Gold flows from Pogo

Partners Teck Cominco, Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. celebrated in February the first gold pour at Pogo, an underground, hardrock mine built in a remote, logistically challenging and environmentally sensitive region of Alaska’s interior.

The mill site is on a hillside overlooking the nearby Goodpaster River, which is a Chinook salmon spawning ground and home for a resident population of Arctic grayling. Pogo is located on state land about 65 km northeast of Delta Junction, a small community at the end of the Alaska Highway in the central part of the state.

Access to the remote site is by an all-weather, 80-km gravel road constructed over the surrounding rolling hills and permafrost ground by contractors working for Teck-Pogo, Inc., the mine’s operating entity. A gravel bar on the Goodpaster River was used as an airstrip and winter trail provided initial access during the project’s early years in the 1990s.

After spending US$347 million to build a 2,270-tonnes/day mill, underground mine workings and necessary infrastructure at Pogo, the three partners expect the mine to produce about 400,000 oz of gold per year, with a current mine life of 10 years.

Project history

The first geologic indications of the Pogo gold deposit were discovered 15 years ago in stream and soil samples gathered in the Goodpaster River drainages. This was in a remote part of Interior Alaska with few rock outcrops and tough terrain to navigate, which had seen very little historical exploration or production.

Exploration crews from Anchorage-based WGM, Inc., working for Sumitomo, are credited with the discovery in 1991. However, the Pogo area didn’t receive industry attention until 1995, when the first drill results were released. News of a potential multi-million-ounce, high-grade, deeply-buried gold occurrence sparked interest in the area and led to a significant staking rush in Interior Alaska in the mid- to late 1990s, despite gold prices spiraling downward at the time.

Sumitomo partnered with Teck Cominco in 1997 to advance exploration on the remote site. To earn its 40% interest, Teck Cominco took over as project operator, completing an extensive surface and underground drilling program to better define the resource. Exploration work identified a sloping, pancake-shaped mineral deposit, located in two 3.6-m-thick quartz veins lying 180 to nearly 275 m underground.

Teck-Pogo developed a mine plan based on a reserve of 7 million tonnes with an average grade of 16 g/tonne (0.48 oz/ton) Au. In August 2000, Teck-Pogo submitted plans and permit applications to state and federal regulators. The remote site lies outside of any municipal boundaries, although Pogo now pays a negotiated annual payment in lieu of taxes to the nearby Delta Junction community.

Construction starts in 2004

U.S. federal regulations required that a formal environmental impact study (EIS) be prepared for the Pogo project, which involved a series of public scoping hearings in local communities. Comments from local citizens and regulators were incorporated into the plans, and Teck-Pogo modified its development proposal to reflect environmental protection concerns.

The final EIS was published in September 2003. State and federal regulators issued permits to proceed with development plans in late 2003 and in early 2004. Construction crews started work at the site and on building a temporary winter ice road in January 2004.

Construction work temporarily halted that spring, when a Fairbanks-based environmental group made a last-minute administrative challenge to the water discharge permit that had been issued by the Environmental Protection Agency. That additional regulatory debate cost construction crews several weeks of work, but was resolved successfully through intensive meetings involving Teck-Pogo, the environmental group and state and federal regulators.

During that process, local citizens provided the environmental group with a taste of its own medicine — protesting with picket signs proclaiming public support for the mine project. “Look how the community comes together when they see a project maligned and attacked improperly. It was an extremely positive experience. At the time, it didn’t feel good,” said Steve Borell, executive director of the Alaska Miners Association. “Environmental groups have had a free ride for decades and have not been held accountable, but this time, they were.”

Logistical challenges

In addition to constructing a conventional mill, camp and mine complex in a remote, earthquake-prone zone with harsh winters, Pogo required construction of basic industrial infrastructure. That included building and maintaining an 80-km all-weather road and building and maintaining an 80-km 138-kV electrical transmission line connecting Pogo to the existing power grid.

During the summer of 2004, construction crews faced an unexpected challenge — wildfires burning out-of-control around the remote site and along the road and power line — that resulted in work delays. The Camp Creek fire, one of several hundred-thousand-acre-plus fires that burned throughout Interior Alaska in the summer of 2004, threatened the Pogo construction site. Most construction workers were evacuated, and only a skeleton crew remained on site, working beside firefighters to put out flames that jumped the Goodpaster River.

That fire turned and headed west, burning through a remote hilltop camp of geologists working for AngloGold (U.S.A.) Exploration about 8 km from Pogo. A Pogo-based helicopter pilot evacuated two geologists from the camp, before the fire burned it down.

The wildfires cost construction crews another two weeks, according to Teck Cominco. Yet the crews remained on schedule, closing in the mill facility in late 2004 and starting work on electrical, piping and mechanical systems during 2005.

The plant was commissioned on Jan. 12, 2006, with the first ore feeding into the mill. Feb. 12 was the date of the official first gold pour, with a 1,000-oz dor bar produced for local media.

Mill process

Pogo run-of-mine ore is conveyed to surface and ground in a SAG-ball mill circuit. The circulating load is fed to a gravity circuit where about 60% of the gold is recovered. The cyclone overflow feeds a sulphide flotation circuit, with the concentrate reground before cyanidation. The slurry then passes though a carbon-in-pulp circuit. Gold stripped from the carbon plus that recovered in the gravity circuit is smelted into bars. The gold dor is further refined in an off-site gold refinery.

Flotation tailings that have not been exposed to cyanide are pressure-filtered and placed into a drystack storage area or are used as part of the backfill. Tailings that have run through the CIP circuit are detoxified in a multi-step process, which involves decanting and recycling most of the cyanide solution, and chemically breaking down the cyanide in the remainder. The detoxified tailings are mixed with cement and placed underground as cemented pastefill.

All mine drainage and precipitation from the mill, camp, shop, site roads and tailings is collected and treated in an on-site water treatment plant, prior to being discharged into large mixing ponds constructed adjacent to the Goodpaster River. All water is tested to ensure compliance before being released to the river.

Increasing company’s gold production

Teck Cominco’s 40% interest in Pogo is expected to bump up the company’s gold production from 245,000 oz in 2005 to over 400,000 oz in 2006, with only a partial year of commercial production at the new Alaska mine. (Sumitomo Metal Mining holds a 51% interest in the property and Sumitomo Corp. holds the remaining 9% interest.)

“Gold production at Hemlo [in Ontario] is declining, so Pogo will allow us to maintain our gold production as Hemlo nears the end of its mine life,” said Michael Allan, vice-president of engineering, in a Teck Cominco
editorial commentary published in 2005. He noted that wide variations in gold prices during the permitting process didn’t deter the partners. “We persevered with the Pogo project in spite of these fluctuations because we knew we had a good mine in the making,” Allan said.

Extending mine life

Efforts to extend the current 10-year mine life include additional evaluation of mineralization surrounding the existing deposit, according to Karl Hanneman, manager of public and environmental affairs and special projects for Teck-Pogo.

“The geologic resource is about five million ounces, with a minable reserve of 3.8 million ounces,” Hanneman said in a March 23 interview with CMJ. “There’s a lot of ounces out there that are not currently in the mine plan, but could be added if the economics change sufficiently. The outer perimeter of the deposit is often too thick and too low of a grade, so we’re mining in the core. We might be able to mine some of the edges in the future… Once we’re underground and can get closer, we might be able to access [mineralization] with drilling that is cheaper, and thereby possibly convert some of the resource to minable reserves.”

Geologists have identified a third zone of mineralization at Pogo that lies about 75 m deeper than the known second layer, which could also offer future opportunities as underground mining provides better access.

Teck-Pogo plans an exploration drill program this summer to include targets within 3 to 13 km of the mine site, Hanneman said. This year’s exploration budget is US$2 million, an increase from last year’s US$1.2 million.

Furthermore, Sumitomo will be prospecting on its own mining claims in the Pogo vicinity this summer, located 50 to 65 km from the recently-completed mine, Hanneman said.

Patricia Liles is a freelance business writer based in Fairbanks, Alaska, and can be reached at pliles@alaska.net.

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