Teck’s Pogo at feasibility, Anarraaq takes shape under Cominco program

Affiliated companies Teck (TEK-T) and Cominco (CLT-T) generated the most excitement in Alaska this past year by advancing their respective Pogo and Anarraaq deposits. Teck’s Pogo gold project, situated 90 miles southeast of Fairbanks, is at the feasibility stage, while Cominco’s Anarraaq deposit, 6 miles north of the Red Dog mine in northwestern Alaska, is developing into a promising base-metal deposit.

Anarraaq hosts thicknesses and grades similar to those at Red Dog, the world’s largest zinc mine. However, the sediment-hosted deposit lies 2,000 ft. below the surface, which means more expensive mining costs than the open-pit mineralization at Red Dog.

Based on Cominco’s criterion of a 10% return at a zinc price of US45 per lb., analysts still aren’t certain if Anarraaq can be developed as a stand-alone operation. Although mined ore could be processed at the Red Dog metallurgical facilities, this may require a new agreement between Cominco and the Northwest Alaska Native Association (NANA).

Cominco operates the Red Dog mine under a long-term lease agreement that gives the aboriginal corporation a share of net proceeds (to a maximum of 50% after payback of capital). The Anarraaq deposit is situated on claims owned 100% by Cominco.

Drilling at Anarraaq has so far defined the eastern, northeastern and southwestern margins of the deposit, which remains open in all other directions. The major is calculating a new resource, based on drilling to date.

Highlights of recent drilling include holes 933, 940 and 944 and 946, as outlined below:

Hole 933 was drilled just south of hole 923 (197 ft. averaging 20% zinc and 6% lead, plus 4 oz. silver per ton); it cut 202 ft. grading 16% zinc, 5% lead and 3.1 oz. silver at a down-hole depth of 2,202 ft.

Hole 940 was drilled 400 ft. southwest of hole 933 and cut two mineralized zones. The first returned 21 ft. grading 13% zinc, 5% lead and 0.3 oz. silver from 2,206 ft. down-hole. The second hit 11 ft. grading 9% zinc, 2% lead and 1.8 oz. silver from 2,284 ft. down-hole.

Hole 944 was drilled 400 ft. north-northeast of hole 924 (three zones grading up to 18% zinc, 4% lead and 0.5 oz. silver over 40 ft.); it cut 20 ft. averaging 18% zinc, 5% lead and 0.2 oz. silver from 2,250 ft. down-hole.

The final hole drilled during the latest program, no. 946, was collared 400 ft. east of hole 923 (197 ft. averaging 20% zinc, 6% lead and 4 oz. silver); it cut an impressive 118 ft. averaging 14% zinc, 4% lead and 1.9 oz. silver from 2,080 ft. down-hole.

Teck, meanwhile, has submitted an environmental impact statement (EIS) for the Pogo gold project. The company’s gold unit can earn a 40% interest in the project from the subsidiaries of Sumitomo Metal Mining and Sumitomo Corp. by spending US$28 million on exploration and completing a feasibility study by the end of 2001.

Teck plans to develop Pogo as an underground mine with a surface mill operating at an initial capacity of about 2,500 tons per day. It would produce about 375,000 oz. gold annually at startup, increasing to 500,000 oz. gold annually, with an eventual expansion of the mill to 3,500 tons per day.

Capital costs are estimated at US$200-250 million. The mine life, based on known tonnage, is expected to be 12 years. At last report, resources stood at 10.7 million tons grading 0.52 oz. gold per ton found in Liese zones 1 and 2.

If all goes as planned, construction could begin in early 2002 and take 25-33 months to complete. Ore would be processed in a mill using gravity separation, flotation and cyanidation processes. The cyanide tailings would constitute only 10% of all tailings and would undergo a cyanide destruction process.

A major issue yet to be resolved is the choice of transportation. Teck prefers the option of an all-season road. The EIS will help determine if this option is more feasible than constructing a winter road.