur restarted construction to complete the mine.

Henderson said the company is now exploring new veins and expects to be able to develop new reserves and extend the mine's operating life, which is now estimated at 12 years.

• Tim Bradner can be reached at tim.bradner@alaskajournal.com.



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