Contango Ore, the minority partner in the joint venture Peak Gold, Inc Manh Choh gold mine project, secured a $70 million loan with two banks to help fund its portion of the project, according to Rick Van Nieuwenhuyse.
Van Nieuwenhuyse provided an update on his company’s involvement in the upcoming mining project during a Greater Fairbanks Chamber of Commerce lunch Tuesday at the Wedgewood Resort.
The Manh Choh mine, located on land owned by the Native Village of Tetlin, is expected to produce around 1 million gold-equivalent ounces over the next four to five years.
Van Nieuwenhuyse said the grade of the ore mined at Manh Choh is expected to be twice that of what’s mined at Fort Knox Kinross near Fox.
Van Nieuwenhuyse called the mine’s location near the highway a benefit for the project. Kinross Alaska, who owns a 70% share of the plan, contracted with Black Gold Transport to haul the ore 240 miles on public roads using custom-built 95-foot tractor-trailers once mining commences in late 2024. Kinross said the trucks will make up to 120 trips per day — 60 loaded trucks to the Fort Knox Mills and 60 unloaded to the mine — during the project’s lifetime.
“We decided to do a business arrangement with Kinross because of Fort Knox,” Van Nieuwenhuyse said. “They have a great track record locally at Fort Knox … they are an ideal partner. Plus they have a really big mill that was really hungry.”
Van Nieuwenhuyse said the partnership saves a lot of time.
“Our estimate is that it would take five years and cost a lot of money to build a mill [near Manh Choh] — upward of $500 million,” Van Nieuwenhuyse said. “Using the infrastructure at Fort Knox, which has been operating flawlessly for 25 years, is a huge capital and time savings.”
The ore will be processed at the Fort Knox mill and the tailings — or waste ore — will be stored on site.
The estimated capital costs are at around $220 million, including $30 million in contingency funds. Contango’s total cost share is around $59.8 million.
“We’re the little guy. Kinross does all the heavy lifting,” Van Nieuwenhuyse said. “But we’ve still got to pay our share.”
The project involved a $19 million drilling project in 2021 to gauge hydrology, geotechnical, engineering, environmental and community outreach, on top of $2 million in exploration drilling costs to potentially expand the mine’s life. A $39.6 million budget was approved in 2022 during the permitting and feasibility phase, along with construction.
The construction includes modifications to the Fort Knox mill, upgrades on a 20-mile road connecting Manh Choh to the Alaska Highway and the renovation and expansion of a 176-person camp/former hotel in Tok.
The Manh Choh mine itself will be an open pit mine with waste rock storage areas. The mining project includes post-operation remediation and reclamation efforts, such as re-grading the storage areas, covering it with top soil and seeding with local plants.
Van Nieuwenhuyse noted with much of Mahn Choh’s planning already set and the project fully committed, Contango plans to explore more of the 675,000 acres in the larger Manh Choh lease area, including stream sediment sampling, geological mapping and surveys. Another 167,000 acres in state mining claims Contango accumulated will also be evaluated adjacent to the Tetlin lease, but he noted those are still in early stages of consideration.
“There’s a lot more gold to find out there,” Van Nieuwenhuyse said. “I think we’ll have a lot of success over the next 20 to 30 years. It’s great for Fort Knox, great for the [Tetlin] tribe and lots of great high-paying jobs.”
One of Contango’s next projects involves exploration of the Lucky Shot mine 112 miles from Anchorage. The mine historically produced 252,000 ounces of ore until its production was shut down in 1942 due to War World II.
The company plans to rehabilitate and extend an existing tunnel and eventually connect to another tunnel and determine whether it can produce up to 500,000 ounces of gold.
Contact reporter Jack Barnwell at 907-459-7587 or jbarnwell@newsminer.com.
