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Metal Mining Successes in Alaska:A Review of Active and Developing Metal Mines in Alaska
November 7, 2006
JOGMEC • Tokyo, Japan
By Albert H. Clough, MSc, PGeolDeputy Commissioner
Alaska Department of Commerce, Community, and Economic Development
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Summary
History of Modern Mining Development in Alaska
Alaska Native Claims Settlement Act, 1971
Alaska National Interest Lands Conservation Act, 1980
Period on intensive statewide reconnaissance mineral exploration, 1970-1990
Mine development and refined exploration - Ongoing
State of Alaska support for mine development
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Alaska Producing Metal Mines
The foundation of a multi-billion U.S. dollar mineral industry!
• Red Dog• Fort Knox• Pogo• Greens CreekFort Knox (Fairbanks)
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Location ofProducingMetal Mines
Red Dog
Fort Knox
Greens Creek
Pogo
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Active Mines
Greens CreekJoint venture between Kennecott Minerals (70%) (owner-operator) and Hecla Mining (30%)
• Began production in 1989.
• Volcanogenic massive sulfide deposit containing economic amounts of silver, lead, zinc and gold.
• Underground mine.
• 12% zinc, 4% lead, 12 opt silver, 0.2 opt gold.
• Production rate approximately 2000T/day.
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Active Mines
Red DogA joint venture between NANARegional Corp. and Teck-Cominco
• The world’s largest zinc reserve(121 million tons of ore).
• World’s largest producer of zinc concentrate.
• 3 million tons of ore mined annually at an average grade of 22% zinc, 6% lead and 3 ounces per ton silver (93 grams silver).
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Active Mines
Red Dog, continued
• Mine employs 450 people (including contractors) 50+% of which are NANA shareholders.
• Production started in 1989.
• Conventional truck and shovel open pit mine.
• Considerable undeveloped reserves near mine and mineralization in region.
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Active Mines
Red Dog
In a classby itself!
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Active Mines
Fort Knox – True North
Kinross Gold Corp. Owner/Operator
• Operating open-pit gold mineproducing 330,000 - 410,000ounces annually from the TrueNorth and Fort Knox deposits at anestimated cash cost of $258 per ounce.
• Average combined grade is 0.025 ounces per ton(0.8 grams).
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Active Mines
Fort Knox – True North, continued
• The mine employs over 400 people and has an annual economic impact of $196 million on the community of Fairbanks.
• Mining complete at True North deposit, currently under reclamation.
• Engineering and regulatory work currently underway to convert low grade stockpiles to heap leach.
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Active Mines
Pogo
A Sumitomo & Teck-Comincojoint venture
• Intrusive related, shear-hosted,gold-quartz vein system.
• Discovered through systematic exploration in 1994.
• Contains 3.6 million ounces of gold at 0.47 ounce/ton (14.6 grams).
• Construction started in 2004, commissioned 1st quarter of 2006.Construction cost est. - $347 M.
• Employment 238 people. Production rate: 2,500 tpd. Mine life: 10 years. Annual production ~450,000 oz.
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Location ofDevelopingMinesand LargeExplorationProjects
Donlin Creek
Kensington
Rock Creek/Big Hurrah
Pebble Copper
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Developing Mines
KensingtonCoeur Alaska
• Mesothermal gold deposit.
• Reserves: 4.2 million tons @0.25 ounces/ton (7.8 grams).
• Operating mine would provide 250 full time workers and spend $13m annually on local purchases.
• Commission schedule – 2007, currently under construction.
• Construction cost - $190 M.
• Mining/milling rate - 1,150 tons/day.
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Developing Mines
Rock Creek/Big Hurrah
• Production: 100,000 oz/year• Commission schedule: 2007, currently under construction• Big Hurrah (30 mi. east) probably will mined concurrently with Rock Creek
• Ownership: NovaGold Resources• Capital Requirements: $50M• Employment: 130 - 150
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Large Exploration Projects
Donlin CreekOperated by Placer Dome in a Joint venture agreement with NovaGold Resources and Calista Corporation
• Orogenic gold-quartz-sulfidesheeted vein deposit.
• 25.4 million ounces of gold at an averagegrade of 0.089 opt (2.8 grams).
• 2nd largest gold resource in Alaska.
• Placer Dome spent $14 million in 2005exploration program.
• Similar expenditure for 2006.
• Ongoing exploration and feasibility investigations.
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Large Exploration Projects
Pebble• Ownership: Northern Dynasty.• Resources: Measured and Indicated:
- 31.3 M oz gold + 18.8 B lbs copper• Inferred:
- 34.3 M oz gold + 31.8 B lbs Cu • Employment forecast: >1,000.• Mining rate: 100 - 200K tpd.• Annual production: >1,200,000 ounces of gold (equivalent).• Capital requirements: >$2,000M.• Commission schedule: 2012(?).• Access: Road to Cook Inlet.• Ongoing exploration, environmental studies, and feasibility investigations.• Kennecott Canada Exploration (subsidiary of Rio Tinto) has recently taken a 9.9% interest in Northern Dynasty.
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State of Alaska Programs and Actions to Advance Mine Development
• Airborne Geophysics
• Alaska Industrial Development & Export Authority (AIDEA)
• Stable regulatory and taxation structure
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State of Alaska Programs and Actions to Advance Mine Development
Airborne Geophysical/Geological Mineral Inventory (DGGS)
A multi-year project to expand the knowledge base of Alaska’s mineral resources as a catalyst to private sector investment.
Products include:•1:63,360-scale aeromagnetic and airborne-electromagnetic maps•1:63,360-scale bedrock and surficial geologic maps•1:63,360-Scale Land status map•and various geological, geochemical and geophysical data compilations
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Inventory of DGGS Alaska Airborne Geophysical/Geological Surveys
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DGGS offers both:DGGS offers both:
1970s or older data)1970s or older data)andand
--? And ? And BLMBLM--DGGS 1997DGGS 1997--?)?)
Regional airborne magnetic and Regional airborne magnetic and resistivity data (USGS & DGGS, resistivity data (USGS & DGGS,
Detailed airborne magnetic and Detailed airborne magnetic and resistivity data (DGGS 1994resistivity data (DGGS 1994
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State of Alaska Programs and Actions to Advance Mine Development
Alaska Industrial Development & Export Authority (AIDEA)
The mission of the Alaska Industrial Development and Export Authority (AIDEA) is to provide various means of financing to promote economic growth and diversification in Alaska.
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State of Alaska Programs and Actions to Advance Mine Development
Alaska Industrial Development & Export Authority (AIDEA)
Support for Alaska mining projects:
• Road & Port for Red Dog Mine
• Skagway Ore Terminal
• Seward Coal Terminal
• Revenue Bonds for Fort Knox Tailing Facility
• Revenue Bonds for Kensington Dock and Tailing Facility
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State of Alaska Programs and Actions to Advance Mine Development
•Regulatory Structure - Large Mine Permit Process
•Land Available for Mining
Federal mineral lands
State of Alaska lands
Private lands, Aboriginal land claims settled –available for mining
• Stable Taxation Structure with Development Incentives
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State of Alaska Programs and Actions to Advance Mine Development
Taxation and Incentives
MINING TAXATIONState corporate income tax. Net income based on graduated scale to
maximum of 9.4% on income over $90,000 USD.
Mining license tax. Based on net income from mineral product sales. Graduated tax, maximum of 7% on products sales over $100,00 USD.
Production royalty. 3% on net income fromsales on state lands only.
Modest state claim rents and lease fees.
• Claim rental up to $520 USD/year for 65 Hectare claim.• Production lease, up to $1.35 USD/hectare.• Annual labor of $100 USD/16 hectare claim.
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State of Alaska Programs and Actions to Advance Mine Development
Taxation and Incentives
INCENTIVES
No state reserves tax.
New mines receive a 3½ year grace period from paying mining license tax.
Credit is given for rents and lease payments against productionroyalty.
Exploration incentives program. Exploration expenditure credits up to $20 million USD per mining property may be booked. These creditsmust be used during the first 15 years of production and appliedagainst corporate income tax, mining license tax, and products royalty.
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Future Trends and Developments
1. Satellite deposits developed adjacent to existing mines – especially:
•Red Dog•Fort Knox•Pogo
2. New mines developed such as Donlin Creek3. Establishment of in-state mineral beneficiation based on mineral wealth, low cost and available energy, and pacific rim location
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Thank You.