North to Alaska, the Gold Rush is on...
Gold! Pebble sparks a rush
BONANZA: Iliamna deposit may be the continent's richest.
By PAULA DOBBYN
Anchorage Daily News
Gold fever is sweeping the hills near Iliamna, home to a massive mineral deposit called Pebble.
A whirlwind of claim staking is under way at Pebble, a mining frenzy Alaska hasn't witnessed since statehood, officials at the Department of Natural Resources said last week.
Since drilling results identified Pebble as possibly the largest gold deposit in North America and the second largest copper deposit, prospectors have staked claims on 365,000 acres, or 570 square miles, the most anywhere in the state, said Kerwin Krause, a property manager with DNR.
"It's a beehive of activity as we speak," Krause said.
Crews for Liberty Star Gold Corp. in December staked what the company called "the largest, one-event block of state mineral land staking in Alaska's history."
That's true, Krause said.
"It was the largest claim-staking effort by one company" ever in Alaska and has helped make Pebble the largest mining district in the state, he said.
Dave Lappi, an owner of Anchorage-based Alaska Earth Resources Inc., spent the past few months staking claims on 82,000 acres near Pebble. The company plans to ramp up its geophysical and sampling work this summer.
"We're excited about the potential," Lappi said.
As staking continues, companies hoping to turn Pebble into a working mine by later this decade are flying in crews and equipment by helicopter for what's expected to be a busy season of exploratory drilling, baseline studies and engineering. A camp is being constructed to house dozens of workers who will operate drilling rigs 24 hours a day, seven days a week, Krause said.
Pebble has been a mining prospect for years. But in January, mineral test results came back indicating that the the deposit was much larger than previously thought, said Bruce Jenkins with Northern Dynasty Minerals, a company based in Vancouver, British Columbia, that hopes to develop a mine.
The deposit is thought to contain at least 26 million ounces of gold, 16 billion pounds of copper and 900 million pounds of molybdenum. If developed, Pebble would be Alaska's largest mine, Krause said. At current metal prices, the mine has an estimated value in the $28 billion range.
"It's massive," Jenkins said.
Cominco Inc., now Teck Cominco, hoped to developed the deposit more than a decade ago. But depressed gold and copper prices shelved the plans. Since then, prices have greatly rebounded and in October 2001, Northern Dynasty jumped in, acquiring the right to earn up to a 100 percent interest in the property from Teck Cominco. The option expires at the end of November when the company is expected to take over the property.
"We know it's a mine," Jenkins said.
The only question is if it's a really big mine or an off-the-charts, mammoth one, he said.
While there's plenty of enthusiasm in mining circles about Pebble, people close to the project note that it's early in the process and there's still years of analysis, design work and permitting to be done. The goal is to have a feasibility study finished by mid-2005. Getting permits will take three to four years. With luck, Pebble could go into production in 2009, Jenkins said.
Northern Dynasty plans to spend $10 million on geological work this year, he said. The company has just leased office space in Anchorage for its Alaska operations and is hiring consultants.
Bill Popp, oil and gas liaison for the Kenai Peninsula Borough, says he's "cautiously optimistic" that Pebble will evolve into a first-class, open-pit mine. But when Popp speaks, his voice resonates not caution but enthusiasm about the project. He notes the 2,000 construction jobs the project may create and the 1,000 workers who would potentially be needed to run the mine, which has a life expectancy of 25 to 50 years.
"If it gets developed, it could have decades of impact in terms of economic growth for the Kenai Peninsula and broadened economic ties with the Bristol Bay region," Popp said. "We believe there's tremendous opportunity for hundreds of workers to be put to work."
A host of questions remain about how Pebble would get its power and where the needed deep-water port and haul road would be built. One way or another, Pebble would require more energy than the entire Kenai Peninsula currently consumes, Popp said.
Popp hopes that whoever ends up developing Pebble will use Cook Inlet natural gas, build a power plant on the lower Kenai Peninsula, and lay subsea cable across the Inlet to carry electricity to the mine. That's one of the options being talked about, he said.
While bullish on Pebble, Popp is also realistic.
"Obviously, when you're talking about a $1 billion project, any number of things can trip it up," he said.
Despite the hurdles and potential obstacles, the prospects at Pebble look good, according to Jenkins.
"It's early days, but it's exciting. We know we have a mine," he said.
Copyright © 2004 The Anchorage Daily News
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