Summer 2020 Mining Update

Red Dog 0140

Our goal is to pursue responsible development of natural resources that benefits NANA and its shareholders for today and future generations by leading mineral exploration, development and production beyond 2031.

In a short period of time, the COVID-19 pandemic has changed the way we live and do business, demonstrating to us all that the future is unpredictable. It has led organizations like NANA, and our partners, such as Teck and Ambler Metals, to adjust to the current and ever-evolving health and safety mandates to keep shareholders, employees and the NANA region as safe as possible.

Although the pandemic was unexpected, learning to adapt is nothing new for the region and Iñupiaq people. For 40 years, NANA shareholders have supported responsible resource development, even during times of uncertainty.

Through that support, projects like the Red Dog Mine continue to provide important economic opportunities for independence and local control for residents of northwest Alaska. Approximately 90% of the NAB budget, and the newly established village improvement fund, is paid for using profits from the mine. In 2019, wages paid to shareholders from mining and mineral exploration were more than $53 million and represented 61% of all shareholder jobs at NANA or with our partners and affiliates.

This summer, to abide by the NAB’s emergency orders, as well as the wishes of in-region communities, natural resource projects continue to modify plans.

COVID-19 Protocols at Red Dog Mine

Red Dog Mine has designated specific COVID-19 testing protocols for employees traveling in the NANA region. All Red Dog employees and contractors who wish to travel home within the region for their time off are required to be tested four to five days before their scheduled departure from the mine and have received negative results prior to travel. Personnel must follow any community-specific guidelines and recommendations during their time off. Employees returning to the mine will follow the worker protection period protocol after arriving at Red Dog prior to returning to their worksite. For in-region employees this includes a COVID-19 test at site; for out-of-region workers, the protocol requires testing before arrival. All employees will self-quarantine for 14 days at site or until they receive a negative test result, whatever comes first.

Red Dog, Regional Stability and Beyond

Red Dog Mine is NANA’s flagship project with partner Teck and is one of the largest zinc mines in the world and also produces lead, silver and germanium. The zinc mined at Red Dog is used for galvanizing steel, fertilizer, zinc tablets for colds, sunblock and more.

Earth minerals, like those at Red Dog, are a limited resource. The current mine plan forecasts Red Dog to close in 2031. With 11 years of mine life left, the question remains: what will replace Red Dog in providing benefits to the region, including jobs, NANA royalties and payment in lieu of taxes given to the NAB?

Fortunately, through a combination of strong partnerships and other NANA-owned lands, there is optimism for future regional sustainability. For decades, NANA has explored alternative projects that have the potential to provide the regional stability Red Dog now offers, including those described below.

Upper Kobuk Mineral Projects (UKMP)

Exploration has occurred at Bornite, part of UKMP, since the late 1950s. In 2011, the NANA board approved a unique agreement between NANA and NovaCopper (now Trilogy Metals) for ongoing exploration. Since that time, Trilogy Metals has spent approximately $145 million, which has provided hundreds of jobs and millions of dollars in shareholder wages.

In late 2019, South32 and Trilogy Metals announced a joint venture partnership that included an additional $145 million contribution from South32 to the project. In February 2020, the joint venture was complete under the name, Ambler Metals.

On July 6, Ambler Metals announced that the UKMP 2020 summer exploration program would not proceed. The decision came after extensive assessment of the current COVID-19 environment.

Despite developing additional safety protocols, and working closely with upper Kobuk communities and NANA, the continued uncertainty of COVID-19, in conjunction with an already delayed and therefore much shortened field season, led to this difficult decision.

Ambler Metals and NANA will continue to update and work with the upper Kobuk communities on the best path forward for future field seasons.

The resources present in the Ambler Mining District, which includes UKMP, may provide a means to maintain a sustainable economy, improve communication connectivity and lower the costs of living for generations into the future.

State Lands Red Dog Anarraaq and Aktigiruq (A&A) Exploration Program

Teck is evaluating a potential mining opportunity on state lands, 10 miles from Red Dog. If used as a mining site, it will be connected by a short road and rely on much of the pre-existing Red Dog infrastructure. These mineral resources are not on NANA land; however, the benefits from jobs and revenue to the NAB would continue, including ongoing use of some of the Red Dog facilities.

Although exploration drilling took place in the summer of 2019, the Red Dog A&A exploration program was temporarily suspended in January 2020. The team is strategically limiting work on the program while waiting on permits for the exploration access road. Work that is continuing includes analyzing core samples from the 2019 drilling program, planning for future scoping studies, advancing permitting and engaging with communities of interest to provide updates and address any concerns about the program.

Ambler Mining District Industrial Access Project

The Alaska Industrial Development and Export Authority (AIDEA) proposes to construct a new 211-mile-long gravel access road in the southern Brooks Range foothills to provide industrial access to the Ambler Mining District. The project is called the Ambler Mining District Industrial Access Project (AMDIAP). The road would originate at the Dalton Highway near Prospect Creek and end at the Ambler Mining District and would have no public access.

In the next couple months, the Bureau of Land Management (BLM) and U.S. Army Corps of Engineers is expected to issue a record of decision on the final phase of the permitting process for AMDIAP.

NANA Exploration

NANA continues to explore the NANA and state of Alaska lands on the northern Seward Peninsula for gold and base metals. This summer our field program has been suspended due to COVID-19-related concerns.

The Future Is Now

To achieve our mission of improving the quality of life for our people by maximizing economic growth, protecting and enhancing our lands and promoting healthy communities, NANA relies on opportunities, like Red Dog Mine. No other single resource has provided the financial flexibility Red Dog has to the corporation, and the region. To keep NANA healthy for future generations, it’s essential to consider new, responsible development projects – while maintaining that subsistence is the highest and best use of our lands.