To complicate matters it is an area of extraordinary natural beauty. And needless to say there are a fair few people who are none too happy about the arrival of a bunch of miners.

Of course, the miners see a glittering opportunity to deliver huge value to shareholders! And if you believe what it says on paper, this could be significant.

Anglo Maerican estimates that for every 3.9bn tonnes grading of 0.99% copper equivalent, there could be 45m oz of gold. And that is before mentioning the copper and molybdenum there.

But… there are the environmental issues!

Anglo bags a big catch

Before going any further, a bit of history.

Back in 1988, Pebble West was discovered by Cominco, now Teck Cominco. After exploring the property until 1997, defining a significant resource, Cominco sold out to Northern Dynasty (”Northern”).

That was in 2001, when the industry was experiencing a bit of a downturn. Northern’s timing was good!

By 2005, Northern controlled 100 % of the Pebble project and had already carried out several exploration programmes. By 2004 it had upgraded 75% of its Pebble West resources to the “measured and indicated” categories.

Things got better in 2005. Northern struck a “world class” deposit at what is now known as Pebble East.

Drilling, environmental and socio-economic studies got underway and are still ongoing. By 2007, Northern had stirred the interest of some of the world’s biggest miners.

First Rio Tinto took a 19.8% stake in the project. Then in July last year Anglo decided it was time to get in on the act.

Behind closed doors, Northern was convinced that a partnership with a mining heavyweight would be the fastest way to production. Not surprising, given that Anglo ranks Pebble’s resources as “among the world’s most important accumulations of copper, gold and molybdenum.”

Anglo has made a significant commitment to the project, which is known as the Pebble Partnership. But to keep hold of its 50% interest, it must make staged cash investments to the tune of $US1.425 bn over the next few years.

2008 — Pebble partners take the plunge

This year it would appear that the Pebble Partnership board is taking the plunge. It will spend US$140m this year to really stir things up.

First of all, US$61.6m will be spent on drilling to upgrade some of the inferred mineral resource at Pebble East to so-called “indicated” category. That implies greater economic certainty, and means the pre-feasibility study can be completed. Drilling will also test the full extent of the deposit.

Then US$30.2m will go to an engineering programme to back up the final pre-feasibility study. And, of course, there is money allocated for an environmental study programme (US$24.9m). Funds have also been put aside for a community engagement and public affairs project (US$14.8m).

The plan is to complete the pre-feasibility study by December 2008, the feasibility study by 2011 and to start production by 2015. That will bring the total invested in Pebble to US$220m since 2002. US$87m of that will have gone to environmental and socio economic studies.

Dirty money for dirty gold?

Obviously it is still early days. Comprehensive studies are underway to collect the data necessary to complete pre-feasibility and feasibility studies. And, as yet, management hasn’t even applied for an environmental impact statement (EIS).

There are two key hurdles to overcome. First, these are nothing more than inferred resources. Pebble partners give a clear warning to investors that there is no guarantee that these are even minable.

Second, environmental campaigners are vehemently opposed to the project. They say the mine risks the Bristol Bay watershed, home to the world’s biggest commercial wild salmon fishery and the planet’s greatest fly fishing wilderness. That is already worth between $20m and $100m to the area. So who needs gold?

Big name jewellery companies, like Tiffany’s are believed to have said they aren’t interested in gold from here. Bob Gillam, an uber-rich Alaskan who owns a holiday home on Bristol Bay, has been a major supporter of the anti-Pebble lobby.

But there has been an interesting turn in events recently, as revealed by the “Truth about Pebble”, which brings us good news about the project. It so happens that Mr Gilliam manages a fund (McKinley Capital Management) which has made huge investments in Anglo American.

According to an SEC filing in the first quarter of this year, McKinley held over 138,000 shares in Anglo stock, worth about US$4 m. And, according to some reports, McKinley’s investment for state retirement funds includes 119,315 Anglo shares, worth $7.7 m.

So, does Mr Gillam have his finger in both pies? In the age of internet information and misinformation it is anybody’s guess. One thing is certain: Mr Gillam can always buy a holiday home elsewhere, says Erin. Of course we want the mines to take care of the environment, and keep disruptions to a minimum. But if all goes well the mine will bring jobs and prosperity to this region.

And it might just prove a worthy investment too.

Keep mining,

Erin and Isabel

Source: The Pebble Mineral Project, Leaving No Stone Unturned

For the tale of the tape, the TSX Exchange fell 0.38%, while the TSX Gold Index fell 0.8% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, ended the session down 0.09% with declining issues once again outpacing the advancers this time by a 577 to 440 margin on moderating volume of nearly 183 million shares traded.

London-listed Griffin Mining has agreed to acquire financially-stalled Yukon Zinc in an all share deal valued at about C$93 million. Under the proposal, Yukon Zinc shareholders get one Griffin share for every nine Yukon Zinc shares held. Griffin holds a 60% stake in Caijiaying zinc-gold-silver-lead mine in the People’s Republic of China and is looking at advancing Yukon Zinc’s Wolverine base metal project in the Yukon. After the transaction closes, Yukon Zinc shareholders will hold 16% of Griffin. Yukon Zinc ended the day up C$0.03 at C$0.17.

On the earnings front, lower zinc prices and a strong Canadian dollar resulted in Teck Cominco posting a 4.2% dropped in profit during the first quarter. The World’s second largest zinc miner tabled income of C$345 million or C$0.78 per share compared to C$360 million or C$0.83 per share in the same period a year ago. Teck ended the day down C$0.78 at C$47.50.

Fording Canadian Coal Trust reported C$500,000 in first-quarter profit, down from C$76.8 million a year earlier. The massive shortfall is attributed to slow rail shipments and a rising Canadian dollar. Fording, whose major shareholder is Teck, closed the day down C$2.30 at C$65.21.

It was a good day for shareholders of Canadian Gold Hunter as the company tabled a 94.5 metre drill intercept running 2.09 grams gold per tonne from the Caballo Blanco project in Mexico. Canadian Gold ended the day up C$0.47 at C$1.52.

Lero Gold, which is in the midst of a takeover offer from European Minerals, tabled an indicated resource estimate of 4.75 million tonnes grading 2.46% copper and an inferred resource of 2.81 million tonnes grading 1.81% copper from its Karchiga deposit in northeast Kazakhstan. Lero ended the day down C$0.05 at C$0.85.

Disappointing earnings results drove investors away from the bigger resource plays, and neglect of the more speculative issues continued. We will see what Wednesday trading has in store.

Nickel followed a similar pattern, poking above $13 in the late morning and holding there, to close at $13.0408/lb., up 22 2/3 cents. Zinc clawed its way back over the $1 mark, ending at $1.01/lb., up more than a penny and a half. Aluminum was a modest gainer, adding a penny, to $1.3706/lb., while lead pushed steadily upward to its intraday high of $1.289/lb., up 2½ cents.

Copper rebounded strongly after three days in the red, as supply worries trumped demand fears, at least for the time being.

On the demand side, traders had been hoping that China would pick up any slack from the worsening U.S. economy. However, some of that optimism was dampened as the price differential between copper traded on the LME, as opposed to the Shanghai Futures Exchange, suggests that Chinese demand may be softening.

“The market realized that Chinese consumers are not buying copper at the elevated levels, and that the spread between copper in Shanghai and at the LME widened to around $938 (per tonne) last week,” said Peter Fertig of Dresdner Kleinwort.

Nevertheless, the Chilean situation is not getting any better. All but one of state-owned Codelco’s mines are now closed, as El Tienente joined the Andina and Salvador operations in shutting down, after an employee was injured in violence there. That left Norte, Codelco’s biggest division, as the only one running.

“The prospect of spreading Chilean strikes, across both worker classes and facilities, will keep the markets on edge until they are fully resolved,” wrote Edward Meir.

And Frank Holmes, CEO of the highly successful U.S. Global Investors funds, is unabashedly bullish.

“The demand side for copper is going to be very strong,” boosted by usage in China and other emerging markets, Holmes said. “We could see $8 a pound for copper,” he predicted.

In company news, diversified Canadian miner Teck Cominco is expecting business to continue to boom. Teck CEO Don Lindsay says he expects no demand falloff, and that, “There’s more than a reasonable chance that …our copper and coal businesses alone will generate record earnings…so the next 12 months look pretty good.”