See below for details on how large low grade gold deposits in Alaska and the Yukon are profitable.
SPECIAL REPORT: “Grade is king” is a well-worn adage in mining circles, the assumption being that the higher the grade, the more financially robust the mine will be.
But a quick look at some of the big gold mines in Alaska’s multi-million ounce Tintina Belt tells you the adage does not hold true in every circumstance as geology and geometry come first.
Operations such as Kinross Gold’s Fort Knox mine in Alaska and Victoria Gold’s Dublin Gulch mine in Canada run at grades well under a gram of gold per tonne (g/t). In Fort Knox’s case, the resource grade is 0.32g/t.
Yet they are highly profitable at US$1500 gold, each producing more than 200,000 ounces of gold a year at all-in sustaining costs (AISC) of US$570-850 an ounce.
One of the keys to the robust economics of Fort Knox, Dublin Gulch and mines like them is that they employ bulk mining, where large tonnages are moved and a large portion of the material qualifies as ore.
Both Fort Knox and Dublin Gulch use a cut-off grade of 0.1 and 0.15g/t respectively, meaning that any material above this grade can be mined economically.
They are essentially big earthmoving exercises with very low strip ratios (the amount of waste material that has to be moved to get the same amount of ore) of around 1:1 or less and low mining costs of less than $US2.20 per tonne.
By contrast, mineralisation in some higher grade gold deposits is found in narrow vein structures that can only be mined in association with a lot of waste, leading to higher strip ratios and higher mining costs.
The other key to keeping costs low at operations like Fort Knox and Dublin Gulch is that the mineralisation is amenable to heap leaching, whereby ore is stacked in a heap and a chemical solution is spread over the heap to help liberate the gold from the ore.