Anchorage Daily News

FAIRBANKS -- New exploration on land that was scoured for gold years ago near Livengood indicates the property could be developed into a mine on a scale similar to the Fort Knox Mine, according to a Colorado-based company.

Jeff Pontius, president and chief executive officer of International Tower Hill Mines, said the company is in a good position to eventually develop a mine in the area.

"We're expecting the deposit to get to be quite large," he told Fairbanks business leaders and miners Wednesday.

Initial results indicate a deposit of 2 million ounces at .07 grams per ton of gold, a grade similar to that at Fort Knox, a mine northeast of Fairbanks.

The company expects to increase the deposit estimate when new reports are released this month.

Initial data also yielded good potential for heap leach extraction, which costs less than other mining processes, he said.

Additional exploratory drilling, possibly throughout several years, will help define whether a mine is economical, he said.

"We're still trying to get our hands around the deposit," Pontius said. A mine could be built within five or six years, he said.

The Livengood deposit is about 300 feet thick and covers about one square mile surrounding Money Knob, he said.

The company spent $7.5 million on exploratory drilling this year and has a budget of $6.5 million for 2009, which may be increased, he said.

Getting power to the site is "a big concern," Pontius said.

The nearest lines are 60 miles away. A heap-leach facility would need about 5 megawatts of power. One option would be routing a small-diameter natural gas bullet line past the gold mine and using generators to power equipment. Pontius said he is talking with gas line proponent Enstar about that possibility.

International Tower Hill houses crews at an old pipeline camp at Livengood and uses former warehouses to store cores, Pontius said. About 25 people are on the site, down from a peak of 42 this summer.

Most of the land is owned by the Alaska Mental Health Trust Authority. The director of the trust's land office, Harry Noah, said a deposit on a par with Fort Knox could deliver significant earnings.

The trust is collecting income for land leases but the real benefits would come as royalties if gold is mined. The Fort Knox Mine also is on trust land. It fed about $1.4 million into trust accounts last year, Noah said.

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