It’s a go for high-grade Mahn Choh gold project east of Delta Junction

Kinross Gold Corp. and Contango ORE, Inc. are proceeding with construction of the high-grade Mahn Choh gold project east or Fairbanks and Delta Junction.

The deposit is on lands owned by Tetlin Native Corp. about 20 miles southeast of Tok in Alaska’s eastern Interior. Tetlin is on the Tetlin River between Tetlin Lake and the Tanana River.

Preliminary construction at the mine has already started and production of ore is expected to begin in late 2024, according to schedules released by the two companies July 28.

Kinross, a major mining company, is managing the project. Kinross also owns the large Fort Knox gold mine near Fairbanks, and will own 70 percent of the Mahn Choh mine. Contango ORE, which owns the remaining 30 percent, is a small minerals company that led the initial exploration at Mahn Choh working with the Tetlin village

Tetlin Native Corporation, the landowner, holds 100 percent of the mineral rights and will receive the mining royalties.

Tetlin is a small village corporation formed under the 1971 Alaska Native Claims Settlement Act, or ANCSA. The community has a population of about 400, according to Tetlin’s website. It owns 743,147 acres that were formerly in the Tetlin Reserve formed by President Herbert Hoover in 1930.

In 1971 ANCSA did away with Native reserves in Alaska including Tetlin and gave local villages the right to select and own reserve lands including mineral rights, a provision Tetlin took advantage of.

What’s different in this is that most Alaska Native corporations owning lands conveyed under ANCSA are required to share 70 percent of natural resource income with other Native corporations. But the revenue-sharing provision does not apply to Tetlin. It’s shareholders get to keep all of the mining royalties

Development the mine is expected to cost about $180 million, Contagio ORE said in a press release, and this includes about $30 million for the purchase of a fleet of heavy bulk ore trucks to move ore from Mahn Choh Fairbanks, to the process mill at Kinross’ Fort Knox Mine.

“By utilizing the existing facilities at Fort Knox the Mahn Choh project will be able to proceed without having to permit, capitalize and construct a mill and tailings (storage) facility at the project site,” Contagio ORE said in its announcement. There will also be reduced environmental disturbance and lower overall Green House Gas, or GHG emissions, the company said.

Kinross said Mahn Choh is expected to produce about 225,000 ounces of gold per year over 4.5 years. At average costs of $900 per ounce. Assuming a gold price of $1,500 per ounce this leaves a $800 per ounce “margin,” or gross profit.

While the deposit being mined down may be depleted after a few years the Tetlin landholding is large and other mineralization is known. It’s common for the operating life of mines to be extended as new resources are discovered in the area.

Rick Van Nieuwenhuyse, Contagio’s CEO, said the Mahn Choh discovery was made about 10 years ago by two veteran mineral explorers, Curt Freeman and Brad Juneau, who were working with the Tetlin village. Freeman is on Contagio’s Board of Directors.

Kinross joined the venture more recently to bring the financial and operational resources of a large mining company to the project. It’s common for explorers working through smaller “junior” mining companies to do exploration and make discovereries and then bring in larger companies as parters to develop a mine.

Contagio said in its press release that an extended community support agreement with Tetlin was signed earlier this year, which demonstrates community support for the project. About 400 to 600 new jobs will be created by the project.