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Gilmore Expansion at Fort Knox

Nov 1, 2018 | Gold, Interior Alaska, Mining

Kinross CEO J. Paul Rollinson, left, Kinross Chief Operating Officer Lauren Roberts, and Alaska Governor Bill Walker talk before the groundbreaking ceremony for the Gilmore expansion at Fort Knox.

Fairbanks Gold Mining Inc.

Julie Stricker
Julie Stricker
Julie Stricker is a journalist living near Fairbanks.

One of the highlights of a visit to the Fort Knox gold mine is posing at the end of the tour with a gold bar produced at the mine.

‘We’re not standing still’

The value of the bar, which weighs 257.1 troy ounces, has fluctuated over the years with the price of gold: $98,000 in September 2003; $484,170 in September 2011; $307,372 in September 2018.

Holding an object in your hand that’s worth more than your house leaves an indelible impression. But a couple of years ago it was looking like the gold bar, the mine, and the millions of dollars it brings to the Fairbanks economy were coming to an end. Fort Knox was running out of gold.

But even while the mine’s operators were publicly planning to shut down mill operations in 2017 and ready the heap leach facility to accept its final loads of ore in 2020, they continued to look at additional prospects in the area, including drilling 205 holes at Gilmore, adjacent to the western edge of the existing pit. Those efforts, which started in 2014, paid off.

In June, Kinross President and CEO J. Paul Rollinson announced plans for a $100 million Gilmore expansion that would keep the mine open until 2030.

“We are pleased to proceed with the initial Fort Knox Gilmore project, a low-risk, low-cost brownfield expansion that is expected to extend mine life to 2030 at one of our top performing operations and contribute 1.5 million gold equivalent ounces to strengthen our long-term US production profile,” Rollinson states.

The mine, located twenty-five miles northeast of Fairbanks, began commercial operations in 1996 amid reports the site held 4 million ounces of proven and probable reserves over an expected mine life of eight to ten years. A combination of high-efficiency mining methods, new technology, and new ore discoveries added years and millions of ounces of gold to the original estimates. By the time Fort Knox (owned by Toronto-based Kinross Gold Corporation) celebrated its twentieth anniversary in 2016, it had more than doubled its original estimated lifespan and produced more than 6 million ounces of gold.

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The Gilmore expansion comprises 709 acres on the existing mine’s western border. But while Kinross had the mineral rights to the land, it couldn’t act on them until the land was transferred from federal to state ownership. That process, which required cooperation between Kinross, the Alaska Department of Natural Resources, the US National Oceanic and Atmospheric Administration, the US Department of Interior, the Bureau of Land Management, and Alaska’s congressional delegation, was completed late in 2017.

“Plain and simple, this is a great day for Fairbanks,” Alaska Governor Bill Walker said in a statement about the expansion. “Because of this new investment by Kinross Gold, Interior Alaska will enjoy another decade of high-paying jobs at the mine and an influx of revenue that supports schools, roads, and public safety.”

Fort Knox is the largest taxpayer in the Fairbanks North Star Borough. It employs 630 workers, plus another couple hundred contractors, depending on the season.

The Groundbreaking

The official groundbreaking ceremony was held on a chilly, overcast August morning, with fog so thick the mine’s 1,860-foot-deep pit and fleet of oversized vehicles couldn’t be seen from the mine’s edge. A heated tent was set up for the ceremony, which was attended by dignitaries including Rollinson, Walker, Congressman Don Young, and other state and federal officials. A row of ceremonial gold shovels was lined up next to a long box of dirt in front of the standing-room-only crowd.

Part of Fort Knox’s success is due to its exceptional safety record, says David Zatezalo, assistant secretary of labor for the Mine Safety and Health Administration. Zatezalo notes there have been “zero reportable injuries this year” at Fort Knox and the mine has gone years at a time without worker injuries during the past twenty years.

“Safety and profitability go hand-in-hand,” Zatezalo says, noting the mining industry in Alaska is one of the safest in his jurisdiction.

The mine’s safety motto is “See it. Own it. Solve It.” A motto that empowers workers to act on and resolve safety issues before they become a problem.

Fort Knox’s safety training program serves as a model for other mines, Zatezalo says. “This mine and this state have a good record of compliance.”

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line of the facilities at Fort Knox.

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“Because of this new investment by Kinross Gold, Interior Alaska will enjoy another decade of high-paying jobs at the mine and an influx of revenue that supports schools, roads, and public safety.”

—Governor Bill Walker

Safety is stressed from the moment a person steps foot on the mine. All visitors and workers must wear safety gear, and a safety briefing is the first order of business. The giant trucks, loaders, and shovels are closely monitored and move between the pit, the mill, and the heap leach in a complex industrial choreography.

Walker says he first toured the mine a couple of years ago and was amazed at the scale of operations.

“I come from a construction background,” he says. “I saw some equipment I could only dream about as far as size. It’s so big that all of the equipment I’ve ever run could probably fit in the bucket of that shovel.”

Fort Knox is an important economic engine for the Fairbanks North Star Borough, Walker says.

All of its approximately 630 workers live in the area, Walker says. He said he has a habit of asking workers at facilities around the state where they live.

“Here at Fort Knox, I always ask the same question,” he says. “Where are you from? Here, I got the most interesting answers. They would sometimes point at lights over from here and say, ‘See that light over there, that’s my house.’

“I have a passion for local hire,” he continues. “When we develop our resources for the maximum benefit of Alaska, it means jobs. It means careers. It means family.”

When Walker first toured the mine, he also got to hold the bar of gold. “It was something that was very special to me. It was something that was made here in Alaska.”

The governor says one of the questions he asked when he first toured Fort Knox was: “What is your determination of how long you will be running?” The answer? The cost of energy.

Walker says his ongoing efforts to get a natural gas line built from the North Slope to Southcentral Alaska would benefit the mine greatly by cutting its energy costs in half. The mine uses between 32 and 35 megawatts of power, supplied by Golden Valley Electric Association.

In 2016, Fort Knox’s electric bill was $41.7 million, according to a report prepared for the Alaska Mining Association, so cutting costs and improving efficiency has been a hallmark of Fort Knox operations.

While Fort Knox contains millions of ounces of gold reserves, much of the gold is microscopic. Mine managers’ attention to the smallest details—such as improving the life of equipment and tires, efficiency in the pit and processing schedules, and upgrades in technology—have given Fort Knox a reputation for quality and efficiency.

Fort Knox History

Mining in the area dates back to the original discovery of gold in a nearby then-unnamed creek by prospector Felix Pedro in 1902. Although the area around today’s Fort Knox has been mined extensively—decades-old drift mines were still extant nearby when the mine opened—claims on the mine site itself were dormant and visible gold wasn’t discovered at Fort Knox until the mid-1980s.

AMAX mining acquired Fort Knox in 1992 and formed Fairbanks Gold Mining Incorporated to manage the project. Kinross acquired AMAX in 1998 and became the sole owner. The first gold pour was December 13, 1996, and commercial production began the next year. Production reached 1 million ounces in 1999 and the second million in 2002.

In 2000, then-general manager Tom Irwin said: “At current gold prices, Fort Knox is supposed to be in operation another eight to ten years, although that could change if further discoveries are made or the market shifts.”

Also in 2000, the price of gold was about $272 an ounce. In 2018, it’s hovering in the range of $1,270 an ounce. The expansion will add an estimated 1.5 million ounces to Fort Knox reserves. Overall production costs mine-wide are about $1,000 per ounce.

Technology was another primary factor in extending the mine’s life.

It was long thought that a heap-leach to recover gold would not work in Interior Alaska’s subarctic winters, but Fort Knox changed that. Engineers developed a process in which the stacked ore is sprayed with cyanide to dissolve the gold, which trickles into catchment areas. The gold is then separated from the leachate and the cyanide reused in a closed system.

The Walter Creek heap leach facility went online in 2009, making it possible to recover grades of ore that weren’t economic to mill and extending the life of the mine further. Today, Fort Knox processes approximately 800 to 900 ounces of gold per day, says Anna Atchison, external affairs manager. About one-third of that comes from the heap leach.

The Expansion

The Gilmore expansion includes another heap leach, Barnes Creek, on which most of the Gilmore ore will be processed. Early construction on the heap leach was planned for 2018, with initial production at Gilmore scheduled for 2020. Mill operations are currently scheduled to end in 2020.

Joe Balash, assistant secretary for Land and Minerals Management at the Department of the Interior, says he has watched the mine grow up.

“The roots here are deep and the community benefits are tremendous,” he says, noting the extensive process that was required to transfer the Gilmore property. “Mining is an opportunity for us to get things right in our community and make it stronger.”

Alaska’s sole congressman, Don Young, says the Gilmore expansion is “a great day for Alaska; a great day for an industry which made Alaska.”

Making the most of Alaska’s abundant natural resources is good for Alaska and the nation, he says. Young says his goal is to develop Alaska’s energy resources in a way that adds value to its mineral resources.

Young says he remembers the first blast in the mine pit, which now measures 1.2 miles across from east to west, 0.9 miles from north to south, and is 1,860 feet deep, with 30-foot terraces stepped from the bottom to top. The scale of the mine makes the massive 240-ton Caterpillar 793 ore trucks look like Tonka trucks moving steadily up and down the pit.

What’s amazing, Young says, is what you don’t hear about Fort Knox.

“You know how many people aren’t aware of this mine—and that’s a positive,” he says. “It means you’re doing things right.

“But the people need to become aware of how much you contribute,” the twenty-three-term congressman says. “It’s good for the state and it’s good for the nation. It’s good for a balanced economy.”

Rollinson says the company is planning to invest $570 million in Fort Knox over the next several years. Kinross plans to fund the initial capital costs from the mine’s cash flow.

“We can keep responsibly operating and doing what we’re doing,” Rollinson says.

Over its lifespan, Fort Knox has been a consistent over-producer for Kinross, and former Fort Knox employees can be found around the world at Kinross’ other properties, he says. In 2017, Fort Knox paid more than $80 million in wages and benefits and spent $188 million for goods and services. It also has won numerous environmental awards, working closely with Alaska agencies to restore fish stocks in areas of historic mining. Fort Knox supports dozens of local agencies, as well as internship and training programs through the University of Alaska Fairbanks.

Rollinson says Kinross is already looking beyond the first two phases of the Gilmore expansion.

“We’re not standing still,” he says. “We’re going to keep looking. I believe this is the first phase of many expansions.”

Alaska Business Magazine August 2019

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