newsminer.com

FAIRBANKS — Results from new exploration on lands long scoured for gold near Livengood are promising, and the property could be developed in a scale similar to Fort Knox, said Jeff Pontius, International Tower Hill Mines president and CEO.

“We feel like we’re in a good position to eventually develop an economic deposit in this area,” he said at a presentation Wednesday in Fairbanks. “We’re expecting the deposit to get to be quite large.”

Free lunch and curiosity packed a room at the Princess Lodge with business people and miners interested to hear how several years’ worth of drilling has panned out for the Colorado-based company.

Exploratory drilling totaled $7.5 million in 2008. A budget of $6.5 million in 2009 may be increased, Pontius said. Initial results indicate a deposit of 2 million ounces at 0.07 grams per ton of gold, a grade similar to that at Fort Knox. Pontius said the company expects to increase the deposit estimate “considerably” when new reports are released in October.

Initial data also yielded good potential for heap leach extraction, which costs less than other mining processes, he said.

Additional exploratory drilling, possibly throughout several years, will help define whether a mine is economical and what type of process — open pit, underground, heap leach — would be best, he said.

“We’re still trying to get our hands around the deposit,” Pontius said. If all goes as planned, a mine could be built within five or six years, he said.

At this point, the Livengood deposit is about 300 feet thick and covers about one square mile surrounding Money Knob.

International Tower Hill houses crews at the old pipeline camp at Livengood and uses former warehouses to store cores, Pontius said. About 25 people are on the site, down from a peak of 42 this summer.

Most of the land under lease to International is owned by the Alaska Mental Health Trust Authority, which means royalties on eventual gold production would go to mental health projects statewide.

Harry Noah is executive director for the authority’s Trust Land Office. Although exploration is still in its early days, a deposit on par with Fort Knox could deliver significant funds, he said.

“We are quite encouraged,” he said.

The trust is collecting income for the land leases, but the real benefits would come as royalties if gold is mined.

Fort Knox also is on trust land and fed about $1.4 million into trust accounts last year, Noah said.

However, royalty agreements on the two properties are structured differently, which means returns at the Livengood property would be greater than those collected from Fort Knox activities, Noah said.

Along with strong gold deposits, the Livengood site has other favorable characteristics, Pontius said. The site is about 40 miles from Minto, the nearest settlement, and streams in the project area aren’t home to salmon. The Elliott Highway bisects the lease area, offering reasonable access. And, while permitting could take a while, Pontius said his team hasn’t identified any issues that would be serious hurdles. International Tower has retained an environmental firm and is taking water-quality samples to prepare for permitting requirements, he said.

Getting power to the site is “a big concern,” Pontius acknowledged.

The nearest lines are 60 miles away. A heap-leach facility would need about 5 megawatts of power. One option is to route a proposed small-diameter natural gas bullet line past the gold mine and use generators to power equipment. Pontius said he is talking with gas line proponent Enstar about that possibility.

Along with gold and mental health trust money, a mine could generate new jobs and economic benefits.

Mining jobs are ideally suited for the Interior, said Jim Dodson, president and CEO of Fairbanks Economic Development Corporation, which helped host Pontius’ presentation.

“From an economic standpoint, these are the types of projects we’re very interested in,” Dodson said. “Mining jobs in the state of Alaska are among the highest-paying jobs. They’re long-term jobs.”

International Tower Hill, an AngloGold spin-off, spent $22 million on exploration in the past two years, discovering four new deposits, three of which are in Alaska. While Livengood is something of a shining star in the company’s portfolio, finds near Chisna, south of the Alaska Range, and Farewell Lodge also are promising, Pontius said.