Fort Knox

Fort Knox gold mine near Fairbanks.

Kinross Gold is expanding its operations at the large Fort Knox Mine 25 miles northeast of Fairbanks. Mining has started at the Gil, a separate gold deposit nine miles east of the main Fort Knox Mine, the company said Nov. 17 at the Resource Development Council’s annual conference in Anchorage.

The project will add about 100 jobs to the current workforce at the mine, which now totals about 700, Fort Knox manager Jeremy Brans told the RDC.

Mining at Gil began as Fort Knox celebrated its 25th anniversary, which was on Nov. 17, and just after having produced 8 million ounces of gold, Brans said.

Since the first “gold pour” at the mine in 1996, Fort Knox has paid about $829 million in wages, purchased $2.8 billion in goods and supplies from mostly local vendors; $127 million in property taxes to the Fairbanks North Star Borough, and $50 million in taxes paid to the state of Alaska.

In addition, the mine has paid an additional $25 million in royalties to the Alaska Mental Health Trust.

Fort Knox is located on land owned by the mental health trust, which supports state mental health trust programs.

Kinross holds the land at Gil and has studied development of the deposit for years. The company has now developed ways to make it viable. Ore will be mined at Gil and trucked over existing roads to the mill at the mine, where it will be processed.

Mining meanwhile continues at the main pit at Fort Knox, which is now one and a half miles across and one-half mile deep. Mining and mill operations had been expected to shut down between 2015 and 2018, but the addition of a heap leach operation has extended the operating life.

Even as a mature mine, Fort Knox is performing well. During the quarter of 2021 production increased and cost of per ounce sold decreased compared with the second quarter of the year, Kinross told investment analysts in its third quarter report.

The quarter-over-quarter production increase was primarily due to more ounces recovered from the two heap leach pads at Fort Knox and higher mill grades and throughput, while cost per ounce was down mainly as a result of lower operating waste mined and higher production.

Both production and cost of sales per ounce were in line year-over-year, compared with third quarter 2020, the company told analysts.

At the RDC conference Brans said the new Gil project will now give Kinross enough identified resources to keep the mine and mill operating through at least 2027, and the mine’s two heap leach operations will allow it to operate longer.

A heap leach is a process that extracts gold from low grade ore or waste rock that still contains gold using an acid process. Kinross pioneered the use of a heap leach in sub-Arctic conditions at Fort Knox. Previously it was not thought to be feasible in the mining industry.

Meanwhile, in a related development Kinross is now in a venture with the Tetlin reservation east of Delta to develop another gold deposit. The project, formerly known as Peak Gold and now as Mahn Choh, is 70 percent owned by Kinross and 30 percent by Contagio Ore, which was the original explorer.

A feasibility study for the mine is expected to be complete in 2022 and with production is expected in 2024. The project will require a $110 million initial capital investment and will involve trucking ore 240 miles to the Fort Knox mill, where it would be processed.

Contagio estimates the recoverable gold resource at 1.3 million ounces but the companies’ mining lease at Tetlin is 675,000 acres. There are additional exploration prospects on the lease.

The grade of the ore is higher at Mahn Choh than at Fort Knox, enough to pay the development costs and trucking and when blended, or mixed, with ore mined at Fort Knox it would upgrade the value of the lower-grade material. The project would also add 400 jobs including mining and trucking.

The name ‘Manh Choh’ was chosen by the Village of Tetlin’s chief, Michael Sam and the tribal council and can be translated from the Upper Tanana Athabascan language to ‘Big Lake,’ referring to the nearby Tetlin Lake, a site of high cultural significance in the community.

“We look forward to the safe and responsible development of the project and the positive benefits it is expected to generate for our community,” said Chief Sam. “We also look forward to further building a relationship with Kinross, a company with a strong track record in Alaska.”

An interesting aspect of the Mahn Choh project is that because the land and mineral deposit is owned by the Tetlin reservation the “7i” revenue-sharing requirements of the 1971 Alaska Native Claims Settlement Act do not apply. Tetlin gets to keep all of the royalties from gold production, and will not be required to distribute 70 percent of the royalties to regional corporations and village corporations formed under ANCSA.

The revenue-sharing act provision, in Section 7i of the settlement act, applies only to lands selected by regional corporations. A separate section of ANCSA allows the handful of reservations that existed in Alaska in 1971 to opt to take their lands in fee simple rather than be joined to the regional corporation for the area. For those lands the 7i revenue-sharing does not apply.

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