Mining News

3 Rock Creek wins round in legal battle Judge: Mine construction could improve condition of surrounding area

7 High prices excite B.C. moly investors Across province projects race to starting line or gear up for expansion

10 Hemis launches hunt for offshore gold Swiss bring hi-tech marine exploration to Alaska's Cook Inlet

A special supplement to Petroleum News WEEK OF

June 24, 2007 PHOTO COURTESY USIBELLI COAL MINE/CHRIS AREND

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WEEK OF JUNE 24, 2007

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Red Dog mine faces new challenge By ROSE RAGSDALE For Mining News

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he Red Dog Mine, 17 years after startup, is unquestionably the economic and human resources success story of the Northwest Arctic Borough. Zinc and lead prices are strong, and production is up at the mine, which is operated by Teck Cominco Alaska on lands owned by the Alaska Native regional corporation, NANA Regional Corp. But the world’s largest producer of zinc concentrate continues to be plagued by issues surrounding its discharge of wasteThe Red Dog Mine in Northwest Alaska water. Treated water from the mine is released into tributaries of the Wulik River, which provides drink- of TDS discharged by Red Dog meets water quality staning water for Kivalina, a Northwest Alaska village 66 dards for TDS adopted by the State of Alaska and approved by EPA since 1998. miles downstream from the mine. New TDS standards have been incorporated into perThe U.S. Environmental Protection Agency issued a mits issued for Red Dog by EPA since the ruling. new five-year wastewater discharge permit for the mine in March, but it was soon challenged under the Clean Water Act by a San Francisco environmental group on Red Dog operations go on The latest appeal does not prevent Teck Cominco behalf of some residents of Kivalina. The appeal marked the second time the Center for from operating Red Dog. Instead, the mining company Race, Poverty and the Environment has challenged Red can continue to treat discharges under an older, modified Dog’s wastewater discharge permit. The group initiated permit until the EPA rules on the appeal. a citizen’s suit against Teck Cominco Alaska in March The EPA Region 10 administrator is currently exam2004. NANA and the Northwest Arctic Borough subse- ining the new permit to determine which of its condiquently joined the suit as defendants in support of Teck tions were challenged in the appeal. Cominco. Once that determination is complete, the issue will go An Anchorage court recently found that Teck before an EPA internal review board in Washington, Cominco did not meet the total dissolved solids, or D.C. Permit conditions not included in the appeal can “TDS,” requirements of its 1998 discharge permit at Red become effective immediately. Dog even though the TDS amount discharged was withThe Alaska Department of Environmental in the limit authorized by the EPA. Further, the amount Conservation also has begun the process of certifying the

COURTESY TECK COMINCO

New discharge permit heads to EPA internal review board, while DEC prepares to certify it under state water quality standards new permit under state water quality standards. Operations at Red Dog, meanwhile, must go on. “We would rather have the new permit, but we’ll still be able to treat and discharge water under the old one,” Jim Kulas, environmental superintendent at Red Dog, said June 14.

Wulik River cleaner than ever Teck Cominco has repeatedly assured Kivalina residents that continuous monitoring of the village’s drinking water, conducted by federal and state agencies including the Alaska Division of Public Health, since 2002 have found no unacceptable results. “The quality of the drinking water downstream of the mine is being protected,” Kulas said. “Each of the tests has shown the water is safe to drink, and there are no problems with TDS.” Ironically, the water downstream from Red Dog is actually cleaner today then it was before the mine started production 17 years ago, said Tom Crafford, acting director of the Division of Mining, Land and Water in the Alaska Department of Natural Resources. “There is nothing about Red Dog that is simple. There are fish living in places where they didn’t live before. The natural runoff from the undeveloped Red Dog zinc and lead deposit put more pollution into the water before than the wastewater treatment process does now,” Crafford explained. “But at the same time, the mine has to treat and discharge water. The treatment process uses chemicals such as calcium and magnesium, which result in a higher amount of total dissolved solids in the water, which have issues of their own.” ●

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Alaska mine wins a round in legal battle Rock Creek project construction could improve the condition of surrounding area, which suffered from historic mining, judge rules By SARAH HURST For Mining News

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n Anchorage judge gave little credence to arguments by a Nome citizens’ group that construction of Rock Creek gold mine should be halted, decisively ruling in favor of developer NovaGold Resources. After a hearing in Alaska District Court June 7, Judge Ralph Beistline made his decision the following day. Bering Strait Citizens For Responsible Resource Development had requested an injunction to protect the area’s wetlands. The plaintiffs argued that the U.S. Army Corps of Engineers’ 404 permit authorizing some of Rock Creek’s construction activities was issued in violation of the Clean DOUG NICHOLSON Water Act and the National Environmental Policy Act. Vancouver-based NovaGold’s subsidiary at Rock Creek, Alaska Gold, intervened in the case as a defendant. Considering the request for an injunction, Judge Beistline had to decide whether the plaintiffs’ case was likely to succeed on its merits, and to balance potential hardships to the plaintiffs, defendants and the public. The parties agreed that Rock Creek is located in “mining country”, a part of Alaska that has a rich history of mining, Judge Beistline noted in his ruling. Much of the land on which the mining is proposed to take place was previously mined and left “scarred” by mining activity, he added. In addition, the wetlands that are the subject of the dispute are surrounded by vast areas of pristine wetland that will not be impacted by the Rock Creek project, the judge wrote. Before starting construction, Alaska Gold “went to great lengths to publicize its intentions and to obtain the support of the local community, two Native organizations, as well as state and federal agencies,” Judge Beistline wrote. “As a result, there is considerable public support for this project and a realistic hope for an economic boon to the community. This is not, therefore, a situation where a mining operation is proposed in an otherwise pristine wilderness amongst an unsuspecting public,” he added. The defendants have complied with the law and proceeded in a manner that is sensitive to the environment, Judge Beistline wrote. The Corps’ issuance of a 404 permit was not “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance

“We continue to assemble our operations team and are working diligently to achieve our production target of Q3-2007, with full commercial production by year end.” —Doug Nicholson, Alaska Gold’s general manager

with law,” he decided. “Considerable time, effort and expense was incurred by AGC (Alaska Gold) to minimize the environmental impact of its mining operation. Additionally, reasonable alternatives were considered by both the Corps and AGC,” the judge noted. “Moreover, if the project proceeds as planned, it is likely that much of the land involved will be left in a far better condition than it was when the project began.” One of the plaintiffs’ objections was that the Corps relied on an Environmental Assessment rather than an Environmental Impact Statement, which would have been lengthier and more detailed. The plaintiffs also argued that the draft EA was not widely distributed. The judge found that the EA took a “hard look” at the potential environmental impact of the project and that the draft EA was distributed to the agencies involved and publicized on the web. The plaintiffs responded to it and it was the subject of considerable discussion, the judge added.

Contact North of 60 Mining News: Editor: Sarah Hurst [email protected] Phone: 907.248.1150 • Fax: 907.522.9583 Address: P.O. Box 231651, Anchorage, AK 99523

Judge: no secrets or efforts to conceal plans Nome residents heard about the EA via public meetings, newspaper articles, radio interviews and mailings. “There were no secrets and certainly no effort to conceal AGC’s plans for mining or the methods intended to be used,” the judge wrote. “Furthermore, it is very unlikely that any more study, time or discussion would have changed the parties’ views with regard to this project or the decision to issue the permit.” The text highlighting was in the judge’s ruling. Another reason why the lawsuit had little merit was because it was filed after much of the construction had already taken place, the judge wrote. It was already too late to prevent most of the harm to wetlands that was going to occur. “An injunction at this time would therefore result in much greater harm to AGC and the citizenry supporting the mining project than to any remaining wetlands or environmental concerns,” Judge Beistline decided. see ROCK CREEK page 5

North of 60 Mining News is a monthly supplement of the weekly newspaper, Petroleum News. It will be published in the fourth or fifth week of every month.

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WEEK OF JUNE 24, 2007

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British Columbia producing faster than ever Outlook for mining industry in the province is positive, with commodity prices high, but new discoveries are needed, survey says By SARAH HURST For Mining News

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he mining industry in British Columbia surpassed itself in 2006, with revenues at an all-time high, according to the annual survey by PricewaterhouseCoopers. Net income for companies active in the province totaled C$2.3 billion, by far the highest amount since the survey was first published in 1968, and an increase of C$507 million on the previous year’s figure. The average number of people employed in British Columbia’s mining sector increased from 7,071 in 2005 to 7,345 in 2006. The latest survey covered 17 operating metal and coal mines, one smelting operation, six operations in the permitted or active permitting stage, eight mines in the reclamation stage and 10 advanced exploration-stage properties, a total of 42 participants compared to 43 in 2005. Four operating and exploration-stage companies that contributed C$19.1 million to exploration and development in 2005 did not participate in the survey in 2006. “The recent resurgence in the global mining industry exceeded the expectations of even the most optimistic analysts and continues to do so. The mining industry in British Columbia has mirrored the global resurgence,” the survey says. “The province should celebrate the successful development or advances towards development of a significant number of projects. But in almost all cases, these are previously known deposits, which are now economic as a result of significant improvements in commodity prices. The province needs new discoveries, and it needs them now.” At the end of 2005 the survey reported that 18 projects were in the permitting stage. Of these projects, only three progressed to operational status during 2006. At the end of 2006 there were 25 mines awaiting permitting, with only six of these expected to go into operation in 2007.

Revenue increases were somewhat offset by parallel increases in the cost of essential supplies such as steel, fuel and tires, and other production costs, according to the survey.

Shipments of metallurgical coal down Shipments of metallurgical coal from British Columbia decreased by 5 percent from 24 million metric tons in 2005 to 22.9 million tons in 2006. Net mining revenues for metallurgical coal remained virtually unchanged at C$1.94 billion (compared to C$1.95 billion in 2005), due to coal price increases. Net mining revenues from copper concentrate increased by 76 percent from C$1.13 billion in 2005 to C$2 billion in 2006. Copper saw a rise in its average price during the period from US$1.67 per pound to US$3.05 per pound, and shipments of copper concentrate from British Columbia were up 5 percent in 2006. Molybdenum was the only mineral covered in the survey that saw a decrease in its average price from 2005 to 2006, dropping 21 percent from US$31.05 per pound to US$24.38 per pound. This contributed to a 30 percent decrease in net molybdenum mining revenues from C$592 million in 2005 to C$412 million in 2006. The price of molybdenum remains strong compared to historical prices, the survey noted. Net revenues from zinc and zinc concentrate increased from C$528 million in 2005 to C1.29 billion in 2006, due to a 137 percent rise in the average price of zinc from US63 cents per pound to US$1.49 per pound, accompanied by an increase of 19 percent in shipments from British Columbia in 2006. There was also a 32 percent rise in the average price of lead during the period, from US44 cents per pound to US58 cents per pound, and a 28 percent increase in shipments of lead from British Columbia. As a result, net mining revenues went up from C$87 million in 2005 to C$137

million in 2006. Shipments of gold from British Columbia were down 4 percent in 2006, while the average price of gold increased from US$444.88 per ounce to US$604.34 per ounce, resulting in an increase of 35 percent in gold net revenues from C$255 million in 2005 to C$343 million in 2006. Net silver revenue increased by 74 percent from C$213 million in 2005 to C$371 million in 2006, mainly due to a rise in the average price of silver from US$7.31 per ounce to US$11.57 per ounce, as well as a 12 percent increase in silver shipments, from 28.8 million ounces in 2005 to 32.2 million ounces in 2006.

Cost increases somewhat offset revenues Revenue increases were somewhat offset by parallel increases in the cost of essential supplies such as steel, fuel and tires, and other production costs, according to the survey. These costs were up from C$1.6 billion in 2005 to C$2.3 billion in 2006, and included increases in the costs associated with hiring and retaining experienced mining personnel. Capital expenditures increased by C$168 million during the year to C$513 million. The largest contributors to the increase were expenditures on machinery, other equipment and surface construction. Outward transportation — comprised of rail costs, shipping costs and wharfage fees — is the largest individual component of industry costs, the survey says. Nevertheless, total transportation costs decreased by 1 percent to C$1.01 billion in 2006 compared to C$1.02 billion in 2005. The decrease was mainly due to reduced coal tonnages shipped during the year. Direct tax payments made by British Columbia’s mining industry increased from C$445 million in 2005 to C$648 million in 2006, reflecting improved profitability. Expenditures at the eight participating mines that are in the reclamation stage amounted to C$63 million in 2006, down 10 percent on the C$70 million spent in 2005. ●

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Mining news summary: Drills turning all over Alaska By CURT FREEMAN For Mining News

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recent piece in the Fairbanks Daily News-Miner newspaper indicated that the U.S. Department of Labor has determined that mining employment has hit a 4-year low in Alaska. I’m not sure who the Department of Labor was talking to but the world I live in happens to be drastically short of qualified manpower with no immediate relief anywhere in sight that might affect this demand surplus and supply shortfall. When you ask mining companies what they are up to, the most common response is “the drills have just started turning on ...” and this trend will result in new results being released in the next month. Here is a summary of where those drills are turning.

Western Alaska NOVAGOLD RESOURCES INC. said JV partner Barrick Gold Corp. has budgeted $87 million for the 80,000 meter Donlin Creek project drill campaign for 2007. The focus of this work will be on converting Inferred Resources to the Measured and Indicated category. Project operator Barrick Gold continues to work toward completion of a pre-feasibility and first feasibility study for the project and has indicated it will not submit the draft applications to begin the permitting and environmental approval process until 2008. NovaGold Resources also said that construction activities at it Rock Creek project near Nome are on schedule. Construction of the tailings facilities and mill site continue. The company anticipated a thirdquarter 2007 mine startup.

Eastern Interior FREEGOLD VENTURES announced additional results from a rotary air blast drilling program on its Golden Summit project in the Fairbanks district. Highlights from the two additional drill fences in the Cleary Hill mine prospect include 15 feet averaging 5.03 grams of gold per tonne in

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ROCK CREEK “We are pleased to have this issue behind us,” said Doug Nicholson, Alaska Gold’s general manager. “As acknowledged by the court, this project will bring significant economic benefits to the community of Nome. Construction at Rock Creek is progressing well. The truck shop, reagent building, leach train and steel superstructure on the mill building are up. Work is continuing on piping and electrical inside the buildings. We continue to assemble our operations team and are working diligently to achieve our production target of Q3-2007, with full commercial production by year end.” The case may not be over yet, though, as it is “more than likely” that the plaintiffs will appeal to the 9th Circuit Court, attorney Victoria Clark with Trustees for Alaska told Mining News. The 9th Circuit is the same court that overturned the district court’s ruling that upheld the Corps’ 404 permit for Kensington mine in Southeast Alaska. Trustees for Alaska is a non-profit organization that provides its services pro bono to the Nome residents it represents. ●

The author The author Curt Freeman, CPG #6901, is a well-known geologist who lives in Fairbanks. He prepared this column CURT FREEMAN June 18. Freeman can be reached by mail at P.O. Box 80268, Fairbanks, AK 99708. His work phone number at Avalon Development is (907) 457-5159 and his fax is (907) 455-8069. His email is [email protected] and his web site is www.avalonalaska.com. hole 177; six feet averaging 20.5 grams of gold per tonne in hole 191; two feet averaging 22.18 grams of gold per tonne in hole 194; six feet averaging 13.42 grams of gold per tonne in hole 211; 12 feet averaging 11.22 grams of gold per tonne in hole 279; and 12 feet averaging 12.17 grams of gold per tonne in hole 273. Additional drilling was conducted 2,300 feet away on the Tolovana mine prospect and returned high grade-results including three feet averaging 23.01 grams of gold per tonne in hole 303; three feet averaging 23.01 grams of gold per tonne in hole 303; 21 feet averaging 4.26 grams of gold per tonne in hole 312; and three feet averaging 18.1 grams of gold per tonne in hole 325. Additional drilling work is planned for 2007. RIMFIRE MINERALS CORP.

announced that drilling had begun on its Goodpaster project joint venture with RUBICON MINERALS CORP. in the Goodpaster district. The partners plan to spend $1 million in exploration to test high priority targets on the Cal-Surf prospect where previous work by Rimfire identified well developed gold and/or bismuth soil geochemical anomalies. Rubicon Minerals Corp. reported that crews have been mobilized to commence a $2 million first-phase exploration program

on its Goodpaster district land holdings acquired earlier this year. First pass surface exploration conducted in 2006 identified several promising areas for follow up. One of these is associated with a 10 kilometer by seven kilometer arsenic stream silt-andpan concentrate anomaly within which samples of quartz veins interpreted as bedrock or rubble-crop returned values ranging from a trace up to 12 grams of gold per tonne. This anomaly will be followed up by additional detailed mapping, hand trenching and auger-soil sampling prior to carrying out up to 7,000 feet of diamond drilling which is expected to be carried out during July. INTERNATIONAL TOWER HILL MINES announced new drilling results

from its Livengood project north of Fairbanks. Results from the first five holes (1,291 meters) of its 8,000 meter 2007 drilling program returned significant intervals of gold mineralization. To date the company and previous operators have completed 21 drill holes in the core target area, which covers a zone of mineraliza-

tion more than two kilometers long by at least 0.5 kilometers wide. The overall average thickness of the mineralization encountered in these holes is approximately 70 meters, with an overall grade of 0.9 grams of gold per tonne. Within this stratigraphically controlled, low-grade body, the company has defined a number of higher-grade structurally controlled zones which appear to be acting as higher-grade feeders. Highlights of drilling within two areas of higher grade mineralization include the Lillian zone which returned 140.99 meters grading 1.30 grams of gold per tonne in hole MK07-15; 127.14 meters grading 1.44 grams of gold per tonne in hole MK06-07; and 41.89 meters grading 1.07 grams of gold per tonne in hole MK07-12. Mineralization at Lillian is hosted in two volcanic units that contain disseminated pyrite and arsenopyrite which has been overprinted by northwest and northeast striking quartz-carbonate-arsenopyrite veins which appear to increase overall gold see FREEMAN page 6

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WEEK OF JUNE 24, 2007

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Petition calls for Cook Inlet coal mining ban Alaska DNR commissioner to decide if reclamation is possible in salmon-rich region; developer continuing with baseline studies By SARAH HURST For Mining News

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rustees for Alaska, the non-profit law firm that represented the Nome plaintiffs in the case against Rock Creek mine, has teamed up with another citizens’ group to oppose coal mining in the Cook Inlet area. The new group is called the Chuitna Citizens NOCOALition, and together with Trustees for Alaska it has petitioned the Department of Natural Resources to declare the Chuitna watershed unsuitable for surface coal mining. Last summer the U.S. Environmental Protection Agency held a series of scoping meetings about the Chuitna project, and the public responses received at the meetings will be used to prepare a supplemental environmental impact statement. Meanwhile, PacRim has been conducting a baseline study program, including wetlands and vegetation mapping, soil surveys and research into the aquatic and terrestrial biology of the site. There has also

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FREEMAN grades. Drill results from the Radio target include 190.2 meters grading 0.96 grams of gold per tonne in hole BAF-7 and 65.8 meters grading 0.80 grams of gold per tonne in hole BAF-8. Mineralization at Radio is hosted in siltstone-sandstone units and appears to be of similar age as that at Lillian. However mineralization at Radio appears to be associated with a nearby intrusive body. International Tower Hill Mines also announced that drilling had begun on its West Tanana project under option from Doyon Ltd. The company believes that this

been some geotechnical drilling in the areas where facilities would be placed, Bruce Buzby, who is responsible for coal at DNR, told Mining News. The project “threatens to destroy over 30 square miles of intact fish and game habitat, including tributaries of the salmon-rich Chuitna River. Additional adjacent leases in the area could bring the total disturbed area to over 55 square miles,” the Chuitna Citizens NO-COALition said in a release June 14. The organization believes that the complex wetlands and salmon stream hydrology in the region make reclamation “virtually impossible,” which is one of the criteria required under the coal regulations in order for an area to be designated unsuitable for mining.

First step is determination of completeness The petition itself is 58 pages long and it was accompanied by 350 pages of supporting documents, Buzby said, so DNR hasn’t yet fully reviewed the materials. Under federal law, all states must make regulatory provisions to con-

high-grade gold anomaly is related to a stacked, low-angle vein system. The 2007 work program calls for an initial phase of 7 drill holes to test a number of gold vein related targets.

Alaska Range INTERNATIONAL TOWER HILL MINES also said that drilling had begun on

its Terra gold project under option from ANGLO GOLD ASHANTI. The current two-drill program will follow-up on encouraging drill results from 2006, focusing on developing an initial resource in the Ben Zone, one of four vein systems discovered to date. The company expects to complete approximately 15 drill holes in order to assess approximately 500 meters

sider such petitions with regard to surface coal mining. Alaska’s regulations, which are almost identical to those in other states, stipulate that the DNR commissioner must decide within 30 days whether the petition is complete or if more information is required. If the petition is complete, a public hearing must be held within several months, and after that the commissioner will decide the issue. The Chuitna Citizens group notes that it has been unable to access closed-door meetings between state and federal regulatory agencies and PacRim Coal and its consultants, and that it has asked Gov. Sarah Palin for an “open-door permitting process.” The Beluga field, which the Chuitna project would mine, contains about 1 billion metric tons of subbituminous coal and the life of the mine could be at least 25 years, according to PacRim Coal. Another Alaska coal project was blocked recently when residents of Chickaloon, north of Anchorage, protested a planned exploration program by Vancouver-based Full Metal Minerals. The company relinquished its leases. ●

of strike length and 300 meters down dip in the vein system.

Southern Alaska Alaska newcomer HEMIS CORP. announced that it had acquired ASPEN EXPLORATION CORP.’S Anchor Point submarine alluvial gold project in the Cook Inlet. Under the terms of the agreement, Aspen was paid $50,000 at signing and will be paid this amount on each anniversary of the agreement. Aspen also is entitled to a 5 percent production royalty. Hemis also announced that a preliminary oceanographic survey was begun in early June. On board instrumentation included a high-precision cesium magnetometer, a fathometer, side-scan sonar and a StrataBox. The StrataBox is an instrument capable of imaging through sediments up to 40 meters thick. This survey was intended to both confirm previous results and to provide baseline information for a drilling program planned for later in 2007. Welcome to Alaska Hemis Corp.!

Northern Alaska NOVAGOLD RESOURCES’ 3,000 meter drilling program is under way on its Ambler volcanogenic massive sulfide project in the Brooks Range. The 2007 company said its exploration program includes

the goal of releasing a new mineral resource summary and further drill testing of both the Arctic deposit and nearby targets. NovaGold has initiated a preliminary economic assessment for the Ambler project.

Southeast Alaska BRAVO VENTURE GROUP INC.

reported commencement of the 2007 mineral exploration program on its Woewodski Island project in Southeast Alaska. The company said final permits have been issued, exploration crews are on site and diamond drill equipment is en route for a planned 2,400 meter drill program. Initial exploration targets include the Red Quartz, Miami Beach and Matt’s Trench gold prospects as well as at the East Lake volcanogenic massive sulfide prospect. Follow-up rock sampling at Red Quartz in 2007 has identified a new epithermal gold-vein occurrence located approximately 500 meters to the south of the Red Quartz trend. The initial four rock chip samples have returned values from 0.9 to 5.6 grams of gold per tonne. Gold mineralization at Red Quartz has a strong association with elevated silver, arsenic and antimony, which is in sharp contrast to the relatively low values of silver and pathfinder elements typically associated with gold mineralization in other parts of the project. The recent identification of bladed quartz-after-calcite along with drusy and banded quartz provide textural evidence of boiling within an epithermal environment. Up to 600 meters of drilling is anticipated on this target as part of the 2007 exploration program. Surface sampling and mapping will continue in order to refine additional drill targets and determine the full strike extent of mineralization. At the East Lake prospect surface gravity and three-dimensional induced polarization geophysical surveys are planned. Previous exploration on the prospect has identified well-preserved Late Triassic volcanic and sedimentary stratigraphy and a series of strong east west-trending electromagnetic conductors. Argillites hosting broad intervals of base-metal and precious-metal enriched iron sulfides occur both on surface and in historic drill intercepts with grades up to 3.3 meters grading 4.2 grams of gold per tonne and 4.68 percent zinc. Up to 800 meters of drilling is anticipated as follow-up to the geophysical targeting. ●

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High prices excite B.C. moly investors Projects across the Canadian province race to starting line, while others gear up for expansion, additional studies BRITISH COLUMBIA MINISTRY OF ENERGY AND MINES

By ROSE RAGSDALE For Mining News

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olybdenum prices have gained altitude and performed a “loop the loop” in recent years that aerobatic pilots would envy. Skyrocketing from a low of $2 a pound in 2002 to a peak of $50 a pound in 2005, before dipping to the $20-apound range last year and climbing back to $33.75 a pound in mid-June, moly prices are having a heck of wild ride. Mining companies, in response, have been scrambling to expand and start up molybdenum projects. The trend is particularly evident in mineral-rich British Columbia, where 1,350 molybdenumbearing occurrences have been identified. Moly’s spectacular comeback stems from unprecedented demand. Consumption is up in manufacturing hardened and anti-corrosive steel for use in pipelines, oil and gas drilling, ships, bridges and skyscrapers. The worldwide trend towards cleaner air, despite an everincreasing number of motor vehicles, is also adding to demand for the gray metal as a catalyst, especially in newer applications such as converting coal to hydrocarbon liquids and making vital components in nuclear power plants. The robust global market for moly also may be changing the nature of molybdenum mining. Currently, 62 percent of the world’s moly production is a by-product of copper mining. But moly is in such short supply that numerous investors have launched standalone moly projects in recent years. In British Columbia, geologists list 430 mineral deposits in the province with molybdenum as the primary commodity. Nearly all of these moly-bearing occurrences were explored and identified up until the 1980s when prices plummeted in an earlier downward spiral from about $30 a pound to less than $3 a pound. Molybdenum production from 100 deposits in British Columbia between 1915 and 2004 totaled 320,300 tonnes, and total resources in some 60 major deposits exceed 1.9 million tonnes, according to the B.C. Ministry of Energy and Mines. Enterprising companies are busy reviving the most promising of these discoveries. Led by Thompson Creek Metals Co., formerly known as Blue Pearl Mining Ltd., the pack is comprised of mostly junior mining companies. This group is moving rapidly toward expansion of existing production at places like Thompson Creek’s Endako Mine near Fraser Lake, B.C., but also toward first production at several new projects across the province. Some B.C. deposits with high-grade cores have the potential for facility production to proceed relatively quickly, the ministry said. These include Thompson Creek’s Davidson project near Smithers, B.C., and Roca Mines’ Max deposit, near the southeastern corner of the province. Adanac Moly Corp.’s Ruby Creek deposit in northwestern B.C. and New Cantech’s Lucky Ship project in the westcentral area also hold considerable promise, their developers say.

Endako updates outlook Thompson Creek Metals changed its

name from Blue Pearl Mining Ltd. after acquiring the Thompson Creek mine in Idaho, along with Endako and a metallurgical roasting facility in Pennsylvania in October. Now the world’s fifth-largest moly producer, Toronto-based Thompson Creek is also developing the Davidson underground molybdenum project near Smithers, B.C. The Endako operation, which includes an open-pit mine, concentrator and roaster, came into production in the mid1960s. Sojitz Corp., a Japanese-based molybdenum trading company, owns 25 percent interest in the mine. Annual output at Endako averages about 9.44 million pounds, though production this year is expected to exceed the average by about 3 million pounds. Endako has an estimated mine life of seven years based on about 103 million pounds of proven and probable molybdenum reserves. In April, Thompson Creek announced an updated measured and indicated molybdenum resource estimate of 463 million pounds of molybdenum for Endako, calculated by the Vancouver office of Wardrop Engineering Inc. The analysis is part of a new mine plan for Endako, incorporating updated operating costs and a long-term molybdenum price assumption of US$10 per pound. Previous reserves estimates and existing

mine plan extending to 2013 assumed a long-term molybdenum price of US$3.50 per pound, the company said. As part of its review, Wardrop is examining the feasibility of constructing a super-pit, unifying Endako’s three existing pits into a large single pit, and of increasing mine production to 50,000 tonnes per day from about 30,000 tonnes per day, with a proportionate increase in

roasting capacity.

Startup looms at Max project Another company that scented opportunity in the wind in 2003 is Roca Mines Inc., developer of the Max Molybdenum Project near Revelstoke, B.C. Since acquiring the deposit in August see MOLYBDENUM page 8’

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MOLYBDENUM

COURTESY ADANAC GOLD CORP.

2004, Vancouver, B.C.-based Roca has galloped toward startup within three years. In April, the company predicted it would achieve first moly production by mid-2007, making Max the first new primary molybdenum producer in Canada. The initial phase of mining is expected to produce about 1.5 million pounds of contained molybdenum from each production run of 72,000 tonnes. Roca said it aimed to complete back-to-back production runs in 2007, resulting in the production of some 3 million pounds of contained molybdenum. Total annual operating costs (mine, mill and overhead) are estimated to total $7.2 million, or about $100 per tonne, with capital costs of about $14 million and payback of start-up capital within 10 months of construction startup, or four months from mill startup. Using a campaigned mining-milling approach, Roca plans to recover much of Max’s estimated 280,000 tonnes of highgrade molybdenum within the first few years of production. Earlier this year, Roca decided to accelerate phase 2 of its plan for developing the Max deposit with additional exploration and underground construction to increase access to the deposit. Roca said the global measured and indicated resource at the Max project is nearly 43 million tonnes, grading 0.20 percent molybdenum at a 0.10 percent molybdenite cutoff, meaning more than $3 billion in contained metal value is at stake with moly selling for at least $30 a pound. This estimate does not include inferred resources and the Max deposit

Molybdenum ore at Ruby Creek

Molybdenum core sample at Ruby Creek

remains open at depth. Roca is also advancing plans to explore the property for tungsten, at both underground and surface tungsten targets. The surface strike length of known tungsten mineralization on the property now totals 1,450 meters in length and extends over a vertical range of 600 meters. Future exploration will focus on expanding the resource both at depth and in areas surrounding the main deposit. Roca said it has formed an advisory board of porphyry molybdenum experts to guide the company with further exploration plans at Max. Several molybdenum deposit experts have observed that the Max deposit has similarities to the URAD deposit (the uppermost deposit associated with the famous 700 million-plus tonne

Henderson deposit). Henderson has operated since 1976 as a primary molybdenum underground mine and is projected to remain an economic producer for another 20 years, Roca officials say. Originally prized for the relatively small (about 13.7 million tons of .35 percent MoS2) URAD ore body, subsequent drilling in 1965 revealed what is now the Henderson deposit within Red Mountain. The Henderson mine 40 years later is operating at more than 30,000 tonnes per day, making it one of the largest underground mines in the world. At this point, Roca is wondering if the 43-million-tonne Max deposit could be an upper offshoot of something much bigger lurking under Trout Mountain.

Ruby Creek races to be first Adanac’s Ruby Creek Molybdenum Deposit is a low-grade bulk-type occurrence estimated to contain a measured and indicated resource of 220 million pounds of molybdenum ore. Located 124 kilometers southeast of Whitehorse and 22 kilometers northeast of Atlin, B.C., Ruby Creek was staked for Adanac Mining and Exploration Co. Ltd. in 1967. Extensive exploration of the property ensued until the early 1980s, but the owners then dropped the minerals claims. In 2001, Adanac Gold Corp (formerly Stirrup Creek Gold Corp) purchased and staked extensive mineral claims in the Atlin Mining Division, including the 10,000-acre Ruby Creek molybdenum deposit. So far, the company has invested $11 million in the project, bringing total investment in Ruby Creek to $35 million. Recognizing the current moly trend in late 2003, Adanac implemented a plan to

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produce molybdenum from the Ruby Creek deposit by early 2009, ahead of all other competing projects. Adanac, which also owns three molybdenum and/or copper-molybdenum deposits in Nevada, is developing a 20,000 tonne-per-day open pit mine at Ruby Creek. The company estimates total production of about 164 million pounds of molybdenum over the mine’s life of 21 years. The junior aims to develop a highgrade (0.84 percent) starter pit during the first five years of production, while continuing to explore the deposit. Ruby Creek’s resource is open to depth to the west and south. Preproduction capital, including operating costs, is estimated at C$434 million, with average operating costs of $5.87 per pound during the first five years. Adanac says it has a 12- to 18-month lead over competing greenfield projects, and Ruby Creek is positioned to become the first major primary molybdenum mine brought into production in decades.

Davidson offers future promise Molybdenum was discovered at the Davidson Project, formerly known as the Yorke-Hardy deposit, under Hudson Bay Mountain in 1944. Extensive exploration since revealed a high-grade deposit with excellent potential for selective bulk underground mining. With a measured and indicated resource of nearly 300 million pounds of molybdenum at Davidson, Thompson Creek is envisioning first production in 2008, assuming a plan to process the ore at Endako, which is 200 kilometers away, proves to be economic. A feasibility study is under way.

Lucky Ship could set sail New Cantech Ventures Inc. of White Rock, B.C., is pursuing development of the Lucky Ship Molybdenum Project near Morice Lake south of Smithers, B.C. The company announced in May completion of a preliminary economic assessment of the project that demonstrates positive economics as a 10,000 tonnes-perday open pit mine. The independent study shows the mine could operate continuously for 16 years using conventional open pit equipment. Powered by hydropower, the mining process would produce a molybdenite concentrate for direct sale. A recent estimate of the indicated and inferred resource at Lucky Ship is 62 million tons, grading at 0.70 percent of MoS2. New Cantech is continuing to explore the property. ●

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N U N A V U T

Starfield Resources sees shine in PGMs Ferguson Lake property in Nunavut could supply metals for booming auto markets in India, China if junior company makes good COURTESY STARFIELD RESOURCES

By SARAH HURST For Mining News

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eology isn’t always a fast-moving business, especially when you consider that minerals lie around for billions of years before they’re discovered and eventually mined. So the fact that Toronto-based Starfield Resources has recently sprung into action after almost a decade of relative quiescence shouldn’t mean too much in the grand scheme of things. What matters is that the company is now taking serious steps towards development of its sole project, the Ferguson Lake polymetallic deposit in Nunavut. Starfield appointed a new president and

The deposit occurred in the Archean period, 3.8 billion to 2.5 billion years ago, when life first appeared on Earth, and when most of the world’s major mineral deposits were formed. CEO, André Douchane, in February, and in April the company began trading on the TSX. It also initiated a scoping study for Ferguson Lake that is due to be completed by the end of the year. In May Starfield filed a new 43-101 that showed an indicated mineral resource estimate for the property’s Main West Zone of 15.2 million metric tons grading 0.71 percent nickel, 1.04 percent copper, 0.08 percent cobalt, 1.64 grams-per-ton palladium and 0.28 grams per-ton-platinum. The previous year’s 43101 showed an indicated resource of 8.7 million tons. The Ferguson Lake property was discovered by Inco in the 1940s and held by that company until the mid-1990s, when Inco dropped it and it was picked up by a couple of prospectors, Douchane explained in a presentation at the RBC Capital Markets Mining and Metals Conference in Toronto June 13. “Starfield was an entrepreneurial company at that point in time and got involved with the prospectors,” Douchane said. “They raised about $71 million over a period of time and discovered the large sulfide deposit. From there, like any entrepreneurial company, they needed to change. The board changed and they went looking for professional management to take this company into the development stage, which they did. I joined the company in February, took a good look at it, just loved the asset and liked the challenge.”

West Zone holds most of mineralization Most of the mineralization at Ferguson Lake is located in the West Zone, which is about 4 kilometers long. In 2006 Starfield put in 116 diamond drill holes and 20 geotechnical holes in the West Zone to try and upgrade it from an inferred resource to an indicated resource. All of the geotechnical holes hit sulfide. The deposit occurred in the Archean period, 3.8 billion to 2.5 billion years ago, when life first appeared on Earth, and when most of the world’s major mineral deposits were formed. “If you’re in Archean greenstones, you’re on the Serengeti looking for lions, it’s the same as you’re looking for gold in the greenstones,” Douchane said. “If you’re in the Archean period you’re in the right place and time.” The deposit is a multi-layer ultra-mafic

Starfield will be investigating a high-grade footwall PGM zone at Ferguson Lake this summer

intrusive, about 15 kilometers long and 6 kilometers wide at one end, 1.5 kilometers wide at the other end. Some of the ore comes to the surface, so the deposit could become both an open pit and an underground mine, according to Douchane. Based on mining a million tons of ore, potential revenue from Ferguson Lake could be between $365 million and $500 million, depending on operating costs and metals prices, Douchane estimates. Demand for platinum, palladium and other platinum group metals that are present at Ferguson Lake will soar in the coming years, Douchane believes. This is mainly due to the vast numbers of cars that people in China and India are purchasing. “Every catalytic converter needs a little rhodium. That’s what takes care of the nitrous oxides. Every catalytic converter needs a small amount of platinum to stabilize that rhodium,” Douchane said. Gasoline engines are also likely to require some palladium, he added. For this year’s field program Starfield has a budget of about $11 million, which will be used to investigate a high-grade footwall platinum-group-metals zone at Ferguson Lake. “There’s a narrow thickness that seems to go through it. It’s about a foot in thickness, 0.35 meters, runs 1 ounce of platinum, 3 ounces of palladium and

one-tenth of an ounce of rhodium,” Douchane said. “It’s extremely rich. ... That’s what we’re going to spend some time on this summer to see if that’s real.” If the permitting process goes according to plan, construction of a mine could begin in three years. Metallurgical test work for Ferguson Lake is being conducted by SGS

Lakefield. Starfield is also working in conjunction with Montreal’s McGill University to develop an energy-efficient metals recovery method. The research is focused on the critical process step of iron precipitation and regeneration of the hydrochloric acid needed for the leaching step.●

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WEEK OF JUNE 24, 2007

A L A S K A

Hemis launches hunt for offshore gold Swiss junior brings hi-tech world of marine exploration to Alaska’s Cook Inlet, plans drill program after oceanographic survey By SARAH HURST For Mining News

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geologist who worked in Alaska decades ago is following a long-harbored ambition to find out if there is gold on the seabed in Cook Inlet. Doug Oliver helped to build the trans-Alaska oil pipeline and returned to the state in the early 1980s with Tenneco Minerals, which had several exploration projects at the time. Tenneco was approached by Aspen Exploration to look for the offshore gold, but a deal couldn’t be reached. Oliver was always interested in the idea and is now pursuing it with Zurich, Switzerland-based Hemis Corp. Aspen did do some preliminary work — remote sensing and geophysical surveys — but it didn’t get as far as drilling, Oliver told Mining News. The surveys identified a number of magnetic anomalies which were encouraging, taken in conjunction with the gold that can be found on Cook Inlet’s beaches, he said. Hemis, a recently formed junior, is conducting an oceanographic survey this summer, collecting data about the sea floor, ●

with the goal of starting a month-long drilling program when the fishing season ends in September. The project is known as Anchor Gold and it is based out of Anchor Point, near Homer on the Kenai Peninsula. Currently two geophysicists go out on a 20-foot boat using on-board instrumentation including a high-precision cesium magnometer, a fathometer, side-scan sonar and a StrataBox. The StrataBox is an instrument capable of imaging through sediments up to 40 meters thick. So far the survey has indicated that the water depth in the area of interest is often less than 10 meters, which would be ideal for drilling, according to Hemis.

About $1 million will be spent this year The company has hired two consultants with Entrix to deal with permitting and equipment for the drill program. Hemis will have to obtain a boat that is at least 60 feet long and possibly up to 100 feet long, Oliver said. The consultants have been talking to several companies that have experience drilling in Cook Inlet for civil engineering projects and bridge foundations, and the drillers

insist that the boat must have a moon pool in the center — not at one end — through which to load the drill rods, because that setup is the most stable. About 14 people will be involved in the drill program. Cook Inlet is a tricky place to work because of its currents and tides, Oliver said. The drillers will need to make sure that parts of the sample don’t wash away when they are being brought to the surface, he added. Hemis plans to spend about $1 million on the offshore project this year, and a large component of that will be the cost of running the anchors and winches, which are “enormous,” according to Oliver. Offshore mining has a very limited history, and Oliver is aware that the obstacles may be too great. “We need to figure out a way to do it in an environmentally sound manner — it might not be possible to do that, or it might be uneconomic,” he said. De Beers has successfully mined diamonds off the coasts of South Africa and Namibia, and Vancouver-based Nautilus Minerals plans to start mining gold and copper off the coast of Papua New Guinea in 2009. ●

A L A S K A

BLM reclaims historic mining properties Environmental conditions at Nome Creek and Harrison Creek watersheds in Interior Alaska have been significantly improved By SARAH HURST For Mining News

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ortunately for Alaska, there are relatively few abandoned mine sites in the state that pose a hazard to the public. Historically, placer mining was widespread in Alaska, which means there aren’t too many deep adits where necks can be broken. But there is still reclamation work to be done, and when there is no new owner to take responsibility on federal lands, the Bureau of Land Management steps in. Over

the past few years staff from BLM’s Fairbanks office have been working at two sites on Harrison Creek and Nome Creek in Interior Alaska. Nome Creek is in the White Mountains National Recreation Area and Harrison Creek is in the Steese National Conservation Area, and both creeks drain into national wild rivers that flow into the Yukon Flats National Wildlife Refuge, BLM’s Linda Musitano explained May 16 at the Northern Latitudes Mining Reclamation Workshop in Juneau. Both the

Recreation Area and the Conservation Area are closed to further mineral entry, but there are still a handful of active mining claims in the Harrison Creek drainage, she added. The scale of the Harrison Creek project was much larger than that of the Nome Creek project. “The Nome Creek area was mined historically by dredge and dragline, while Harrison Creek was mined primarily by heavy earth-moving equipment, and the access to the sites differs as well,” Musitano said. Nome Creek is about 30 miles north of Fairbanks and a state-maintained road goes there, while Harrison Creek is only accessible via a seasonal mining road.

Nome Creek a popular recreation area BLM’s concern about Nome Creek was heightened because it is a popular recreation area for activities that include camping, fishing and gold panning. The upper middle reaches of Nome Creek were dredged and extensively placer mined from the late 1800s to about 1980. Evidence of mining, such as old dredge buckets, still remains there today. “Most of Nome Creek’s stream channel and associated floodplain were disturbed by dredges and the earth-moving equipment and much was left in an unreclaimed state,” Musitano said. “It had been diverted and its banks totally reworked until it was almost unrecognizable as a stream in some parts. By 1980, when it became part of the White Mountains Recreation Area, over seven miles of the stream were disturbed by mining.” The overall project goal at Nome Creek was to reduce the erosion problem by stabilizing the channel and creating a functioning floodplain. BLM began a streamflow

monitoring project at Nome Creek in 1989 and the information was used to help design a new stream channel and a suitable floodplain for the upper reaches of the drainage. Peak flow gauges were installed at two sites on Nome Creek and one site on Moose Creek in 1989, and 10 years later an automated water level recorder was installed. Reclamation work began with filling in the settling pond by using the material from the surrounding tailing piles and then grading the area as flat as possible with the grade not to exceed 3:1. A pilot channel was then dug, avoiding the filled-in ponds. For revegetation work, BLM worked with the Plant Materials Center in Palmer, testing various grass species and willow planting techniques. “We had good results with the grass seed mixture that was spread on the tailing piles,” Musitano said. “At the beginning of the project the seeding rates were at about 55 pounds per acre. This was continued for about three years and then it was observed that the grasses were probably interfering with the natural revegetation of the willows, so the rates were reduced to 36 pounds per acre, and they were only put on the areas that were highly erodable. Fertilizer was also applied annually to the newly constructed floodplains ... at rates ranging from 330 pounds per acre to 400 pounds per acre. The sites treated annually with the fertilizer exhibited faster rates of return for natural revegetation of willows than the sites that were not treated with the fertilizer.” Results from the project showed that site selection, planting techniques and summer weather routines all factor into plant sursee RECLAMATION page 15

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A L A S K A

‘The Birdman of Treadwell’ Diary of a Treadwell Gold Miner 1903-1904, by Edwin Warren, presented by Barry Kibler, AuthorHouse, $8.30 BARRY KIBLER COLLECTION

By SARAH HURST For Mining News

Warren bothered by gas, smoke in mine Warren was immediately hired for night shifts at the mine, and after just one week of work he was already having difficulties. “The gas and smoke have bothered me a good deal, making my head ache,” he wrote on June 24. “Last night, the boss put me in a different part of the mine and I got along better.” Not all that much better, apparently, as on July 29 Warren reported that he had fainted recently from the effects of the gas, and that it was the only time in his life he had fainted. On Aug. 1 Warren received his first paycheck, amounting to $50.30. He sent most of it home to save for his tuition at Stanford University, preferring not to go downtown to celebrate with “lots of the boys.” Four days later three men were killed in the mine and others were badly injured when a cable broke, causing a skip loaded with ore to drop to the bottom of the shaft. On Aug. 6, Warren himself narrowly escaped an underground collision that would have been fatal. By the time they closed down in 1917, approximately 200 men had been killed at the Treadwell mines. But despite the harshness of the working conditions, Warren was always able to appreciate the beauty of Southeast

BARRY KIBLER COLLECTION

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f Edwin Warren’s diary is anything to go by, most miners in Alaska in the early 20th century were more interested in spending their paychecks on booze and debauchery than writing eloquent accounts of their daily lives and natural surroundings. But Warren was different. An avid ornithologist and devout Christian, he agonized over whether to work on a Sunday and wished that the local Indians could be kept away from the worst influences of white people. Warren’s grandson, Barry Kibler, has published his diary of the years 1903-04, when he worked at the Treadwell gold mines in Douglas, near Juneau. The book is illustrated with several photos from the era and a few taken more recently by Kibler himself. Warren set out for Alaska in April 1903 from Pacific Grove, Edwin Warren Calif., on his “wheel” — his trusty worked at the bicycle — and rode to Sacramento. Treadwell mines to He took the train to Portland, Ore., save money for his tuition at Stanford and from there traveled via Seattle University, which he and Cloverdale, British Columbia, to later attended. Vancouver. A steamer took him to Ketchikan, where he boarded another ship to Douglas, arriving in mid-June.

The last remaining stamp mill at the Treadwell mines near Juneau.

Alaska. “The mountains across the channel cast their dark shadows into the still water, and over their tops to the northward was a soft, mellow, light,” he wrote on Aug. 22. “It seems as if one could see wonderful things from those summits on a night like this.” In September the miners were disturbed by a ghost that “appeared in hip-boots and slicker” and “finally disappeared through a raise, climbing up hand over hand on an invisible rope,” as Warren was told. A few days later he discovered the explanation: “It now appears that the ghost which appeared to Dick was especially prepared for the occasion by some of the boys, and let down by a string into the pit where he was working. Dick was fired for circulating his ghost yarn, as the bosses were afraid it would cause some of the men to quit.”

Treadwell mine complex produced 3 million ounces Warren’s diary is thoughtful and often entertaining, and serves as a fascinating snapshot of the life of an ordinary miner in the Gold Rush years. Kibler has also included a brief portrait of John Treadwell, a carpenter and builder who mined in California and Nevada before coming to Alaska and purchasing claims in 1881. The Treadwell mine complex became the largest gold mine in the world, eventually producing 3 million ounces. Treadwell sold his interest in the mines for $1,500,000 and returned to

California, where he filed for bankruptcy in 1914 after starting a failed business. The book’s only shortcomings are minor errors that should have been caught by a proofreader, for example referring to this newspaper as “Mining News SE Alaska” in one instance and then as “Miner North” in another. Some of the problems are due to the careless use of an automatic spelling-checker, which resulted in Nansen (author of “Farthest North,” which Warren was reading) being referred to as Nauseas on page 19 and Mansen on page 28. Similarly, LeConte, author of “Elements of Geology,” is called LeLeontis on page 28 and LeCeonte on page 32. One other point that requires further clarification is the date of the diary entry on page 45, which is given as May 5, 1903, when Warren puts his “wheel” into storage in Seattle. This entry concludes the first year of the diary and occurs directly after the entry for Nov. 24, 1903. So either the May 5 entry is in the wrong place, or the date should perhaps be November or December 1903. It cannot refer to 1904, as by that time Warren was back in Alaska. More information about Edwin Warren and his diary can be found on Barry Kibler’s web site: http://www.pagebypagedesigns.com/journals. ●

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WEEK OF JUNE 24, 2007

Y U K O N

Yukon government comes to Minto’s aid Sherwood Copper revises its power purchase agreement that will hook mine to the grid, and produces first copper-gold concentrates COURTESY SHERWOOD COPPER

By SARAH HURST For Mining News

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he open pit Minto mine in the Yukon produced its first copper-gold concentrates in late May as part of the equipment commissioning process. Production is forecast to ramp up to full capacity during the third quarter of 2007, Vancouver-based Sherwood Copper announced May 31. “This is an exciting day for Sherwood and everyone involved in the rapid transformation of the company to producer status,” said Sherwood’s president and CEO, Stephen Quin. “In less than two years we acquired the partially constructed but dormant Minto project, redrilled the resources to reserve standards, completed a bankable feasibility study, arranged project financing, built a brand new mine and staffed it for production.” At almost the same time as the concentrates were produced, Sherwood received another dose of good news from the Yukon Utilities Board, which approved an amended power purchase agreement which could enable Minto to have access to grid power by the end of 2008, replacing diesel and significantly reducing mine operating costs.

“The discovery of the adjacent Area 2 deposit provides an opportunity to extend the mine life and/or increase production to the benefit of all stakeholders in the project.” —Stephen Quin, Sherwood Copper president, CEO

Yukon stepped in on power purchase agreement The Yukon government earlier stepped in to help rewrite the power purchase agreement after the Yukon Utilities Board expressed some doubts about it. Minto Explorations, a subsidiary of Sherwood, signed the agreement with Yukon Energy Corp., but the Yukon Utilities Board raised a number of unexpected concerns. “Sherwood is appreciative of Yukon Government’s progressive approach to the power purchase agreement,” Stephen Quin said May 15. “The result of the amendment to the PPA is that Sherwood obtains the certainty with respect to capital and operating costs that it needs, allowing its shareholders to benefit from reduced energy costs at an acceptable level of risk, while Yukon stakeholders gain significant benefits from incremental energy sales, infrastructure development and taxes, while at the same time reducing the generation of greenhouse gases in the Yukon.” One of the issues raised by the Yukon Utilities Board about the power plan was that Minto Explorations’ proposed $7.2 million contribution to the construction of a 138 kilovolt transmission line extension and $3.8 million payment for the construction of a transmission spur line to the mine site should not be fixed amounts, but instead should be based on a percentage of the project costs. “The board is concerned about the level of risk associated with this

Construction at Minto is now complete and the first copper-gold concentrates were produced in late May.

financing,” it said in its decision. The board also questioned Yukon Energy’s plan to purchase Minto’s four 1.6 megawatt diesel generators for $2.24 million. “YEC has not demonstrated a need for the units nor provided an adequate business case supporting this option,” the board said. This is particularly true in light of the Yukon government’s decision to provide funding for the Aishihik hydroelectric power station’s third turbine, a 7 megawatt generator that could be in service by 2009, the board noted. Key modifications to the original PPA are a fixed rate to the end of 2012 of 10 cents per kilowatt hour, a rate that would escalate on an annual basis in accordance with an inflation measure; and a guarantee by the Yukon Development Corp. of the financing risks related to the Minto capital contribution payments, including responsibility for any risk that the amount of Minto’s contribution for the main line may increase beyond $7.2 million.

Phase 2 mill expansion to be accelerated In other developments at Minto, Sherwood announced April 11 that it would accelerate the Phase 2 mill expansion using funds from a recently completed convertible debenture financing. “We will be able to maintain our current construction momentum by rolling straight from Phase 1 mine construction into Phase 2 mill expansion utilizing our existing contractors,” Quin said.

Minto’s feasibility study assumed that the Phase 2 mill expansion from 1,563 metric tons per day to 2,400 tons per day would take place during the first year of operations and would be funded from cash flow, once available. Sherwood now aims to complete the Phase 2 expansion by the end of 2007, six to nine months ahead of previous forecasts. The layout and design of the mill expansion will be adjusted to allow for future increases, beyond 2,400 tons per day. The construction managers at Minto are JDS Energy & Mining; engineering and procurement for the mine is being done by Hatch Ltd.; and construction by Clark Builders. All major equipment has already been installed and the remaining work principally consists of piping, electrical and instrumentation tie-ins. High grade copper-gold ore is a few meters from being exposed, with pre-stripping more than 85 percent complete. On April 24 Sherwood announced that the Yukon government’s Department of Economic Development had awarded Minto Explorations up to $200,000 in funding to support the advancement of the Area 2 discovery towards a production decision. “The discovery of the adjacent Area 2 deposit provides an opportunity to extend the mine life and/or increase production to the benefit of all stakeholders in the project,” Quin said. “I am appreciative of the proactive and supportive role of Yukon government in assisting in the development of the mining industry in Yukon,” he added. ●

Companies involved in Alaska and northwestern Canada’s mining industry

D I R E C T O R Y

The Red Dog mine in northwest Alaska.

Mining Companies Fairbanks Gold Mining/Fort Knox Gold Mine Fairbanks, AK 99707 Contact: Lorna Shaw, community affairs director Phone: (907) 488-4653 • Fax: (907) 490-2250 Email: [email protected] • Web site: www.kinross.com Located 25 miles northeast of Fairbanks, Fort Knox is Alaska’s largest operating gold mine, producing 340,000 ounces of gold in 2004. Niblack Mining Corp. Suite 615-800 W. Pender St. Vancouver, BC V6C 2V6 Contact person: Paddy Nicol Phone: (604) 682-0301 ext. 106 Fax: (604) 682-0307 E-mail: [email protected] Website: www.niblackmining.com NovaGold Resources Inc. 2300 – 200 Granville Street Vancouver, BC V6C 1S4 Contact person: Ariadna Peretz Phone: 1 (866) 669-6227 Fax: (604) 669-6272 E-mail: [email protected] Other office: Alaska Gold Company P.O. Box 640 115 6th Avenue West Nome, AK 99762-0640 Website: www.novagold.net NovaGold Resources Inc. is a gold and copper company engaged in the exploration and development of mineral properties in Alaska and Western Canada. Rimfire Minerals Corp. Vancover, BC V6C 1G8 Canada

Contact: Ahnna Pildysh, Mkt. Coordinator Phone: (604) 669-6660 Fax: (604) 669-0898 Email: [email protected] • Web site: www.rimfire.bc.ca Gold and silver projects in Alaska, Yukon, BC and Nevada. Preferred partner of senior mining firms. Partnered with the world’s three largest gold producers. Usibelli Coal Mine Fairbanks, AK 99701 Contact: Bill Brophy, vp cust. relations Phone: (907) 452-2625 • Fax: (907) 451-6543 Email: [email protected] • Web site: www.usibelli.com Other Office P. O. Box 1000 • Healy, AK 99743 Phone: (907) 683-2226 Usibelli Coal Mine is headquartered in Healy, Alaska and has 200 million tons of proven coal reserves. Usibelli produced one million tons of sub-bituminous coal this year.

Service, Supply & Equipment 3M Alaska 11151 Calaska Circle Anchorage, AK 99515 Contact: Paul Sander, manager Phone: (907) 522-5200 Fax: (907) 522-1645 Email: [email protected] Website: www.3m.com Serving Alaska for over 34 years, 3M Alaska offers total solutions from the wellhead to the retail pump with a broad range of products and services – designed to improve safety, productivity and profitability.

Ace Transport Anchorage, AK 99502 Contact: Henry Minich, owner Phone: (907) 243-2852 • Phone: (907) 229-9647 (cell) Fax: (907) 245-8930 • Email: [email protected] Specializing in heavy hauling. Equipment includes 85ton lowboy. Aeromed International Anchorage, AK 99503 Contact: Brooks Wall, director Phone: (907) 677-7501 • Fax: (907) 677-7502 Email: [email protected] • Web site: www.ykhc.org Aeromed International is an all jet critical care air ambulance fleet based in Anchorage. Medical crews are certified Flight Nurses and certified Flight Paramedics. Air Liquide Anchorage, AK 99518 Contact: Brian Benson Phone: (907) 273-9762 • Fax: (907) 561-8364 Email: [email protected] Air Liquide sells, rents, and is the warranty station for Lincoln, Miller, Milwaukee, Victor and most other welding equipment and tool manufacturers. Alaska Cover-All 6740 Jollipan Crt. Anchorage, AK 99507 Contact: Paul Nelson, mgr. Phone: (907) 346-1319 • Fax: (907) 346-4400 E-mail: [email protected] Contact: Scott Coon Phone: (907) 646-1219 • Fax: (907) 646-1253 Email: [email protected] National Call Center: 1-800-268-3768

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PETROLEUM NEWS

NORTH OF 60 MINING

We are the Alaska dealers for Cover-All Building Systems. Steel framed, fully engineered, LDPE fabric covered, portable buildings in 18 to 270 foot widths and any length. Alaska Earth Sciences Anchorage, AK 99515 Contact: Bill Ellis, Rob Retherford or Dave Lappi, owners Phone: (907) 522-4664 • Fax: (907) 349-3557 Email: [email protected] A full service exploration group that applies earth sciences for the mining and petroleum industries providing prospect generation, evaluation and valuation, exploration concepts, project management, geographic information systems and data management. We also provide camp support and logistics, geologic, geochemical and geophysical surveys. Alaska Frontier Constructors P.O. Box 224889 Anchorage, AK 99522-4889 Contact: John Ellsworth, President Phone: (907) 562-5303 Fax: (907) 562-5309 Email: [email protected] Alaskan heavy civil construction company specializing in Arctic and remote site development with the experience, equipment and personnel to safely and efficiently complete your project. Alaska Steel Co. 1200 W. Dowling Anchorage, AK 99518 Contact: Joe Lombardo, vice president Phone: (907) 561-1188 • Toll free: (800) 770-0969 (AK only) Fax: (907) 561-2935 Email: [email protected] Fairbanks Office: 2800 South Cushman Contact: Dan Socha, branch mgr. Phone: (907) 456-2719 • Fax: (907) 451-0449 Kenai Office: 205 Trading Bay Rd. Contact: Will Bolz, branch mgr. Phone: (907) 283-3880 • Fax: (907) 283-3759 Full-line steel and aluminum distributor. Complete processing capabilities, statewide service. Specializing in low temperature steel and wear plate. Arctic Controls Anchorage, AK 99501 Contact: Scott Stewart, president Phone: (907) 277-7555 • Fax: (907) 277-9295 Email: [email protected] Website: www.arcticcontrols.com An Alaskan owned and operated company since,1985, Arctic Controls has been highly successful as manufacturer representatives for the state of Alaska in the Process Control and Instrumentation field. Arctic Foundations Anchorage, AK 99518-1667 Contact: Ed Yarmak Phone: (907) 562-2741 • Fax: (907) 562-0153 Email: [email protected] Website: www.arcticfoundations.com Soil stabilization – frozen barrier and frozen core dams to control hazardous waste and water movement. Foundations – maintain permafrost for durable high capacity foundations. Chiulista Camp Services/Mayflower Catering 6613 Brayton Dr., Ste. C Anchorage, AK 99507 Contact: Joe Obrochta, pres. Contact: Monique Henriksen,vp. Phone: (907) 278-2208 • Fax: (907) 677-7261 Email: [email protected] The 100 percent Alaska Native owned and operated catering company on the North Slope, catering and housekeeping to your tastes, not ours. CN Aquatrain Anchorage, AK Contact: Laurie A. Gray, agent Phone: (907) 279-3131 Toll Free: (800) 999-0541 • Fax: (907) 272-3963 CN Aquatrain has provided Alaska with dependable access to Canadian and Lower 48 markets for 38 years. Construction Machinery 5400 Homer Dr. Anchorage, AK 99518 Contact: Ron Allen, Sales Manager Phone: (907) 563-3822 • Fax: (907) 563-1381 Email: [email protected] • Web site: www.cmiak.com Other Offices: Fairbanks office Phone: 907-455-9600 • Fax: 907-455-9700 Juneau office Phone: 907-780-4030 • Fax: 907-780-4800 Ketchican office Phone: 907-247-2228 • Fax: 907-247-2228

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WEEK OF JUNE 24, 2007

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Advertiser Index 3M Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Ace Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Aeromed International Air Liquide Alaska Cover-All . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Alaska Dreams Alaska Earth Sciences . . . . . . . . . . . . . . . . . . . . . . . 10 Alaska Frontier Constructors Alaska Railroad Alaska Steel Co. Arctic Controls Arctic Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Bombay Deluxe Restaurant Chiulista Camp Services/Mayflower Catering CN Aquatrain Construction Machinery . . . . . . . . . . . . . . . . . . . . . 16 Dowland-Bach Egli Air Haul . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Fairbanks Gold Mining/Fort Knox Gold Mine . . . 11 Foundex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 GPS Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Jackovich Industrial & Construction Supply. . . . . 10 Judy Patrick Photography. . . . . . . . . . . . . . . . . . . . . 4 Lynden MRO Sales Nature Conservancy, The Niblack. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Northern Air Cargo . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Pacific Rim Geological Consulting . . . . . . . . . . . . . 15 Panalpina PTI Group Rimfire Minerals Salt+Lite Creative Usibelli Coal Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 U.S. Bearings & Drives Veco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Wasilla Office Phone: 907-376-7991 • Fax: 907-376-7971 Dowland-Bach Corp. 6130 Tuttle Pl. P.O. Box 230126 Anchorage, AK 99523 Contact: Lynn Johnson, president Phone: (907) 562-5818 • Fax: (907) 563-4721 E-mail: [email protected] Website: www.dowlandbach.com Egli Air Haul P.O. Box 169 King Salmon, AK 99613. Contact: Sam Egli Phone: (907) 246-3554 • Fax: (907) 246-3654 Email: [email protected] • Web site: www.egliair.com Serving Alaska since 1982, we perform a wide variety of flight operations, including airplane and helicopter charter, aerial survey, and specialized operations such as external load work, powerline maintenance, aerial filming and videography. Foundex Pacific 2261 Cinnabar Loop Anchorage, AK 99507 Contact: Howard Grey, manager Phone: (907) 522-8263 • Fax: (907) 522-8262 E-mail: [email protected] • Website: www.foundex.com Other offices: Surrey, BC Canada Contact: Dave Ward Phone: 604-594-8333 Email: [email protected] Drilling services relating to exploration, geotechnical investigations and wells. GPS Environmental Industrial Water/Wastewater & Mining Equipment 3340 Arctic Blvd., Suite 102 Anchorage, AK 99503 Contact: Paul Schuitt Phone: (907) 245-6606 • Cell: (907) 227-6605 Fax: (928) 222-9204 Email: [email protected] Website: www.pgsenvironmental.com GPS Environmental, LLC is a manufacturers representative company representing companies that manufacturer water treatment, wastewater treatment, mining equipment and modular camps. Jackovich Industrial & Construction Supply Fairbanks, AK 99707 Contact: Buz Jackovich Phone: (907) 456-4414 • Fax: (907) 452-4846 Anchorage office Phone: (907) 277-1406 • Fax: (907) 258-1700 24- hour emergency service. With 30 years of experience, we’re experts on arctic conditions and extreme

Judy Patrick Photography Anchorage, AK 99501 Contact: Judy Patrick Phone: (907) 258-4704 • Fax: (907) 258-4706 Email: [email protected] Website: JudyPatrickPhotography.com Creative images for the resource development industry. Lynden Alaska Marine Lines • Alaska Railbelt Marine Alaska West Express • Lynden Air Cargo Lynden Air Freight • Lynden International Lynden Logistics • Lynden Transport Anchorage, AK 99502 Contact: Jeanine St. John Phone: (907) 245-1544 • Fax: (907) 245-1744 Email: [email protected] The combined scope of the Lynden companies includes truckload and less-than-truckload highway connections, scheduled barges, intermodal bulk chemical hauls, scheduled and chartered air freighters, domestic and international air forwarding and international sea forwarding services. MRO Sales Anchorage, AK 99518 Contact: Don Powell Phone: (907) 248-8808 • Fax: (907) 248-8878 Email: [email protected] Website: www.mrosalesinc.com MRO Sales offers products and services that can help solve the time problem on hard to find items. Northern Air Cargo 3900 W. International Airport Rd. Anchorage, AK 99502 Contact: Mark Liland, acct. mgr. Anch./Prudhoe Bay Phone: (907) 249-5149 • Fax: (907) 249-5194 Email: [email protected] • Website: www.nac.aero Serving the aviation needs of rural Alaska for almost 50 years, NAC is the states largest all cargo carrier moving nearly 100 million pounds of cargo on scheduled flights to 17 of Alaska’s busiest airports. NAC’s fleet of DC-6, B-727, and ATR-42 aircraft are available for charters to remote sites and flag stops to 44 additional communities. Pacific Rim Geological Consulting Fairbanks, AK 99708 Contact: Thomas Bundtzen, president Phone: (907) 458-8951 • Fax: (907) 458-8511 Email: [email protected] Geologic mapping, metallic minerals exploration and industrial minerals analysis or assessment. PTI Group Edmonton, AB, Canada T6N 1C8 Phone: (800) 314-2695 • Fax: (780) 463-1015 Email: [email protected] Website: www.ptigroup.com PTI Group Inc. is the premium supplier of integrated remote site services. Offering full turnkey packages or individual services such as construction, catering and wastewater treatment, PTI delivers above and beyond client expectations. Shaw Alaska 2000 W. International Airport Rd, C-1 Anchorage, AK 99502 Contact: Jane Whitsett, office director E-mail: [email protected] Phone: 907-243-6300 Fax: 907-243-6301 Website: www.shawgrp.com Shaw Alaska is a subsidiary of The Shaw Group, one of the World’s largest providers of engineering, design, construction, environmental, infrastructure, fabrication and manufacturing services. U.S. Bearings & Drives Anchorage, AK 99518 Contact: Dena Kelley, branch mgr. Phone: (907) 563-3000 • Fax: (907) 563-1003 Email: [email protected] • Web site: www.bearings.com U.S. Bearings & Drives has been providing solutions to it customers for over 25 years. We offer quality components, name brands and highly trained personnel. VECO 949 E. 36th Ave., Ste. 500 Anchorage, AK 99508 Contact: Emily Cross Phone: (907) 762-1510 • Fax: (907) 762-1001 Email: [email protected] • Web site: www.VECO.com VECO is a multi-national corporation that provides services, project management, engineering, procurement, construction, operations and maintenance – to the energy, resource and process industries and the public sector.

PETROLEUM NEWS

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WEEK OF JUNE 24, 2007

NORTH OF 60 MINING

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COURTESY BLM

continued from page 10

RECLAMATION vival. Dormant cuttings had higher survival rates than the willows that were cut on site. Another challenge was large overflowing ice that occurred when the stream froze down to the bed. This kind of ice filled the valley in the springs of 1996 and 1997. “Not only does it cause problems to the floodplain that was recently constructed, but it also delays revegetation of the reclaimed areas,” Musitano said. During several summers there were also severe storms that caused extensive flooding in Nome Creek. “The pilot channel that was put in place remained largely intact, but other areas suffered from lateral erosion and braiding,” Musitano said. “While overestimating channel dimensions may increase construction costs and possibly cause braided channels, the results of underestimating can be channel failure and catastrophic floodplain damage,” she added.

Harrison Creek project lasted only a few weeks

The Nome Creek watershed was reclaimed over a period of almost two decades, in an effort to reduce erosion and create a functioning floodplain.

tributing topsoil and organic material where possible. A bulldozer operated for about 20 hours a day for 14 days. About 80,000 cubic yards of tailings material was moved and 4.3 acres of topsoil was salvaged and spread on the new floodplain. In 2008 and beyond BLM will look at reclaiming some other stretches of Harrison Creek.

In-house work reduced Nome Creek cost In total, 2,400 operator hours were spent at Nome Creek over a period of almost 20 years. At Harrison Creek 353 operator hours were spent in two weeks. Nevertheless, the cost of the Harrison Creek project was about $680,000 (with 1.46 stream miles reclaimed), compared to $344,000 at Nome Creek (with five stream miles reclaimed). The biggest difference was that Nome Creek was done in-house and Harrison Creek required outside help, including $50,000 to create a topographic contour map; this kind of map was already available for Nome Creek.

COURTESY BLM

The Harrison Creek reclamation program was much more short-term than the one at Nome Creek, lasting only for two weeks in July and August 2006. It did require a few years of planning, though, after BLM received funding for the project from the federal Abandoned Mine Lands program in 2001. BLM then contracted with the United States Geological Survey to collect hydrologic information about the watershed so that the reclamation program could be designed. Engineering firm USKH provided a literature review for BLM, covering what had already been written about the area. As at Nome Creek, BLM wanted to create a functional floodplain to reduce the erosion problem at Harrison Creek and to encourage native species to grow there. “Some specific objectives were to design river reaches that mimicked the undisturbed areas both upstream and downstream of the reclamation project. To reduce the environmental degradation by getting rid of the spoil piles, and to rehabilitate the riparian habitat,” Musitano said. Reclamation activities included pushing over and flattening tailings piles, excavating floodplains along channel margins, filling in braided channels, cutting back stream banks to lower the angle of the bank, and redis-

BLM’s reclamation work at Harrison Creek last summer helped return the area to its natural state.

“Based on our experience at Nome Creek we found that what appears to produce the most labor- and cost-effective results in terms of revegetation is to apply fertilizer for several years after reclamation to encourage native species coming in, but not conducting additional willow plantings. If you are going to do willow plantings, the dormant cuttings were pretty time-consuming,” Musitano said. The use of a single bulldozer at Nome Creek was effective because only a small

portion of the valley was being reclaimed each year, according to Musitano. “At Harrison Creek our idea was to get a larger area reclaimed in a very short period of time and so the use of two bulldozers was not nearly as effective, probably because the pushing distance was pretty far, and to balance the cut-and-fill it was taking a lot of time, so they recommended that we use an excavator and dump trucks for future projects there,” she said. ●

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PETROLEUM NEWS

NORTH OF 60 MINING

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WEEK OF JUNE 24, 2007

YOU’RE BACKED BY A WINNING TEAM! Southeast Alaska Sales Team: Eric Cole, Brian Elliot, Chris Gerondale

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