Overview
Kinross acquired a 100% interest in the Fort Knox open pit mine in Alaska in 1998. The mine is located within the Fairbanks mining district, a northeast trending belt of lode and placer gold deposits that comprise one of the largest gold producing areas in the state of Alaska. Access to the Fort Knox mine from the nearby city of Fairbanks is by 34 kilometres of paved highway followed by 8 kilometres of unpaved road. The area has a sub-Arctic climate with long cold winters and short summers.
The deposit at Fort Knox is mined by conventional open pit methods. Mining is carried out on a year-round basis, seven days a week and high-grade ore is processed at the carbon-in-pulp mill, which has a daily capacity of between 33,000 and 45,000 tonnes per day.
In February 2008, Kinross' Board of Directors approved the construction of a heap leach facility and expansion of the open pit mine, known as the Phase 7 Expansion. Fort Knox mines and stockpiles large volumes of low grade ore and mineralized waste material that cannot be economically processed at the existing mill. The heap leach facility will allow the mine to process some of these low-grade materials, as well as zones of lower-grade ore that have not yet been mined.
The Fort Knox Expansion Project is expected to extend the life of the mine from 2012 until 2018. As well, the project will double the life-of-mine production to 2.9 million gold ounces, and will increase Fort Knox production to an average 370,000 gold ounces per year during the five years starting in 2010. Production from the Phase 7 Expansion project is expected to begin in the fourth quarter of 2009.
Location
Fort Knox is located 40 kilometres (25 miles) by road, northeast of the city of Fairbanks, Alaska. Kinross? mining and exploration properties are located within the Fairbanks mining district, a northeast trending belt of lode and placer gold deposits that comprise one of the largest gold producing areas in the state of Alaska.
Geology
The Fairbanks district is situated in the north-western part of a geologic formation called the Yukon ? Tanana Terrane (?YTT?). The YTT consists of a thick sequence of polymetamorphic rocks that range from Precambrian to upper Palaeozoic. The dominant rock types in the district are gray to brown, fine-grained micaceous schist and micaceous quartzite known as the Fairbanks Schist. The Cleary Sequence, consisting of bimodal
metarhyolite and meta-basalt with actinolite schist, chlorite schist, graphite schist, and impure marbles, is intercalated with the Fairbanks Schist. Higher grade metamorphic rocks of the Chatanika Terrane are thought to be middle Palaeozoic to Ordovician and they outcrop in the northern part of the district. Granodiorite to granite igneous bodies intrude YTT rocks.
The mineral deposits are generally situated in a northeast trending, structurally complex zone characterized by a series of folds, shear zones, high angle faults, and occasional low angle faults. Northeast striking high angle faults influence the location of gold deposits.
Mineralization
The Fort Knox gold deposit is hosted by a granitic body that intruded the Fairbanks Schist. The surface exposure of the intrusive body is approximately 1,100 meters in the east-west direction and 600 meters north-south. Gold occurs in and along the margins
of pegmatite veins, quartz stockwork veins and veinlets, quartz-veined shear zones, and fractures within the granite. The stockwork veins strike predominantly east and dip randomly. Stockwork vein density decreases with depth. Shear zones generally strike northwest and dip moderately to the southwest. Gold mineralization in the quartz-filled shears is distributed relatively evenly, and individual gold grains are generally less than 100 microns in size. The gold occurrences have a markedly low (less than 0.10%) sulphide content.
The True North gold deposit is located in the Chatanika Terrane. Gold is hosted in mafic to felsic schists and is frequently accompanied by carbon and carbonate alteration in sheared or otherwise structurally prepared zones. The gold is very fine grained, and is
closely associated with pyrite, arsenopyrite, and stibnite in the unoxidized zones. It occurs in quartz veins, and in altered and brecciated rocks. There appears to be a direct relationship between veining and gold content, as weakly veined rocks generally carry lower gold values.
Mining & Operation
Fort Knox is mined as a conventional truck and shovel open pit mine. Production experience indicates the current mineral resource and reserve models are within a marginally acceptable tolerance of variance for both tonnage and grade of the deposit when compared to surveyed mine production. The reconciliation showed that the mineral model estimated total ore tones, grade and ounces to be less (2.4%, 9.4% and 12.1% respectively) than the ore control model revealed. Over the two-year period consisting of 2006 and 2007 (not depicted), the mineral model underestimated total ounces by 4.7%.
Life of Mine Plan (LMP) was based on the design pit and Proven and Probable Mineral Reserves at a $550.00 per ounce US gold price assumption. The LMP indicates the Fort Knox deposit host sufficient mineral reserves to support a seven year mine life. Pit production continues from 2008 through 2014 at the Fort Knox deposit. Thereafter, re-handling of low-grade stockpiles to the leach pad will occur until early 2019. The LMP
specifies an annual production rate from the pit of 39.5 million tonnes, including 135.6 million tonnes of mill and leach ore averaging 0.61 g/tonne Au. Mill recoveries are estimated at 85% during the life of mine, and long-term leach recoveries are estimated to be 65%. FGMI estimated both operating and capital cost requirements in support of the LMP. The financial analysis indicates a positive cash flow. The LMP, cost estimates, budgets and financial analysis have been prepared using industry standard procedures and assumptions. The authors of this report have reviewed these documents and found them to be complete and free of gross errors or omissions. FGMI considers these documents to be confidential in nature and therefore, are not incorporated into the body of this report. Individuals requiring access to said documents are required to sign a confidentiality agreement with Kinross Gold Corporation.
Processing
The Fort Knox deposit provides feed for the mill, a modern carbon-in-pulp gold extraction plant with a 32,658 to 45,359 (36,000 to 50,000 short tons) tonne per day capacity. A heap leach facility is currently under construction. The leach pad is designed to receive 32,658 to 45,359 tonnes per day (36,000 to 50,000 short tons) from the pit and stockpiles starting in the 3rd quarter of 2009.
