Mines on the Horizon
Three mining prospects move closer to potential operation
“Mining continues to have a bright future in Alaska, with responsible mining and development occurring all around our great state,” says Marleanna Hall, executive director of the Resource Development Council for Alaska.
The three world-class prospects are the Donlin Gold prospect in Southwest Alaska, the Upper Kobuk Mineral Project in Northwest Alaska, and Pebble in the Bristol Bay region of the state. All three are near or in the permitting phase, a multi-year process in which various state and federal permits must be approved before construction and mining can begin.
For each, however, the biggest hurdle is a lack of infrastructure. There are no roads, ports, or utilities within hundreds of miles of the potential mines. In fact, Barrick Gold and NovaGold Resources, which own Donlin Gold, say they haven’t reached a decision on whether to build the mine, despite receiving major permits in August 2018, including a joint Bureau of Land Management and US Army Corps of Engineers Federal Record of Decision.
“The issuance of the Donlin Gold ROD and key project permits is a significant milestone for both partners,” says Rob Krcmarov, executive vice president of exploration and growth for Barrick. “Now, with key permits in hand, we can concentrate on further exploring ways of reducing initial capital and unlocking the value of this asset for all of our partners, in keeping with our deep commitment to community engagement and environmental stewardship.”
Donlin is one of the richest undeveloped gold prospects in the world with 39 million ounces of gold grading to 2.24 grams per tonne, according to Barrick. It is expected to produce 1.1 million ounces of gold annually over its twenty-seven year lifespan if and when production ramps up. Already, Donlin Gold has spent twenty years conducting environmental studies and developing engineering plans for the site.
The permit announcement was a welcome step forward, says Hall.
“As with all projects in Alaska, [Resource Development Council] advocates for a fair and timely, science-based permitting process,” she says. “We view two agencies working together as a move in the right direction, as Alaska is a resource development state.”
Mining is a major economic driver for Alaska, generating about $2.5 billion in gross revenue in 2016. A mine, such as the Red Dog lead and zinc mine in Northwest Alaska, can dramatically reshape the economy of the region. Red Dog is operated by Teck Resources, which works closely with Kotzebue-based NANA Regional Corporation, the landowner. It employs about 600 workers, many of whom are NANA shareholders, and has contributed millions of dollars to the local economy in the form of wages, purchases, and payments in lieu of taxes to the Northwest Alaska Borough. That kind of partnership with Native corporations is a blueprint for similar projects around the world, including Donlin.
Donlin is working in partnership with Calista Corporation and The Kuskokwim Corporation on its mine plan and employment opportunities. After residents expressed concern at the amount of diesel fuel that would need to be barged up the Kuskokwim River to operate an onsite 220-megawatt power plant at the mine, Donlin decided to build a 312-mile pipeline to connect to natural gas in Cook Inlet to power the facility. When it turned out that part of that pipeline would affect the famed Iditarod National Historic Trail, Donlin re-routed part of the pipeline around the trail to mitigate its impacts.
Donlin must still secure key state permits, such as one for a tailings dam and for water rights. It is also exploring partnerships with third parties for the ownership of the natural gas pipeline and power plant, which could cost $1 billion of the estimated $6 billion capital costs required for mine construction. Those costs include port facilities in Bethel—as well as on Crooked Creek near the mine site—a water treatment plant, housing, and an airstrip.
According to NovaGold President and CEO Gregory Lang, the future is bright for Donlin.
“We now have a unique project permitted for development in Alaska, one of the most business-friendly jurisdictions in the world, which welcomes socially and environmentally responsible mine development,” Lang says. “With its significant size, excellent grade, and outstanding exploration potential, we believe that Donlin Gold has the potential to become a pacesetter in the precious metals mining industry for decades to come.”
“With its significant size, excellent grade, and outstanding exploration potential, we believe that Donlin Gold has the potential to become a pacesetter in the precious metals mining industry for decades to come.”
Become an Industry Sponsor
While Donlin Gold has kept a relatively low profile in the news, another major prospect has generated headlines since it was first announced. The Pebble prospect is a copper, gold, and molybdenum deposit about 200 air miles west of Anchorage near Lake Iliamna. It is located near the headwaters of rivers that flow into Bristol Bay, one of the richest salmon fisheries in the world. Its location stalled potential development, but with certain restrictions lifted under the Trump Administration, the project is going forward, according to Tom Collier, president and CEO of Pebble Limited Partnership. He says Alaskans’ defeat of Ballot Measure 1, which would have imposed restrictions on development, was a clear message of support.
“For a long time, we have been told by Pebble opponents that everyone in Alaska is opposed to the project,” Collier says. “This election clearly demonstrated that most Alaskans support a fair process which allows Pebble and other development projects to participate in the rigorous federal and state permitting process—while electing a governor who believes the same.”
The Pebble deposit includes an estimated 57 billion pounds of copper, 71 million ounces of gold, 3.4 billion pounds of molybdenum, and 345 million ounces of silver in the measured and indicated categories, with more inferred.
Pebble’s permit application was accepted by the US Army Corps of Engineers, which started the project’s permitting process under the National Environmental Policy Act. The prospect has been radically retooled from earlier design proposals in response to criticism of its potential impact on Bristol Bay salmon populations. Under the new plans, the mine’s footprint has been reduced and additional environmental safeguards added.
“We are committed to designing a project that is responsive to Alaskan input and needs,” according to Pebble Partnership. “As such, we expect to enter permitting with a project that has a demonstrably smaller footprint than previously contemplated.”
Pebble Partnership, wholly owned by Northern Dynasty, struck an agreement with landowner Alaska Peninsula Corporation in October to build a toll road to the Pebble mine site. The agreement also includes a profit-sharing arrangement for the Alaska Peninsula Corporation shareholders.
Pebble is expected to generate up to 1,000 jobs for Alaskans with an operating life of twenty years. Up to 75 million tons of material would be mined annually with 660,000 tons of copper/gold concentrate and 16,500 tons of molybdenum concentrate produced. The open-pit mine would be powered by a natural gas-fired power plant on site, with a pipeline to facilities at Anchor Point.
“This election clearly demonstrated that most Alaskans support a fair process which allows Pebble and other development projects to participate in the rigorous federal and state permitting process—while electing a governor who believes the same.”
Farther north, Upper Kobuk Mineral Project (UKMP) in the Ambler Mining District in Northwest Alaska is looking promising, says Trilogy Metals President and CEO Rick Van Nieuwenhuyse. UKMP includes two major sites: the Arctic project and the Bornite project, both of which have some of the richest copper resources in the world, Van Nieuwenhuyse says. “We keep advancing,” he says. “At Arctic we are working on the feasibility study.” During the 2018 field season, Trilogy completed twenty-five drill holes and a number of test pits to gather geotechnical information for the mill, tailings, and development rock disposal sites. It also completed a number of drill holes to gather hydrological information, which, in combination with meteorological and stream run-off data, will be used to develop a detailed hydrology model for the basin, Van Nieuwenhuyse says. “In 2019, we will gather still more geotechnical, hydrological, and meteorological data to complete the feasibility study and ready the project for permitting,” he says. “We expect the US Army Corp of Engineers will be the lead federal agency as the only federal permit we need is a Wetlands Dredge and Fill 404 permit. All of the other permits will be issued by the State of Alaska.” State permits include air quality, water discharge, dam operation, and mine operation, he says. “We look forward to working with the state and federal agencies as we advance toward permitting the Arctic project,” he says. “Meanwhile, at Bornite, we keep exploring to see how big this deposit gets,” Van Nieuwenhuyse says. “During 2017 and 2018 we drilled about 19,000 meters [about 62,000 feet] in twenty-five holes. Once we get all the assays for this year’s drill program, we will update the resource at Bornite. We have already outlined 6 billion pounds of copper and 77 million pounds of cobalt—both metals are essential elements to build electric vehicles, battery storage, and to produce alternative energy [wind and solar in particular].” Trilogy spent about $17 million in 2018 on UKMP, about $11 million at Bornite and $6 million at Arctic. It expects a similar level of expenditure in 2019. So far, Trilogy has spent more than $120 million at the site. With resources that rich, Trilogy still faces a major hurdle: getting it to market. There are no roads anywhere near the Ambler region. A 221-mile road from the Dalton Highway west to the region, the Ambler Mining District Industrial Access Road, has seen slow progress. But with the election over and a new governor in office, Van Nieuwenhuyse expects that to change. “It’s full steam ahead on permitting the road,” he says. According to the Bureau of Land Management’s website, the draft EIS for the Ambler Access Road is scheduled to be complete in March. After a period of public comment, the final EIS is expected to be complete by the end of this year, with the record of decision shortly thereafter. Van Nieuwenhuyse has been involved in the Alaska mining industry for decades and was one of the principals in the exploration at Donlin Gold. He says the Alaska mining industry is in great shape. “Our five major mines are going strong with expansion projects underway at most operations,” he says. “We have a lot of exploration work going on statewide. The Australians have arrived in a big way—first with our partnership arrangement with Perth-based South32 and now this year Northern Star purchased the Pogo Mine from Sumitomo. In addition, there are a half a dozen new Australian junior companies conducting exploration including PolarX, White Rock, and Riversdale. Meanwhile, Constantine has had another very successful year at the Palmer project near Haines. “So yeah, lots going on. Alaskans spoke strongly in support of resource development with a crushing defeat of the Ballot Initiative 1 and we have a governor who knows and also supports mining. So I think the stars are aligned to develop more mines in this great state. Let’s get busy!”
“It’s full steam ahead on permitting the [Ambler Mining District Industrial Access Road].”
In This Issue
Distinguishing Differences in Financial Institutions
There are thousands of financial institutions in Alaska, providing everything from checking and savings accounts to loans and investment solutions. Banks and credit unions are among the most prominent financial services companies serving Alaskans.