Large gold deposit discovered across inlet

Posted: Sunday, March 28, 2004

Buried in the foothills of the picturesque mountains jutting above the western shore of Cook Inlet lies a potentially multibillion dollar secret: there's gold in them there hills and lots of it.

In fact, according to the company planning to develop it, the amount of gold believed to be at a site near Lake Iliamna may be larger than any previously-known deposit not only in Alaska, but in all of North America.

"It is world class," Bruce Jenkins, spokesperson for Vancouver, British Columbia-based Northern Dynasty Minerals, said Thursday.

Northern Dynasty was one of several companies to stake claims near the site last year, and the company has plans in the works to develop it into a full-fledged mine.

Jenkins said the location, known as the Pebble porphyry deposit, is believed to contain 26.5 million ounces of gold and 16.5 billion pounds of copper. If those figures are accurate, that would rank the Pebble deposit as the largest known gold deposit and second-largest copper deposit in North America.

"It's the largest contained gold resource in North America," Jenkins said.

The discovery is approximately 15 miles north of the village of Iliamna in an area of rolling foothills that Jenkins said could be an ideal location for a gold mine.

"It's an excellent location for a variety of reasons," he said.

In addition to being near tidewater at Cook Inlet, Jenkins said the site is easy to get to because the gold and copper are near the surface, meaning his company won't have to remove enormous amounts of rock and soil to get at the minerals.

Northern Dynasty has budgeted more than $15 million for work on developing the project this year. Most of that money will go toward additional mapping of the site and preliminary environmental work.

"We are now transitioning from exploration mode to mine description, permitting and development mode," he said.

Jenkins, whose background is in environmental sciences and fisheries biology, said because the site lies in an environmentally sensitive area wedged between the Lake Clark and Katmai National Preserves, his company will spend a significant amount of time and money conducting baseline environmental monitoring in advance of submitting its environmental impact statement.

"It's not without its challenges," he said. "There are several major stream systems in the area. We won't just let the engineers go in and (plan the mine) independent of the environmental concerns."

Bob Shavelson, executive director of Homer-based environmental watchdog Cook Inlet Keeper, said Friday his group is closely watching the situation across the water.

"Any time you've got some open pit strip mining, you're going to have concerns for fish streams in the area," Shavelson said.

Cook Inlet Keeper has begun some introductory discussions with Northern Dynasty to see what kind of environmental protections can be put in place. Shavelson said he's still not sure exactly what kind of operation Northern Dynasty plans to run at the mine, but initial indications from the company have been it intends to work with environmental groups.

"They seem to be open to some suggestions," he said.

Cook Inlet Keeper is not opposed to the mine proposal in general, Shavelson said, and he's hopeful Northern Dynasty can ensure strict environmental safeguards are in place if development goes forward.

"Hopefully, we'll find some ways to work together to proceed with some type of development while protecting the resources in the area," he said.

Jenkins said the mine still is a long way from becoming a reality. In fact, he said the preliminary permitting phase of the project is expected to take between three and four years and that's under ideal circumstances.

However, Northern Dynasty has begun preliminary talks with both the Alaska Department of Natural Resources and Department of Transportation and Public Facilities on its plans, which likely would call for infrastructure construction in the area, including roads and dock facilities.

When and if the mine reaches the construction phase, Jenkins said he believes his company will spend between $700 million and $1 billion on capital costs, and that the mine's life could be as long as 50 years.

Jenkins said if Northern Dynasty does get its permits, construction likely will take an additional two years.

"This mine isn't going to be built tomorrow," he said.

If it was, however, local businesses could end up cashing in.

Although the site is in the Lake and Peninsula Borough, its construction could have impacts on the Kenai Peninsula.

The first one is jobs. Jenkins said he expects that if the mine is built, it would employ 2,000 workers annually.

What those jobs would mean to the area's economy is unknown, but at least one local politician believes the peninsula could capitalize on the mine's construction in a variety of ways.

Kenai Mayor John Williams has been watching development at the project closely since he first heard of the discovery.

He said Friday he believes the project could reap major benefits for the peninsula and already is having Kenai Economic Development Director Casey Reynolds work on putting together information on how the project would benefit Kenai.

"I've already put Casey on it," Williams said.

He said there are a number of ways the peninsula could benefit. First, he said the mine will need a power plant, which could end up being located on the peninsula. Second, the area could serve as a staging area for construction operations.

"There is some significant activity that could occur here in Kenai," Williams said.

And, he said, the peninsula could serve as a home base for workers at the mine.

"We could offer ourselves as a bedroom community or offer our airport facilities as an alternative to Anchorage," he said. "This could be a very significant project."

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