It is the extent of the new ore zone and its high quality that has caused Northern Dynasty to re-evaluate its development plan for the project, which would be one of the world’s largest mines, Jenkins said.

“Our intent is to have a new development plan that integrates the resources of both the eastern and western ore bodies completed by the third quarter of 2007,” Jenkins said. That plan would provide the basis for permit applications to be filed with state and federal agencies, he said.

Northern Dynasty announced results of four of the 2006 drill tests Aug. 21. Two of the tests penetrated more than 2,000 feet of mineralized ore with grades ranging from approximately 1.1 percent to 1.3 percent copper equivalent, according to the company’s press release. Two other holes penetrated 1,170 feet to 1,225 feet of mineralization with ore grades ranging from approximately 1.16 percent to 1.29 percent copper equivalent.

Copper equivalent is a way of calculating the value of ore containing several minerals. Pebble is mainly a copper deposit that also contains substantial amounts of gold and molybdenum.

Jenkins said among the options being considered are developing the eastern ore body as an underground mine first and developing the previously known western ore body later as an open-pit mine.

Change in plans could

reduce power needs

The redesign has ramifications that would ripple through the entire project. For example, if the ore-processing mill is designed to handle lower tonnages of higher-quality ore rather than larger volumes of lower-grade ore, the power requirements for the mine will be reduced.

Power supply has emerged as a key challenge for the mine. The current plan for a 250,000-ton-per-day mill and other mine activities would require 250 megawatts of power. If the project is rescoped and the daily tonnage through the mill is reduced, for example to 150,000 tons-per-day, the power requirements would be less, Jenkins said. This would reduce costs for the project, he said.

Northern Dynasty is working with Homer Electric Association, the Kenai Peninsula electric utility, to secure the power needed for the mine. HEA has proposed a submarine cable across Cook Inlet that would tie the mine into the utility’s existing grid on the peninsula.

Jenkins said the base case for power supply is the submarine cable and a new 250-megawatt gas-fired power plant built in Nikiski, near Kenai. However, other options, including coal-fired power, also are under consideration, he said.

Exploration work has fueled jobs

Meanwhile, a busy exploration program has created a small boom in seasonal employment for villages in the region. About 100 people from 22 small communities in the region worked this summer at Pebble. Approximately $500,000 in payroll has been paid in the region so far this year, Jenkins said.

Additional people from Anchorage and other Alaska communities also are working on the project, mostly for contractors and subcontractors, he said.

Pebble was discovered in 1988 by Cominco, now Teck-Cominco, a large Canada-based mining company. Cominco explored the prospect over the next decade and established a resource base of 1 billion tons.

Northern Dynasty took the project over from Cominco in 1997 and began its own exploration program in 2001. Since then the company has identified 4.1 billion tons of resources in the shallower, western ore body and 1.8 billion tons of resources in the new eastern ore body. The resources of the eastern ore body are likely to increase when results of the full 2006 drilling program are compiled.

Northern Dynasty is a subsidiary of Hunter-Dickenson Inc., a Vancouver, British Columbia minerals development company. In June, London-based Rio Tinto Zinc, one of the world’s largest mining companies, purchased a 9.9 percent interest in the Pebble project. Northern Dynasty has said that it intends to bring a number of large mining companies into a consortium to develop Pebble.

If the mine were developed it would be a large mine creating substantial employment in the region. Under the existing development plan, 2,000 construction workers would be needed and about 1,000 in production operations. Those numbers could change if the project is redesigned, however.