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Mining industry hurting due to low prices

Posted: Tuesday, November 20, 2001

WHITEHORSE, Yukon (AP) -- Low prices for minerals have led to a big drop in mine production and exploration spending in both Alaska and the Yukon this year, according to geologists.

David Szumigala, senior minerals geologist for Alaska, told the Whitehorse Star that the state is seeing a major reduction in exploration activity and the value of ore produced.

The total value generated by Alaska's mining industry is expected to plunge by roughly 22 per cent, from $1.28 billion last year to about $1 billion this year, he said.

Exploration spending is expected to total $20 million or so, down from $35 million last year, Szumigala estimated.

Placer miners in the state produced 45,000 ounces of gold last year, he said.

''If we hit 40,000 this year, we will be lucky.''

Overall output is up, but increases in tonnage have been smothered by fading metal prices.

Cominco's Red Dog lead-zinc mine near Kotzebue, for instance, has increased production by about 25 per cent, but the overall value of that mine's production value has fallen, he said.

''All metals are down,'' he said. ''The base metals -- zinc, lead, gold -- and those are the ones affecting the bottom line.''

The Yukon Territory is having the same experience.

Hard rock geologist Mike Burke of the Yukon Geology Program said exploration expenditures for this year will be in the area of $7.2 million (Canadian), down from $8.8 million last year.

The figures show a huge decline since 1996, when exploration in the Yukon hit a record $54 million (Canadian), followed by $35 million in 1997 and $15 million in 1998.

The Brewery Creek gold mine was the only producing hard rock mine in 2001. Operations were suspended there after production of 10,811 ounces in the first six months, Burke said.

The number of placer mines in the Yukon dropped to 124, from 140 last year and 171 in 1999, placer geologist William LeBarge said.

''With the current trend, we are predicting around 69,000 (gold) ounces produced,'' LeBarge said. ''It is likely to be the lowest production since 1979.''

The total value of gold from placer operations is expected to total $22 million (Canadian) for 2001, down from $25.3 million last year.

The largest downturn in activity, he said, was south of Dawson City in the Indian River drainage, the biggest producing region for placer gold in the territory.

Last year, placer operations in the Indian River area produced 37,704 ounces, but that figure is expected to drop by nearly 10,000 ounces, he said.

Miners in the Klondike River drainage increased production this year from 13,168 ounces to roughly 16,394. There was also increased production in the lower Stewart River and the Kluane area.

Overall, however, LaBerge predicts a 10 percent drop in the amount of placer gold mined this year. He attributes much of the downturn to lower gold prices and higher fuel prices.

With a continuing drop in the mining-related expenditures in the Yukon, Burke noted several exploration projects that are showing signs of promise, from a resurgence of activity in the Wheaton River drainage to rising interest in emeralds east of Faro.

Also of note, Burke said, is the planned reopening of the Cantung tungsten operation just across the border in the Northwest Territories.

Burke said he learned recently the mine will be going into operation in January.

''They are really happy with the progress. The work on the underground is coming along and the work in the mill is on-schedule, so they are really positive over that,'' he said.



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