Alaska mining company pushing Cook Inlet, Hatcher Pass projects will merge with Canadian firm

By Max Graham/Northern Journal

A Fairbanks-based company with several Alaska mining projects, including two near Anchorage, could nearly double in size in a proposed merger with a Canadian firm. 

The deal, announced this week, would combine Contango Ore with Vancouver-based Dolly Varden Silver Corp. It’s the latest in a recent flurry of deals in the global mining industry, including in Alaska. 

Contango is involved in multiple high-profile projects in Alaska, including the already operating Manh Choh mine in the Interior. It’s also doing substantial exploratory work at two other prospects — one in Hatcher Pass, above the Mat-Su, and another on Indigenous-owned land surrounded by a national park southwest of Anchorage that’s drawn sharp opposition.

The merged company would be called Contango Silver & Gold and would control both companies’ assets. 

Contango and Dolly Varden are touting the deal as a step toward becoming a bigger, multibillion-dollar business. Once combined, their executives said, they’d have deeper pockets — though the new company would still be geared mainly toward exploration and would need several years to build producing mines.

“We had a good five-year plan, and now we’ve got a good 20-year business,” Rick Van Nieuwenhuyse, Contango Ore’s chief executive, said on a call with investors after the announcement. 

There are no expected changes to Contango’s plans for its Alaska projects, and the company would remain based in Fairbanks, Van Nieuwenhuyse said later in a phone interview. A longtime player in the state’s mining industry, Van Nieuwenhuyse would become chief executive of the merged company.

Contango is perhaps best known for its unconventional development model, which involves shipping minimally processed ore to other mines rather than building its own storage areas for potentially toxic tailings.

It’s also known for helping launch Manh Choh, near the town of Tok. The company owns a 30% stake in that mine, which trucks ore some 250 miles on state highways to a processing plant at another Interior mine, Fort Knox. The state of Alaska, through the Permanent Fund, invested $10 million in Contango in 2021.

Beyond Manh Choh, the company is pushing the Johnson Tract project, a gold, zinc, copper, lead and silver deposit beneath an Indigenous-owned inholding in Lake Clark National Park — on the remote west side of Cook Inlet. 

That project has fueled concerns from commercial fishermen, environmental groups and tribal governments over potential environmental impacts and the project’s proximity to the national park and prime wildlife habitat, including for endangered beluga whales in an area called Tuxedni Bay.

Its other significant prospect is named Lucky Shot. At that project, in the scenic Hatcher Pass area north of Anchorage, Contango is trying to revamp a historic underground gold mine. 

Dolly Varden’s focus, meanwhile, has been a large exploratory silver mine in British Columbia, called Kitsault Valley, near the border with Southeast Alaska. 

Though Dolly Varden doesn’t currently operate in Alaska, one of its top shareholders is Hecla Mining Co., which runs the huge Greens Creek silver mine in the Juneau area. (Hecla owns some 13% of Dolly Varden, according to financial disclosures.)

Industry observers say deals like this one are common among small mining firms, known as juniors. What they portend for a company’s prospects, however, can be challenging for outsiders to parse.

“It‘s part of the mysterious, impenetrable workings of the churnings of junior mining companies,” Bob Loeffler, an industry consultant and research professor of public policy at the University of Alaska Anchorage’s Institute of Social and Economic Research, said in an email.

The deal comes just a few weeks after a different Vancouver-based company announced the sale of a contentious copper and zinc project in Southeast Alaska. It also comes a few months after the multinational company that operates Northwest Alaska’s massive Red Dog mine, Teck Resources, agreed to merge with another global mining firm, Anglo American. 

In the call with investors, Van Nieuwenhuyse and Dolly Varden’s chief executive, Shawn Khunkhun, said they would continue to advance both the Johnson Tract and Lucky Shot prospects. 

Johnson Tract opponents say they’ll continue to fight the project. The proposed merger indicates Contango is focused on “vanity metals” like gold and silver, rather than “critical minerals,” Cooper Freeman, Alaska director at the Center for Biological Diversity, said in a statement.

Gold and silver “do nothing for humanity but plunder spectacular places like Lake Clark National Park and Tuxedni Bay for corporate profit,” he added.

The merger is not expected to be finalized until February or March, Contango said in a press release.

This article was originally published in Northern Journal, a newsletter from Nathaniel Herz. Subscribe at this link.