Fort Knox | Kinross Gold Corporation
Mining Exploration in 2021
Searching for the mines of the future
By Nancy Erickson

igging up buried treasure without a map is always somewhat of a gamble.

“Exploration is significant capital invested without a sure outcome,” says Deantha Skibinski, executive director of the Alaska Miners Association. “[But] without exploration, the industry will not grow and existing mines will not expand.”

Mineral exploration is the driving force behind the other two components of Alaska’s mining industry: mine development and mineral production.

Alaska’s 2021 mining exploration season got off to a slow start in March due to a coronavirus pandemic-induced lack of drilling equipment and worker shortages. Despite obstacles, it bounced back for the most part and finished another successful year.

While a full compilation of this year’s mining economic numbers won’t be available until later in the year, some of the larger companies are sharing their results.

Kensington Mine

Coeur Alaska’s Kensington Mine, an underground hard rock gold mine 45 miles northwest of Juneau, has extracted more than 1 million ounces (a milestone hit in 2019) since production began in 2010. The search continues for more of the precious metal to keep the mine active. Coeur Alaska acquired the Kensington property in 1987 and began operations in 2010, says Mark Kiessling, general manager.

Kiessling says Coeur Alaska’s investment in exploration at Kensington has increased over the years, from $5.9 million in 2018 to $8.6 million in 2020, and 2021 is expected to end up at approximately $12 million.

Exploration spending for 2021 started with two underground core rigs focusing on drilling along two exploration targets: the Elmira and Jualin vein structures, says Kiessling. The company ramped up to five core rigs early in the third quarter.

Core drilling is the process of using specialized machinery to extract a sample (core) of rock from below the earth’s surface, says Rochelle Lindley, community and government affairs manager for the mine. The core is typically less than 4 inches in diameter but can be between 300 and 1,500 feet long. Geologists then analyze rock within the core to determine if it has the potential to carry gold.

Coeur Alaska currently employs a team of seven employees and three contractors supporting its exploration program. Exploration efforts are expected to continue through the winter with drilling from underground or surface locations that do not require helicopter access, Lindley says.

Donlin Gold

Yet to begin production is Donlin Gold, one of the largest known undeveloped gold deposits in the world, with a probable gold resource estimated at 39 million ounces, according to Kristina Woolston, external affairs manager. Ongoing exploration helps to pin down that estimate.

Owned by NOVAGOLD and Barrick Gold, the project is located in Southwest Alaska in the Yukon-Kuskokwim region and sits on land owned by Calista Regional Corporation and The Kuskokwim Corporation.

A variety of subcontract services are provided by Calista companies and joint ventures: Boart Longyear partnered with Brice Inc. for core drilling crew. Brice Environmental Services provided site survey services, and ESS Support Services partnered with E3 Alaska for camp catering and housekeeping services. In addition, a subsidiary of Bristol Bay Native Corporation was awarded an early season contract to refurbish fuel tanks and fuel storage equipment, Woolston says.

The 2021 drilling program saw a number of notable achievements.

Although the 2021 plan called for drilling 20,000 meters by the end of September, thanks to efficiencies at the site, Woolston says exploration crews ended up gathering 24,000 meters of core during the season.

Additional drilling and field work are planned for 2022, pending board approval. The Donlin board approved additional funding in September to advance engineering studies and increase staffing needed to support the additional work to advance the project, according to Woolston. The development is currently in the advanced permitting stage.

“Where do we want our metal resources to come from—countries with few environmental laws or worse, child-labor-using warlords? Or Alaska, where we have some of the strictest environmental laws and a history with no appreciable damage done by modern mining operations.”
Rick Van Nieuwenhuyse
President and CEO
Contango Ore
Contango Ore

Predevelopment continues with further exploration at a mining prospect in the eastern Interior. The Manh Choh deposit was discovered in 2011, three years after Texas-based Contango Ore signed an exploration agreement with Tetlin Native Corporation to search for minerals on 675,000 acres of Native land near Tok. The Manh Choh deposit contains 1.3 million ounces of gold, averaging four grams per ton of gold in a near-surface, open pit deposit, according to Rick Van Nieuwenhuyse, Contango’s president and CEO.

In September 2020 the company signed a joint venture agreement with Kinross Gold, operators of the Fort Knox gold mine near Delta Junction, to advance development of the Manh Choh project to production, Van Nieuwenhuyse says.

“We did this to take advantage of the existing underutilized milling and tailings facility at the Fort Knox mine that Kinross has operated for twenty-five years,” he explains. “This allows Contango investors to participate in the development of the mine with a vastly simplified plan and at significantly reduced capital costs since we are not building a mill or tailings facility, which also greatly reduces permitting risk and timeline to production.”

Kinross, which functions as the manager and operator of the joint venture with 70 percent interest, worked with a budget of $19 million in 2021 and had a strong field program, Van Nieuwenhuyse reports.

The joint venture expects to be in the permitting stage as 2022 begins, with a feasibility study completed by year end. Early-work construction activities may happen on portions of the project not requiring federal permits.

While Manh Choh is Contango’s flagship asset, the company was also busy in 2021 growing their portfolio of Alaska projects.

Contango completed about a half-million dollars’ worth of exploration on its 100 percent owned Eagle-Hona claims, northwest of the Manh Choh property, Van Nieuwenhuyse states. The project involved completing a detailed rock chip sampling, following up on previously identified stream sediment and pan concentrate sampling anomalies.

The company’s newest acquisition is the Lucky Shot mine, on the Willow side of Hatcher Pass. Crews will continue working the vein that historically produced 250,000 ounces of gold ore averaging 1.6 ounce per ton, says Van Nieuwenhuyse. “That’s excellent grade in today’s world of low-grade gold deposits.”

The 2021 season also involved detailed soil sampling at the Shamrock property near Salcha that will continue in 2022. Contango plans to drill a large copper-gold target in the Triple Z project northeast of Manh Choh, pending a land transfer from the federal government.

Graphite Creek

Graphite One (Alaska), a subsidiary of a Canadian firm, is focused on developing its Graphite Creek property north of Nome to mine, process, and manufacture high grade graphite. The company spent 2021 on a pre-feasibility study to advance understanding of the project’s potential. The next step is a feasibility study in 2022, says Chief Operating Officer Stan Foo (formerly president and general manager of Donlin Gold).

Small-scale mines at the Graphite Creek property produced some of the carbon mineral in the early parts of the twentieth century, Foo says, but there is no history of any other notable graphite production in Alaska, to his knowledge.

“We believe the Graphite Creek deposit is quite unique in Alaska and more broadly for the entire United States, based on its size, grade, and quality of the graphite,” says Foo. The company intends to undertake additional drilling and field work in 2022 necessary to advance the feasibility study and continue collecting environmental baseline data required for permitting.

Foo says Graphite One’s output will be primarily for the lithium-ion electric vehicle battery market. “The United States is currently 100 percent dependent on natural graphite imports from China and other countries to supply this critical mineral,” Foo says.

“Let’s build the processing center first while we’re still developing the mine. That allows us to accelerate the process, get the customer base established, and then eventually the Bokan mine will come on-line and feed the plant in addition to other US-allied feedstocks.”
Mike Schrider
Vice President and COO
Strategic Metals

Also critical in high-tech consumer products, electric and hybrid vehicles, and various defense applications are rare earth elements (REE). Although some of the worldwide REE ore is mined in the United States, it is all shipped to China for processing. There is currently no processing of REEs in the United States.

Ucore Rare Metals is working hard to change that and broaden the supply chain of REEs to once again include REEs sourced and processed in the United States.

“We find ourselves in a position to depend on China for REE and that’s not a good place for the United States to be. We’re trying to change that,” says Mike Schrider, Ucore’s vice president and chief operating officer.

Ucore’s vision centers on disrupting China’s control of the North American REE supply chain by developing a heavy rare-earth processing facility: the Alaska Strategic Metals Complex (SMC) in Ketchikan.

In 2021, Ucore signed a memorandum of understanding with Vital Metals, an Australian firm with an REE mine in Canada’s Northwest Territories. Vital Metals pledges to process ore at a rare earth extraction plant in Saskatchewan and ship the concentrate to the SMC in Ketchikan to separate into elements, such as praseodymium, neodymium, terbium, and dysprosium.

Ucore’s goal is to have the SMC complex substantially completed by the end of 2023 and operational in the first half of 2024, Schrider says.

The supply agreement with Vital Metals is the first of a two-pronged strategy to extract REE in Alaska. Ucore has been developing the Bokan-Dotson Ridge deposit on Prince of Wales Island since 2009. Because of the time it takes to develop a mine, Ucore decided to make sure the SMC was ready first.

“Let’s build the processing center first while we’re still developing the mine,” Schrider says. “That allows us to accelerate the process, get the customer base established, and then eventually the Bokan mine will come on-line and feed the plant in addition to other US-allied feedstocks.”

Many Years, Many Millions

The Biden administration is proposing lofty goals toward zero carbon emissions and higher electric vehicle usage, but China currently has the market cornered on minerals vital to reach that goal.

Copper, silver, gold, zinc, lithium, and rare earth elements are absolutely necessary to build solar and wind farms and electric vehicles, Van Nieuwenhuyse says.

“We need five times more copper to build and drive a Tesla over a Ford Mustang, and ten times more copper for an offshore wind farm to replace a coal-fired power plant,” he adds. “If we want to truly transition to a green energy future, we must come to grips with the fact that mining must be part of that strategy. Where do we want our metal resources to come from—countries with few environmental laws or worse, child-labor-using warlords? Or Alaska, where we have some of the strictest environmental laws and a history with no appreciable damage done by modern mining operations.”

Mineral exploration is a long and all-encompassing process that typically takes ten years to find an orebody and another ten years to permit and raise the capital necessary to actually build a mine.

“It’s a long process that takes tens of millions… sometimes hundreds of millions of dollars to complete,” says Van Nieuwenhuyse. “But we need these minerals if we’re going to make the transition to a carbon-free energy and transportation future.”