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Mining News March 01, 2024 07:30:50 PM

Alaska Mine Value Tops $4 Billion in 2023

Paul Ploumis
ScrapMonster Author
While not as steep a rise, Northern Star is anticipating more gold output from Pogo.
Alaska Mine Value Tops $4 Billion in 2023

SEATTLE (Scrap Monster):  At a value of $1.5 billion, zinc held onto its throne as the most valuable metal produced in Alaska during 2023. With production forecasts and price trends headed in opposite directions for zinc and gold, however, the gleaming precious metal that drew fortune-seekers North at the turn of the 20th century could soon regain the crown as the most valued metal produced in the 49th State.

According to preliminary calculations completed by Alaska's Division of Geological & Geophysical Surveys (DGGS), the total value of metals produced at Alaska mines was approximately $3.76 billion during 2023. When you include sand and gravel mining for the construction sector, that value bumps up to around $4.1 billion, according to the U.S. Geological Survey (USGS).

When you add in the coal produced for in-state power plants, the total value of all the materials extracted from Alaska mining operations during 2023 comes in at around $4.25 billion.

In addition to a solid year of production from Alaska's one coal, seven hardrock metal, and 145 placer gold mines, mineral exploration spending continued to be strong across the Far North State remained strong during 2023.

Dave Szumigala, a mineral resources geologist at DGGS, informed attendees of an Alaska mining sector overview at the AME Roundup mining convention that roughly $230 million was spent at around 50 mineral exploration projects across the state last year.

According to preliminary data compiled by DGGS, nearly half of the 2023 mineral exploration spending was invested in discovering and expanding gold deposits, making the precious metal the top mineral commodity sought in Alaska.

Polymetallic volcanogenic massive sulfide deposits, such as those being mined at Hecla Mining Company's Greens Creek Mine on the Southeast Panhandle and Ambler Metals' Arctic mine project in Northwest Alaska, were also popular exploration targets in the state last year.

While the exploration for new sources of the minerals and metals needed for the lithium-ion batteries powering electric vehicles has not yet been as pronounced in Alaska as many of the other mining jurisdictions around the world, the search for graphite, nickel, and cobalt accounted for roughly 8% of exploration spending last year. Battery mineral exploration spending is expected to continue to rise as current projects expand and new projects emerge over the next couple of years.

Globally significant zinc output

Due in large part to the high-grade deposits at Teck Resources Ltd.'s Red Dog Mine in Northwest Alaska, zinc continues to be the top commodity mined in the state.

During 2023, Red Dog produced 539,800 metric tons (1.19 billion pounds) of zinc, which accounts for 4.5% of the 12 billion metric tons of all the zinc mined on Earth last year.

When you add in the 47,000 metric tons (103.6 million lb) produced as a byproduct at the Greens Creek silver mine, Alaska operations accounted for around 5% of the global supply of zinc, a metal considered critical to the U.S.

Alaska's share of the global zinc supply, however, could begin to slip as ore grades decline at the 35-year-old Red Dog Mine over the coming years.

"Over the next three years, production is expected to decrease due to declining grades at Red Dog," Teck Resources CFO Crystal Prystai informed analysts and investors on Feb. 22.

 While the 2024 zinc output at Red Dog is expected to remain on par with 2023 levels, Teck is forecasting a roughly 30% drop to around 382,500 metric tons (843 million lb) by 2027.

As of the beginning of 2023, Red Dog hosted 38.5 million metric tons of proven and probable reserves averaging 12.4% (4.03 million metric tons) of zinc, 3.6% (670,000 metric tons) of lead, and 66.2 grams per metric ton (81.9 million oz) silver.

This is enough ore to keep Red Dog in operation until 2031.

Teck's Aktigiruq, Anarraaq, and Lik deposits on state lands roughly 10 miles northwest of the current Red Dog operations could provide future supplies of high-grade ore to the Red Dog mill.

Aktigiruq and Anarraaq are large deposits on lands held by Teck with grades on par with what is currently being mined at Red Dog.

Lik, which is being explored under a 50-50 partnership with Solitario Zinc Corp., hosts 17.6 million metric tons of potentially open-pit mineable indicated resource averaging 8.1% zinc, 2.7% lead, and 50.1 grams per metric ton silver; plus 2.8 million metric tons of inferred resource at 8.6% zinc, 2.7% lead, and 38.9 g/t silver.

Combined, these deposits have the potential to provide the Red Dog mill with ore for several more decades at current production rates.

To ensure Red Dog remains a globally significant source of zinc, Teck is carrying out extensive exploration across the district.

Nearly 1 million oz gold per year

Falling zinc output from Red Dog opens the door for gold to be crowned as the most valuable metal mined in Alaska. Thanks to strong prices and rising production profiles at Alaska's largest gold mines, this precious metal could take the throne before zinc production falls.

During 2023, Alaska's hardrock and placer mines produced approximately 728,000 oz of gold in 2023. At the $1,940/oz average price during 2023, this puts the value of the gold produced in the state at around $1.4 billion, which is only a touch under the value of zinc produced at Red Dog and Greens Creek.

So far in 2024, the price for an ounce of gold has held above $2,000. While continued strength in the price of this precious metal would bolster the value of Alaska gold output this year, it is an expected increase in the number of ounces that could unseat zinc.

The largest gold producer in Alaska, Kinross Gold Corp.'s Fort Knox Mine, could also be the biggest contributor to gold production growth in the state in 2024 and beyond.

Last year, the iconic mine about 20 miles northeast of Fairbanks produced 290,651 oz of gold, edging out the 259,573 oz produced at Northern Star Resources Ltd.'s Pogo Mine about 90 miles southeast of Alaska's Golden Heart City.

The gold output from Fort Knox is expected to get a major boost from the much higher-grade ore being delivered from Manh Choh, a mine about 200 miles southeast of Fort Knox that is being developed under a partnership between Kinross (70%) and Contango Ore Inc. (30%).

Going into 2024, Manh Choh hosted 4.1 million metric tons of proven and probable reserves averaging 7.6 g/t (1 million oz) gold and 13.5 g/t (1.8 million oz) silver, which is an order of magnitude higher gold grade than the ore currently being fed into the Kinross Alaska Mill at Fort Knox.

Kinross reports that the development of Manh Choh is essentially complete, and ore is being trucked the roughly 250 road-miles to Fort Knox.

"In Alaska, construction of the Manh Choh project is essentially complete and is on budget and on schedule for initial high-grade production in the second half of the year," said Kinross Gold President and CEO Paul Rollinson.

With the higher-grade ore from Manh Choh, the annual production at Fort Knox is expected to increase to nearly half a million oz over the coming five years.

While not as steep a rise, Northern Star is anticipating more gold output from Pogo.

Since completing an expansion of the Pogo mill to 1.3 million metric tons per year in 2022, Northern Star has been working to ramp up the annual gold production at the high-grade underground mine to 300,000 oz.

Reaching this gold production target is premised on feeding ore through the mill at around its nameplate capacity of 325,000 metric tons per quarter and improving the grade of ore being processed.

Aside from the first three months of 2023, which was impacted by a six-week shutdown of the mill for repairs, the mill at Pogo ran near or above its nameplate capacity during 2023.

"So, lifting that average grade up is where we're going to get that uplift in the revenue," Northern Star Resources Managing Director Stuart Tonkin told analysts and investors during a Jan. 23 call.

The expected increases in gold production at Fort Knox and Pogo, along with steady output from the Kensington, Greens Creek, Dawson, and roughly 145 placer mines, could elevate Alaska's gold output to the realm of 1 million oz per year by 2025.

 Courtesy: www.miningnewsnorth.com

 

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