The Alaska Mental Health Trust Land Office is evaluating a heavy mineral prospect near Yakutat that could change the course of the agency for generations.
Icy Cape is a long stretch of beach owned by the trust at the entrance of Icy Bay that appears to hold world-class deposits of several heavy minerals, according to Trust Land Office Executive Director John Morrison.
"It's difficult to quantify the value of (Icy Cape) in terms of heavy minerals; it's just mind boggling," Morrison said in an interview. "There's enough heavy minerals there to run a really large mine operation for over 100 years and we're talking about hundreds of millions of dollars every year."
The minerals are literally grains in the beach sand on a parcel of coastline that stretches for more than 30 miles and totals roughly 48,000 acres, Morrison described.
Trust officials stressed that the resource evaluations are preliminary, but early drilling samples of the "ore" -- sand, really -- indicate up to 40 percent of the ore is heavy minerals in the broadest delta area near the point of the cape. Specifically, the samples are roughly composed of 20 percent epidote, 19 percent garnet and 0.5 percent zircon.
Epidote and zircon are semiprecious gemstones. Garnet has also been used as a gemstone for hundreds of years, but more recently the hard mineral has been put to use as an industrial abrasive on sandpapers and in sandblasting applications. It is also used in water filtration; garnet's small pores allow for the passage of liquid while catching some contaminants.
"We would be the only source for garnets on the West Coast," Morrison said. "Specifically, there's all sorts of metrics and parameters that the buyers of those types of materials would want and our garnets are the best you could have in terms of the size of the crystals and the way they're fractured."
The Icy Cape sands also contain gold concentrates of about 1.4 grams per metric ton, according to the early exploratory results.
The sands comprise two sediment patterns coming from opposite directions, those materials that have eroded and washed down from the steep mountain faces above and sediments that tidal and wave action have pushed up to the shoreline.
If the preliminary resource indications are proved on a larger scale, the minerals and metal in a tonne of Icy Cape sand could be worth $190 at current market prices, the Trust Land Office estimates.
The Trust Land Office manages roughly 1 million acres of land across Alaska for resource development, the proceeds of which go to fund the Alaska Mental Health Trust Authority's work to benefit Alaskans with mental health and addiction challenges.
Morrison said the trust is conservatively projecting that a full-scale mining operation could process up to 250 tonnes per hour for 270 days each year; that adds up to more than $300 million in gross revenue per year for 100 years, he said.
The operation would likely start on a much smaller scale, however, of about 50 tonnes per hour, Morrison said, which would require about a $50 million investment.
As a passive landowner the trust could expect to see about 20 percent of the gross revenue from any mine, but Morrison said he would hope to retain control as a more active investor and take "substantially more" risk and subsequent reward from the project.
Trust Land Office revenues have varied greatly over its 20-year existence, as money from timber and land sales and other resource projects has come and gone.
Since 2011, its annual revenue has been between about $10 million and $16 million; even a minority share of a $300 million per year mine would dwarf that.
The City and Borough of Yakutat would also see a bump in its tax revenue from an Icy Bay mine operation, he noted.
The processing, or relative lack thereof, required of the sand adds to the positivity of the prospect. Extracting the gold and heavy minerals doesn't necessitate the intensive milling or chemical leaching common in large metal operations, meaning Icy Cape should theoretically be relatively simple to permit, according to Morrison.
"It's the sand. It's placer mining. You literally just take a backhoe and scoop the sand into your separator as fast as you can and you get these various compounds," he described.
The Trust Land Office has held the Icy Cape property for almost all of its 20-year existence and held a timber sale there last year.
Morrison said it has received interest from individuals wanting to placer mine gold at Icy Cape, but the plans were too small to entertain them.
It was only recently when Icy Cape drilling samples from the 1990s were unearthed at the Alaska Geologic Materials Center in Anchorage that the Trust Land Office was spurred to do its own drilling last summer.
This year the trust plans to conduct a low-altitude airborne magnetic survey and collect bulk ore samples to further delineate the resources. Then in 2017 the plan is to drill the magnetic anomalies to prove the high-grade, mineable zones, Morrison said.
He added that the trust has already gotten interest from international mining companies that are supporting some of the exploration work and want to be a part of the larger development project.
"I would say by the end of next summer we should be really headed down the path, depending on the results we get, of forming a joint-venture (partnership) to start the process of permitting a mine," Morrison said.
In the end, he forecasts small-scale production to start in five to eight years if all goes well.
Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com. (c)2016 the Alaska Journal of Commerce. Visit the Alaska Journal of Commerce at www.alaskajournal.com. Distributed by Tribune Content Agency, LLC.