Alaska 2007: mining in review: a statewide look at Alaska's rich resource.(SPECIAL SECTION: MINING ISSUE)

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Even though the year is not yet completed, it seems a safe bet to say that 2007 will go down in the books as one of the most exciting and productive years in Alaska mining history. Mineral exploration at Alaska mines has reached new levels of productivity and efficiency. Development projects brought two new mines to the commercial production stage while two others are nearing start-up. Several advanced-stage exploration projects are planning to bring on some of the largest mines ever envisioned for Alaska, while a large stable of quality exploration targets were investigated in 2007 over the length and breadth of Alaska. The highlights presented will give you some idea of how busy 2007 has been and how much more exciting 2008 promises to be.

WESTERN ALASKA

Teck-Cominco's Red Dog mine turned in a stellar performance in 2006 and saw continued strong operating profits in the second half of 2007. For 2006, the mine produced 557,500 tonnes of zinc in concentrate from ore grading decreased to 19.9 percent. The mine also produced 123,500 tonnes of lead from ore grading 5.7 percent. The mine posted a whopping $1.079 billion (yes, Dorothy, billion) operating profit for 2006. For the first half of 2007, the mine generated 287,000 tonnes of zinc and 64,000 tonnes of lead in concentrate. Operating profit in the first half of 2007 rose to $265 million, versus an operating profit of $240 million in the same period in 2006. Average zinc and lead grade mined was 20.6 percent and 6.0 percent, versus 22.2 percent. Mill throughput of 1,687,000 tonnes in the first half of 2007 was significantly up from the 1,539,000 tonnes milled in the first half of 2006. The first concentrate shipment left the Red Dog mine on July 5, 2007, 19 days earlier than in 2006. Total shipments for the 2007 shipping season are expected to be approximately 1 million tonnes of zinc concentrate and 260,000 tonnes of lead concentrate.

NovaGold Resources Inc. announced that JV partner Barrick Gold Corp. has budgeted $87 million for the 80,000 meter Donlin Creek project drill campaign for 2007. The focus of this work will be on converting Inferred Resources to the Measured and Indicated category. Project operator Barrick Gold continues to work toward completion of a pre-feasibility and first feasibility study for the project and has indicated it will not submit the draft applications to begin the permitting and environmental approval process until 2008.

Northern Dynasty announced a new resource estimate for its already giant but growing Pebble porphyry copper-gold-molybdenum deposit. At a 0.60 percent copper equivalent cut-off, the estimated inferred mineral resources in the Pebble East deposit are 3.379 billion tonnes grading 0.57 percent copper, 0.36 grams of gold per tonne and 0.036 percent molybdenum, which is equivalent to a 1 percent copper equivalent grade containing 42.6 billion pounds of copper, 39.6 million ounces of gold, and 2.7 billion pounds of molybdenum. The 2006 drilling program at Pebble East expanded the north-south length of the deposit to greater than 7,000 feet. The deposit remains open to the north and south. In August, Northern Dynasty announced that it had joint ventured the project with mining giant Anglo American plc. Under terms of the deal Anglo can become a 50 percent partner in Pebble by making staged cash investments of $1.425 billion. Anglo's staged investment includes a committed expenditure of $125 million to complete a pre-feasibility study targeted at the end of 2008. After the completion of the pre-feasibility study, Anglo must elect to commit to a further $325 million for a feasibility study, the completion and approval of which is targeted for 2011. Upon the decision to develop a mine, Anglo must elect to commit to the next $975 million of expenditures to retain its 50 percent interest, completion of which will meet the $1.425 billion requirement. Thereafter, any further expenditure will be funded on a 50/50 basis. If the feasibility study is completed after 2011, Anglo's overall funding requirement increases to $1.5 billion. Northern Dynasty will assess its 50 percent share of any project debt financing when a production decision is made. Not sure about this but I think the $1.425 billion earn-in is the largest joint-venture earn-in amount in Alaska mining history. Anybody out there know if this is the case?

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