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CONSTANTINE METAL RESOURCES LTD.
In early June crews began building pads for the 2013 drill program at theConstantine Metal Resources’ Palmer volcanogenic massive sulfide project inSoutheast Alaska. This US$3-million program, being funded by Dowa Metals& Mining Co., is targeting the expansion of Glacier Creek, the mostadvanced of a number of known VMS prospects across the 15,000-acre(6,300 hectares) property. See page 3.
A special supplement to Petroleum NewsWEEK OF
June 30, 2013
5 Battle over Pebble erupts in D.C. Washington policymakers, newspapers wade into Alaska resource skirmish
10 Mega-miner chases Nunavut VMS Glencore Xstrata invests C$40M on exploration of silver-rich Hackett River
14 Vast gravity anomaly grips junior Explorer formulates strategy to get to the bottom of Darnley Bay riddle
By SHANE LASLEYMining News
AUS$22 million option and joint ven-ture agreement forged with Dowa
Metals & Mining Co., Ltd. earlier thisyear is providing Constantine MetalResources Ltd. with the ability to resumethe expansion of a high-grade vol-canogenic massive sulfide deposit at itsPalmer project in Southeast Alaska.
In addition to a cash infusion duringtight financial markets, Dowa brings 130years of experience in the mining andsmelting of VMS ores to its newly forgedpartnership at Palmer.
“They bring expertise with financialresources to join our team in the nextsteps to realize the full potential of thePalmer project,” said ConstantinePresident and CEO Garfield MacVeigh.
Dowa, which began mining and smelt-ing VMS ore in the 1880s, has refined thescience of separating the precious andbase metals common to these complexdeposits. Today the company operates thelargest zinc smelter in Japan.
With most mines on the Japanese Islesshuttered, Dowa now looks overseas forconcentrates to feed its smelters. Palmer,a copper- and zinc-rich deposit situatedsome 35 miles (60 kilometers) from thePacific Rim deep-sea port of Haines, mayfit the bill.
“In this case, their interest, in part, isto lock up a strategic source of smelterfeed,” Constantine Vice President ofExploration Darwin Green told Mining
News.To earn a 49 percent stake in Palmer,
Dowa has agreed to invest someUS$20.75 million on exploration at
Palmer and pay Constantine US$1.25million in cash over a four-year span. ForConstantine and its shareholders, thismeans a substantial investment into theexpansion of the existing high-gradeVMS resource at Palmer without dilutingshare prices or giving up a controllinginterest in the project.
“It is a good deal in a good market, it’sa fantastic deal in this market,” Greensaid when Constantine and Dowa inked apreliminary agreement last November.
Dowa will get its feet wet at Palmerwith a US$3 million investment in Palmerduring 2013, which includes a
� A L A S K A
Japanese smelter eyes SE Alaska metalsIn hopes of securing future concentrates, Dowa agrees to invest US$22M to expand VMS deposits at Constantine’s Palmer project
3NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
North of 60 Mining News is a monthly supplement of the weeklynewspaper, Petroleum News. It will be published in the fourth orfifth week of every month.
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see PALMER PROJECT page 4
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Expansion of the Glacier Creek prospect is the focus of the 2013 drill program at the Palmer project. While one rig drills the steeply dippingSouth Wall zones, a second rig is testing RW, a more horizontal limb of the stacked layers of volcanogenic massive sulfide mineralization.
US$500,000 payment to Constantine withthe balance going to the exploration pro-gram.
“It will give our partners a chance toreally get familiar with the project beforeramping things up more aggressively,”Green explained.
Glacier Creek expansionThe 2013 exploration at Palmer, which
got underway in mid-June, includes a4,000-meter drill program targeting theexpansion of Glacier Creek, the mostadvanced of a number of VMS prospectsknown across the 15,000-acre (6,300hectares) property.
Five zones of mineralization have beendiscovered to date at Glacier Creek – RWEast, RW West, and South Wall zones 1, 2and 3.
The South Wall zones consist of paral-lel layers of steep-dipping VMS mineral-ization. At the upper extent of South Walla fault cuts and folds the three layers atwhich point they lay into a more horizon-tal orientation. South Wall Zone 2 andZone 3 are of the same age strata as twostrata drilled at RW, the flat lying limb ofthe mineralization.
Based on 32 holes drilled into the RWand South Wall zones through 2009, aninferred resource of 4.75 million metrictons averaging 1.84 percent copper, 4.57percent zinc, 0.28 grams per metric tongold and 29 g/t silver (using an NSR cut-off of US$50/t) has been calculated forGlacier Creek.
This resource calculation does notinclude 10 holes Constantine drilled intothe Glacier Creek deposit in 2010, a pro-gram that expanded the breadth of thezones at both South Wall and RW.
Hole CMR10-40, an 80-meter step-outto the east of the resource of South Wallzone 1, cut 20.8 meters grading 1.03 per-cent copper, 5.01 percent zinc, 0.14 gramsper metric ton gold and 11.3 g/t silver,including 12.05 meters grading 1.41 per-cent copper, 6.13 percent zinc, 0.17 g/tgold and 14.4 g/t silver.
Hole CMR10-39, drilled into South
Wall zone 3, cut 2.45 meters averaging 1.1percent copper, 4.52 percent zinc, 0.13 g/tgold and 24.8 g/t silver. This represents thedeepest massive sulfide intersection todate and expands zone 3 110 meters downplunge to the west.
South Wall mineralization has nowbeen defined from surface to a verticaldepth of 525 meters and over a strikelength of 450 meters.
Hole CMR10-35, a step-out alongstrike to the west-northwest, cut 7.1 metersaveraging 2.1 percent copper, 1.52 percentzinc, 0.18 grams per metric ton gold and16.8 g/t silver.
Hole CMR10-38 cut 10.15 meters ofRW mineralization averaging 0.7 percentcopper, 6.51 percent zinc, 1.02 percentlead, 0.39 g/t gold, and 89.7 g/t silver.Immediately below this intercept, the drillcut a 13.65-meter zone of precious metal-rich, base metal-leached oxide zone min-eralization grading 1.13 g/t gold and 148g/t silver.
To continue adding tonnage to theGlacier Creek VMS deposit, Constantineand Dowa have one rig targeting SouthWall and a second at RW.
“This year is all about expansion,focused on South Wall and RW,” Greentold Mining News. “There is RW East andRW West; and at South Wall there arezones 1, 2 and 3. So, there is really fivessubzones and they are all open to expan-sion.”
To build tons and get a sense of the sizeof the Glacier Creek deposit, Dowa andConstantine plan to continue step-outdrilling.
“The immediate focus is getting theexisting resources up to some sort of criti-cal size threshold,” he added.
Though Constantine has not yet com-missioned a scoping study for the GlacierCreek deposit, the company believes that,considering the grades encountered so far,a doubling of the tonnage of the currentresource would easily generate positive
economics for the Palmer project.“We have always felt that the next
US$10-US$15 million invested in thisproject would probably get you where youhave reached that critical size threshold,”Green explained.
To begin to see just how big the GlacierCreek deposit is, the 2013 program willinclude widely spaced step-out holes alongthe multiple open edges of the zones aswell as test the 300-meter gap between RWEast and RW West.
“The objective is to push the bound-aries out. We will come back and fillthings in after we frame in something thatlooks like it will work,” the explorationvice-president told Mining News.
Though the 2010 program has expand-ed the South Wall and RW zones beyondthe limits of the 2009 resource and the2013 drilling is expected to continueadding tonnage to the Glacier Creekdeposit, it is uncertain whether the part-ners will produce an updated resource cal-culation this year.
“We will evaluate that at the end of theseason,” Green said.
The exploration vice president said thatcalculating a new NI 43-101-compliantresource is not a priority for Dowa. Giventhe current state of the financial markets,even a robust expansion of the resource atPalmer would do little to bolsterConstantine’s share price and the companyhas little need to raise financing, leavingthe company to weigh the technical meritsof commissioning an independentresource estimate.
“It is a nice position to be in right now– to be somewhat independent, knowingthat we have funding for the project,”Green said.
Understanding metallurgyBeing primarily a smelting-refining
company with a long history of processingcomplex VMS ores, Dowa has a keeninterest in understanding the metallurgy ofVMS the Palmer mineralization.
“In terms of smelters and refineriesthey are some of the most sophisticatedoperators in the world,” Green said.
Dowa has been improving its expertisein separating the various precious and basemetals from VMS deposits since it beganmining Kuroko ore in northern Japan dur-ing the 1880s.
Kuroko is a black colored massive sul-fide ore composed of sphalerite, galena,chalcopyrite, pyrite, barite and other minorminerals. Although Kuroko ore containedabundant precious metals such as gold andsilver, they were difficult to smelt due tothe ore’s complex mineral composition.
As a result of technological improve-ment over the years, Dowa overcame the
metallurgical challenges of Kuroko ore.Today, Dowa’s Kosaka Smelter in northernJapan continues to be amongst the mosttechnologically advanced smelters of com-plex ore in in the business.
“Since its establishment in 1884, Dowahas faced many dramatic changes andchallenges but has weathered them withthe courage to make changes and a strongemphasis on technology,” said DowaGroup President Masao Yamada.
This long history of refining massivesulfide ores makes Dowa ideally suited forunderstanding the best techniques forachieving the most ideal metallurgy resultsfrom the polymetallic mineralization atPalmer.
“For us, it is a good fit that they havethat familiarity with VMS deposits,”Green said.
The 2013 program includes bench-scale metallurgical testing, work importantto Dowa as it considers the potential offuture concentrates for the KosakaSmelter.
Sourcing concentratesDowa’s interest in sourcing concen-
trates from the Pacific Northwest goesbeyond Palmer and VMS deposits. TheJapanese smelting and mining companyholds a minority interest in Huckleberryand Gibraltar, porphyry copper mineslocated in central British Columbia.
The smelting and mining companyowns 6.25 interest of Huckleberry, a B.C.operation that produced 35.11 millionpounds of copper, 2,578 ounces of gold,191,787 ounces of silver and 4,556 lbs. ofmolybdenum in 2012. Three of Dowa’sJapanese counterparts own 43.75 percentof Huckleberry, Imperial Metals Corp.owns the remaining 50 percent of the por-phyry operation.
Dowa holds a 6.25 percent stake inGibraltar through its 25 percent stake inCariboo Copper Corp., a Japanese consor-tium that owns 25 percent of the copper-molybdenum mine. Taseko Mines Ltd.owns the remaining 75 percent of the oper-ation.
Gibraltar produced 89.7 million lbs. ofcopper and 1.3 million lbs. of molybde-num in 2012. Upgrades currently beingcommissioned are expected to push cop-per production to more than 165 millionlbs. per year. Or more importantly to Dowaand fellow smelter, Furukawa Co. Ltd.,280,000 metric tons of copper concentrate.
Further afield but more akin to thePalmer project, Dowa owns 39 percent ofTizapa, a VMS mine in Mexico.Sumitomo Corp. holds a 10 percent inter-est of Tizapa; and Mexico-based Minas
4NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF JUNE 30, 2013
continued from page 3
PALMER PROJECT
see PALMER PROJECT page 5
“It is a good deal in a goodmarket, it’s a fantastic deal in this
market.” —Constantine Metal VicePresident of Exploration Darwin Green
By SHANE LASLEYMining News
A growing number of Lower 48 lawmakers areweighing in on the potential risks and rewards of
building a mine at the enormous Pebble copper-gold-molybdenum deposit in Southwest Alaska, shifting thefrontline of the escalating battle to Washington D.C.
With the U.S. Environmental Protection Agencyseemingly positioning itself to exercise unprecedentedpowers to halt the Pebble project without giving develop-ers the opportunity to have their plans vetted under thecurrent permitting process, the stage is set for a mêléethat could shape environmental policy in the UnitedStates.
“The decibel level is rising,” Peter Robertson, seniorvice president for corporate affairs with the PebblePartnership, told The Hill. “It’s gaining more attention allthe time — and appropriately so because of the momen-tous decision the EPA might make in a relatively shorttimeframe.”
On one side, a group of environmentalists, fishermenand West Coast Democrats contend that Bristol Bay’sworld-class salmon run is too vital a resource to allow alarge-scale mine like Pebble to be allowed there. Manybelonging to this anti-Pebble contingent have urged theEPA to employ its full arsenal to stop the potential devel-opment of this large-scale mining project, including apresumed provision under Section 404(c) of the CleanWater Act to pre-emptively deny the issuance of permitsneeded to develop and operate a mine at the colossaldeposit.
Although the U.S. Army Corps of Engineers has beenrelegated the authority over CWA Section 404 permits, aprovision grants the EPA the power to prohibit, restrict,or deny such permits that pose an unacceptable adverseimpact to fisheries or other water uses.
While this authority has never been used to deny aproject the right to apply for permits, the EPA claims ithas the power to do so.
Pebble proponents, including a group of Republicansenators, argue that the EPA does not and should notwield the power to strike down Pebble before developershave the opportunity to apply for permits.
Even The Washington Post has opined that Pebbledevelopers, Northern Dynasty Minerals and AngloAmerican, should be given the opportunity to have theirmining plans vetted by the full permitting process.
“If complete federal reviews find that the companiescan’t protect the fishery, regulators can reject the project.But, given the potential economic value of the mine, theyshould hear the companies out,” the newspaper conclud-
ed in a June 23 editorial on Pebble.
Republicans grill EPAThe latest volley on the Washington D.C. front of the
Pebble battle was launched by group of five Republicansenators concerned that the Bristol Bay Assessment – astudy being carried out by EPA to determine the effectslarge-scale mining would have on the fish resources inthe area where Pebble is found – is intended to build acase for denying the Pebble Partnership the ability toapply for permits.
Sens. John Barrasso, R-Wyo.; John Boozman, R-Ark.;Mike Crapo, R-Idaho; David Vitter, R-La.; and RogerWicker, R-Miss., questioned the motivations of theassessment in a June 11 letter to Ken Kopocis, nomineefor assistant administrator for EPA Office of Water.
“What harm would result from EPA allowing PebbleMine proponents to actually apply for a Clean Water Actpermit before commenting on potential mining impacts,instead of the agency speculatively opining on hypothet-ical scenarios?” the senators asked.
The hypothetical mining scenarios EPA used as abasis of the Bristol Bay Assessment have been a point ofcontention for Pebble proponents.
“The Bristol Bay Watershed Assessment process hastruly become the theatre of the absurd,” NorthernDynasty President and CEO Ronald Thiessen said.“Rather than waiting for the Pebble Partnership to submita proposed development plan for consideration by feder-al and state regulatory agencies under the NationalEnvironmental Policy Act, something that is expected tooccur this year, EPA has invented its own hypotheticalmine, it has continued to ignore modern mine engineer-ing practices and regulatory requirements, it has shunnedthe best available scientific and environmental data at itsdisposal, and it has created a public and peer reviewprocess designed to minimize scientific scrutiny of itswork.
The Republican senators claim the EPA has been eva-sive when it comes to the impetus for conducting theBristol Bay Assessment, leading the lawmakers to sur-mise “that the agency feels the assessment is a necessarypredicate for a future ‘pre-emptive veto’ of the PebbleMine project.”
“This is a dangerous and unprecedented tactic thatwould allow EPA to jeopardize the project even before aCWA permit application has been submitted,” the law-makers wrote.
The senators closed their letter with two final ques-tions for Kopocis to ponder, “Has EPA identified a spe-cific harm that will occur if Pebble Mine is allowed tosubmit a CWA permit application? If no specific harmhas been identified, why is EPA dedicating precious andscarce resources to speculation on potential miningimpacts to the Bristol Bay watershed?”
Vitter, the top Republican on the Environment andPublic Works Committee, said, “EPA is playing a dan-gerous game, using hypothetical situations to shut downjob creation.”
This sentiment is shared by the world’s largest busi-ness federation.
“EPA’s decision to choose a poor-performing hypo-thetical mine plan to base their study on is problematicand is stacking the deck against the project before it haseven been proposed. At a minimum, this exercise by EPAprejudices the fair and unbiased consideration of a mineproposal that would actually provide much needed jobs— thousands of them — for America’s economy,” theU.S. Chamber of Commerce wrote in a Bristol BayAssessment public comment letter to EPA.
Democrats petition ObamaWhile Republicans are pressing EPA for answers, a
group of West Coast Democrats are urging the ObamaAdministration to remain vigilant in protecting BristolBay from large-scale mines, and Pebble in particular.
The lawmakers – Sens. Maria Cantwell and PattyMurray, D-Wash.; Sens. Barbara Boxer and DianneFeinstein, D-California; and Sen. Jeff Merkley, D-Oregon– worry that developing the mammoth copper-gold-molybdenum project could harm the salmon runs in the
� A L A S K A
Pebble battle frontline erupts in D.C.Washington lawmakers, newspapers, U.S Chamber all weigh in on escalating resource development-conservation battle in SW Alaska
5NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
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Peñoles S.A. de C.V. owns the remaining51 percent.
Like Palmer, Dowa became involved inTizapa during the exploration phase.Since commercial production began in1994, concentrates from the Mexico minehave provided feed for the Kosaka Smelterand has been a cornerstone of Dowa’s zincbusiness.
With a growing deposit of VMS miner-alization situated a few short miles from aPacific Rim deep-sea port in SoutheastAlaska, Palmer may represent a futurecornerstone of Dowa’s business and anongoing feedstock for the Japanese firm’sstate-of-the-art smelter. �
continued from page 4
PALMER PROJECT
see PEBBLE BATTLE page 6
“If complete federal reviews find that thecompanies can’t protect the fishery, regulatorscan reject the project. But, given the potentialeconomic value of the mine, they should hear
the companies out.” —The Washington Post
“Today, the state’s (California) fishingindustry remains closely tied to the health of
Bristol Bay; Californians hold over 140 BristolBay fishing permits, the second highestnumber for any state after Alaska and
Washington; and these permits enable over550 jobs related to salmon fishing.”
—Sens. Barbara Boxer and Dianne Feinstein, D-California; Sen.Jeff Merkley, D-Oregon; and Sens. Maria Cantwell and Patty
Murray, D-Washington
“It is a nice position to be in rightnow – to be somewhat
independent, knowing that wehave funding for the project.”
—Darwin Green, vice president ofexploration, Constantine Metal Resources Ltd.
Bristol Bay region of Southwest Alaskaand by extension threatens thousands offishing-related jobs in their states.
“Our states have a strong maritime his-tory of which our commercial fishingindustries are a key part. In order to main-tain these direct fishing and processingjobs, and the jobs supported by associatedbusinesses like gear manufacturers, ship-builders, suppliers and other maritimebusinesses, we must maintain healthy, sus-tainable fishery resources,” the senatorspenned in a June 10 letter to PresidentObama.
The policymaking quintet referred to arecent study by the University of Alaska,Institute of Social and Economic Researchthat shows the Bristol Bay salmon fisherygenerates some 6,000 full-time jobs in
Washington, Oregon and California.The letter to Obama claims the Bristol
Bay fishing and processing industry “fuelsapproximately 12,000 seasonal jobs andanother 10,000 salmon-related industryjobs across the United States, from Alaskato Maine.”
This assertion, though, was a misreadof the Bristol Bay salmon industry studyby ISER.
The report reads, “In 2010, the BristolBay sockeye salmon fishery supported12,000 fishing and processing jobs duringthe summer salmon fishing season.Measuring these as year-round jobs, andadding jobs created in other industries, theBristol Bay salmon fishery created theequivalent of almost 10,000 year-roundAmerican jobs across the country, andbrought Americans $500 million inincome.”
The University of Alaska researchgroup did find that the West Coast states
are large beneficiaries of the economicactivity created by the Bristol Bay fishery.
According to the ISER report, “Aboutone-third of Bristol Bay fishermen andtwo-thirds of Bristol Bay processing work-ers live in West Coast states (Washington,Oregon and California).”
“Today, the state’s (California) fishingindustry remains closely tied to the healthof Bristol Bay; Californians hold over 140Bristol Bay fishing permits, the secondhighest number for any state after Alaskaand Washington; and these permits enableover 550 jobs related to salmon fishing,”the lawmakers wrote.
The letter urges Obama “to protectBristol Bay from any large-scale miningthat would threaten our nation’s vibrantfishing economy.”
To further this discussion, the WestCoast lawmakers requested staff meetingswith the Obama Administration’s Councilon Environmental Quality andDepartment of Commerce.
Economic engineThe Pebble Limited Partnership – a 50-
50 alliance forged between Vancouver,B.C.-based Northern Dynasty andLondon-based Anglo American – contendthat West Coast fishermen could enjoytheir annual bounty while mining the mas-sive Pebble deposit could add severalthousand jobs and billions of dollars ineconomic activity that centers on BristolBay and ripples outward across the coun-try.
In late May, the Pebble Partnershipreleased “The Economic and EmploymentContributions of a Conceptual PebbleMine to the Alaska and United StatesEconomies,” a 69-page report commis-sioned by the developer that forecasts amine at Pebble could contribute US$1.1-US$1.4 billion annually to gross stateproduct during the initial 25 years of oper-
ation.“Pebble is a substantial multibillion-
dollar state asset as shown by this report,which provides great insight regarding thelong-term positive economic impacts theproject could have for the region, stateand the Lower 48,” said PebblePartnership CEO John Shively. “For per-spective, the report indicates Pebbledevelopment alone would pay more inannual taxes to the state than the entirefishing industry combined. This clearlyshows Pebble development could be animportant economic driver for Alaska’sfuture.”
Compiled by IHS Global Insight,which is considered among the leadingeconomic analysis and forecasting firmsin the world, the economic report esti-mates that some US$4 billion in taxes androyalties from mining the ore at Pebble isprojected to be deposited into Alaska cof-fers over the first 25 years of production.The federal government would collectanother US$4.4 billion in taxes during thesame time-span.
Construction of the mine will require acapital investment of more than US$1.2billion annually in direct spending over afive-year timeframe.
During the construction phase, thePebble project would support some16,000 jobs across the United States,nearly a third of which are projected to beheld by Alaskans. Roughly half of thesome 5,000 in-state jobs would be direct-ly involved with developing the mine; thebalance of the swell in employment wouldbe with suppliers or result from jobsinduced by the added economic activityspurred by the development of Pebble.
Once the mine is built, it is projected toprovide roughly 2,900 operating jobs, ofwhich 915 will be at the mine. The aver-age annual wage for on-site workers atPebble is expected to be roughlyUS$109,500, according to the report, andabout 75 percent of these high-payingjobs are expected to be filled by Alaskaresidents.
“What is critical for us is that Pebbledoes provide a major positive impact inthe region and in Alaska,” Shively said.“At the local level, Pebble could provide adramatic increase in potential revenues tothe borough. This sort of project can cre-ate an economic transformation in aregion that currently faces economic chal-lenges, due largely to a serious lack ofyear-round jobs.”
In addition to jobs and entrepreneur-ship opportunities available to the resi-dents of the Bristol Bay region ofSouthwest Alaska, the report estimates themine would contribute some US$30 mil-lion in taxes to the Lake & PeninsulaBorough where the massive copperdeposit is located.
The IHS Global Insight study is basedon a conceptual mine plan using an itera-tion of the ongoing engineering workundertaken by the Pebble Partnership. Thestudy estimated the state and national eco-nomic benefits associated with a five-yearconstruction phase, followed by a 25-yearproduction phase, and the potential forthree subsequent 20-year developmentphases.
Pebble engineers are hammering outthe final details of a mine-plan that isexpected to be released to the public laterthis year.
“While we are still finalizing our initialdevelopment plan for Pebble, this starts togive us some context about the projectfrom an economic perspective. We arecontinuing our work on the environmentalpackage for the mine which is one of itsmost critical design elements. We lookforward to sharing our plan with Alaskanslater this year,” Shively added. �
6NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
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continued from page 5
PEBBLE BATTLE
7NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
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8NORTH OF 60 MINING
By CURT FREEMANFor Mining News
Further proof that the mining industryis undergoing fundamental changes
can be found in “Mine: A ConfidenceCrisis,” the 10th edition ofPricewaterhouseCoopers’s annual reporton the global mining industry. Thisrecently released report indicates that in2012 the top 40 global mining companiessaw net profits plummet 49 percent toUS$68 billion.
To make matters worse, after a 25 per-cent decline in average mining stockvalue in 2011 and a slower but still down-ward trend in 2012, mining stocksdropped an additional 20 percent in thefirst quarter of 2013. And gold companiestook it on the chin harder than companiesproducing other commodities; gold com-panies also suffered a 15 percent declinein market value, decreasing a whoppingUS$29 billion in market capitalization in2012. Companies are looking more andmore toward maximizing value fromexisting projects. New projects being con-sidered for acquisition will need todemonstrate at least a 25 percent internalrate of return on capital invested, if theywant major companies to take seriousinterest. With new CEOs and senior man-agers at a number of major and interme-diate producers, caution looks to be theword for the day, month and year.
Western AlaskaLINUX GOLD CORP. said it has exe-
cuted an agreement with KENNROBERTS to produce gold using a uniqueplacer mining technology at its DimeCreek project in the Koyuk MiningDistrict. Under terms of the agreement,Linux Gold will earn a dividend amountof 50 percent and Kenn Roberts will earna 50 percent interest after payback of aninitial US$32,000 provided by Roberts.During payback, 20 percent of all goldrecovered will be allocated to Linux Goldand 10 percent will be allocated toRobert. Details regarding the in-situ plac-er gold recovery process also were
released. Partners NORTHERN DYNASTY
MINERALS and ANGLO AMERICANPLC released economics and employmentestimates for their Pebble copper-gold-molybdenum project. During the five-year construction period of the miningfacility, the project would employ 2,525people directly and an additional 925indirect jobs in Alaska. In the lower 48-states, the mine would employ an addi-tional 6,250 indirect jobs. During the first30-years of mine life, the operation wouldemploy 915 people directly and an addi-tional 1,175 indirect jobs in Alaska.During the same 30-year period in thelower 48 states, the mine would employan additional 305 people directly and pro-vide an additional 6,070 indirect jobs.Average annual employee salaries esti-mated during construction and during thefirst 30-years of operations averageUS$63, 500 and US$72,500, respectively,which equates to wages that are 24 per-cent and 42 percent, respectively, abovethe average annual income in Alaska. It isestimated that 75 percent of the mine-based jobs would be held by Alaskan resi-dents, generating some US$400 millionper year in contributions to the Alaskaneconomy during construction andUS$1.14 billion to US$1.43 billion peryear in contributions to the Alaska econo-
my during operations. During the five-year construction period the projectwould pay the State of Alaska US$27 mil-lion per year in taxes and royalties.During the first 30-years of mine opera-tions, the project would pay the State ofAlaska US$136 to US$180 million peryear in taxes and royalties. Federal gov-ernment revenue generated in Alaskawould average US$54 per year during thefive-year construction period and US$164million to US$218 million per year dur-ing the first 30 years of operations.Estimated annual tax receipts to the Lakeand Peninsula Borough would range fromUS$29 million to US$33 million for thefirst 30 years of mine operations, com-pared with the commercial fishing indus-try’s tax contributions of US$1.5 millionto US$2 million per year. During the first30 years of operations at Pebble, the minewould churn out 150,000 to 300,000 met-ric tons of copper, 10 million to 40 mil-lion pounds of molybdenum, 400,000 to900,000 ounces gold, 1.25 million to 2.25million oz silver and commercially signif-icant amounts of palladium and rhenium.This 30-year production schedule wouldconsume only 17 percent of the Pebbledeposit’s known resources, indicating themine could be a part of Alaska’s economyfor more than 100 years.
FULL METAL MINERALS LTD.reported the release of a CanadianNational Instrument 43-101 technicalreport on its Pyramid copper-gold-molyb-denum project on the Alaska Peninsula.The US$3.7 million recommended budgetincludes 4,000 meters of additional infilland expansion drilling on the depositalong with additional surface explorationwork. At a 0.21 percent copper equivalentcutoff, this near-surface supergene enrich-ment zone hosts 93.7 million tons of min-eralization, averaging 0.40 percent cop-per, 0.019 percent molybdenum and 0.092grams-per-metric-ton gold, or 0.55 per-cent copper equivalent. This equates to823 million lbs of copper, 40 million lbsof molybdenum and 277,000 oz of gold.The hypogene zone hosts 79.1 millionmetric tons, averaging 0.26 percent cop-
per, 0.020 percent molybdenum 0.083 g/tgold, or 0.45 percent copper equivalent ata 0.21 percent copper-equivalent cutoff.This equates to 514 million lbs of copper,35 million lbs molybdenum and 212,000oz gold.
Alaska RangePURE NICKEL INC. announced com-
mencement of its 2013 exploration pro-gram on the Man Alaska property.Activity in 2013 will consist primarily ofa 2,200-meter drill program. The workprogram will focus on a zone of nickel-copper-platinum group element mineral-ization, informally termed the Eurekazone, identified in the Alpha mafic-ultra-mafic complex in 2012. The Alpha com-plex is one of five discrete mafic -ultra-mafic complexes located on the 47,000-hectare (116,137 acres) property. TheEureka zone consists of a broad intervalof disseminated sulfide mineralizationthat straddles the contact between gab-broic and ultramafic rocks in the northernhalf of the Alpha complex. Past drillinghas intersected the zone in widely spacedholes along a strike length of seven kilo-meters (4.34 miles) in the central part ofthe complex.
WESTMOUNTAIN GOLD INC. report-ed the start of its summer 2013 explo-ration program at its Terra gold project inthe western Alaska Range. The programincludes an upgrade of the pilot mill facil-ity, construction of a C-130 Hercules air-craft-capable runway, road constructionand mine portal construction. This infra-structure expansion should result in therecovery of gold during the 2013 season.Additional exploration and drilling areplanned for later in the season.
Southeastern AlaskaCONSTANTINE METAL
RESOURCES LTD. said it has com-menced a 4,000-meter drilling programon its Palmer volcanogenic massive sul-fide project near Haines. The US$3 mil-lion 2013 budget is funded by Dowa
� C O L U M N
Profits of top miners plummeted in 2012Industry focuses on maximizing value of existing projects; new projects need 25 percent internal ROI or better to interest buyers
TheauthorThe author
Curt Freeman,CPG #6901, is awell-known geol-ogist who lives inFairbanks. He pre-pared this column CURT FREEMANJune 24. Freeman can be reached bymail at P.O. Box 80268, Fairbanks, AK99708. His work phone number atAvalon Development is (907) 457-5159and his fax is (907) 455-8069. His emailis [email protected] and his website iswww.avalonalaska.com.
see FREEMAN page 9
Metals & Mining Co., Ltd. The currentdrill program includes plans for 10 to 15holes focused on the South Wall and RWzones, both of which are open to expan-sion in multiple directions. The 2013 pro-gram also will include metallurgical testwork, downhole geophysics, and environ-mental baseline surveys. The project ishost to a NI 43-101-compliant inferredresource of 4.75 million metric tons,grading 1.84 percent copper, 4.57 percentzinc, 0.28 g/t gold and 29 g/t silver.
ARROWSTAR RESOURCES LTD.reported the release of a NI 43-101 tech-nical report on its Snettisham iron oreproject south of Juneau. The companyhas conducted additional mapping andsample work over the project in May andfiled a drilling permit for the project.Arrowstar hopes to drill up to nine holesto depths of 500 meters this year.Additional geophysics and geologicmapping would accompany the drillingin the proposed US$1.2 million explo-ration program. �
9NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
By J. P. TANGENFor Mining News
Here’s an open letter to Sen. MarkBegich, D-Alaska:
Dear Sen. Begich, Last week, I had the privilege to sit in
on a constituent teleconference with youconcerning a number of issues confrontingAlaska. During the course of your com-ments, and in response to a question con-cerning the Pebble Project, you indicatedthat you were reserving judgment untilEPA’s pending Bristol Bay Assessmentwas complete. Implicitly, you suggestedthat the assessment was entitled to greatweight, and that your opinion on the proj-ect would be driven by the conclusionsreached in that study.
Your comments along these lines are ofgrave concern to this writer because theBristol Bay Assessment, as they say onCapitol Hill, will be “Dead on Arrival.”
There is no shortage of flaws in theprocess the EPA has used in creating theassessment. Among the most basic is thatit is premised upon a hypothetical minethat the Pebble Project has not proposed toconstruct and which, under existing statu-tory and regulatory requirements, couldnot be permitted. Distilled to its essence, itis a fabrication based upon weak science,cobbled together by a ragtag band of folkswho are driven by different, unhealthymotives.
The fishermen of Seattle fear a possi-ble impact on their bread-and-butter fish-ery. The residents of the Bristol BayRegion have been electrified by baselessfear-mongering. The multimillion-dollarenvironmental industry has seized on thisproject to burnish its fund-raising mission.Little needs to be added to the publicrecord about Bob Gillam’s motivation.And EPA has gone way out on a limb,legally, to enlarge its authoritarian role. Inthe classic context of American democra-cy, a variety of activists, operating in theirown self-interest, have come together in acommon cause to shoot themselves in thefoot.
My concern here is not that you give
heed to these diverse naysayers. Of courseyou must - that is your job – you couldlose your job if you did not. My concernis that you scare the rest of the Alaskacommunity by suggesting that once theEPA has done its thing, you will make an“ex cathedra” pronouncement that willsomehow give credence to what the EPAhas already telegraphed it will conclude. I,for one, urge you to keep your powder dry,not only at this point, but for a long timeinto the future. And here’s why:
For the past 35 years, the United Stateshas worked hard to put into place a com-prehensive process for the regulation ofhow and where industry may impact theenvironment. Everything from endlessenvironmental impact statements to intri-cate rules governing every aspect ofpotential water and air pollution has beengenerated. The detailed examination ofvirtually every jot and tittle on every proj-ect has filled the case law reports in lawlibraries across the country. The regulatoryprocess works to a fare-the-well. ThePebble Project will be the beneficiary ofevery single one of those prescriptions.No one is going to turn a blind eye to anytheoretical risk to anyone associated withmining in the Bristol Bay Region.Comprehensive environmental regulationinsisted upon by federal, state and localagencies and overseen by the full array ofstakeholders ensure that should the PebbleProject ever mature into a mine, it will bethe very best development that scienceand technology can assemble.
There are other factors, however, thatyou should also keep in the back of yourmind when pondering your political posi-tion. Perhaps 7 billion people around theworld want to enjoy, at a minimum, theAmerican standard of electricity andplumbing, and that demands new copper.The Pebble deposit is huge, but not nearlyhuge enough to meet the projectedrequirements. Assuming that copper mustbe mined for computers and hybrids, if fornothing else, the choice is whether tomine it in the most regulated environmentin the world or to ship those many jobsoffshore to less regulated jurisdictions
where pollution and other social negativesmay thrive. If you opt for regulation, as wemust, where in America would you preferto remote Alaska, a state more than threetimes the size of California? And where inAlaska would be better than in the poorestregion of the state where thousands oflocal jobs paying wages far in excess ofthe state average for perhaps 100 years ormore would actually do some good?Currently, southwest Alaska is rapidly los-ing its population base due to the dearth oflocal economic opportunities. The PebbleProject could staunch or even reverse that.
Finally, permit me to say that you havecommendably demonstrated courage dur-ing your brief tenure by pushing backagainst an administration of your ownparty that inarguably has no sense ofAlaska issues. Mining is Alaska’s second-largest industry, and the Pebble Project isthe largest potential mining developmenton the horizon, but there will be more. Itis critical to all that you make sound deci-sions with regard to this subject. Alaska isa resource state; the Pebble Project is animportant resource. It deserves watching,not prejudgment. �
� C O L U M N
Senator Begich, don’t prejudge Pebble!Consider ‘reserving judgment’ about the mine project for the time being, given the blatant inadequacy of the EPA’s assessment
Mining & thelaw
The author,J.P. Tangen hasbeen practicingmining law in J.P. TANGENAlaska since 1975. He can be reached [email protected] or visit his Web site atwww.jptangen.com. His opinions do notnecessarily reflect those of the publishersof Mining News and Petroleum News.
Comprehensive environmentalregulation insisted upon by
federal, state and local agenciesand overseen by the full array ofstakeholders ensure that shouldthe Pebble Project ever matureinto a mine, it will be the very
best development that science andtechnology can assemble.
—J.P. Tangen, guest columnist
Contact North of 60 Mining News:Publisher: Shane Lasley • e-mail: [email protected]
Phone: 907.229.6289 • Fax: 907.522.9583
continued from page 8
FREEMAN
By ROSE RAGSDALEFor Mining News
Among the dozen or so companiesthat are advancing mineral-rich
deposits in Nunavut this year, none hasmore going on inside and outside of theterritory this summer than GlencoreXstrata plc.
Xstrata plc, owner of the Hackett Riversilver-zinc project located in westernNunavut, merged with GlencoreInternational plc in late May to becomeone of the world’s largest mining andtrading companies. The US$30 billiondeal created a mega-entity that employsnearly 200,000 people in 50 countriesaround the globe to generate full year rev-enues of about US$245 billion. The com-bination is expected to produce near-termsavings from operational synergies ofUS$500 million to US$800 million and
untallied additional savings down theroad from reductions in capital spending.
Glencore is a global operator in diver-sified commodities and, in addition tometals (copper and zinc), also trades inenergy products such as oil and naturalgas. Its agricultural products businessmanages stockpiles of agricultural prod-ucts such as grains, sugar and cotton.
Xstrata is more focused on mining andprocessing metals such as cobalt, zinc,iron and gold. It also has a coking coaloperation which mines and processes coalfrom mines throughout the world. Thecompany is the world’s fourth largestmining company and its largest zinc pro-ducer,
A 2012 pro forma calculation for acombined Glencore and Xstrata showsthat copper accounts for 33 percent of thecompany’s earnings, followed by coalwith 25 percent and zinc with 15 percent.
Trading in metals contributed 17 percent,while trading in energy and agriculturalcommodities contributed 5 percent each.
Xstrata reported earnings of aboutUS$1.2 billion in 2012 on US$31 billionin revenues, showing a profit margin lessthan 4 percent, while Glencore’s US$3.1billion in after-tax earnings showed aprofit margin of less than 1.5 percent.
Silver-rich VMS in NunavutIn Canada, Xstrata employed about
6,000 workers in 2012 at two mines andthree plants that produced zinc; one mineand two plants that produced copper andtwo mines and one plant that producednickel.
In Nunavut, the company is advancingthe Hackett River Project, which hosts sil-ver-rich volcanogenic massive sulphidemineralization on claims covering 10,637hectares (26,284 acres). The property and
the contiguous Wishbone and Muskclaims to the south are located in thewestern region of Nunavut about 625kilometers (387.5 miles) southwest of thearctic Hamlet of Gjoa Haven.
Xstrata Zinc Canada purchased mostof the Hackett River property and certainof the Wishbone claims from Sabina Gold& Silver Corp. in October 2011 for C$50million, plus a 22.5 percent royalty on thefirst 190 million ounces silver producedfrom the properties and a 12.5 percentroyalty on all payable silver producedthereafter.
The buyer also agreed to incur not lessthan C$50 million on exploration andother expenditures on the properties overa four-year period in order to advancethem toward production.
As of December 2011, Hackett Rivercontained a potentially mineableresource, including an indicated resourceof 43 million tons with 200 millionounces of silver (averaging 144 grams permetric ton) and 2 million metric tons ofzinc (4.65 percent) along with an addi-tional inferred resource of 15 million tonswith 64 million ounces of silver (136 g/t)and 652,000 tons of zinc (4.46 percent).The project also contains appreciablequantities of copper, lead and gold.
Glencore Xstrata is currently studyingdevelopment of a proposed 15,000-met-ric-tons-per-day open pit and under-ground mining and milling operation atHackett River. Four open-pit and twounderground mines would produce250,000 metric tons per year of zinc over15 years, and provide 800 jobs duringconstruction and 500 when operating.The zinc would be shipped out throughthe Northwest Passage, past Resolute Bayand down the west coast of Baffin Islandto Europe.
Substantial progress in 2012Glencore Xstrata completed major
exploration in 2012, engaging five drillsto complete 51,548 meters of diamonddrilling on mining leases in the northernpart the Hackett River property, which isbarely explored. The company drilled 203holes totaling 51,548 meters during afield program that lasted 219 daysbetween February and September.
Of the 43,500 meters of explorationdrilling, 24,500 meters were focused onextensions of the Main Zone, EastCleaver, Boot and Jo Deposits in hopes ofincreasing resources, while 19,000 meterswere drilled to test new geophysical andgeochemical targets for potential discov-eries.
The major also drilled 8,000 meters ofgeotechnical and metallurgical holes, pri-marily condemnation drilling in severalareas where potential infrastructure ormine workings may be located to supportan ongoing prefeasibility study.
In addition, Glencore Xstrata’s 2012campaign included two drill holes, fieldsampling/mapping work across the near-by Wishbone, Mahna Mahna, Hackett andClaim X properties, some downhole geo-physics drilling and airborne surveysflown over some portions of the property.
Glencore Xstrata has said it anticipatescompletion of the prefeasibility study inJune. Meanwhile, the company has most-ly completed environmental and socio-economic baseline studies for the projectand hopes to complete and submit to reg-
� N U N A V U T
Major chases Hackett River VMS projectNewly merged Glencore Xstrata advances a step in quest to unlock silver-zinc property’s potential with port and road infrastructure
10NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF JUNE 30, 2013
Cu29
63.55
World-class project. World-class science.
Pebble is a world-class copper deposit and one of North America’s most significant copper
discoveries. Since 2001, more than 100 independent scientists and technicians have
conducted one of the most extensive environmental studies program in Alaska.
The Pebble Partnership is committed to responsible resource development in Southwest
Alaska — recognizing that a world-class project requires world-class science.
www.pebblepartnership.com
see HACKETT RIVER page 11
ulators a draft environmental impactstatement in the third quarter of 2013.
Ambitious exploration in 2013For 2013 Glencore Xstrata embarked
on another advanced exploration programwith a similar February-September sched-ule. The company is spending C$40 mil-lion, adding a sixth drill rig and targeting57,000 meters of diamond drilling. Of the50,000 meters that has allocated for 2013exploration, 21,000 meters are beingdrilled near known deposits, while 29,000meters will seek deposits in unexploredareas of the property.
The remaining 7,000 meters will begeotechnical drilling to support the pre-feasibility study, pit slope and under-ground mining and foundations.
Glencore Xstrata also planned to aug-ment the drilling this year at HackettRiver with more downhole geophysicsusing BoreHole ElectroMagnetic technol-ogy, and to commission more airbornesurveys and surface geophysics as well asmapping and sampling on the property.
In its annual report of mineralresources, the company May 3 reportedan updated resource estimate for theHackett River project that reflects a 34percent increase in all categories.Measured-and-indicated resources at theproject climbed to 25 million metric tonsgrading 4.2 percent zinc and 130 g/t sil-ver, while inferred resources rose to 57million metric tons grading 3 percent zincand 100 g/t silver. This brings the pro-ject’s measured-and-indicated silverresources to 105 million ounces silver,with another 183 million ounces in theinferred category.
“The Hackett royalty is a significantasset to Sabina,” said Sabina Presidentand CEO Rob Pease. “We are veryencouraged by Xstrata’s progress on theproject and their current activities. Themore work done to de-risk and advancethe project, the more the value of the roy-alty should materialize for our sharehold-ers.”
Port and road accessGlencore Xstrata’s tentative timeline
for the project calls for development andconstruction of a mine between 2015 and2018. A major hurdle to forward momen-tum, however, is the project’s remote loca-tion. The Hackett River project site has noroad access, but it is located about 80kilometers (50 miles) west of a potentialdeep-water port on the shore of BathurstInlet.
The company is currently evaluatingthe potential for year-round shipping fromBathurst Inlet. Glencore Xstrata andneighbor Sabina, which is advancing theBack River gold project located about 70kilometers (43 miles) to the south, recent-ly submitted a new “Baffin Inlet Port andRoad” project proposal to the NunavutImpact Review Board with additionaldetails on environmental issues, wildlifeprotection, marine and road traffic thanan earlier version that they asked the reg-ulator to consider in December.
BIPR, formerly known as BIPAR, isnot a new project. Mining companies andothers in Northwest Territories andNunavut have much of spent the pastdecade studying and promoting the devel-opment of a port about 40 kilometers (25miles) south of the Hamlet of BathurstInlet. The proposal was previouslyadvanced through the environmentalapprovals process a few years ago by a50/50 joint venture between regional con-tractor Nuna Logistics Ltd. and Kitikmeot
Corp., a birthright corporation, owned bythe Inuit of the western Kitikmeot Regionof Nunavut.
The latest proposal, submitted by theBIPR Company, the 50-50 joint ventureformed by Glencore Xstrata and Sabina –calls for construction of a deep-water portin Bathurst Inlet with connecting roads tothe Hackett River project site and to theBack River project site, as well as a futureconnection to the existing ice road whichservices the Ekati and Diavik mines fromYellowknife, Northwest Territories.
BIPR’s first stage — which could startas early as 2015 — would see the con-struction of a wharf to serve specially-designed 50,000-metric-ton polar class 2(about 200 meters in length) vessels),which would deliver fuel and bulk cargoand general supplies to the port, and even-tually serve to transport zinc concentrateto Europe.
BIPR also would include a dock tohandle barges serving communities in theKitikmeot Region, a 200-person campand services, a 220-million-liter dieselfuel tank farm, a 40-megawatt powerplant (capable of producing four timesmore electricity than the power plant orIqaluit, Nunavut’s capital), and a 1,200-meter airstrip and heliport.
The first phase of the project alsowould include the construction of 10-meter-wide, 83-kilometer (51.5 miles)road, with as many as 27 bridges.
Building on previous proposalThe new proposal will determine the
guidelines for the project’s future draftenvironmental impact statement.
But the companies won’t have to comeup with a new environmental impactstatement; instead they supplement anexisting draft EIS with more information,Hackett River project manager DenisHamel told reporters in April.
In May, the Review Board approvedthe new proposal and the draft environ-mental impact statement on the project isbeing prepared for filing with the regula-tor later this year.
“We are also pleased to have NIRBapproval to advance through the permit-ting process for BIPR. We view the portand road as infrastructure that will serveboth industry and the regional communi-ties of Nunavut. We have a good workingrapport with what is now the Canadianzinc division of Glencore Xstrata, andlook forward to continuing our mutuallybeneficial relationship,” Pease said.
Representatives of Glencore Xstrata,meanwhile, have been conducting com-munity consultations, and gave a publicpresentation in Yellowknife May 28.
The biggest issue discussed at theYellowknife meeting was caribou, accord-ing to a report in the NWT & NunavutChamber of Mines May 2013 newsletter.The BIPR region is an area that both theBathurst and Ahiak caribou herds use, andthese herds migrate annually from theNorthwest Territories to Nunavut andback. Caribou calving grounds are alsolocated “not far away” from the proposedport site.
Port essential to economicsThe Chamber also observed that the
main Hackett River deposit was actuallydiscovered in 1969, but a lack of trans-portation infrastructure has been a majorfactor in it not becoming a mine in all theintervening years.
“We are pleased to see the BIPRCompany advancing the port and roadproject. The region hosts great mineralpotential, and the Inuit have selected asignificant amount of sub surface landsin the region with hopes that they willalso benefit from future mining on theirlands. We are looking forward to the
BIPR Company’s good work to advancethe project in an environmentally respon-sible manner, and in a way that providessignificant benefits to the North,” theChamber added.
Glencore Xstrata hopes to prepare forpre-construction of the port and roadproject in 2014.
Glencore Xstrata’s Hamel said thepartners are also seeking additional part-ners to offset the project’s cost, which ear-lier proponents estimated at C$270 mil-lion.
Though Glencore Xstrata is still yearsaway from a production decision atHackett River, Hamel said the companywants the port built because it will ensurethe economic viability of the proposedmine.
“Shipping year-round is still the besteconomic choice,” he told an audience atthe 2013 Nunavut Mining Symposium inIqaluit in April. Spending money toadvance BIPR now seems like a goodshort-term investment, he added.
That’s because, among other things,year-round shipping – at a frequency ofone ship a month – will reduce the num-ber of ships at the port site at any giventime, which will reduce the footprint ofthe proposed mine, Hamel said.
He said the ships would take the samepath along the shipping route, when pos-sible, to minimize the extent of ice break-ing, and the broken ice would be slightlylarger than the width of the ship (about 35meters).
Hamel said the companies also plan todevelop accident and spill preventionplans that must be approved by federaland territorial regulators before shippingbegins.
He also cited recently developed minesin Nunavik, Quebec and Labrador thathave shipped through the winter monthswithout incident. �
11NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF JUNE 30, 2013
kinross.com
First things first. At Fort Knox, our priorities are simple. Our people. Our community.Our environment.
Fairbanks Gold Mining Inc.A Kinross company
We invest in our people, so they are trained to do the best job possible.
We support our community with charitable donations, volunteer hours and local purchases.
We adhere to the toughest standards to protect water and air quality. These are our priorities.
Because at Fort Knox, it’s about putting first things first.
continued from page 10
HACKETT RIVER
By SHANE LASLEYMining News
R egardless of having its stock price bat-tered to the point of triggering a
delisting review by the Toronto StockExchange, Pure Nickel Inc. has musteredresources sufficient to carry out multimil-lion-dollar mineral exploration programs atboth of its Alaska properties in 2013.
Due to the low share price of the stock,Pure Nickel’s market capital fell below theC$3-million-threshold for mining compa-nies listed on the TSX, which triggered thedelisting review. Pure Nickel has until earlySeptember to meet the TSX market caprequirement. At the current shares out-standing, the explorer’s share price musthold at or above C4.5 cents for 30 consecu-tive days to satisfy the minimum criteria. AtJune 25, Pure Nickel shares were at C5cents on the TSX.
Currently, Pure Nickel’s market capbarely accounts for the company’s roughlyC$2.5 million of working capital and givesthe company little credit for the US$3.5million of exploration being funded by itspartner, Itochu Corp., at the Man nickel-copper-platinum group element project inAlaska; or the company’s portfolio of min-eral properties, including the Salt Chuckpalladium-gold project in SoutheastAlaska.
“The markets aren’t a lot of fun,” PureNickel President David McPhersonexplained during a May interview with TedOhashi of Ticker Talk. “But I like to thinkthat we have been better than most at man-
aging our way through it, not withstandingwhat the share price is. We are in a strongcash position today – our working capital isjust under C$3 million, which compared tomy peer group is very strong.”
While he may not be able to control themarkets, McPherson said he can positionPure Nickel to be ready when investorsonce again have an appetite for the high-risk, high-reward opportunities that themineral exploration sector offers.
To that end, Pure Nickel and Itochu arezeroing in what appears to be a massivezone of nickel-copper-PGE mineralization
at Man. Once the partners are finished withtheir drilling, the Toronto-based explorerwill mobilize the rig to Southeast Alaska totest a high-grade gold discovery at its sole-ly-owned Salt Chuck palladium-gold proj-ect on Prince of Wales Island.
Eureka discoveryItochu has spent roughly US$21 million
on exploration at Man since partnering withPure Nickel on the property in 2008. Thiswork has earned the Tokyo-based companya 30 percent interest in the project and ledto the discovery of what the partners believe
is a distinct and widespread layer of plat-inum-palladium-gold-copper-nickel miner-alization across a wide swath of the centralportion of the 181.5-square-mile (470square kilometers) property that covers ofthe Wrangellia Terrane.
“I think both Itochu and ourselves feelthat the drilling in 2012, combined withprevious year’s drilling, has led to the iden-tification of a significant zone of mineral-ization which occurs in the same geograph-ic position in every drill hole, so we know ithas some continuity,” explained PureNickel Senior Geologist Jon Findlay.
This zone, which has been dubbedEureka, is a subset of the 21-mile- (33 kilo-meters) long Alpha mafic-ultramafic com-plex that stretches across the central portionof the Man property.
Eureka consists of a broad interval ofdisseminated sulfide mineralization thatstraddles the contact between gabbroic andultramafic rocks in the northern half of theeast-west trending Alpha complex. Thezone was first recognized in 2010 drillholes PNI-10-35 and PNI-10-36. Hole 35cut 32 meters averaging 0.169 grams permetric ton platinum-palladium-gold, 0.1percent copper and 0.23 percent nickel.Hole 36 cut 165.5 meters averaging 0.272g/t platinum-palladium-gold, 0.13 percentcopper and 0.28 percent nickel. A 2012 drillhole, PNI-12-063 confirmed the continuityof the mineralization with an 80.95-meterinterval averaging 0.315 g/t platinum-palla-dium-gold, 0.17 percent copper and 0.25percent nickel.
Pure Nickel said that a review of pastdrilling on the property shows that all drillholes that intersected the Eureka zonestratigraphy have encountered disseminat-ed sulfide mineralization with strikinglysimilar grades.
Historic holes that cut the Eureka zoneinclude:
•PNI-10-29, which cut 94 meters aver-aging 0.15 g/t platinum-palladium-gold,0.06 percent copper and 0.22 percent nick-el;
•PNI-07-01 cut 85 meters averaging0.224 g/t platinum-palladium-gold, 0.12percent copper and 0.27 percent nickel;
•PNI-07-02 cut 7.9 meters averaging0.438 g/t platinum-palladium-gold, 0.07percent copper and 0.27 percent nickel;
•FL-003 cut 77.1 meters averaging0.237 g/t platinum-palladium-gold, 0.14percent copper and 0.27 percent nickel; and
•Fl-006 cut 78.3 meters averaging 0.349g/t platinum-palladium-gold, 0.15 percentcopper and 0.29 percent nickel.
This widely spaced drilling has encoun-tered the Eureka zone along a strike lengthof seven kilometers (4.5 miles) in the cen-tral part of the Alpha Complex, which, forthe first time, provides a solid target inwhich the partners can explore with delin-eation drilling.
“We now have a level of predictabilityabout where the mineralization lies and soit de-risks the project a little bit, which as anexecutive makes me really happy,” saidMcPherson.
Pure Nickel and Itochu have kicked offthe 2013 program with delineation and con-firmation drilling within the seven kilome-ters of Eureka zone mineralization tappedto date. This drilling is anticipated to formthe basis for a maiden resource estimate forthe Man project.
Pure Nickel, which believes Eureka hasthe potential to stretch along the length of
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� A L A S K A
Pure Nickel navigates financial tempestDespite dour markets, Toronto-based explorer is drilling large PGE zone at Man, then high-grade gold discovery at Salt Chuck
see PURE NICKEL PROJECTS page 13
PUR
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A 1,700-meter drill program carried out by Pure Nickel in 2012 discovered nearly one-ounce-per-metric ton gold at the North Pole Hill of the Salt Chuck palladium-gold property. This year's pro-gram will follow-up on this road-accessible, high-grade gold discovery on Prince of Wales Island.
the Alpha complex, said testing the extentof this zone is a key objective for the com-pany.
“The Alpha complex as a whole isalmost 33 kilometers in length and becauseof the continuity we see where we have drillintersections … we believe there is thepotential to expand that zone of mineraliza-tion to the east and west, across the entireAlpha Complex,” explains Findlay. “FromPure Nickel’s point of view it is also impor-tant know how big this thing is.”
To begin to test Eureka’s ultimate size,the explorer plans to position some holesbeyond the seven-kilometer area where pastdrilling has tapped the zone.
“The MAN project continues to holdgreat promise, and we look forward toworking with our partner, Itochu, to unlockthe potential of the property in this our sixthseason of working together,” saidMcPherson.
Salt Chuck goldOnce drilling is completed at Man, Pure
Nickel plans to move the rig to its SaltChuck property on Prince of Wales Islandin Southeast Alaska, where the temperateclimate favors year-round drilling.
“We are pretty excited about this proj-ect,” McPherson said.
The historical Salt Chuck Mine pro-duced some 300,000 metric tons of ore,reported by U.S. government summaries(1948) to average 0.95 percent copper, 1.96g/t palladium, 1.12 g/t gold and 5.29 g/t sil-ver. The mine was the largest producer ofpalladium in the USA during its era of pro-duction.
While its palladium potential is whatinspired Pure Nickel to acquire the SaltChuck property in 2007, the company’senthusiasm for the project was heightenedby a high-grade gold discovery made in2012.
Targeting a geophysical and geochemi-cal anomaly that indicated a palladiumdeposit may be lying in wait, last year’s1,700-meter drill program instead hit nearlyone-ounce-per-metric ton gold at an areaknown as North Pole Hill, situated at thewestern end of the Salt Chuck property.
“We were targeting the same type ofmineralization at the mine and instead wegot extremely high gold mineralization,which you don’t see at the mine,” Findlaysaid.
NPH-12-04, the gold discovery hole, cut2.58 meters averaging 29.1 g/t gold, 14.1 g/tsilver and 0.79 percent copper; and includ-ed 0.35 meters averaging 127.8 g/t gold,57.6 g/t silver and 2.78 percent copper.
NPH-12-09, drilled 550 meters south-west of hole 4, cut 5.49 meters averaging1.2 g/t gold.
McPherson said, “It is extremely satisfy-ing to be able to report a new gold discov-ery. The styles of mineralization encoun-tered at North Pole Hill represent excep-tional targets for continued exploration.”
With the area drilled in 2012 showingrelatively low concentrations of gold in theoverlying soil, yet yielded nearly an ounce-per-metric-ton of the precious yellow metalin the drill core, Findlay took another lookat the geochemical data from Salt Chuckand identified areas that show much higherconcentrations of gold in soil samples.
“There are much better gold anomaliesthat have never been drilled,” explained thesenior geologist.
This provides Pure Nickel with two goldtargets to follow-up on when it returns toSalt Chuck this fall: expanding upon thehigh-grade gold discovered beneath a rela-tively weak gold anomaly; and drillingother geochemical targets with much high-
er concentrations of the precious metal.Pure Nickel hopes the drilling around
hole 4 will continue to tap high-grade gold,forming the basis for an initial resource inthe immediate area of the discovery, whilethe exploration holes will begin to test a2,000-meter trend of higher grade geo-chemical targets that indicates the prospectof a much bigger gold-system at SaltChuck.
“The gold anomalies in soils form a verycoherent, geologically interpretable trend.And I feel there is a real potential of a majorzone of mineralization following these goldanomalies,” said Findlay.
While gold has grabbed the spotlight at
Salt Chuck, broad zones of anomalous pal-ladium concentrations encountered atgreater depths, continue to provide tantaliz-ing clues to the platinum group metal theproperty is known for.
NPH-12-02 cut 50.1 meters averaging138 parts-per billion (0.138 g/t) palladium,including 234 ppb (0.234 g/t) palladiumover 12.85 meters.
NPH12-04 cut 43.5 meters averaging 94ppb (0.094 g/t) palladium.
Pure Nickel says these anomalous inter-sections appear to reflect primary magmat-ic mineralization, and they raise the possi-bility that remobilized palladium mineral-ization, such as at the Salt Chuck Mine,
may be associated with other structures notyet encountered in the North Pole Hill area.
Pure Nickel hypothesized that the NorthPole Hill anomalies reflect the presence ofthe same style of remobilized magmaticcopper-gold-silver-palladium mineraliza-tion found at the historic Salt Chuck mine,roughly 2,000 meters to the southeast.
These anomalies extend 1,500 metersalong strike to the east and west, and a sec-ond gold in soil anomaly splays southwardand continues a further 1,700 meters. PureNickel said the induced polarization anom-alies extend to the limits of the geophysicalsurveys, leaving the potential mineralizedstructures at Salt Chuck wide open. �
13NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF JUNE 30, 2013
continued from page 12
PURE NICKEL PROJECTS
A New in Remote Site AccessEra
F l y i n g i s o u r p a s s i o n , S a f e t y i s o u r m i s s i o n
By ROSE RAGSDALE For Mining News
You say the world’s frontiers have allbeen conquered, and Nature’s riddles
have all been solved? Don’t tell that toDarnley Bay Resources Ltd.
The Toronto-based junior is celebrat-ing two decades this summer of workingto unravel one of Earth’s most intriguingmineral mysteries. The puzzle lies deepbeneath the earth’s surface in Canada’sFar North in what potentially may be thestrongest isolated gravity anomaly in theworld and certainly, in North America.
Located near Paulatuk, NorthwestTerritories on the Arctic coast, theDarnley Bay Anomaly with gravity andmagnetic amplitudes of 132 milligals(mGal) and 1,350 nanoteslas (nT),respectively, has been favorably com-pared by the Geological Survey ofCanada to other prominent gravity anom-alies in the world. The anomaly is largerand stronger than any of these compara-tives by a wide margin, measuring 100kilometers (62 miles) long north to southand about 80 kilometers (50 miles) wide.
In fact, it extends right under the ham-let of Paulatuk into Darnley Bay, whichopens onto the Beaufort Sea in north-western Northwest Territories.
The GSC discovered the anomaly in1969, and its source has never beenexplained, despite numerous explorationprograms carried out by the GSC and sev-eral companies that included seismic andaeromagnetic surveys as well as othertests, sampling and some drilling.
Between 1969 and 1991, the GSC con-ducted both ground gravity and aeromag-netic surveys over the region. In 1970Northgate Exploration Ltd. flew a heli-copter-borne magnetic survey over themost intensive part of the gravity anom-aly and detected a coincident magneticanomaly.
In 1993 the GSC collected samplesfrom a number of basic sills east of theanomaly that contained minor amounts ofnickel, copper, platinum, gold, silver andcobalt. Geologists believe these rocks andmetals may be genetically associated withthe anomalies.
But what is it?Darnley Bay Resources has reviewed
all available geophysical and geological
data of the anomaly and surroundingarea.
“There are two different schools ofthought about the source of the anomaly;one is that it is similar to Sudbury basin inOntario and Noril’sk in Russia, and theother theory is that it is an IOCG (iron-oxide-copper-gold) deposit like OlympicDam (in South Australia). Both are asso-ciated with ultramafic rock,” said StephenW. Reford, P. Eng., Darnley BayResources’ chief technical officer anddirector.
Available geophysical data indicate alarge intrusive complex with interpretedsimilarities to the Sudbury Basin, theNorilsk deposits and the BushveldComplex in South Africa. The discoveryof diamonds on surface within the anom-aly area, and diamondiferous kimberliteson the nearby Parry Peninsula to thenorthwest, indicate the potential for a newdiamond district in the NorthwestTerritories.
Placer miners also have recovered goldand sulphides from local riverbed allu-vials in the area of the anomaly. Theseminerals could have been derived from anoverburden covered mineralized intru-sive.
Based on the results of its extensivework, the GSC interprets the Darnley Baygravity anomaly (132 mGal) to be muchstronger than, but similar to, the follow-ing:
Four times stronger than SudburyBasin (30 mGal), which hosts the world’slargest nickel-copper sulphide depositswhere production started in 1883 and iscurrently producing US$3 billion in metalsales annually. (Total resources at 2010prices exceed US$370 billion of nickel,gold and base metals.)
Five times stronger than the Noril’skdeposits (25 mGal), where the minedgrade of copper and nickel is the highestin the world. (Total resources at 2010prices exceed US$900 billion of nickel,platinum and palladium
Twice as strong as the BushveldComplex (65 mGal), estimated to contain70 percent of the world’s platinum andpalladium. (More than 11.5 billion metrictons averaging 5.44 grams per metric tonof platinum group elements.)
The GSC also has concluded that theDarnley Bay anomaly has a moderate tohigh rating to host nickel-copper-PGEdeposits.
Decades of explorationFormed in 1993, Darnley Bay
Resources has spent 20 years attemptingto unlock the secrets of the coincidentgravity and magnetic anomalies discov-ered at Darnley Bay.
In the mid-1990s, the mining andexploration company was granted by theInuvialuit Settlement Region the rightsfor exploration over some 566,572
hectares (14 million acres) which encom-pass the coincident anomalies.
Today, Darnley Bay Resources has 100percent control of exploration and poten-tial development of the property, subjectto certain back-in and other rights ofInuvialuit Regional Corporation, whichholds the land on which the anomalyoccurs.
In 1997 the company completed ahigh-resolution aeromagnetic surveywithin and around the area of the anom-aly. The survey covered 607,050 hectares(1.5 million acres) and was flown at anelevation of 120 meters in an east-westdirection with a line spacing generally800 meters apart, tightened to 400 metersover the core of the anomaly, and loos-ened up to 1,600 meters apart northwestof the anomaly.
Results of the survey indicated that themain source of the anomaly is a buriedintrusive body lying 1,000-3,000 metersbelow surface, and that it is complex andmay be a multiple injection intrusion withparts re-mobilized after the originalevent. The magnetic data suggest thatthere are several high angle fault zonesand dyke systems that show both verticaland horizontal displacements. The dataindicated that the project area has beenwell prepared structurally to host mineraldeposits.
Gas resources in the general area of
� N O R T H W E S T T E R R I T O R I E S
Junior targets huge Darnley Bay prospectTenacious explorer celebrates 20 years of working to unlock secrets of the strongest isolated gravity anomaly in North America
14NORTH OF 60 MINING
PETROLEUM NEWS • WEEK OF JUNE 30, 2013
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We were there at the beginning.
see DARNLEY BAY page 15
DA
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BAY
RES
OU
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ES
15NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF JUNE 30, 2013
the anomaly are hosted by the same source rocks thathost significant reservoirs elsewhere.
Advantages of locationDespite its remote Arctic location, the Darnley Bay
project has significant advantages. The Inuvialuit Settlement Region has a C$1 billion
infrastructure as a result of oil and gas development. Theexplorer’s project site offers power, water, sanitation,waste disposal, and telephone and communication serv-ices. It also is directly accessible by commercial airlinesin addition to winter roads, barges and ocean traffic.
Yellowknife, 885 kilometers (550 miles) southeast ofPaulatuk, and Whitehorse, 870 kilometers (540 miles)southwest of Inuvik, Nwt. are the main transit locationsfor developments in the western Arctic. Tuktoyaktuk,Nwt., 351 kilometers (218 miles) by air to the west, is theservice center for oil and gas developments in theBeaufort Sea. It has a commercial airstrip, and transitwarehouse facilities for western Artic materials deliveredby water transportation from the railhead at Hay River,NWT.
The Darnley Bay project is also unique in that it is thefirst mineral resource venture of this potential magnitudein which the Inuvialuit have participated, and have beenentitled to a cost share participation.
“This is an important project for the Inuvialuit; it is anopportunity for the people of Paulatuk and the InuvialuitSettlement Region to participate in a meaningful way intheir northern economy. We urge Darnley Bay Resourcesto continue to consult closely with Paulatuk and with theInuvialuit generally to maximize the opportunities forlocal people to gain skills and experience from work onthe project. The people of Paulatuk who have invested agreat deal in this initiative, are anxious for work to pro-ceed, said IRC Chairwoman and CEO Nellie Cournoyeain support of the project.
In April the company made a payment of C$440,896comprised of expenses, administrative fees and interestowing with respect to a previous drill program, to theregional corporation. The payment brings the mineral
concession agreement entered into between Darnley Bayand IRC in 2009 into good standing and represents partof more than C$3.8 million paid to the regional corpora-tion since 1995.
“We are happy to get these payments behind us andfocus our funds on finding the source of the gravityanomaly. We look forward to working with the InuvialuitRegional Corporation on this initiative” Darnley BayResources Chairman Kerry Knoll said in a statementApril 10.
Significant diamond potentialThe 1997 aeromagnetic survey located four clusters
of magnetic anomalies in the area, which promptedDarnley Bay Resources to also embark on a diamondproject.
In 2000, the company collected till samples within thearea of the two most northerly clusters. The samples werefound to contain many kimberlite indicator minerals,three of which carried diamonds. This is significant asonly one in 30,000 till samples actually carry diamonds.
Regional sampling results of stream sediments sug-gest that the main in-situ source(s) of recovered indicatorminerals and diamonds within the anomaly may be struc-turally associated with a southeast trending mafic dykeswarm.
Darnley Bay Resources, in a follow-up aeromagneticsurvey at 200-meter line intervals on parts of the norther-ly clusters, identified 39 kimberlite targets which togeth-er with 55 from the 1997 survey totaled 94. Ground geo-physical surveys were completed on 41 of the kimberlitetargets with 28 selected as priority drill targets. Only oneof the targets is located under a lake.
The explorer also collected some 22,000 pounds (10metric tons) of till and drill core samples for chemicalanalysis and 44 stream sediment and beach heavy miner-al samples were collected and processed for indicatorminerals. The junior then drilled 13 kimberlite targets; 10intersected kimberlite and seven contained diamonds.
A joint venture with an optionee, Diadem ResourcesLtd., that has the right to earn a 50 percent interest in theFranklin diamond project, completed 52,000 line-kilo-meters of an airborne survey and has added an addition-al 11 highly rated kimberlite targets to the drilling inven-tory. A total of 27 high-priority kimberlite targets for
ground surveys have been identified and, as warranted,will be drilled.
The Darnley Bay dyke swarm (723 Ma) in the projectarea is parallel to The Mackenzie Dyke Swarm (1270Ma) where the Lac de Gras diamond corridor hosts threeCanadian diamond producers (Ekati, Diavik and SnapLake), and one past-producer (Jericho).
Company geologists say the Lac de Gras diamondcorridor apparently has been offset to the west and maycontinue north through Darnley Bay. The Darnley Baydyke swarm conditions for diamond exploration are sim-ilar to those in the Lac de Gras diamond corridor. TheMackenzie Dyke Swarm might have been reworked inthe Darnley Bay dyke swarm’s geological time providingthe loci for both dyke intrusions and perhaps stillyounger dykes and kimberlite pipes of another magmat-ic event.
In May, Darnley Bay Resources entered into a defini-tive agreement with Diadem that provides for the sale ofDarnley Bay’s interest in the Franklin diamond project.In consideration Diadem will pay to Darnley a signifi-cant number of shares, C$40,000 in cash to cover thecost of clean-up from the 2010 drilling program and a 2percent net smelter return royalty on the sale of all dia-monds and other minerals from the property. In addition,Diadem agreed to incur a minimum of C$1.5 million inexpenditures on the property within 24 months of thedefinitive agreement. The deal, which is subject to TSXapproval, is expected to close June 30.
Elusive source of anomalies The gravity and magnetic anomalies at Darnley Bay
remain unexplained.While Diadem hunts for diamonds nearby, Darnley
Bay Resources is focusing its attention on the anomalies.The company’s on-site exploration has been concentrat-ed in two periods: 1997-2000 and 2010-2011, includingone drill hole in the former and four drill holes in the lat-ter. None of the drill holes reached their targets for tech-nical reasons.
In 2000 DBL drilled a vertical drill hole on theThrasher Zone magnetic target that encountered consid-erable mechanical problems prior to reaching its targeted
continued from page 14
DARNLEY BAY
see DARNLEY BAY page 19
Mining Companies
Kinross Fort Knox/Fairbanks Gold Mining Inc.Fairbanks, AK 99707Contact: Anna Atchison, Manager, Community and Government RelationsPhone: (907) 490-2218 Fax: (907) 490-2290E-mail: [email protected]: www.kinross.comLocated 25 miles northeast of Fairbanks, Fort Knox isAlaska’s largest producing gold mine; during 2011,Fort Knox achieved 5 million ounces of gold pro-duced, a modern record in Alaska mining.
Usibelli Coal MineFairbanks, AK 99701Contact: Bill Brophy, VP Customer RelationsPhone: (907) 452-2625Fax: (907) 451-6543Email: [email protected]: www.usibelli.comOther OfficePO Box 1000Healy, AK 99743Phone: (907) 683-2226Usibelli Coal Mine is headquartered in Healy, Alaskaand has 700 million tons of coal reserves. UCM pro-duces an average of 2 million tons of sub-bituminouscoal each year.
Service, Supply & Equipment
Alaska Air Cargo • Horizon Air CargoP.O. Box 68900 SEAFZSeattle, WA 98168Contact: Joe Sprague, Vice President of CargoPhone: (206) 392-2705 or 800-2ALASKA
Fax: (206) 392-2641E-mail: [email protected]: www.alaskacargo.comAward winning cargo services to more places, moreoften, with more lift to, from, and within the stateof Alaska.
Alaska Analytical Laboratory1956 Richardson HighwayNorth Pole, AK 99705Phone: (907) 488-1266 • Fax: (907) 488-077E-mail: [email protected] analytical soil testing for GRO, DRO,RRO, and UTEX. Field screening and phase 1 and 2site assessments also available.
Alaska Earth SciencesAnchorage, AK 99515Contact: Bill Ellis, Rob Retherford, ownersPhone: (907) 522-4664 • Fax: (907) 349-3557E-mail: [email protected] full service exploration group that applies earthsciences for the mining and petroleum industries pro-viding prospect generation, evaluation and valua-tion, exploration concepts, project management,geographic information systems and data manage-ment. We also provide camp support and logistics,geologic, geochemical and geophysical surveys.
Alaska Frontier ConstructorsP.O. Box 224889Anchorage, AK 99522-4889Contact: John Ellsworth or Chris LedgerwoodPhone: (907) 562-5303Fax: (907) 562-5309E-mail: [email protected]: akfrontier.comAlaskan heavy civil construction company specializing
in Arctic and remote site development with theexperience, equipment and personnel to safely andefficiently complete your project.
Alaska Steel Co.1200 W. DowlingAnchorage, AK 99518Contact: Joe Pavlas, outside sales managerPhone: (907) 561-1188Toll free: (800) 770-0969 (AK only)Fax: (907) 561-2935E-mail: [email protected] Fairbanks Office:2800 South CushmanContact: Dan Socha, branch mgr.Phone: (907) 456-2719 • Fax: (907) 451-0449Kenai Office:205 Trading Bay Rd.Contact: Will Bolz, branch mgr.Phone: (907) 283-3880 • Fax: (907) 283-3759Rebar Division1200 W. DowlingAnchorage, AK 99518Contact: Mike Galyon, rebar mgr.Phone: (907) 561-1188 • Fax: (907) 562-7518Full-line steel, aluminum, and rebar distributor.Complete processing capabilities, statewide service.Specializing in low temperature steel and wear plate.
Arctic FoundationsAnchorage, AK 99518-1667Contact: Ed YarmakPhone: (907) 562-2741 • Fax: (907) 562-0153Email: [email protected]: www.arcticfoundations.comSoil stabilization – frozen barrier and frozen coredams to control hazardous waste and water move-
Companies involved in Alaska andnorthwestern Canada’s mining industry
D I R E C T O R Y
The Red Dog mine in northwest Alaska.
17NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF JUNE 30, 2013
ment. Foundations – maintain permafrost for durablehigh capacity foundations.
Austin Powder CompanyP.O. Box 8236Ketchikan, AK 99901Contact: Tony Barajas, Alaska managerPhone: (907) 225-8236 • Fax: (907) 225-8237E-mail: [email protected] site: www.austinpowder.comIn business since 1833, Austin Powder providesstatewide prepackaged and onsite manufacturedexplosives and drilling supplies with a commitmentto safety and unmatched customer service.
Calista Corp.301 Calista Court, Suite AAnchorage, AK 99518Phone: (907) 279-5516 • Fax: (907) 272-5060Web site: www.calistacorp.com
Construction Machinery Industrial, LLC5400 Homer DriveAnchorage, AK 99518Contact: Robert Fairbanks, Sales ManagerPhone: (907) 563-3822Fax: (907) 563-1381Email: [email protected]: www.cmiak.com
ERA Helicopter6160 Carl Brady DriveAnchorage, AK 99502Contact: David Sell, Business Development AlaskaPhone: (907) 550-8607Fax: (907) 550-8608E-mail: [email protected]: www.erahelicopters.comHelicopter charters, flight-seeing tours, aerial pho-tography, oil and gas support, mineral exploration,construction, seismic remote site work, internal andexternal load, heli-hiking and sled-dog adventures.
GCI Industrial TelecomAnchorage:11260 Old Seward Highway Ste. 105Anchorage, AK 99515Phone: (907) 868-0400Fax: (907) 868-9528Toll free: (877) 411-1484Web site: www.GCI-IndustrialTelecom.comRick Hansen, [email protected] Johnson, Business Development [email protected]:Aurora Hotel #205Deadhorse, Alaska 99734Phone: (907) 771-1090Mike Stanford, Senior Manager North [email protected], Texas:8588 Katy Freeway, Suite 226Houston, Texas 77024Phone: (713) 589-4456Hillary McIntosh, Account [email protected] Industrial Telecom provides innovative solutionsto the most complex communication issues facingindustrial clientele. We deliver competitive services,reputable expertise and safely operate under themost severe working conditions for the oil, gas andnatural resource industries. GCI-your best choice forfull life cycle, expert, proven, industrial communica-tions.
Global Equipment Services Inc. 3820 Schact St. Fairbanks, AK 99701Contact: Jeff Dahl, General ManagerPhone (425) 531-1854Email: [email protected]: www.GESequipment.comGlobal Equipment Services Inc. purchases, sells andrents high quality heavy equipment worldwide witha strong emphasis on high quality work readyCaterpillar Track type tractors.
HDR Alaska Inc. 2525 C St., Ste 305Anchorage, AK 99503Contact: Jaci Mellott, Marketing CoordinatorPhone: (907) 644-2091Fax: (907) 644-2022Email: [email protected]: www.hdrinc.comHDR Alaska provides engineering, environmental,planning, and consultation services for mining andmineral exploration clients. Services include: biologicalstudies; cultural resources; project permitting; NEPA;stakeholder outreach; agency consultation; and envi-ronmental, civil, transportation, energy, and heavystructural engineering.
Jackovich Industrial & Construction SupplyFairbanks, AK 99707Contact: Buz Jackovich
Phone: (907) 456-4414 • Fax: (907) 452-4846Anchorage officePhone: (907) 277-1406 • Fax: (907) 258-170024- hour emergency service. With 30 years of experi-ence, we’re experts on arctic conditions and extremeweather.
Judy Patrick Photography511 W. 41st Ave, Suite 101Anchorage, AK 99503Contact: Judy PatrickPhone: (907) 258-4704Fax: (907) 258-4706E-mail: [email protected]: www.judypatrickphotography.comCreative images for the resource development indus-try.
Keller Williams Commercial101 West Benson, Ste. 503Contact: Stewart Smith, Associate BrokerAnchorage, AK 99503Phone: (907) 865-6505Cell: (907) 727-8686Email: [email protected]: Ryan Mae Lucas, AssociateCell: (907) 360-7135Email: [email protected]: www.stusell.com;www.AKMiningClaims.comMining Claims to buy, sell, or lease, call the Alaskaprofessionals. We provide real estate brokerage serv-ice to the mining industry, with over 35 years of com-mercial experience. Call for a list of our featuredproperties.
Last Frontier Air Ventures39901 N. Glenn Hwy. Sutton, AK 99674Contact: Dave King, ownerPhone: (907) 745-5701Fax: (907) 745-5711E-mail: [email protected] Base (907) 272-8300Web site: www.LFAV.comHelicopter support statewide for mineral exploration,survey research and development, slung cargo,video/film projects, telecom support, tours, crewtransport, heli skiing. Short and long term contracts.
LyndenAlaska Marine Lines • Alaska Railbelt MarineAlaska West Express • Lynden Air CargoLynden Air Freight • Lynden InternationalLynden Logistics • Lynden TransportAnchorage, AK 99502Contact: Jeanine St. JohnPhone: (907) 245-1544 • Fax: (907) 245-1744Email: [email protected] combined scope of the Lynden companiesincludes truckload and less-than-truckload highwayconnections, scheduled barges, intermodal bulk
chemical hauls, scheduled and chartered airfreighters, domestic and international air forwardingand international sea forwarding services.
Northern Air Cargo3900 W. International Airport Rd. Anchorage, AK 99502Contact: Mark Liland, acct. mgr. Anch./Prudhoe BayPhone: (907) 249-5149 • Fax: (907) 249-5194Email: [email protected] • Website: www.nac.aeroServing the aviation needs of rural Alaska for almost50 years, NAC is the states largest all cargo carriermoving nearly 100 million pounds of cargo on sched-uled flights to 17 of Alaska’s busiest airports. NAC’sfleet of DC-6, B-727, and ATR-42 aircraft are availablefor charters to remote sites and flag stops to 44 addi-tional communities.
Pacific Rim Geological ConsultingFairbanks, AK 99708Contact: Thomas Bundtzen, presidentPhone: (907) 458-8951Fax: (907) 458-8511Email: [email protected] mapping, metallic minerals exploration andindustrial minerals analysis or assessment.
Pebble Partnership3201 C St., Suite 604Anchorage, AK 99503Phone: 907-339-2600www.pebblepartnership.com
PND Engineers Inc.1506 W. 36th Ave. Anchorage, AK 99503Phone: (907) 561-1011Fax: (907) 563-4220Website: www.pndengineers.comFull-service engineering firm providing civil, structur-al, and geotechnical engineering, including miningsupport, resource development, permitting, marineand coastal engineering, transportation engineering,hydrology, site remediation, and project manage-ment.
TTT Environmental LLC 4201 “B” St.Anchorage, AK 99503Contact: Tom Tompkins, general managerPhone: 907-770-9041 • Fax: 907-770-9046Email: [email protected]: www.tttenviro.comAlaska’s preferred source for instrument rentals,sales, service and supplies. We supply equipment forair monitoring, water sampling, field screening, PPEand more.
Taiga Ventures2700 S. CushmanFairbanks, AK 99701Mike Tolbert - presidentPhone: 907-452-6631 • Fax: 907-451-8632Other offices:Airport Business Park2000 W. International Airport Rd, #D-2Anchorage, AK 99502Phone: 907-245-3123Email: [email protected] site: www.taigaventures.comRemote site logistics firm specializing in turnkeyportable shelter camps – all seasons.
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By ROSE RAGSDALEFor Mining News
The Government of Yukon is seekingfeedback until July 31 on proposed
amendments to the Canadian territory’s“Quartz Mining Act, Placer Mining Act”and appropriate regulations. The pro-posed changes reflect Yukon officials’response to a court ruling in Decemberand are intended to support positive rela-tionships among First Nations and theexploration and mining industries.Amendments to the legislation must be inforce by Dec. 27, 2013 to meet the one-year timeline imposed by the Court ofAppeal for Yukon for implementing thecourt’s decision.
“We are consulting on measures aimedat ensuring that Class 1 exploration activ-ities are carried out responsibly,” saidMinister Brad Cathers of Yukon’s Energy,Mines and Resources department inannouncing completion of the draft pro-posals. “First Nations and other landusers have expressed interest in moreinformation on Class 1 activities, and arecent court decision also has confirmedYukon’s requirements to consult on min-ing exploration activities at a Class 1 levelwith non-settled First Nations, to theextent those activities may adverselyaffect Aboriginal rights.”
Duty to consultIn “Ross River Dena Council v.
Government of Yukon,” the Court ofAppeal ruled Dec. 27, 2012 that theYukon government must follow the sameguidelines in its “open entry” registrationsystem for quartz mineral claims as thoserequired of the Canadian federal govern-ment to consult with First Nations.
The Ross River Dena Council is one ofthree Yukon First Nations that have notentered into a final agreement with thegovernments of Yukon and Canadaregarding their claims to Aboriginal titleand rights. A member of the larger KaskaFirst Nation, the Ross River DenaCouncil’s traditional area extends over63,000 square kilometers (24,318 square
miles), or roughly 13 percent of theYukon.
The other Kaska group, the Liard FirstNation, and the White River First Nationin southwestern Yukon also have notfinalized agreements regarding claims toAboriginal title and rights. Eleven otherYukon First Nations have final agree-ments in place with both the Yukon gov-ernment and the Crown.
The lawsuit by the Ross River Denachallenged Yukon’s open-entry stakingsystem and the government’s right to reg-
ister mining claims without consultingaffected First Nations. Under Yukon’sQuartz Mining Act, an individual canacquire mineral rights by physically stak-ing a claim and then recording it with theMining Recorder. Once recorded, a claimgives its owner rights to the mineralswithin its boundaries and the right tocarry out Class 1 exploration activities onthe land without further authorization ornotice to the Yukon government.
The Ross River Dena argued that thesystem allows activities that infringe on
its Aboriginal rights and that principlesadhered in a 2004 case, “Haida Nation v.British Columbia (Minister of Forests),”require the Yukon government to consultwith the First Nation before recordingquartz mining claims within the RossRiver area.
The Yukon Territory Supreme Courtruled in 2011 that the Yukon governmentmust give notice to the First Nation afternew mining claims have been registered.
The Ross River Dena appealed, assert-ing that consultation must take placebefore mineral claims are recorded andthat consultation requires more than merenotice of new claims.
The Yukon government argued that thegranting of a mineral claim is automaticrather than discretionary when statutoryrequirements are met and thus, there is noduty to consult.
Moreover, mineral exploration activi-ties in the Yukon, in general, are subjectto assessment under the YukonEnvironmental and Socio-EconomicAssessment Act. Section 74(2) of thisregulation includes a requirement forconsultation with First Nations. Certainexploration activities, however, corre-sponding to those that fall under Class 1exploration activities are exempted fromassessment, meaning they can take placewithout notice to or consultation with theFirst Nations with claims that may beaffected by them.
The Court of Appeal agreed with theplaintiff, noting in its decision that “inorder for the ‘government’ to meet itsobligations, it must develop a regime thatprovides for consultation commensuratewith the nature and strength of theAboriginal rights or title claim and withthe extent to which proposed activitiesmay interfere with claimed Aboriginalinterests.
“The duty to consult exists to ensurethat the Crown does not manage itsresources in a manner that ignoresAboriginal claims. It is a mechanism bywhich the claims of a First Nation can bereconciled with the Crown’s right to man-age resources. Statutory regimes that donot allow for consultation and fail to (pro-vide) any other equally effective means toacknowledge and accommodateAboriginal claims are defective and can-not be allowed to subsist,” wrote the Hon.Justice J.A Groberman on behalf of theappeals court.
Issues of concernClass 1 programs are small-scale min-
eral exploration activities that generallyhave minimal impact on the environment.Currently, prospectors undertaking theseactivities on mineral claims are notrequired to inform the government oftheir work. Class 1 activities include lim-ited clearing of land, construction of lines,corridors and temporary trails, the use ofexplosives and the removal of subsurfacerock and other specified activities.
In a seven-page discussion paper post-ed online in June, the Yukon governmentsaid increased levels of mineral explo-ration in recent years have highlightedconcerns about the lack of informationaround Class 1 exploration programs andClass 1 placer land use operations (Class1 programs). The ongoing development ofregional land use plans also has identifiedthe need to review how government man-
� Y U K O N T E R R I T O R Y
Government seeks input on mining rulesYukon invites public comments by July 31 on proposed regulatory changes governing Class 1 exploration, First Nation consultations
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NOTES:
• Days are calendar days
• Notification Form - to be developed
• Subsequent Year Notifications that include the same program over the same claim areas - expect an expedited process for identification of any issues
• Public Registry - only the name, location, date of entry, duration of program will be posted on the public registry. All other information submitted as part of the notification will only be made available to government and First Nation as part of determining effects.
Proposed Process - Class 1 Notification
Proponent to Contact Mining Lands Office
Recommended Proponent Actions: • Ensure program is within threshold limits • Ensure information is adequate • Complete Notification Form • Contact First Nation to discuss proposed program
Proponent submits Notification Form to MLO
MLO posts public information on public registry: this includes name, location (by quad sheet), duration, date of entry
25 day clock starts
• Notification is forwarded electronically to affected First Nation Lands Office • Mining Lands Office conducts internal YG review (including other departments as required) of plan and mitigations • Chief, Mining Lands determines if need for extension past the 25 days. This determination is based on whether or not the plans for mitigation proposed will not mitigate effects or further time is required to complete First Nation consultation
No extension warranted
If no extension warranted, program approved as submitted - no formal notice back to proponent - deemed approved at 25th day
Extension warranted
If extension warranted as per above, Chief notifies proponent in writing that the review will be extended. Reasons for extension will be outlined, including notice of extended consultation with the affected First Nation(s)
Chief, Mining Lands and proponent discuss new or amended terms and conditions resulting from consulta-tion or required mitigations for environmental or socio-economic effects of the program
Determination
Chief Mining Lands provide notice of additional terms and conditions that will be attached to and be part of the notification
The public notification detail is posted
on the Mining Map Viewer
(web-based map)
see YUKON RULES page 19
GO
VER
NM
ENT
OF
YU
KON
depth at 2,300 meters. It was terminatedat depth of 1,812 meters due to extremeground water pressure and gravel run-infrom aquifers.
The drill hole revealed a considerableamount of information about the geologyof the region and intersected the contactbetween the Precambrian and youngeroverlying sediments (Phanerozoic) at adepth of 1,168 meters.
The Precambrian formations outcropjust east of the anomaly suggesting thatthe igneous intrusive may be shallower tothe east and therefore more accessible andless expensive for continued drilling.
Between 2007 and 2012, Darnley BayResources conducted three-dimensionalmodeling of the gravity and magneticdata that confirms the interpretation of anextremely large intrusive source, withupper reaches that are within mineabledepths for one or more large tonnagenickel-copper-PGE or IOCG deposits.
Difficult drilling conditionsA number of issues recurred on the
four holes the company drilled for basemetals in 2010-11, according to Reford,who served as president and CEO ofDarnley Bay Resources from June 2008to June 2011.
In a technical report released inFebruary 2012, Reford reported that pre-vious drilling for kimberlite pipes withthe same drill contractor (Northtech), drilland crew on the Parry Peninsula inAugust 2010 went smoothly. In that area,the overburden ranged in thickness from4.2 meters to 19.2 meters. The holes weredrilled at dips of 45 degrees or 50degrees. Bedrock consisted mainly ofdolomite and didn’t present any difficul-ties.
The four drill holes on the base metalstargets encountered 156 meters to 161meters of unconsolidated sediments,incorporating sands, clays, boulders andvoids of up to 3 m. Figure 37 shows anexample of the glacial till in the area.
In 2010 the junior drilled three drillholes over base metals targets interpretedfrom the airborne surveys, with follow-upground geophysics, but did not reach thetargeted formations due to glacial over-burden, blocky ground, clay seams anddeteriorating weather conditions.
At target G09-01, the drilling difficul-ties were compounded by the underlyingdolomite being vuggy in nature, withadditional voids. These conditions result-ed at times in the casing being shifted,dropped or broken and significant infillof sand and clay. Drilling in permafrostadded to the difficulty in maintaining aproper temperature for the fluids. Drillingat G09-01 was further impacted by theearly onset of winter in late October 2010.
The drill contractor undertook a num-
ber of measures to mitigate these issues,including casing to solid bedrock; tele-scoping the casing from P to H to N, max-imizing the depth of each; maintainingthe optimal temperature of the fluids toprevent freezing the hole in permafrostwhile minimizing any melting around thehole that would destabilize the casing;using of bentonite and other materialsextensively to stabilize the hole; and test-ing tri-cone bits as well as diamond drillbits.
The company returned in March 2011to re-drill one hole over a base metal tar-get but did not reach the targeted forma-tions due to ongoing difficulties withdrilling through unconsolidated sedi-ments and underlying vuggy dolomite.
This hole proceeded smoothly andefficiently to 242 meters (still in vuggydolomite). However, the voids within theunconsolidated sediments resulted inmovement of the casing, and ultimately,the hole could not be recovered after aweek of attempts.
New combination drill planReford recommended that the compa-
ny continue to explore the 22 targets thathave been identified on the anomaly withtargeted seismic surveys, followed by acombination of reverse circulation anddiamond drilling to determine itssource(s).
“We’re planning to start the holes withRC drilling down to depths of about 1,000feet (300 meters) until we hit solidbedrock, and from there, do diamonddrilling,” he told Mining News in mid-June.
Reford said downhole geophysics willfurther guide drilling towards primary tar-gets for economic mineralization.
“Additional gravity surveys over tar-gets may be warranted depending on ini-tial drill results. Other ground-based geo-physical methods may be applicabledepending on the physical properties,contrasts with host rock and overlyinghorizons and source depth determinedfrom drilling. These may include time-domain electromagnetic, IP/MT (Titan-style) and/or 2D/3D seismic surveys.
In the 2012 report, Reford outlinedbudgets of about C$5 million and C$8million for drilling campaigns in 2012(four targets) and 2013 (seven targets), ,respectively, but the junior has encoun-tered “extreme” difficulty raising suffi-cient capital in the current tight financialmarkets to carry out the programs.
Earlier this year, Darnley BayResources appointed Jacquelin Gauthier,P. Eng., as project manager at DarnleyBay, and said Gauthier’s duties would ini-tially involve a detailed review of pastexploration data in order to select drill tar-gets, determining the best drilling meth-ods, budgeting and permitting for theDarnley Bay project.
In April the junior reported plans, sub-ject to financing, to initiate a new drill
program on the gravity anomaly in 2013. Reford, now vice president of
Paterson, Grant & Watson Ltd.(Consulting Geophysicists, Toronto,Ontario), said Darnley Bay Resourcesintends to move forward this year with atleast limited exploration, primarily down-hole geophysics that will further guidefuture drilling towards primary targets foreconomic mineralization.
The junior reported June 24 that it hasapplied for permits to conduct a magneto-telluric (MT) survey and a geological sur-vey on the Darnley Bay property thissummer. The objective of the MT surveyis to find alteration zones and dykes/sillswith special chemistry, which could beindicators of metallic mineralization atdepth. The geological survey will coverabout 25 percent of the property wherethe probability of finding outcrops isgreater, such as cliffs, canyons andriverbeds.
“We’ve done airborne geophysics,gravity and electromagnetic (VITEM)surveys and we’ve done ground sur-
veys,” said Reford. “We’re looking at amagnetotelluric survey, which hasn’tbeen tried in this area. The goal is main-ly to sense deeper images, much deeperthan those of any other technique of thiskind.”
In the 1990s, MT was used success-fully to locate mineral deposits as deepat 1,750 meters in the Sudbury nickelcamp. In the past 10 years, the technique,which is routinely used by the oil indus-try to better define deep targets, has seena number of improvements, particularlywith the development of modern 3Dinversion, the company said.
The summer 2013 field program isestimated to cost C$300,000, and is sub-ject to financing and final permitting.
Though the source of its anomaliesremains a mystery, Reford said DarnleyBay is “one of those properties or targetsthat the whole industry keeps an eye on.”
“It’s kind of a ‘go big or go home’type of deal. If it has economic potential,it could be gigantic. It’s what they call, acompany maker,” he added. �
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continued from page 15
DARNLEY BAY
ages these types of activities and how thecurrent regulatory system may need mod-ification.
“Yukon is also aware of its obligationsto work with Yukon First Nations –including those that have entered intoYukon First Nation Final Agreements andthose that have not yet settled land claims– and mineral rights holders,” officialswrote.
Yukon is proposing to amend the regu-latory regime affecting Class 1 programsas set out in the territory’s mining legisla-
tion. Amendments to the laws must be inforce by Dec. 27 to meet the timelineimposed by the Court of Appeal forimplementing its declaration.
The proposed amendments establish asystem for the mineral exploration indus-try to notify the Yukon government ofClass 1 programs before undertakingwork on mineral claims, and for govern-ment to ensure that these programs arecarried out in a responsible manner,respectful of asserted Aboriginal rights.The discussion paper outlines the changesthat are proposed to the legislation.
Strengthening regulationsYukon officials say the changes will
assist the government in meeting its legalobligations resulting from the court deci-sion.
The proposed amendments also enablethe Yukon government to establish addi-tional operating conditions in areas withspecial environmental or socio-economicconcerns.
These identified areas could includeCategory B Settlement Lands or desig-nated areas identified in land-use plan-ning.
“We will continue our work in ensur-ing a solid regulatory regime that pro-vides certainty and supports the strength-ening of relationships among FirstNations and the mining industry,” said
Cathers. The Mineral Resources branch of the
Yukon government is consulting with thepublic on the draft amendments throughJuly 31. The proposed amendments anddiscussion documents can be accessed athttp://www.emr.gov.yk.ca/mining/class_1_exploration_consultation.html.
To provide comments, for more infor-mation, or to request a meeting, contactYukon’s Mineral Resources branch at:Email: [email protected]; phone:867.667.3422; fax: 867.456.3889. Orwrite: Yukon Energy, Mines andResources, Mineral Resources Branch,Suite 300, 211 Main Street, Whitehorse,Yukon Y1A 2B2. �
continued from page 18
YUKON RULES
20 NORTH OF 60 MINING
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