Support services keep mining in motion
Geologist Jackie Rowley (far right) examines a core sample.
In Alaska there are six actively producing mines, two projects in permitting, and an additional four advanced exploration projects in play in 2018. According to a March 2018 report compiled by the McDowell Group, the total value of mineral exports accounted for 35 percent of Alaska’s total exports in 2016 at a value of $1.5 billion. The report also indicates that there was $110 million spent on exploration and $213 million spent on mine construction and other capital investment in 2017 alone.
More than stimulating the Alaska economy through an influx of cash, the mining industry provides much needed jobs to Alaskans living in rural communities. Through partnerships with Alaska Native corporations such as Red Dog Operation and NANA, 55 percent of the 550 year-round jobs at Red Dog are filled by NANA shareholders and NANA companies. And NANA is not the only Alaska Native corporation to take advantage of such partnership opportunities. Iliamna Development Corporation, Calista Corporation, and the Kuskokwim Corporation have all worked to develop businesses that serve the mining sector.
While their names aren’t always as well known as the mine owners and operators, there are many companies that provide vital services to the mining industry to keep Alaska’s mines safe and productive.
Avalon Development Corp.
Geologist Jon Findlay examining copper-nickel-platinum-palladium mineralization at the Genesis copper-nickel-platinum group element project, Chugach Mountains, south-central Alaska.
Preliminary Research and Data Collection
Founded twenty-six years ago, Alaska Earth Sciences (AES) provides consulting expertise to promote, manage, and support mineral resource and exploration development in Alaska. Through a suite of service offerings including geotechnical engineering, logistics, geographic information services (GIS), permitting assistance, and equipment rental, AES can provide the background services that enable successful, efficient, and cost-effective mining.
“Oftentimes a client will want to have to preliminary research conducted and data collected in order to justify the expense of the added permitting and regulations associated with drilling and mining,” says Michelle Johnson, chief operating officer for AES.
AES has a team of four geologists who work in the field to conduct regional scale mapping and rock sampling. The team also makes geologic observations and collects soil samples that are sent to a laboratory for analysis. Once analyzed, the information is compiled into a rudimentary geological map for AES’ clients. This service is integral to the planning process for entities interested in mining in Alaska because it gives a rough estimate of the viability of producing an active mine. If the company chooses to move forward, AES will then return to the site to collect more samples at a decreased spacing and employ their specialized geophysical tools to craft a detailed map.
“There is a whole array of tools we can use, and we typically work with a geophysical contractor to target the data that we want collected—typically then we would progress to a drilling stage to collect core samples,” says Johnson.
She emphasizes the importance of using geophysical mapping tools prior to drilling not only because of its cost effectiveness but because it also eliminates the need for ground disturbance.
“Geophysical is a passive data collection, so you don’t do any ground disturbances and you aren’t collecting any soil, rock, or water samples. The equipment used takes readings of magnetic polarization refraction which lets you read certain subsurface characteristics that can help you make an informed decision,” says Johnson.
Geologist Meredith Guhl poses in front of a rock formation in southeast Alaska.
According to Johnson, AES clients mine for a variety of materials, including well-known commodities in Alaska such as copper, gold, and silver, as well as less familiar end-products including graphite and industrial minerals.
The company’s clients are as diverse as the minerals they mine for. Over the years, AES has worked with junior exploration companies like Constantine Metal Resources and Metallic Resources that perform work early in the exploration process, looking at historically producing mines for third-party entities. According to Johnson, there are more junior mining companies than major, but that number has been slowly shifting. When they are not working with smaller companies, AES provides services to state agencies, Alaska Native corporations, and international mining companies.
“One of the biggest challenges to providing exploration services is the environment in which we are working—the literal wilderness. We don’t have a lot of infrastructure, so that’s one of the reasons AES focuses so much on the early processes, so we can be literal first boots on the ground and engage the local community while identifying what resources are there. There are significantly, significantly reduced access points as compared to the Lower 48,” says Johnson.
Avalon Development Corp.
Three geologists traverse the Genesis copper-nickel-platinum group element project with Mt. Sanford in the background.
Contracts and Commodities
Based in Fairbanks, Alaskan-owned Avalon Development Corporation provides a range of services such as permit acquisition, contract management, drilling program management, and leasing. Avalon has twelve properties that are available for acquisition, lease, or joint venture. Avalon President Curt Freeman says that the most common services rendered by the company are based on early exploration.
“We do mostly early stage work, so some of the things that people call us about are picking up a new property and they need somebody to compile existing data and put together an exploration program to tell them what to do next,” says Freeman.
Like AES, Avalon collects rock and soil samples but more of their efforts are spent conducting first exploratory drilling to find the resources that might be available on a given project. With a wide spectrum of mineral grades and tonnage, Freeman believes planning and proper drilling for core samples can make or break a mining project.
“There are a variety of things that can make a target attractive from a mining sense. There’s everything from Fort Knox, which is very low grade with less than a gram of gold per a ton of rocks, to Pogo that has 15 grams of gold in a ton of rock. On the other hand, the base metal mines tend to be 10 or 15 percent total lead or copper. So, there are different kinds of economics and it’s a pretty wide spectrum of possibilities,” explains Freeman.
Regarding Fort Knox, less than a gram of gold in a ton of rock might seem unfeasible, but as Freeman explains, the mine is quite profitable because its accessible location cuts down drastically on transportation costs. This is one of the reasons that Avalon provides budgeting services to their clients. The company’s extensive knowledge of the Alaska landscape is an asset to clients when it comes to determining overall cost-effectiveness, and it is an asset Freeman has used creatively.
“Back in 2001 metals were a harder sell because the value of every metal was down and the industry was sort of flat on its back. So, we came up with a system of comprehensive field exploration with a unique shared risk budget management system,” says Freeman.
The unique system counteracts those instances when the project completion incentives don’t align for the mine operating company and geologic consultants. For instance, a mining company’s primary aim is to get as much done for the best price possible, whereas from a consultant’s point of view, the longer the project takes, the more money they stand to make, says Freeman. To offer peace of mind to their mine operating clients, Avalon developed a system in which a budget for a defined scope of work is agreed upon and, if the budget goes over, Avalon pays the entirety of the overage. If Avalon comes in under their bid price, then their client pays Avalon half of the price differential.
“To my knowledge, nobody offers something similar, and some days I wonder if I am completely insane for offering it, but if we run things efficiently then we benefit from that and the client is happy because their project comes way under budget,” says Freeman with a chuckle.
Betting on the efficiency of his crews isn’t the only calculated challenge that Avalon faces. According to Freeman the biggest challenge the company encounters is getting the story out there that there is a whole lot more in Alaska than the old placer mines for which the state is famous.
One thing that has Freeman excited is the presence of cobalt, which has gone from being a metal of little importance to being sold for $40 a pound.
“[Cobalt] is a metal that is being used for car batteries and electric vehicles and that has driven its price up almost three-fold! I make sure to follow those trends on a worldwide scale because if you don’t you’re going to be missing out [and] end up behind the eight ball—so you better have that kind of industry knowledge tucked away in your back pocket for when someone needs it,” Freeman says with a smile.
O'Hara Shipe is a freelance writer in Anchorage.