It’s been tough year for many of Alaska’s businesses but one industry is doing well – mining.
Metals prices are up and fuel costs are down, and that means good profits for Alaska’s handful of producing mines.
A few mining companies are putting more funds into exploration with the happy result that more gold is found and producing is rising.
One example is at Pogo, an underground mine near Delta Junction east of Fairbanks. Northern Star Resources Ltd., an Australian company that owns Pogo, has increased reserves at the mine to an estimated 6.7 million ounces, at 0.29 ounces per ton of ore, a record amount of gold for the mine.
This also gives Pogo one of the world’s highest-grade resources in mines with an ore body of greater than 5 million ounces. Overall, Pogo’s gold “endowment,” is now measure at 11 million ounces, combining the current resource of 6.7 million ounces and over 4 million ounces produced from the mine so far.
Within the 6.7-million-ounce current resource, 3.1 million ounces are in the higher confidence “measured and indicated” category and 3.6 million ounces are in the “inferred” category.
This is mineral industry jargon. Measured and indicated resources are those where the mineral quality and quantity is known and well established, typically through the drilling of test holes that obtain core samples of underground ore.
Inferred” resources are those where the mineral continuity is identified is identified by drilling but the quality and quantity of information are not of sufficient confidence to add into a mine plan. To add this material into the mine plan, further drilling is required to increase confidence of the resource from the inferred to the indicated category.
Northern Star’s resource additions at Pogo would have been greater, the company said in briefings, had COVID-19 restrictions not slowed planned exploration, extensional and infill drilling, the Company said. Because of the restrictions, the company spent only 62 percent of its drilling budget by June 30, the end of its fiscal year.
About 200,718 ounces of gold were mined at Pogo last year and Northern Star was able to replace that with resource additions and improved average ore grade. The continued operation of the Pogo means that the economic value added for Interior Alaska, and across the state, is substantial. In the company’s Fiscal Year 2020 nearly $200 million was spent on goods and services purchased from Alaska businesses and over $80 million was spent on employee wages.
Newly added resources at Pogo will be an important source of continued jobs and income for Alaska residents, particularly in the Fairbanks and Delta Junction areas.
Northern Star set records in production in the first quarter of its fiscal year despite operating under restrictive and strict COVID-19 protocols. August production was 22,791 gold ounces and production for the September was over 50,000 ounces. The mine’s production fosca;-year-to date has been over 4 million ounces has been at an average grade of over 12 grams per ton.
Meanwhile, a $30 million expansion of Pogo’s process plant to enable it to handle 1.45 million tons per year was 60 percent complete in mid-autumn and will be commissioned by the middle of 2021. This will enable Pogo to reach a sustainable production of 300,000 ounces per year in the next couple of years.
Surface exploration at Pogo has also restarted with surface in-fill diamond drilling programs in progress on the Goodpaster project. The $18 million regional exploration program includes resource definition focused on the eastern end of the Goodpaster trend to define potential resource areas for further evaluation.
This multimillion-ounce discovery is just over half a mile from existing mine infrastructure and is a separate ore body that could potentially be accessed through existing underground tunnels in the mine.
There are other new prospects in the immediate area, including Hill 4021; Burn; Cholla, and Stone Boy. A regional heliborne aeromagnetic survey was completed over three claim blocks within Stone Boy, named Ink; Fog and Skippy. Like most mines, more mineral resources have been found at Pogo once the mine began operation. The higher grades of the discovered ore have helped the economics of mine expansion.
What is unusual about Pogo, although not surprising to those familiar with mining industry, is that the deposit was discovered in a relatively remote area where there was little previous history of gold discoveries or production.
Typically, new deposits including underground lode, or hard rock, are found in areas where there has been traditional production, mostly placer mining at the surface.
Pogo’s discovery, however was the result of modern geologic reconnaissance using new scientific tools and procedures that were not available to early-day prospectors who found most of Alaska’s previous gold discoveries. In other words, a large gold deposit was found where geologists had not previously expected it.
This has happened elsewhere in Alaska. At Greens Creek, on Admiralty Island in southeast Alaska, geologists similarly used modern geochemical sampling and gravity surveys to find the underground silver, zinc, and gold ore deposit, again in an area that had not seen previous mining.
The development of the Pogo mine is important for the state because jobs in the minerals industry are among the best-paying in Alaska.