Interior Gold Mines
Diverse and prolific economy drivers
Fort Knox stockpile and mill in the Interior.
Photo courtesy of Kinross
If you were to look at a map of Interior Alaska, find the largest gold discoveries in the past century and draw a line between them, it would form a 1,200-mile-long, 200-mile-wide arc from an area southwest of McGrath, extending east into Yukon, Canada, and south to British Columbia. Major fault systems border the region on the north and south.
In between, in what is known as the Tintina Gold Belt, millions of ounces of gold have been recovered—an astonishing amount. But that’s only the tip of the mother lode. The region includes Pogo, Fort Knox and Nixon Fork mines, as well as the Livengood and Donlin Gold prospects and others in Canada. In the past 20 years alone, millions of ounces of gold have been recovered, more have been discovered and the region remains a prime area for exploration.
Many of the mines are in areas that have been actively mined off and on for the past century, but modern geologists are still making new discoveries measuring millions of ounces.
It means mining, although long surpassed by government and tourism as a main driver of Interior Alaska’s economy, is still an economic foundation, says Jim Dodson, president of the Fairbanks Economic Development Corp.
“You’ve got Pogo to the southeast of us, and Fairbanks Gold just outside of town and hopefully Tower Hill to the north,” Dodson says. “The mines that exist today have a very significant year-round impact on this community.
“They’re just the type of jobs that this community needs to carry it through the long winter months when we don’t have tourists and other types of activities,” Dodson says.
Mining jobs are among the highest paying in the state, according Neal Fried, an Alaska state labor economist. “They’re right up there behind oil, but not that far behind,” Fried says.
As of May, the Alaska Department of Natural Resources had received 515 mining applications for the season, according to Jeff Rogers, a Fairbanks-based geologist with DNR. Last year at this time, the agency had received only 372, which was 100 above what the state received overall in 2010. Most of the permits he’s seeing are from people new to the state.
Reality television is behind another kind of modern mining boom. Shows such as “Gold Rush Alaska,” “Gold Rush,” “Bering Sea Gold” and “Goldfather” have sparked a modern gold rush to Alaska, Rogers says. “All the old-school dudes are still around,” he says, “but their numbers pale in comparison to the new people coming in.”
Chances are many of the newcomers will never see much gold. Even in the big mines, the gold is the smallest part of the operation. Today’s mines rely on cutting-edge technology and economies of scale to both discover and recover gold that often is visible only through a microscope.
The Mining Equation
The trick is in figuring out how to get the workers and supplies to the mine, how to extract the gold economically and which milling process will yield the most return. In the calculus of mining, however, location is key.
“You have to go where the deposit is,” says Lorna Shaw, external affairs manager for Sumitomo Metal Mining Pogo LLC. “Generally, they’re in a really inconvenient place.”
The fact that gold has been trading at more than $1,500 per ounce is a bonus, Rogers says. “When large mines make their plans, they plan for a price of gold that is far less than the actual price of gold. Nobody makes their mining plans for these prices.”
The price of gold isn’t the only thing that goes into a mining plan. Despite similarities of vast size and large reserves, Pogo, Fort Knox and Nixon Fork all have mining plans specifically targeted to their locations and ore makeup.
“Different deposits do not lead themselves to the same kind of processes,” Shaw says. “Pogo would not be a good above-ground mine.”
Pogo mill facility in a 2011 aerial view.
Photo courtesy of Sumitomo Metals Mining
Pogo, owned by Sumitomo Metal Mining, is an underground mine located 38 miles northeast of Delta Junction. This summer, it plans to pour its 2 millionth ounce of gold, Shaw said. Pogo has produced more gold on an annual basis since it went into production in 2006 than the massive Fort Knox open pit mine northeast of Fairbanks.
Because it’s an underground mine, it generally costs more to produce an ounce of gold, and therefore requires a higher-grade deposit to make it economic, Shaw says.
In spring 2012, Pogo announced the discovery of a new deposit that contains at least 1.2 million ounces of gold. East Deep is located outside the main ore body and the find boosts the known reserves by 20 percent, according to a company news release. The find extends the life of the mine about two years, to about 2019, but that could change. Exploration at East Deep is continuing and Pogo officials are optimistic there is more gold to be found.
This summer, workers are upgrading and adding to the man camp at the mine site. Because of its remote location, most workers are housed on site and work shifts that last anywhere from four days to four months, Shaw says. The remoteness is one of the challenges of running Pogo, she says.
“Pogo, really, it’s like a small city,” Shaw says. The challenge is making sure everything the workers need on site is there. It’s a three-hour drive to the mine from Fairbanks in the summer, longer in the winter. The main access road to the mine is not open to the public.
“We don’t have the opportunity for employees to go home at the end of every shift,” Shaw said. “It’s really a lifestyle choice. Camp life isn’t for everyone.”
Consequently, local hire is a challenge, but not because of a lack of qualified workers. About 60 percent of the Pogo workforce was hired locally, but those statistics require an explanation, Shaw says.
“One of the challenges is we hire locally whenever we can,” she says. “We will hire people locally in Fairbanks and Delta, but then they are making so much money that they move their families outside to some place like Colorado where it’s cheaper to live. I don’t think that’s a company problem, a mine problem. That’s a community problem and that’s something we need to work on.”
For Kinross Gold Corp.’s Fort Knox, its location only 25 miles from Fairbanks is a boon, giving it access to a skilled workforce within commuting distance.
The mine began production in 1995 and poured its first bar of gold in 1996. It is a 1,400-foot-deep open pit mine that is traversed by gigantic shovels and ore trucks that can carry from 150 tons to 240 tons per load. Each load may contain only 5 ounces to 7 ounces of gold, requiring a massive operation to stay economic.
Fort Knox produced 349,729 ounces of gold in 2010. In 2011, Fort Knox poured its 5 millionth ounce of gold, making it the single largest producer of gold in Alaska history.
Continued exploration and gains in technology have already doubled the life span of Fort Knox. Original estimates showed 4.1 million recoverable ounces of gold, which meant the mine was expected to cease operations in 2009.
The mine continues to expand its life by identifying more reserves, according to environmental manager Delbert Parr. The mine recently got approval to expand the pit into Phase 8, which adds 1.3 million ounces to its reserves, Parr says. “We’re working on the permitting now,” he says.
The additional reserves means Fort Knox will expand its mill site by 280 acres as well as add to its heap leach facility. The mine is currently accelerating the rate of loading to the heap leach, which is permitted for 161 million tons. The expansion will take it to 370 million tons.
“Add the new reserves to the current plan—the drills are still turning,” Parr said. The milling facility is expected to run through 2018, and the heap leach will be loaded through 2021, with processing continuing for several years afterward.
The view from Tower Hill over Livengood valley, where gold was discovered in 1914.
Photo by Julie Stricker
For Fairbanks residents, however, the biggest gold mining news in the past couple of years is coming out of Livengood, 70 miles north of Fairbanks.
“Livengood looks like the next big mine after Kensington (a mine in Southeast Alaska),” Fried says. “With Livengood being within 70 miles of Fairbanks, Fairbanks will be the epicenter for supplies and manpower.”
Gold was first discovered in the Livengood valley in 1914 and optimistic prospectors named a nearby rocky-topped hill “Money Knob.”
Already, half a million ounces of ore has been mined in Livengood valley, from early drift mining a century ago to small and large hydraulic operations. Miners cut ditches along Money Knob and nearby Tower Hill following their hunch that something larger was out there, but came up empty.
“Those old-timers were good,” Tower Hill Mines general manager Tom Irwin says. “They knew it was there, they just didn’t have the technology to find it.”
It took persistence and modern technology to uncover what may be the real mother lode—right underneath Money Knob.
International Tower Hill Mines has been exploring the area for the past several years and through 2011 had found approximately 20 million ounces of gold, and is still continuing to drill. Any potential mine is still years away as Tower Hill continues its pre-feasibility process, but the outlook is encouraging.
According to Irwin, it is a very large, as well as very deep resource. The prospect covers about 50,000 acres and drills on the sides of 1,800-foot Money Knob have reached almost to sea level. “We’re looking at about double the size of Fort Knox,” he says. “These are low-grade deposits. You need a large operation and economies of scale to make a mine viable.”
The prospect has one huge advantage—a paved road that leads directly from Fairbanks to the mine site. The distance to Fairbanks, about 70 miles, is a bit awkward, however. In the winter, the drive may be too long and treacherous to make commuting feasible. Determining whether to build a man camp or rely on a commuter workforce, or some combination, will be a large part of the mining plan, Irwin says.
About 1,000 to 1,100 workers will be needed in the construction phase, which will last about 2.5 years, Irwin says. Once operating, the mine will employ about 500 workers. Tower Hill hopes to ramp up production no later than 2018. If 100,000 tons of ore is moved daily, the mine’s expected life span would be about 23 years.
Another big part of the operational puzzle at Livengood is energy. Irwin estimates about a third of the total operational cost of the mine will be energy costs. “It’s the biggest overall concern in making the project pencil out,” he says. On-site energy generation is one possibility, but the most attractive option is a 50-mile line that would link in to Golden Valley Electric Association’s infrastructure just north of Fairbanks.
In the end, location is the key.
“The burden to make this a mine is on us,” Irwin says. “We have all the right conditions.”
Livengood core samples.
Photo by Julie Stricker
Nixon Fork Mine
The next mine expected to begin production in the Interior is the Nixon Fork Mine, located 300 miles northwest of Anchorage, 32 miles northeast of McGrath. It is accessible only by air.
“We are projecting that the Nixon Fork Mine will reach commercial production within the next three months,” said Nina Lafleur, investor relations manager for Fire River Gold Corp., which operates Nixon Fork through its wholly owned subsidiary, Mystery Creek Resources.
Nixon Fork was first staked in 1917 and is an underground lode mine that has been in sporadic operation for nearly a century. Mystery Creek Resources began operations in 2011, with a goal of producing 29,000 ounces of gold by the end of 2012, ramping up to 50,000 ounces annually. Its annual production cost is estimated at $950 per ounce in the short term, dropping to $750 per ounce in 2013 and $600 per ounce in 2014. The year-round underground mine produces gold-rich copper concentrate and dore bars with silver as a byproduct.
The mine was previously owned by Nevada Goldfields Inc. and St. Andrew Goldfields Ltd. Fire River Gold, based in Vancouver, British Columbia, bought the property in 2009. The mine uses a gravity and flotation milling process. In March 2012, a carbon-in-leach circuit was completed, which will allow Mystery Creek to recover gold from the historic tailings pond, which contains between 7 grams and 8 grams of gold per tonne. Other samples have returned grades from 22 grams to 81 grams of gold per tonne.
Julie Stricker is a writer living near Fairbanks.
Posted: July 1, 2012