Gold Rush: Alaskans Brace for Next Boom

GOLD miners are as much a part of Alaska's folklore as bush pilots and husky dogs. But the panners' century-old search for the elusive mother lode has lately played a minor role in the state economy. Until now.

The Fort Knox Gold Mine - the biggest project to hit Fairbanks since construction of the trans-Alaska pipeline in the 1970s - is scheduled to open later this year and become North America's largest gold producer. The mine will cover thousands of acres on Fairbanks' northeastern outskirts and produce up to 350,000 ounces of gold a year.

The return to mining here has prompted a new gold rush across the state. Yet it also marks a significant departure from the days when scruffy prospectors sloshed through cold streams with a tin pan and a dream. Today's prospectors tend to be corporations with high-tech tools, gung-ho investors, and numerous state mining-incentives.

Low-tech panning and digging touched no more than a tenth of the Fairbanks's gold reserves, experts say - "the easy stuff," according to Bob Trent, dean of the University of Alaska Fairbanks School of Mines.

Fort Knox owners hope to do much better than that, and they appear to have some company. The mega-project has encouraged other Fairbanks projects by Ryan Lode Mines, Placer Dome, Silverado Mines, and other prominent companies. Elsewhere in interior Alaska, near the remote village of McGrath, Consolidated Nevada Goldfields Inc. has opened its Nixon Fork Mine, projected to produce 60,000 ounces a year.

Behind Alaska's gold rush is the release last year by the Alaska Department of Natural Resources of detailed airborne geophysical surveys. The multi-hued maps - available on computer discs - are the fruit of a survey program just begun in Alaska.

A new mining-incentive law signed last summer has also borne fruit, state officials say. The law allows companies to subtract up to $20 million in exploratory expenses from taxes or royalties owed to the state, and by late 1995, 17 companies had applied for such credits. The legislature has also repealed work-hour limited for underground mines.

As a result, new mining claims have doubled and mining exploration, development, and production are up by about one-fourth.

For its part, Fairbanks has heartily embraced its new boom. Local businesses are gearing up for the 322 new jobs that Fort Knox is expected to create. And many residents welcome a return of the boomtown culture that marked Alaska's birth.

Professor Trent predicts an infusion of corporate aid. "I think they'll be a good corporate partner for our school, as well as the university," he says.

Mine opposition is limited, says John Fields, who works at the nearby Howling Dog Saloon. "There's a few bunny huggers who don't like it."

Actually, Fort Knox gets good marks from environmental regulators. The site is an easy commute but far from the city's residential areas. It is on state land that had been mined for decades, so there are few regulatory complications. And residents applaud plans to create a fish-stocked lake after the huge pit mine closes.

Less welcome are companies along the prized shorelines of southeastern Alaska. Environmentalists there have targeted several mines, such as the huge underground Alaska-Juneau Mine, which produced 3 million ounces of gold in the early part of the century. The mine, closed by World War II, can produce at least that much again, says its new owner, Alberta, Canada-based Echo Bay Mines. But the company has encountered staunch opposition from residents over pollution and has abandoned plans to use cyanide to aid gold recovery.

Echo Bay has also scrapped plans for a huge tailings dam in a popular Juneau valley. Now the company is seeking special permission to dump the tailings underwater, a practice that has been outlawed in the United States for more than a decade.