Companies working on the large Pebble gold-copper mine near Iliamna have cut project development spending to $59 million because of a difficult world economy, but hope to increase the budget to $70 million later this year if conditions improve.

"The level of commitment we're seeing for Pebble this year, in a period of global economic downturn, demonstrates the commitment to move this project forward," John Shively, CEO of the Pebble Partnership, a joint venture company formed to develop the project, said in a statement.

The budget is down considerably from last year's $140 million, and $80 million from from 2007.

Shively also said preparations are on track to make applications to state and federal agencies for permits in 2010, which will give the public the first look at how the company believes the mine can be developed.

It is believed that a combination of an underground and surface mine will be proposed to tap two different ore bodies, one that is deep and would be mined from a shaft, and a second that is shallow and would be mined from the surface.

A pre-feasibility study of the project that is now underway will lay out the details of mine construction and environmental protection measures. It also will identify a source of power and other infrastructure needed for the mine.

The source of power for the mine is of keen interest to electric utility managers in the state's Southcentral-Interior regions because the mine will require a large amount of power.

If whatever is built to provide that power could be linked to the existing railbelt power infrastructure, it could strengthen the regional grid. Electric utilities in Southcentral and the Interior face challenges with aging power plants and electric interties.

The base case for the project is for a new gas-fired power plant to be built on the Kenai Peninsula that would be connected to the mine with a long-distance submarine and overland electric intertie. Still, the companies are investigating other options, including imports of liquefied natural gas to a power plant built on the west side of Cook Inlet.

The project also will require major new transportation infrastructure in the region, including a 68-mile road to a new port on Cook Inlet's west side.

Shively said the major objectives of the 2009 work program include completion of the pre-feasibility study, which is needed for the companies involved in the Pebble Partnership to make a decision that the mine is economically viable.

Environmental research by the companies also will continue this year, Shively said. Data collection on hydrology, water quality and wildlife species listed as threatened or endangered will continue, as will the drafting of an environmental baseline study to provide the basis for the company's permit applications.

Field work for the 2009 season will include some drilling to obtain data on the mineral resource. Geotechnical drilling and other site investigations to support the engineering team working on the pre-feasibility study are expected later in the year.

The pre-feasibility study is an important step to determine whether a mine is viable. A formal feasibility study will come later. This is typically the final step that comes after permits are secured and final engineering is done, and is required before companies make a final decision to begin construction.

If it is developed, Pebble would require a $4 billion to $5 billion construction program that could employ approximately 2,000 over two to three years, the mining companies involved in the project have said. Once in production, the mine would employ about 1,000.

The Pebble Partnership was formed in mid-2007 as a 50-50 partnership between a subsidiary of Anglo American and Northern Dynasty Minerals Ltd. The proposed mine is on state-owned lands that are designated for mineral exploration and development in state regional land-use plans.

Current estimates indicate about 9 billion tons and measured and indicated, and inferred, resources that could contain 72 billion pounds of copper, 94 million ounces of gold and 4.8 billion pound of molybdenum. Quantities of silver, palladium and rhenium also occur in the deposit, according to information materials prepared by Northern Dynasty.