Alaska 2018—Mining in Review

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Nov 1, 2018Mining

Curtis Freeman is the owner and president of Fairbanks-based Avalon Development Corporation. He may be contacted via email at avalon@avalonalaska.com or for more information visit avalonalaska.com.

Curtis J. Freeman
Curtis Freeman is the owner and president of Fairbanks-based Avalon Development Corporation. He may be contacted via phone at 907-457-5159; email at avalon@avalonalaska.com; or online at avalonalaska.com.

Although the Alaska mineral industry is in better health in 2018 than it has been in the last five years, the spirited recovery that was in progress in the first quarter of the year turned into a dead-cat bounce, a minor unsustained recovery after a long down trend extending back to 2012. Hindsight says the cause was threat of a global tariff war that introduced uncertainty and angst into the natural resource sector. Metal prices soon reacted as demand softened, and by the end of the second quarter virtually all of the precious, base, and strategic metals had declined in price significantly or were showing signs of doing so in the near future. Alaska’s producing mines are feeling the pinch of declining metals prices, and—not surprisingly—the mineral exploration sector had budgets slashed in response. With exploration funds shrinking for many explorers, their previously approved work programs had to be downsized or eliminated completely. To be sure, companies are spending 10% to 15% more on exploration than they did in 2017, but the prognosis for the mining industry in 2019 remains murky.

Western Alaska

Teck Resources and partner NANA Regional Corporation announced year-end 2017 and first-half 2018 results from Red Dog mine. For 2017 the mine produced 541,900 tonnes of zinc in concentrate at a mine grade of 15.5% with mill recoveries steady at 82.1%. The mine also produced 111,300 tonnes of lead in concentrate for 2017 at an average grade of 5% with mill recoveries of 52.3%. Year on year, zinc production was 13% higher in 2017 while lead production was 29% lower. Gross operating profit for the year was $874 million, compared with $668 million in 2016. Mill throughput for 2017 was up slightly at 4,270,000 tonnes. During 2017 the mine paid royalties of $412 million versus royalties of $282 million in the year-previous period. In the latter part of 2017 the company began a $110 million mill upgrade designed to increase average mill throughput by about 15% over the remaining mine life, helping to offset lower grades and harder ore in the Aqqaluk pit. For the first half of 2018 the mine produced 275,100 tonnes of zinc in concentrate at an average grade of 16.2% with mill recoveries at 83.9%. The mine also produced 45,400 tonnes of lead in concentrate at a grade of 4.6% with mill recoveries of 48.9%. The mine posted a $342 million operating profit for the first half of 2018, up significantly from the $245 million profit in the year previous period. Royalty costs for the first half of 2018 quarter were $96 million versus $70 million in 2017. The expected 2018 production of contained metal is now estimated at 525,000 to 545,000 tonnes of zinc contained in concentrate and 95,000 to 100,000 tonnes of lead contained in concentrate.
Solitario Zinc Corporation announced that a wholly owned subsidiary of Teck Resources commenced a field program on the Lik zinc project with both companies sharing the exploration costs. The work program will consist of geologic mapping, relogging of existing core, and conducting a gravity geophysical survey over a substantial portion of the 6,075-acre property. The project has an indicated resource of 17.3 million tonnes grading approximately 12% zinc equivalent and an additional 2.9 million tonnes of inferred resource at approximately 11% zinc-equivalent.
Graphite One Resources commenced a field program at its Graphite Creek graphite project. The planned work consists of continued community engagement, 2,000 meters of core drilling to tighten drill spacing within the identified mineral resource, collection of core samples to be used for additional metallurgical test work, assessment of various alternative project access routes, and reconnaissance level fish and wildlife surveys.
The big news was the announcement that 50/50 partners NovaGold Resources and Barrick Gold received major permits from two federal agencies on the Donlin gold project. The project is on land owned by mineral estate owner Calista Corporation and surface estate owner The Kuskokwim Corporation. The US Army Corps of Engineers and Bureau of Land Management issued a joint Record of Decision for the project four months after the publication of the Final Environmental Impact Statement, marking the completion of the multi-year federal environmental review process through the National Environmental Policy Act. The Corps of Engineers issued a combined Clean Water Act Section 404 and Rivers and Harbors Act Section 10 permit while the US Bureau of Land Management issued the Offer to Lease for the right-of-way for those portions of the natural gas pipeline that would cross federal lands. The Alaska Pollutant Discharge Elimination System Wastewater Discharge permit was issued earlier in 2018. Other key state and federal permits and approvals are scheduled to be finalized in the near future, while the partners continue optimization work aimed at improving capital efficiencies. This new information will be needed to update the 2011 feasibility study. Total budgeted project costs for 2018 are $28 million.
Earlier in 2018 Northern Dynasty Minerals announced a sweeping series of new development considerations for its Pebble copper-molybdenum-gold project near Iliamna. The company also filed a technical report on the deposit with a revised resource estimate. At a 0.3% copper equivalent cut-off, the deposit contains 6.456 billion tonnes in the combined measured and indicated categories at a grade of 0.4% copper, 0.34 gpt gold, 240 ppm molybdenum, and 1.7 gpt silver, containing 57 billion pounds of copper, 71 million ounces of gold, 3.4 billion pounds of molybdenum, and 345 million ounces of silver. In addition, the deposit contains 4.454 billion tonnes in the inferred category at a grade of 0.25% copper, 0.25 gpt gold, 226 ppm molybdenum, and 1.2 gpt silver, containing 25 billion pounds of copper, 36 million ounces of gold, 2.2 billion pounds of molybdenum, and 170 million ounces of silver. Shortly after that, the company announced that the US Army Corps of Engineers accepted the project’s permit application, commencing the permitting process under the National Environmental Policy Act. The permit application entails a significantly smaller mine plan and numerous environmental safeguards including the consolidation of most major site infrastructure in a single drainage, the North Fork Koktuli, the absence of any primary mine operations in the Upper Talarik drainage, a fully lined tailings storage facility, no permanent waste rock piles, and no cyanide use. The mine plan calls for four years of construction activity followed by a twenty-year mine life. The mining rate will average 90 million tons per year, with milling of 58 million tons per year (160,000 tons per day). Life of mine stripping ratio is an extremely low 0.1 to 1. Mineralized material will be processed via conventional froth flotation. On average, the mine would produce 287 million pounds of copper, 321,000 ounces of gold, 1.6 million ounces of silver, and 13 million pounds of molybdenum per year. Mine infrastructure includes a 230 megawatt power plant located on-site, an 83-mile transportation corridor from the mine site to a port site on the west side of Cook Inlet, a permanent, year-round port facility near the mouth of Amakdedori Creek on Cook Inlet, and a 188-mile natural gas pipeline from the Kenai Peninsula to the project site. The project will directly employ about 2,000 workers during its four-year construction phase and approximately 850 full-time workers during its twenty-year operations phase.
Riversgold announced an update on its 2018 exploration at its Luna/Quicksilver and Gemuk projects. The field efforts include geochemical sampling and induced polarization survey over the Luna and Luna East drill targets and drilling. At Luna, outcropping stockwork in sediments returned rock chip samples up to 64.7 gpt gold with associated arsenic, silver, antimony, and bismuth. At Luna East outcropping mineralization from rock chips returned up to 3.7 gpt gold, 90 gpt silver, and 1.2% copper. At Quicksilver a 1 kilometer long zone of outcropping veins within the North Fork Pluton returned rock chip values up to 37.6 gpt gold with associated arsenic, silver, antimony, and bismuth. At Kisa (Golden Dyke) a 4 kilometer swarm of felsic dykes within sediments returned rock chips grading 0.5 to 8.0 gpt gold with associated arsenic, silver, antimony, and bismuth. At Gemuk historic sampling returned gold values ranging from 91 to 100 gpt gold associated with anomalous silver and arsenic and revealed high-grade antimony in quartz-stibnite veins at the contact between a biotite diorite and hornfelsed quartzite and shale.

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Interior Alaska

Kinross Gold announced year-end 2017 and first-half 2018 results from its Fort Knox mine. During 2017 the mine produced 381,115 ounces of gold at a cost of $628 per ounce versus 409,844 ounces of gold at a cost of $741 per ounce in 2016. Average mill grade for the year ranged from 0.75 to 0.96 gpt gold. Mill recoveries ranged from 81% to 85%. Average heap leach grades for 2017 ranged from 0.23 to 0.26 gpt gold. In late January 2018 the mine reported production from the heap leach had passed 1 million ounces since the facility came online in 2009, averaging about 125,000 ounces of gold per year. During first quarter 2018 the mine produced 79,928 ounces of gold at a cash cost of $530 per ounce versus 93,038 ounces at a cash cost of $617 per ounce in the year-previous period. The mine’s production decrease was due to lower mill grades over the year-previous period and the seasonally slower heap leach recovery experienced during colder winter months. The mill treated 3,110,000 tonnes of ore grading 0.7 gpt gold with a mill recovery of 82%. The heap leach saw additions of 5,839,000 tonnes of ore grading 0.2 gpt gold. During the second quarter of 2018 the mine produced 71,463 ounces of gold at a cost of $969 per ounce in the second quarter versus 91,848 ounces of gold at a cost of $635 per ounce in the year-previous period. Production decreased compared to the second quarter of 2017 largely due to a decrease in ore grades. The mill treated 3,106,000 tonnes of ore grading 0.44 gpt gold with a mill recovery of 80%. The heap leach saw additions of 4,279,000 tonnes of ore grading 0.18 gpt gold.
Kinross Gold also announced that it will proceed with a multi-phase layback of the Fort Knox pit and the construction of a new heap leach pad to access resources in the Gilmore land package it recently acquired on the west end of its existing open pit. The expansion is expected to extend mining at Fort Knox by six years to 2027 and leaching to 2030, at an initial capital cost of approximately $100 million, increasing life-of-mine production by 1.5 million gold-equivalent ounces. Estimate internal rate of return (IRR) is 17% with a net present value (NPV) of $130 million based on a $1,200/oz gold price and an IRR of 26% and NPV of $239 million based on a $1,300/oz gold price. Life of mine stripping ratio is 1.2:1 and average grade of the new resources is 0.35 gpt gold. All-in sustaining cost of production is estimated at $950 per ounce. Construction of a new heap leach site and dewatering will commence in the third quarter of 2018 with stripping starting in 2019 and initial production starting in 2020. Current plans call for conversion of operations to heap leaching only with milling expected to end in 2020. With the Gilmore block resources added to existing resources, the mine carries 3,374,000 ounces of proven and probable gold reserves at a grade of 0.37 gpt gold, 1,795,000 ounces of measured and indicated gold resources at a grade of 0.38 gpt gold, and 1,093,000 ounces of inferred gold resources at a grade of 0.32 gpt gold.
In late August Australia-based Alaska newcomer Northern Star Resources announced that it acquired the Pogo mine from Sumitomo Metal Mining Co. (85% interest and the mine operator) and Sumitomo Corporation (15% interest) for $260 million. This purchase equates to approximately $63 per ounces of resource. The mine’s 8 million oz gold endowment had contributed 3.8 million ounces of gold since 2006 at an average mine grade of 13.6 gpt. In 2017 the mine produced 271,273 ounces of gold at all-in sustaining cost of $882 per ounce at a head grade average of 10.8 gpt. At year-end 2017, Pogo had resources of 3.34 million ounces at 12.3 gpt and reserves of 760,000 ounces at 11.9 gpt. Northern Star indicated that it intends to invest in targeted intensive drilling programs to extend mine life through resource growth and reserve conversion. Sumitomo previously announced a 2018 exploration budget of $21 million. This would include exploration at newly discovered mineralization at the Fun zone and the Goodpaster zone, just northwest of current underground mining operations. The high-angle Fun zone has returned intercepts up to 10 opt gold, while drilling in the Goodpaster zone returned 22.8 feet grading 0.103 opt gold and 17.5 feet grading 1.739 opt gold, the latter in an orthogneiss host rock with mineralogy and gold:bismuth ratios identical to the paragneiss-hosted Liese veins to the southeast. CSAMT geophysical results suggest the Goodpaster zone may be up to 5,000 meters long and may be the fault offset of the Liese zone. Welcome to Alaska, Northern Star Resources.
Endurance Gold Corporation commenced a 2018 summer exploration program on its Elephant Mountain project. For 2018 the company plans trenching, geological mapping, and additional rock and soil sampling on several targets located on the Trout and Wolverine prospects. Within a 1 kilometer long, +100 part per billion gold in soil anomaly at Trout, soil sampling has defined a continuous area of oxidized intrusive-hosted shear zone in which gold in soil values exceed 200 ppb gold over 175 meters of strike and 25 to 50 meters width. In addition, work will be completed in 2018 at Wolverine to expand and define the extent of visible gold bearing quartz vein stockwork. Follow-up rock samples on South Fork prospect returned gold values including 10.35 ppm gold with up to 1.28% lead.
International Tower Hill Mines reported first quarter results from its Livengood gold project. The company announced a 2018 budget of $5.1 million. The work program incorporated in this budget will continue metallurgical studies undertaken in 2017 to define and refine the project flowsheet. Using the improved mineralization and alteration models now available for the deposit, 4,000 kilograms of metallurgical composites have been selected and a portion will be processed in 2018 to determine whether different recovery or cost parameters should be applied to different portions of the orebody.
Freegold Ventures began a 2018 drilling program at its Shorty Creek porphyry copper-gold project. Significant 2017 drill results at Hill 1835 prospect include 360 meters grading 0.24% copper in hole 17-01, 339 meters grading 0.3% copper in hole 17-02, 105.2 meters grading 0.27% copper in hole 17-03, and 165 meters grading 0.29% copper in hole 17-05A. Porphyry style mineralization is associated with potassic and pervasive sericite alteration within hornfelsed sedimentary rocks that are cut by porphyritic dykes and sills. The copper mineralization is primarily chalcopyrite with subordinate bornite which also contains anomalous gold, silver, cobalt, and tungsten.
Contango ORE announced that Peak Gold, the company’s joint venture with Royal Alaska, a wholly-owned subsidiary of Royal Gold, approved a Phase 1 budget of approximately $9.1 million for the Peak gold-silver-copper project. The budget includes a Preliminary Economic Assessment, exploration for a third skarn orebody in close proximity to the Main Peak and North Peak orebodies, and acquisition of data to evaluate the potential for porphyry and/or epithermal mineralization elsewhere on the project. Included in the budget is 6,900 meters of exploration drilling and 74 line kilometers of induced polarization and Titan geophysical surveys. The exploration for new skarn mineralization will be conducted on four separate near-resource targets. Exploration for porphyry type deposits will be conducted in three prospect areas that have not been explored to date. The company also announced that a stream sediment sampling program was completed in late 2017 on its Noah block, west of the main resource area. The sampling identified three areas with anomalous gold or gold/copper mineralization where follow-up work is warranted.

Alaska Range

Usibelli Coal Mine held a 75th anniversary open house at its coal mining operations near Healy. The mine shipped its first 10,000 tons of coal to the US Army in Fairbanks in 1943 and since then has shipped coal to numerous power plants in Alaska and internationally. In 1971, six years before it was required by federal law, the mine pioneered a successful reclamation program including the now-standard process of recontouring and reseeding disturbed areas with a mixture of grasses and plants indigenous to the northern regions. Since 1971, more than 5,500 acres of land have been reclaimed. Last year, the mine reclamation team planted more than 25,000 trees and seeded 138 acres for final reclamation. The mine recently completed a haul road to access a new mining area known as the Jumbo Dome Mine. This new road provides access to 83 million tons of permitted coal with a 100-plus year mine life at current production levels.
White Rock Minerals announced drill results from its Red Mountain volcanogenic massive sulfide deposit in the eastern Bonnifield District. Significant results include 3.5 meters grading 15.1% zinc, 6.7% lead, 518 gpt silver, 2.1 gpt gold and 0.2% copper in West Tundra hole WT18-28, approximately 75 meters from the nearest drilling. At the Dry Creek prospect significant intercepts included 8.9 meters grading 6.5% zinc, 2.7% lead, 124 gpt silver, 0.7 gpt gold, and 0.2% copper in hole DC18-76; 4.7 meters grading 19.5% zinc, 7.8% lead, 466 gpt silver, 6.9 gpt gold, and 1.5% copper in hole DC18-79 in the Discovery lens; and 4.3 meters grading 4.8% zinc, 2.3% lead, 1,435 gpt silver, 2.2 gpt gold, and 0.5% copper in hole DC18-77 in the Fosters lens. The combined resource at the Dry Creek and West Tundra Flats deposits includes 16.7 million tonnes grading 4.1% zinc, 1.7% lead, 0.2% copper, 99 gpt silver, and 0.7 gpt gold including a high-grade component of 9.1 million tonnes at 5.8% zinc, 2.6% lead, 0.1% copper, 157 gpt silver, and 0.9 gpt gold. The company also noted that seven new prospects, including Hunter, Dry Creek South, Dry Creek East, West Tundra, Ram, Megan’s Draw, and South Platypus, were identified by ground and airborne geophysics, mapping, and geochemical sampling. Initial drilling results from Hunter include 1.4 meters grading 17.4% zinc, 3.9% lead, 90 gpt silver, and 1.6% coper in hole HR18-01 and 1.8 meters grading 13.8% zinc, 3.1% lead, 56 gpt silver, and 0.9% copper in hole HR18-02.
PolarX announced late 2017 and 2018 drilling results at the Zackly prospect on its Alaska Range project. Late 2017 drilling results included 18.44 meters grading 1.3% copper and 1.2 gpt gold from 169.5 m in ZM-17010, 5.85 meters grading 1.2% copper and 2.2 gpt gold from 88.8 m in ZM-17015, 33.43 meters grading 1.2% copper and 1.3 gpt gold from 98.27 m in ZM-17002, and 20.43 meters grading 2.1% copper and 1.7 gpt gold from 28.96 m in ZM-17007. The 2018 drilling program has included expansion drilling along strike and down dip below the current resource. Results include hole ZX-18020, some 850 meters east of the current resource base, which intersected 54.6 meters grading 0.6% copper, and 2.8 gpt gold starting at 2.5 meters depth and 9.3 m grading 3.3% copper, 2.3 gpt gold, and 19.7 gpt silver in hole ZX-18023. Mineralization is hosted in garnet skarn above a fault which brings the mineralized skarn into contact with intrusive diorite. The company also has undertaken a 50-meter line-spacing airborne magnetics program over the entire northern part of the property, completed a detailed soil sampling and geological mapping on a 200 by 150 meter grid over the Mars target, and conducted mapping and rock-chip sampling at the Moonwalk Tintina-style gold prospect. The inferred resource for the Zackly deposit is 3.4 million tonnes grading 1.2% copper, 2.0 gpt gold, and 14 gpt silver (41,200 tonnes of copper, 213,000 ounces of gold, and 1.5 million ounces of silver).
Alaska newcomer New Age Metals announced a lease-purchase option with a private Alaska corporation Anglo Alaska Gold to acquire the Genesis platinum group metal prospect north of Valdez. The drill ready reef style target has not been drilled, but surface samples returned 2.4 grams of palladium per tonne, 2.4 grams of platinum per tonne, 0.96% nickel, and 0.58% copper. The mineralized reef has been identified in outcrop for 850 meters along strike over a 40-meter true thickness and remains open to the east, west, north, and at depth. A separate style of chromite-bearing mineralization on the project contains up to 2.5 grams of palladium per tonne and 2.8 grams of platinum per tonne. Known platinum group metal mineralization covers a distance of 9 kilometers across the prospect. Welcome to Alaska, New Age Metals.
Nova Minerals (formerly Quantum Resources) commenced an 8,000-meter drilling program at its Estelle gold project. The reverse circulation drill program planned at the Oxide prospect will focus on the strong geophysical anomaly vectoring off drill hole SE12-04, which returned 41.5 meters grading 1.1 gpt gold. Drilling in this hole was approaching a strong geophysical anomaly further southeast which will be tested as the potential center of the intrusion-related gold mineralized system.

Northern Alaska

Trilogy Metals and funding partner South32 announced year-end 2017 drilling results and 2018 year-to-date results at the Bornite deposit at its Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA. The 2017 exploration program included a total of nine drill holes comprising 8,437 meters. This effort doubled the size of the mineralized footprint which now measures 1,500 meters by 2,500 meters over a 50-meter thick zone averaging at least 1% copper. Results suggest northeast and northwest-oriented controls on higher grade copper mineralization. Initial drilling from 2018 exploration includes 16.4 meters grading 5.34% copper and 0.21% cobalt in hole RC18-0247 in the South Reef trend. The company also announced that metallurgical work from late 2017 demonstrates that a high quality, 30% copper concentrate containing no deleterious metals can be produced. In addition, as part of its $10 million 2018 budget, the company tabled its resource estimate for cobalt. At a base case 0.50% copper cut-off grade, the deposit is estimated to contain in-pit inferred resources of 124.6 million tonnes grading 0.017% cobalt for 45 million pounds of contained cobalt. Below the resource pit shell, at a base case cut-off grade of 1.5% copper, the deposit is estimated to contain additional inferred resources of 57.8 million tonnes grading 0.025% cobalt for 32 million pounds of contained cobalt. This brings total inferred resources to 182.4 million tonnes grading 0.019% cobalt for 77 million pounds of contained cobalt. Results from metallurgical studies indicate that cobalt occurs predominantly as cobaltiferous pyrite which preferentially reports to the copper tailings.
Trilogy Metals announced final 2017 results and year-to-date 2018 results for its Arctic copper-zinc-lead-silver-gold project on the Upper Kobuk Mineral project, a business relationship owned and controlled by Trilogy and NANA. Under an Option Agreement between Trilogy Metals and affiliates of South32, South32 has the right to form a 50/50 Joint Venture with respect to Trilogy’s Alaska assets including the Arctic deposit. The 2017 field program included 785.2 meters of diamond drilling to collect representative sample material to conduct bulk ore sorting studies for the Arctic deposit. An additional 273.8 meters of sonic drilling was completed to collect geotechnical, hydrological, geothermal, and hydrogeological information for the tailings management facilities and waste rock dump for the project in support of the pre-feasibility study (PFS) released in early 2018. Proven plus probable mineral reserves used in the PFS are 43,038,000 tonnes grading 2.32% copper, 3.24% zinc, 0.57% lead, 0.49 gpt gold, and 36 gpt silver. Highlights of the PFS include a pre-tax NPV, calculated at 8% discount rate, of $1,935.2 million calculated at the beginning of the three-year construction period and an IRR of 38% for the base case. The after-tax NPV was $1,412.7 million and after-tax IRR was 33.4% for the base case. At $2 per pound copper price, after-tax payback is three years. The PFS estimates approximately 400 year round jobs during mine operations. Initial capital costs were estimated at $779.6 million and sustaining capital of $65.9 million for total estimated capital expenditures of $845.5 million over the estimated twelve-year mine life. In addition, closure and reclamation costs are estimated at $65.3 million. A minimum mine life of twelve years supports a maximum 10,000 tonne-per-day conventional grinding mill and flotation circuit to produce copper, zinc, and lead concentrates containing significant gold and silver by-products with a life-of-mine strip ratio of 6.9 to 1. Total “all-in” cash costs (initial/sustaining capital, operating, transportation, treatment and refining charges, road toll, and by-product metal credits) are estimated at $0.63 per pound of payable copper. Improvements in the NPV and IRR of the project over the 2013 preliminary economic analysis (PEA) include an improved mine plan that moves approximately $100 million in the pre-stripping costs forward which allows for a more aggressive mine ramp up over two years rather than four years estimated in the PEA. Other cost improvements include use of liquid natural gas versus diesel to generate the average 12.6 megawatts of power needed, reducing power generation costs and saving approximately $2/tonne in operating costs on processing, improved metallurgical recoveries, and an almost 20% increase in resource tonnes, along with an improvement in grade resulting from in-fill drilling programs conducted over the past few years. The company later approved a $6.7 million 2018 budget to advance the project towards feasibility and permitting.

Alaska newcomer Valhalla Metals announced the completion of a Canadian National Instrument 43-101 compliant mineral resource estimate for its 100%-owned Sun polymetallic volcanogenic massive sulfide deposit in the Ambler Mining District. Using a $75 per tonne cutoff value, indicated resource are 1.71 million tonnes grading 4.32% zinc, 1.48% copper, 1.11% lead, 60.0 gpt silver, and 0.21 gpt gold, and inferred resources are 9.02 million tonnes grading 4.18% zinc, 1.21% copper, 1.46% lead, 81.7 gpt silver, and 0.25 gpt gold for a combined total of 10.73 million tonnes of 10.97% zinc-equivalent. The company owns a 100% interest in the claims and all historical technical on the deposit and adjacent lands. Significant mineralization has been intersected on the property over a strike length of almost 3.5 kilometers, from the southernmost drill hole at the SW deposit northeast to the Picnic Creek prospect. The Main and SW deposits are comprised of multiple individual lenses that are spatially related. Three primary horizons of massive-sulfide mineralization have been identified at the Main deposit and two at the SW deposit. Mineralization is comprised primarily of sphalerite, tetrahedrite-tennantite, galena, chalcopyrite, bornite, pyrite, pyrrhotite, and arsenopyrite. Welcome to Alaska, Valhalla Metals.
Goldrich Mining Company announced 2017 and interim 2018 production figures from its Chandalar placer gold mine in the Brooks Range. The Chandalar mine is owned by Goldrich NyacAU Placer (GNP), a 50/50 joint venture between Goldrich and NyacAU. The mine production for 2017 was 14,670 ounces of raw placer gold, which is approximately equivalent to 12,000 ounces of fine gold. The 2017 production season ran from approximately June 4 through September 27. In addition, stripping of overburden and stockpiling of pay gravel was completed in mid-October. The partners also completed 231 sonic drill holes totaling 14,271 feet in 2017. A total of 15,000 feet of previously conducted reverse circulation drilling delineated approximately 10.5 million cubic yards of mineralized material at an average grade of 0.025 ounces (0.78 grams) gold per cubic yard containing an estimated 250,000 ounces of gold. For 2018 the total mine production from season restart on May 31 through the end of July was 10,557 ounces of raw placer gold, equivalent to approximately 8,657 ounces of fine gold. The company indicated that normal operating season is June through mid-September. The company indicated that anticipated production figures for 2018 will not allow GNP to meet year-end gold deliveries to Goldrich, at which point GNP will be dissolved and mining operations by GNP will cease. The parties have entered arbitration in an attempt to resolve differences.

Southeast Alaska

Hecla Mining Company announced year-end 2017 production and resources and first-half 2018 production and exploration results at its Greens Creek mine. The total cash cost per ounce of silver produced for 2017 was $0.71 per ounce versus $3.84 per ounce in 2016. The average grade of ore mined during the year was 12.88 opt silver, down from the average grade of 14.55 opt in the year previous. For the year the mine produced 8,351,882 ounces of silver, 50,854 ounces of gold, 17,996 tons of lead, and 52,547 tons of zinc. The mill operated at an average of 2,300 tons per day in 2017. Year-end reserves and resources included proven and probable reserves of 7,550,000 tons grading 11.9 opt silver, 0.10 opt gold, 3% lead, and 8.1% zinc. In addition the mine contains measured and indicated resources of 2,805,000 tons of indicated resources grading 11.2 opt silver, 0.09 opt gold, 2.9% lead, and 7.7% zinc. The mine also reported inferred resources of 2,708,000 tons grading 12.1 opt silver, 0.08 opt gold, 2.7% lead, and 6.9% zinc. For the first half of 2018 the mine produced 3,913,023 ounces of silver and 26,873 ounces of gold, both slight increases over 2017 first-half production levels. The mine also produced 10,326 tons of lead and 28,978 tons of zinc. Average grades mined include 12.08 opt silver, 0.097 opt gold, 3.06% lead, and 7.95% zinc. The mill operated at an average of 2,307 tons per day in the first half of 2018. Cash cost of production was negative $4.22 per ounce of silver compared to $1.26 per ounce in the year previous period.
Coeur Mining reported year-end 2017 production and resources and first-half 2018 production and exploration results at its Kensington mine. For 2017, production was 115,094 ounces of gold, a significant decrease over the 124,331 ounces of gold produced in the year previous period. The mine processed 668,727 tons of ore grading 0.18 opt gold. Average recovery was 93.5%. Average cash costs for the year were $920 per ounce. Year-end 2017 reserves and resources include proven and probable reserves of 620,700 ounces contained in 2,961,000 tons grading 0.21 opt gold; measured and indicated resources of 712,600 ounces contained in 2,743,800 tons grading 0.26 opt gold; and inferred resources of 304,800 ounces contained in 1,387,800 tons grading 0.22 opt gold. During first-quarter 2018 the mill processed 168,751 tons of ore, a slight increase over the 158,706 tons of ore produced in the year previous period. During the first quarter of 2018 the mine produced 26,064 ounces of gold grading 0.17 opt gold with an average recovery of 94%. During the second quarter of 2018 the mine produced 25,570 ounces of gold grading 0.16 opt gold with an average recovery of 92.6%. Average production costs were $1,010 per ounce in quarter one and $1,195 per ounce in quarter two. These lower production figures were anticipated due to mine sequencing. The company also indicated that development work and dewatering of the high-grade Jualin deposit is progressing with production increases expected in the second half of 2018. Jualin resources stood at 74,100 ounces of gold contained in 157,600 tons grading 0.47 opt gold (16.1 gpt gold). The company indicated that it expects full-year 2018 production from the mine at 115,000 to 120,000 ounces of gold.
Constantine Metal Resources and joint venture partner Dowa Metals & Mining Company announced additional drill results and initial results from metallurgical work at its Palmer volcanogenic massive sulfide deposit. Significant drilling results from the South Wall zone include 15.5 meters grading 1.6% copper, 4.8% zinc, 25 g/t silver, and 0.1 g/t gold in a 50-meter step-out. This interval includes 4.1 meters at 15.9% zinc and 6.1 meters at 3.6% copper. The results expand the zone to the west and confirm continuity of grade and width to the west and down-plunge toward the deeper South Wall EM zone. At the AG zone significant intercepts include 4.8 meters grading 436 gpt silver, 1.3 gpt gold, 3.6% zinc, and 1.6% lead and an additional 12.5 meters grading 217 gpt silver, 1.8 gpt gold, 5.2% zinc, 0.7% lead in hole CMR18-109; 43.3 meters grading 143 gpt silver, 0.5 gpt gold, 6.5% zinc, and 2.5% lead including 28.8 meters grading 141 gpt silver, 0.5 gpt gold, 9.0% zinc, and 3.5% lead in hole CMR18-110; and 21.1 meters grading 0.5 g/t gold, 92 g/t silver, 1% zinc, 0.4% lead, and 55% barium sulfate in a 90-meter step-out to the southeast, doubling the known strike of the AG zone to 450 meters. Mineralization remains open to expansion. Inferred mineral resources at the project currently stand at 8.1 million tonnes grading 1.41% copper, 5.25% zinc, 0.32 gpt gold, and 31.7 gpt silver. On the metallurgical front, initial tests confirmed that a high-quality barite concentrate can be produced as a co-product of copper-zinc-gold-silver recovery. Results indicate barite recovery of 91.1% to a clean, high-grade barite concentrate with a high specific gravity of 4.44. In August the partners commissioned a preliminary economic assessment (the first such study for the project) upon completion of the updated mineral resource estimate.
Following encouraging drilling results from late 2017, Grande Portage Resources announced an updated resource estimate for its Herbert gold project near Juneau. The resource estimate is based on 143 drill hole totaling 22,090 meters of drilling. The new resource contains indicated resources of 1,107,000 tonnes containing 257,950 ounces of gold at 7.25 gpt gold and an inferred resource of 423,200 tonnes containing 82,200 ounces of gold at 6.04 gpt gold, both at a 2.5 gpt gold cut-off. The system is open to length and depth and is host to at least six main composite vein-fault structures that contain ribbon structure quartz sulfide veins. Plans for 2018 include drilling of 18 to 20 holes to test up to four separate major veins, with emphasis on expansion of the Goat and Deep Trench veins.