Mining News: Majors drive mineral industry revival

Alaska sees front end of supply, demand cycle after four-year downturn in exploration, development slowed pace of new discoveries

Curt Freeman

Special to Mining News

At a recent mining industry panel discussion at the Western States Land Commissioners Association meeting in Anchorage, I was asked if the recent upturn in activity in the Alaska mining industry was a function of commodities prices or a growing worldwide recognition of Alaska’s enormous mineral potential. I answered that I thought neither factor was driving the Alaska mineral industry revival: commodities prices have been steady or rising slowly over the last year and Alaska’s mineral potential is well recognized across the industry.

I feel the invigorated Alaska mining industry is seeing the front end of a simple supply and demand cycle, driven largely by steady or increased production of commodities that coincides with the four-year exploration and development downturn that has resulted in fewer new deposits discovered, developed and put into the production pipeline. In short, new resources have not been added to the resource pool at anywhere near the rate they are being depleted.

My favorite mineral economist, Richard Schodde of MinEx Consulting, recently quantified these worldwide trends by showing that over the past 20 years, exploration discovery rates have dropped for virtually all commodities. During that same period, major and intermediate producers have refocused their capital on mine and mill plant improvements, cutting exploration budgets to near zero.

As a consequence, the proportion of discoveries made by junior mining companies grew to a whopping 70 percent. However, the capital pool available to junior companies dried up and the total number of discoveries plummeted, both in terms of total resource size and resource quality.

Yeah, yeah, yeah, so what does this have to do with Alaska’s mineral industry revival?! A quick look at who is doing the exploring in Alaska this summer will answer the question: more than 60 percent of the announced exploration budgets for Alaska for 2017 are being contributed by major producing companies. At the same time, major and intermediate producing companies are actively seeking new acquisitions in Alaska, several of which will likely become public before the end of the year. Junior exploration company expenditures remain down or flat relative to the past several years.

It seems clear that both major and intermediate producers have recognized that the shovel-ready deposits that junior explorers use to discover and advance to the acquisition phase are simply not being discovered or developed. The producers have been forced to conduct their own generative exploration and/or acquire existing prospects at an earlier stage than has been the norm in the past.

Macro-economics 101: often ignored but always in play!

WESTERN ALASKA

Quaterra Resources Inc. announced that it has commenced a core drilling program of between two and four holes at the Groundhog copper prospect, a 40,000-acre property situated in an established copper porphyry belt 200 miles southwest of Anchorage. Quaterra has an option to purchase a 90 percent interest in Groundhog. The program is operated by Chuchuna Minerals Co., an Alaska company jointly owned by Kijik Corporation, the Alaska Native village corporation for the community of Nondalton, and Alaska Earth Sciences, an Anchorage-based mineral exploration company. Holes will be sited to test several shallow IP anomalies identified by historic surveys and 16.5 kilometers of new induced polarization geophysical surveys during late June and July. The holes are widely spaced across the property forming an equilateral triangle with sides of about 4.5 kilometers. Two of the holes will test anomalies under shallow Tertiary volcanic cover and one hole will test an anomaly under glacial till. These are the first holes drilled in the area. The property is located on State of Alaska claims covering the northern extension of a 10-kilometer (six miles) wide north-northeast trending structural zone that hosts a number of porphyry copper-gold prospects, including the Pebble porphyry copper, gold and molybdenum project, which is about three miles south of the Groundhog claim boundary. Regional magnetic data suggest that geology similar to that at Pebble extends under cover for an additional 30 kilometers (18.6 miles) northeast from the Pebble deposit.

CopperBank Resources Corp. announced that a second drill rig has been added to the diamond drilling program being conducted on its 100 percent controlled Pyramid project located on Aleut Native Corporation lands on the Alaska Peninsula. The addition of a second rig will significantly increase the previously planned 1,500-meter drill program planned for the project and will allow one rig to focus on each of the two main zones of mineralization, the North and South zones.

INTERIOR ALASKA

Freegold Ventures Ltd. also announced commencement of a core drilling program at its Shorty Creek copper-gold project in the Livengood District. The Hill 1835 prospect, discovered in 1985 but on which limited drilling was done in 1989-1990, was drilled in 2015 and 2016. Significant results include hole SC 16-01 intersected 434.5 meters grading 0.36 percent copper including 207 meters grading 0.45 percent copper and hole SC 16-02 which intercepted 409.6 meters grading 0.29 percent copper including 93.5 meters grading 0.38 percent copper with both holes ending in mineralization. The 2016 drill program successfully confirmed the presence of a copper-gold-molybdenum porphyry system at Shorty Creek, with an alteration/mineralization footprint that covers an area of about 10 kilometers (six miles) in diameter. The airborne and ground magnetic surveys have identified a number of magnetic highs, which appear to be coincident with copper mineralization. Mineralization on Hill 1835 was intersected in drill holes to a minimum depth of 500 meters and remains open in all directions. Mineralization consists of sulfide-bearing quartz stockwork veining and disseminated sulfide within strong secondary biotite alteration and anhydrite primarily situated within a flysch unit intruded by quartz feldspar porphyry sills and/or dykes. Disseminated and fracture-controlled pyrite, pyrrhotite, chalcopyrite, arsenopyrite and bornite have been identified (along with numerous secondary oxide minerals) in drill core. Four additional targets (Hill 1890, Hill 1870, Steel Creek and Quarry) were identified by airborne magnetics and electromagnetic geophysics, ground induced polarization geophysics and soil sampling. The 2017 program will focus on further expanding the mineralization at Hill 1835 and initial drill testing of the Steel Creek and Quarry targets. Additional ground magnetic and geochemical surveys were undertaken at Steel Creek in 2016. The Steel Creek anomaly measures 700 meters by 2,000 meters and is associated with a strong magnetic signature similar to Hill 1835. At the Quarry prospect, located roughly five kilometers, three miles) east of Hill 1835, a 10 kilometer long northeast trending airborne magnetic high is associated with stockwork veined quartz-feldspar porphyry. Ground magnetics and soil geochemistry were completed over a small portion of the 1,000-meter-by-10,000-meter anomaly and soil geochemistry returned both strong copper and molybdenum values.

ALASKA RANGE

SOUTHEAST ALASKA