This company helped build an Alaska mine without a tailings dump. Can it build 2 more?

Rick Van Nieuwenhuyse has little patience left for mines that aren’t getting built.

After 40 years in Alaska’s mining industry, he is tired of permitting delays, lawsuits and the state’s lack of infrastructure.

So a bell chimed in his head four years ago when he read a vague line in a corporate report proposing an unusual kind of gold mine — one that could be ready for construction in just a couple of years, instead of the dozen or more that some projects take.

The idea was simple: Dig a typical pit and mine the ore — but send the rocks somewhere else for the heavy industrial process of separating out the gold.

“When I read that, I was like, ‘That actually makes a hell of a lot of sense,’” Van Nieuwenhuyse said in an interview.

A mine could be approved more quickly, and built much faster, Van Nieuwenhuyse figured, if it didn’t need the same processing and waste disposal sites that most large mines do. It also, in theory, would have a smaller environmental footprint, would need less power and would cost less to build.

Thus was born the central strategy of Contango Ore, a Fairbanks-based company that has emerged as a player in Alaska’s mining industry since Van Nieuwenhuyse took over as chief executive in 2020.

The company notched an early success in 2023: Its flagship project, Manh Choh, near the town of Tok in Alaska’s Interior, became the first large mine to open in the state in more than a decade.

Critical to its development was a partnership with multinational Kinross Gold Corp., which now owns 70% of Manh Choh.

The project’s unconventional model, aligning with Van Nieuwenhuyse’s vision, involves huge trucks that carry dozens of loads of ore each day along a nearly 250-mile route. The trip ends at a pre-existing Kinross mine near Fairbanks, where the ore is processed.

Contango is now seeking to grow by using a similar model in Southcentral Alaska: It aims to develop two more gold mines by the end of the decade that, like Manh Choh, would ship raw ore rather than processing it on site. One of the prospects is in the scenic Hatcher Pass area, just north of Anchorage.

The company’s outside-the-box strategy could inject new life into an industry long frustrated by delays to development.

Some of the state’s biggest proposed mines, like the Pebble and Donlin projects in Southwest Alaska, have stalled for years amid permit denials and prolonged regulatory decisions, lawsuits and economic obstacles.

If Contango’s vision pans out, it could help develop three different mines before Donlin — or any number of other slow-going Alaska projects — gets built.

But the company’s new model also raises new questions. And it has already been met with intense backlash in the Interior.

A major hurdle for Contango is the challenge of shipping ore, which is bulkier and harder to move than the concentrated stuff produced by most mines.

To get its ore to the processing site at Kinross’ Fort Knox Mine, Manh Choh relies on a sprawling logistics operation: Double-trailer trucks haul rocks several hours along the Alaska Highway and other state-maintained roads. The trucks, each weighing some 80 tons when fully loaded, travel at all hours and in all kinds of weather — typically making about 60 round trips each day.

The rise in truck traffic on the two-lane highway, and through Fairbanks, has sparked a furious local debate about road safety and wear and tear on public infrastructure. Interior residents have formed an advocacy group to oppose the ore hauling, and some have sued the Alaska Department of Transportation and Public Facilities to stop it.

Now, as Contango moves ahead with its projects not far from Anchorage, the company’s model is starting to face wider scrutiny.

“The rest of the state needs to become aware of what’s happening here,” said Mary Farrell, a Fairbanks resident who opposes Manh Choh’s trucking operation. “Sooner or later, if you live on a major road, it will be in your neighborhood, too.”

No mill, no problem?

Most large mines in Alaska sit beside mills where workers process ore — crushing, grinding, and adding chemicals to it to separate valuable minerals from plain old rock. When the work is finished, the toxic stuff left behind often gets dumped in big piles or ponds.

These processing and tailings storage sites can be among the most difficult parts of a mine to permit, and also among the most environmentally risky, according to industry experts.

What’s different about Contango’s model, the company says, is that it effectively bypasses those challenges: Since the processing occurs at another mine, the new one doesn’t have to spend money on engineering, permitting and designing its own mill and tailings dump — or wait for government agencies to approve them.

But Contango’s model also has tradeoffs, said Brett Watson, an economist at the University of Alaska Anchorage’s Institute of Social and Economic Research.

A key one is the cost of transportation. Moving raw ore long distances from a mine to a mill is more expensive than processing the rocks at the mine, then shipping a far smaller quantity of concentrated material, Watson added.

That makes Contango’s concept less suitable for a prospect that’s far from an existing mill, or low in its ratio of valuable minerals to rock, Watson said.

And, while the model mitigates certain environmental risks, it still leaves the possibility of some pollution, industry observers say.

Manh Choh’s waste rock dumps — where the mine stores material that’s not worth processing — and its open pit could both be sources of toxic dust and water contamination, said Dave Chambers, president of the Montana-based, mining-focused nonprofit Center for Science in Public Participation.

A May letter from the U.S. Fish and Wildlife Service listed a number of other concerns, including heavy metals that could escape from trailers full of ore and chemicals shed by tires that could threaten salmon streams.

“I think everybody tends to focus too strongly on tailings” at the expense of other potential impacts, Chambers added.

Kinross and Contango say their truck trailers are fully covered and produce minimal dust, and that Manh Choh underwent a rigorous environmental permitting process.

The Fort Knox factor

Contango uses three criteria to judge a project’s potential: proximity to existing infrastructure or the ocean — closer is better; the grade of the ore — higher is better; and land jurisdiction. Permitting tends to move more quickly on state, private or tribal property than federal land.

One other factor, though, could also explain why the company’s ore-shipping model has worked at Manh Choh: Contango’s partner on that mine, Kinross, also owns and operates Fort Knox, the Fairbanks-area mine where the Manh Choh ore gets trucked and processed.

For the past three decades, Kinross has been slowly depleting its main gold deposit at Fort Knox. The operation employs hundreds of people and pays millions of dollars in local property tax each year, and to keep it operating, the company has been eyeing new ore deposits.

In 2020, Kinross reportedly said it would consider sourcing ore from mines within 300 miles of Fort Knox — and not just along roads, but potentially rivers, too. The company’s chief executive, Paul Rollinson, appeared to hint recently that future feedstock could come specifically from new Contango assets, according to a recent report in North of 60 Mining News.

“Hopefully, this is just the beginning of lots more that we can do together,” Rollinson reportedly told Van Nieuwenhuyse at an event celebrating the first production of gold from Manh Choh.

For now, though, the companies’ relationship revolves only around Manh Choh: Kinross is not currently in discussions with Contango about building future mines to feed Fort Knox’s mill, Meadow Riedel, a Kinross spokeswoman, said in an email.

“It is important to recognize that we are two separate companies with two separate business models,” she said, adding that Rollinson’s comment was “a general statement made to a current business partner at a celebratory event.”

Kinross, she added, is not focused on developing new mines but rather on Fort Knox’s existing open pit and its immediate area.

A new strand of opposition

One of the first things that Bob McHattie will tell you, and then tell you again, is that he is not a “greenie.”

A longtime Fairbanks resident, McHattie generally supports resource development, including mining.

“I’m basically not an environmentalist,” he said in an interview.

Yet McHattie has become an outspoken critic of the long-distance ore-hauling model.

He is troubled, in particular, by the trucks — and not just “how big they are or how scary they might look” but their “atrocious frequency.”

McHattie, who worked for more than two decades at the Alaska Department of Transportation, doesn’t think it’s fair for Manh Choh’s owners to send dozens of heavy trucks up and down state roads each day, wearing down pavement that taxpayers must pay to repair.

“The state is essentially providing them with all the infrastructure for a conveyor belt, and the company doesn’t have to do any upkeep,” McHattie said.

Kinross says it contributes to maintenance through the state’s gas tax, some of which funds road projects.

“Anyone paying for fuel is contributing proportionally to the maintenance of public highways,” Riedel said.

Interior residents also say they worry about road safety, given the size and frequency of the trucks.

“I have to fight my way through them to get to the grocery store,” said Patrice Lee, a Fairbanks resident and environmental advocate.

An average of five ore trucks an hour travel to and from Fort Knox. The vehicles have been involved in a few incidents since the operation launched, including a fatal accident after another driver failed to stop at a stop sign, according to state troopers.

A recent report commissioned by DOT found that trucking from Manh Choh could be associated with an average of roughly 10 crashes each year and would add some $3 million in maintenance costs each year.

State transportation officials say that the highways used for ore-hauling — the Richardson, Alaska and Steese — have plenty of capacity for the increased traffic.

“While, if you’re not used to seeing trucks on the road, it might seem like a big change, really we’re talking about a fairly low volume of these trucks on the road,” DOT spokeswoman Shannon McCarthy said in a phone interview.

McCarthy also stressed that transportation is crucial to the state’s economy and that it “would be illegal for us to single out an industry or a specific business.”

“If we want mining jobs, I think we have to take advantage of the infrastructure we have,” said Van Nieuwenhuyse.

State officials say they are accounting for the public’s safety concerns, spending more than $1 million to clear brush along the ore haul route to help drivers see. They’re also testing a program in the area that alerts truck drivers to school buses nearby.

“Safety is our top priority,” said Riedel, the Kinross spokeswoman. She noted that Manh Choh truckers sometimes are the first to respond to crashes and report unsafe road conditions and hazardous drivers.

A gold mining revival near Anchorage?

As it contends with ore-hauling opposition in the Interior, Contango is moving ahead with plans for its next operation: The company could bring about a mining revival in Southcentral Alaska, which has been without a major operating mine for decades.

Contango is advancing two developments in the area. One is in the Hatcher Pass region, about an hour’s drive north of Anchorage; the other is in the mountains on the remote west side of Cook Inlet, on Alaska Native corporation property within Lake Clark National Park and Preserve.

Contango says the Hatcher Pass development, Lucky Shot, is a few years closer to production than the other, known as Johnson Tract.

Today, Hatcher Pass is best known as a mountainous weekend getaway for city dwellers seeking fresh powder in winter, or alpine hikes and plump blueberries in summer.

But a century ago, the area crawled with gold miners, and hundreds of people worked at multiple operations across the area. Abandoned mineshafts still dot valley walls, and tunnels bore through the rock — remnants of subterranean mines that mostly stopped producing during the Second World War.

Contango now owns and leases a mix of claims on private and state land around three of those former mines. They’re all along the same gold vein on the west side of the pass, toward the small town of Willow, where there’s less recreational use.

Less than a decade ago, a different company proposed to resurrect Lucky Shot and build a mill in Willow, where the company would have processed ore trucked in from the mine. But it failed to raise the money it needed, and now Contango, which purchased the operation in 2021, is moving quickly on its own development efforts.

A mine plan could be out within two years and production could start soon after, once the company has done additional drilling to improve an estimate of the deposit’s size, Van Nieuwenhuyse said.

The underground operation at Lucky Shot would be significantly smaller than the open pit at Manh Choh, producing roughly one-sixth as much ore each day, he added. His company has not yet said how that rock would be transported, and where it would be refined.

Those remain key questions not just for the economics of the mine but also for the residents of Willow.

Alaska Business Magazine reported a year ago that Contango was considering trucking ore more than 300 miles to Fort Knox.

“That’s certainly an alternative we’ll take a look at,” Van Nieuwenhuyse told the magazine.

But in an interview last month, Van Nieuwenhuyse said that trucking to Fairbanks was not the most likely option.

Instead, he said, Contango wants to use the Alaska Railroad, which it could access some 20 road miles west of the mine. Ore then could head south to the coast, where it could be loaded onto ocean-going barges.

Van Nieuwenhuyse wouldn’t rule out any options, but he said he doesn’t see why his company would want to truck ore all the way to Fairbanks. “Rail is just cheaper,” he said.

Getting rocks to the railroad still would require trucks, but it would be a “relatively small-scale operation,” Van Nieuwenhuyse said. The previous owner’s plan called for 10 trucks a day, according to a 2017 Anchorage Daily News report.

Contango’s aspirations have received relatively little attention in the area. The Willow community council has not taken a position on or even discussed the company’s project, said Trygve Erickson, its chair.

Erickson said he’s generally supportive of mining but added that a long-distance trucking operation similar to Manh Choh’s could cause apprehension.

“It’s not the mining, it’s the trucking that’s the issue,” said Erickson, noting that he was sharing his personal views and not those of the council.

Steve Charles, a longtime resident of Willow, said that ore hauling was one of the town’s primary concerns when the previous Lucky Shot owner presented its proposal.

He said he’d expect that concern to emerge again if Contango proposes trucking ore out of Hatcher Pass and onto the Parks Highway, which runs through Willow.

“I’m pretty confident that communities would be concerned, like any community would be, about heavy trucks running down Hatcher Pass Road and the Parks Highway, with school buses going around,” he said.

Van Nieuwenhuyse said that haul trucks from Lucky Shot would be smaller than the ones used at Manh Choh. Vehicles of that size generally aren’t allowed on the road between Willow and Hatcher Pass, according to state regulations.

Van Nieuwenhuyse said he intends to visit Willow in 2025 to discuss the company’s plans.

Meanwhile, Contango is also in the process of evaluating various options to ship ore from a potential mine at Johnson Tract, the project on Native land on the west side of Cook Inlet that the company acquired earlier this year.

Production at Johnson Tract is likely at least five years away, according to a recent company presentation.

One of the challenges with that prospect, in addition to growing scrutiny from environmental groups, is that the ore there contains several different metals, not just gold.

To extract all of the minerals requires a special kind of mill that doesn’t currently exist in Alaska, Van Nieuwenhuyse said.

The ore likely would be shipped by barge to a facility close to the water, possibly in Canada, Van Nieuwenhuyse said, but he declined to provide more specifics. A preliminary study of the project’s economics is expected early this year, and that will shed more light on possibilities, he added.

He did say that one option is unlikely, though: building a mill at the mine.

“If it didn’t take 10 years to permit something,” he said, “I might have a different attitude.”

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