MINING

Upper Tanana Bonanza

The glitter of Manh Choh gold

By Isaac Stone Simonelli

Contango Ore

Tetlin Lake in Alaska’s eastern interior is situated in the Tetlin Passage, a corridor through the upper Tanana River valley where the Alaska Range and Wrangell Mountains create a funnel for migratory birds. Tetlin Lake also feeds the Tetlin River, a short tributary of the Tanana. Both are named for the Athabascan village of Tetlin, located along the riverbank within hiking distance of both the Tanana and the lake.

The Upper Tanana Athabascan language gives the lake a different name: Manh Choh, which simply means “big lake.”

Manh Choh is also the name of a nearby gold mining development. Until last year, it had been called the Peak project, and the developer is still known as Peak Gold, a joint venture of Texas-based Contango ORE and

Ontario-based Kinross Gold. The companies agreed to change the name of the project at the suggestion of the Tetlin tribal council and village chief Michael Sam.

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

The Manh Choh project is designed as an open pit mine about 12 miles west of Tetlin, or 10 miles south of Tok. To shrink both costs and environmental impact, ore will be trucked about 250 miles to the outskirts of Fairbanks for processing at Fort Knox, the largest producing gold mine in Alaska, also owned by Kinross.

“Utilizing existing infrastructure makes this project possible and also reduces the environmental footprint of the operation,” Kinross says on its Manh Choh website.

At 4.1 grams of gold per tonne of milled ore, the deposit is considered relatively high grade for an open pit mine. The developers estimate at least 1.2 million ounces of recoverable gold, which would keep the mine operating for about four and a half years.

Short in the life of a very old village; a huge windfall in the life of a very small village.

Off the Road

A gold rush passed through Tetlin once before. Stampeders heading to Chisana, in what is now Wrangell-St. Elias National Park and Preserve, bought provisions at a trading post along the Tetlin River in 1913. The village swelled… to a few dozen people.

Today, Tetlin has a population of 126 from twenty-five families, according to the US Census Bureau. A dirt road connects Tetlin to the stretch of Alaska Highway between the Canadian border and Tok.

Manh Choh will use mostly existing highways to haul ore to Fort Knox for processing. The developers tell locals to expect up to four trucks per hour. The Alaska Department of Transportation and Public Facilities has sketched out road improvements, including asphalt resurfacing, passing www.akbizmag.com

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lanes, and bridge replacements. That project is now seeking an independent corridor analysis.

The Native Village of Tetlin, which owns the surface and subsurface rights to the Manh Choh project, will earn mineral royalties once the mine is in operation. Chief Sam published an op-ed in the Fairbanks Daily NewsMiner in February that said, “Manh Choh is more than an economic opportunity and the promise of jobs— it is a legacy project for my people and the surrounding region. With the development of this mine, we will be able to be financially self-sufficient and continue to live our cultural and traditional way of life.”

Over the operating life of the mine, Manh Choh is forecast to pump several millions of dollars toward local community benefits, such as investment in training, education, scholarships, or sponsorships, according to an economic impact report by McKinley Research Group. The mine also comes with the promise of infrastructure improvements, such as a fully functional elder’s home.

Those benefits should start flowing once gold production begins, scheduled for late in 2024.

Whether that schedule holds depends on factors far outside of Tetlin.

More with Less

Peak Gold had approved spending $47.9 million on Manh Choh in 2022. A February filing with the Securities and Exchange Commission shows the partners cut that investment by nearly half, to $26 million. This, just as the project was about to embark on a feasibility study in advance of final permitting.

“The reduced spend in 2022 reflects the reality that inflation is hitting all sectors of the economy, especially construction,” says Contango ORE President and CEO Rick Van Nieuwenhuyse. He also blames the cutbacks on competition for construction contractors.

However, Van Nieuwenhuyse adds, “The reduced spend this year does not significantly delay delivery of key milestones: feasibility and permitting by the end of 2022, main construction in 2023, and production

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More than 300 drill holes have defined the mineral deposit at Manh Choh of at least 1.2 million ounces of gold at a grade of 4 grams per tonne, which is relatively high for an open pit mine.

Contango Ore

in 2024.” He adds that Contango is likewise undeterred in its other Alaska prospect: reviving the Lucky Shot gold mine near Hatcher Pass, north of Palmer and Wasilla.

Project management firm KG Mining also expects the Manh Choh feasibility study to remain on target for the second half of the year, despite the reduced budget. The spending level is still considered robust, enough to pay for economic and engineering details, environmental monitoring, community engagement along the route to Fort Knox, and additional mineral exploration. The company is refining its project plan to address labor market constraints and the effects of inflation.

Indeed, the same inflation that squeezes less out of a dollar also makes the gold mine more attractive at this moment. “It should also be no surprise to gold investors to see the price of gold rise as well, yesterday piercing above the $1,900 level,” Van Nieuwenhuyse said in February. “Gold is doing what it has done for eons and remains a store of value.”

As it is, Manh Choh is streamlined for quick development. Using the existing mill at Fort Knox reduces the cost and complexity of the new mine. Tailings waste will also be stored at Fort Knox where the ore is processed, avoiding the need for some environmental permits at a new site.

Local concerns mainly center on the noise and pollution from trucks. To alleviate those worries, the company pledges to use late-model vehicles to minimize road rumble and diesel exhaust.

“Kinross is continuing to prioritize transparent engagement with local communities in the Village of Tetlin as it develops the project, building on its long and successful history of safe, responsible mining in Alaska,” says Jeremy Brans, a former general manager and vice president at Kinross who has since been transferred to a different Kinross mine in Canada.

Spreading the Wealth

Operating Fort Knox since 1993, Kinross is a relative latecomer to Manh Choh. Contango and Colorado-based Royal Gold began the development; Contango’s subsidiary CORE Alaska www.akbizmag.com

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A soil auger crew testing the Manh Choh site. A reduced spending outlay is not expected to derail plans for further mineral exploration in 2022, as well as a feasibility study and permitting.

Contango Ore

had been a 60 percent owner, but now Contango retains a 30 percent interest. Kinross owns the other 70 percent, acquired in September 2020.

For its $93.7 million in cash, Kinross bought broad authority to steer the project, pairing it with Fort Knox as a “tuck-in” supplement, reducing overall risk.

Pairing the two mines together also spreads the economic impact across two regions: the Fairbanks North Star Borough and the Southeast Fairbanks Census Area, which stretches from the Golden Heart City to the Canadian border.

Fort Knox is already the largest single payer of Fairbanks North Star Borough property tax. Manh Choh is lined up to have a similar impact for the unorganized area encompassing Delta Junction, Tok, and Tetlin.

During the development phase, McKinley Research Group estimates Manh Choh will generate $50 million in labor income and about 280 new jobs over the construction period. Moreover, economic multipliers that consider indirect, as well as direct, impacts from the mine put total labor income of about $75 million statewide.

Once the mine is up and running, McKinley Research Group estimates 500 direct jobs with an annual direct payroll of $75 million. By comparison, 320 miners work at Pogo, the underground gold mine near Delta Junction. Counting indirect and induced employment, Manh Choh is expected to support 950 jobs in Alaska, with an annual average payroll of $120 million.

“The average annual wage is estimated to be about $128,230 (not including benefits), exceeding the average 2020 wage for residents of the Southeast Fairbanks Census Bureau ($75,085) by 70 percent and the Fairbanks North Star Borough ($56,916) by 125 percent,” the report states.

“While the economic impacts of Manh Choh will be significant, the population-related impacts will be short-term and likely will not result in significant population changes in the nearby communities,” the McKinley Research Group analysis continues. “The employment and income opportunities offered by Manh Choh are not expected to attract new permanent residents to the area, but rather provide employment and income opportunities to existing residents.”

Putting traditional lands to productive use was the vision of the late Tetlin chief Donald Fred “Danny” Adams. Before he passed away, he urged the tribe to develop its resources as a way to secure long-term operating funds, employment opportunities, and infrastructure support for Tetlin tribal members.

“With the mining of minerals, the point I am trying to make is that if you sit back then you get nothing. You have to go out and venture, but if you don’t find anything then it doesn’t mean you give up,” Adams said in 2015.

A second gold rush for the village by the big lake brings to fruition the vision Chief Adams had for his people.