Fire River Drills as it Mills in Alaska
By Greg Klein
As Americans celebrated the Fourth of July last week, some Americans and Canadians celebrated the rebirth of an Alaska mine. This was the day that Fire River Gold Corp cranked up the mill at its recently reopened Nixon Fork Mine in the Tintina Gold Belt. “We started up the mill on July 4 and ran on waste for two days,” President/COO Richard Goodwin reports. “Then we started running it on low grade, and we’ll be switching to full-on ore.”
Goodwin continues, “We do have a stockpile ahead of the mill of about 3,000 tonnes, and that’s what we’ll be chewing through while we continue to ramp up the mine to full production.” That’s slated for October, when both mine and mill will be operating near capacity. The company plans its first shipment of concentrate this month and will pour its first dore bar in August.
Nixon Fork has gone through two previous incarnations. “One was 1993 to 1998; that was Nevada Goldfields,” says Goodwin. “Then there was a very brief campaign, only about four or five months of mining in 2007 under St Andrew Goldfields.
“There were several factors behind the 2007 shutdown,” he adds. “The price of gold wasn’t really strong. I think it was around $750 to $900. Also they were contract-mining, which resulted in a very high mining cost. Probably those are the main reasons, but also they hadn’t done a lot of drilling at that point. They did their drilling afterwards, not before mining. Had they done their drilling before they went mining, they’d have had more success.”
July 7 Nixon Fork assays include 13.33 grams per tonne gold over 8.1 metres, 25.56 g/t over 5.4 metres (including 86.16 g/t over 1.4 metres), 40.93 g/t over 2.8 metres, 14.69 g/t over 4.4 metres, 57.01 g/t over 4.4 metres and 93.52 g/t over 8.1 metres (including 190.23 g/t over 1.9 metres). June 6 assays include 107.13 g/t over 8.4 metres (including 164.05 g/t over 5.1 metres), 33.28 g/t over 2.9 metres, 28.92 g/t over 3.1 metres, 20.44 g/t over 4.2 metres and 17.11 g/t over 5.8 metres. Fire River’s 28,000-metre 2011 drilling campaign continues.
“Our latest announcement is a bit different from our previous results over the last few months,” Goodwin says. “We’ve really come to the end of the ore definition phase, where we were hitting the stopes that were going to be mined early. You’ll see in the new results that there are two new areas being drilled, and this is more pure exploration where we’re looking for additional zones. We’ve pretty well defined our early-stage production adequately enough. We can’t really perfectly define it through drilling; you actually have to go inside the stope, mine it and test-hole drill it, which we’re doing right now. But we’re at a sufficient level of confidence to support our first six months of operation.”
According to a September 2010 NI 43-101 report, Nixon Fork has 105,168 gold ounces indicated and 63,256 ounces inferred, at a 10 g/t cut-off. A revised resource estimate should appear later this year.
The key here is to replenish what you mine on an annual basis. I believe the property has the potential to go for 10 years —Richard Goodwin
Goodwin points out that rehabilitating a recently used mine certainly has its advantages. “We didn’t add very much infrastructure,” he says. “They had spent about $18 million on upgrades and the start of the CIL [cyanide-in-leach] plant. We’re going to put in about $5 million to finish off the CIL plant. We did a study that estimated $7.6 million for the plant, but we’re actually putting it in much cheaper than that. We also got about $3-million-worth of equipment to upgrade the underground mining fleet. Pretty much everything else was in place.”
According to a February 2011 preliminary economic assessment, Nixon Fork will deliver an internal rate of return of 549% and net present value of $60.9 million over its first two years of operation, based on a gold price of $1,200 per ounce and operating costs of $447 per ounce.
The old mine also left substantial gold behind in the tailings pond, 34,664 ounces indicated and inferred at 7.6 g/t. By 2012, in addition to its mine feed, the plant will get an additional 100 tonnes per day of tailings.
At press time, Fire River had 99.2 million shares outstanding, trading at $0.50 for a market cap of $49.6 million.
Goodwin concludes, “The key here is to replenish what you mine on an annual basis. At this point it does not have a large resource—it’s only 200,000 tonnes, which represents about three to four years of mining. I believe the property has the potential to go for 10 years, but it’s a matter of doing the exploration in time to put those tonnes into the production forecast.”