Metal Mining Successes in Alaska: A Review of Active and Developing Metal Mines in Alaska

Transcription

1 Metal Mining Successes in Alaska: A Review of Active and Developing Metal Mines in Alaska November 7, 2006 JOGMEC Tokyo, Japan By Albert H. Clough, MSc, PGeol Deputy Commissioner Alaska Department of Commerce, Community, and Economic Development 1

2 Summary History of Modern Mining Development in Alaska Alaska Native Claims Settlement Act, 1971 Alaska National Interest Lands Conservation Act, 1980 Period on intensive statewide reconnaissance mineral exploration, Mine development and refined exploration - Ongoing State of Alaska support for mine development 2

3 Alaska Producing Metal Mines The foundation of a multi-billion U.S. dollar mineral industry! Fort Knox (Fairbanks) Red Dog Fort Knox Pogo Greens Creek 3

4 Location of Producing Metal Mines Red Dog Fort Knox Pogo Greens Creek 4

5 Active Mines Greens Creek Joint venture between Kennecott Minerals (70%) (owner-operator) and Hecla Mining (30%) Began production in Volcanogenic massive sulfide deposit containing economic amounts of silver, lead, zinc and gold. Underground mine. 12% zinc, 4% lead, 12 opt silver, 0.2 opt gold. 5 Production rate approximately 2000T/day.

6 Active Mines Red Dog A joint venture between NANA Regional Corp. and Teck-Cominco The world s largest zinc reserve (121 million tons of ore). World s largest producer of zinc concentrate. 6 3 million tons of ore mined annually at an average grade of 22% zinc, 6% lead and 3 ounces per ton silver (93 grams silver).

7 Active Mines Red Dog, continued Mine employs 450 people (including contractors) 50+% of which are NANA shareholders. Production started in Conventional truck and shovel open pit mine. Considerable undeveloped reserves near mine and mineralization in region. 7

8 Active Mines Red Dog In a class by itself! 8

9 Active Mines Fort Knox True North Kinross Gold Corp. Owner/Operator 9 Operating open-pit gold mine producing 330, ,000 ounces annually from the True North and Fort Knox deposits at an estimated cash cost of $258 per ounce. Average combined grade is ounces per ton (0.8 grams).

10 Active Mines Fort Knox True North, continued The mine employs over 400 people and has an annual economic impact of $196 million on the community of Fairbanks. Mining complete at True North deposit, currently under reclamation. Engineering and regulatory work currently underway to convert low grade stockpiles to heap leach. 10

11 Active Mines Pogo A Sumitomo & Teck-Cominco joint venture Intrusive related, shear-hosted, gold-quartz vein system. Discovered through systematic exploration in Contains 3.6 million ounces of gold at 0.47 ounce/ton (14.6 grams). Construction started in 2004, commissioned 1st quarter of Construction cost est. - $347 M. 11 Employment 238 people. Production rate: 2,500 tpd. Mine life: 10 years. Annual production ~450,000 oz.

12 State of Alaska Location of Developing Mines and Large Exploration Projects Rock Creek/ Big Hurrah Donlin Creek Pebble Copper Kensington 12

13 Developing Mines Kensington Coeur Alaska Mesothermal gold deposit. Reserves: 4.2 million 0.25 ounces/ton (7.8 grams). Operating mine would provide 250 full time workers and spend $13m annually on local purchases. Commission schedule 2007, currently under construction. Construction cost - $190 M. 13 Mining/milling rate - 1,150 tons/day.

14 Developing Mines Rock Creek/Big Hurrah Ownership: NovaGold Resources Capital Requirements: $50M Employment: Production: 100,000 oz/year Commission schedule: 2007, currently under construction Big Hurrah (30 mi. east) probably will mined concurrently with Rock Creek

15 Large Exploration Projects Donlin Creek Operated by Placer Dome in a Joint venture agreement with NovaGold Resources and Calista Corporation Orogenic gold-quartz-sulfide sheeted vein deposit million ounces of gold at an average grade of opt (2.8 grams). 2nd largest gold resource in Alaska. Placer Dome spent $14 million in 2005 exploration program. Similar expenditure for Ongoing exploration and feasibility investigations.

16 Large Exploration Projects Pebble 16 Ownership: Northern Dynasty. Resources: Measured and Indicated: M oz gold B lbs copper Inferred: M oz gold B lbs Cu Employment forecast: >1,000. Mining rate: K tpd. Annual production: >1,200,000 ounces of gold (equivalent). Capital requirements: >$2,000M. Commission schedule: 2012(?). Access: Road to Cook Inlet. Ongoing exploration, environmental studies, and feasibility investigations. Kennecott Canada Exploration (subsidiary of Rio Tinto) has recently taken a 9.9% interest in Northern Dynasty.

17 State of Alaska Programs and Actions to Advance Mine Development Airborne Geophysics Alaska Industrial Development & Export Authority (AIDEA) Stable regulatory and taxation structure 17

18 State of Alaska Programs and Actions to Advance Mine Development Airborne Geophysical/Geological Mineral Inventory (DGGS) A multi-year project to expand the knowledge base of Alaska s mineral resources as a catalyst to private sector investment. 18 Products include: 1:63,360-scale aeromagnetic and airborne-electromagnetic maps 1:63,360-scale bedrock and surficial geologic maps 1:63,360-Scale Land status map and various geological, geochemical and geophysical data compilations

19 Inventory of DGGS Alaska Airborne Geophysical/Geological Surveys 19

20 DGGS offers both: Regional airborne magnetic and resistivity data (USGS & DGGS, 1970s or older data) and Detailed airborne magnetic and resistivity data (DGGS ?? And BLM-DGGS 1997-?) 20

21 State of Alaska Programs and Actions to Advance Mine Development Alaska Industrial Development & Export Authority (AIDEA) The mission of the Alaska Industrial Development and Export Authority (AIDEA) is to provide various means of financing to promote economic growth and diversification in Alaska. 21

22 State of Alaska Programs and Actions to Advance Mine Development Alaska Industrial Development & Export Authority (AIDEA) Support for Alaska mining projects: Road & Port for Red Dog Mine Skagway Ore Terminal Seward Coal Terminal Revenue Bonds for Fort Knox Tailing Facility 22 Revenue Bonds for Kensington Dock and Tailing Facility

23 State of Alaska Programs and Actions to Advance Mine Development 23 Regulatory Structure - Large Mine Permit Process Land Available for Mining Federal mineral lands State of Alaska lands Private lands, Aboriginal land claims settled available for mining Stable Taxation Structure with Development Incentives

24 State of Alaska Programs and Actions to Advance Mine Development Taxation and Incentives MINING TAXATION State corporate income tax. Net income based on graduated scale to maximum of 9.4% on income over $90,000 USD. Mining license tax. Based on net income from mineral product sales. Graduated tax, maximum of 7% on products sales over $100,00 USD. Production royalty. 3% on net income from sales on state lands only. Modest state claim rents and lease fees. 24 Claim rental up to $520 USD/year for 65 Hectare claim. Production lease, up to $1.35 USD/hectare. Annual labor of $100 USD/16 hectare claim.

25 State of Alaska Programs and Actions to Advance Mine Development 25 Taxation and Incentives INCENTIVES No state reserves tax. New mines receive a 3½ year grace period from paying mining license tax. Credit is given for rents and lease payments against production royalty. Exploration incentives program. Exploration expenditure credits up to $20 million USD per mining property may be booked. These credits must be used during the first 15 years of production and applied against corporate income tax, mining license tax, and products royalty.

26 Future Trends and Developments Satellite deposits developed adjacent to existing mines especially: Red Dog Fort Knox Pogo 2. New mines developed such as Donlin Creek 3. Establishment of in-state mineral beneficiation based on mineral wealth, low cost and available energy, and pacific rim location

27 Thank You. 27