NovaGold expects new Galore Creek plan soon

TORONTO – Vancouver-based NovaGold will publish a new mine plan for its 50%-owned Galore Creek project, in British Columbia, in the first quarter of this year, a company spokesperson said on Tuesday.
The plan will include higher copper and gold price assumptions and an optimised mine design, and will likely be followed by a prefeasibility study, said corporate and investor relations manager Rhylin Bailie.
NovaGold and partner Teck Resources are considering a more “aggressive” programme this year, aimed at getting the project towards a construction decision and although a decision to build the mine is not expected this year, one could be made in 2011, Bailie said.

Teck and NovaGold started building the Galore Creek copper/gold project in 2007, but surprised the market in November that year by announcing that construction would be stopped because of surging capital costs.
Since then, studies have focused on re-engineering and redesigning the project to improve the economics. Work on the access road has also continued.
Galore Creek is a large and lucrative deposit, with measured and indicated resources of 8,9-billion pounds of copper, 7,3-million ounces of gold and 123-million ounces of silver.
Once the new mine plan is completed, the partners expect to start work on the prefeasibility study, which will include a new, updated capital cost estimate, as well as a reserve statement.
The prefeasibility study results are expected by the end of 2010, Bailie said.

NovaGold and Teck are hoping that the re-engineering and design work over the last two years, coupled with easing input costs, will help lower the capital investment required for the project.
When the companies announced the project was being put on ice late in 2007, they revealed that capital cost forecasts for the mine had more than doubled, to as much as $5-billion.
“Construction costs went up in '07 and '08 but have actually come back down quite a bit since their peaks in mid-2008,” Bailie commented on Tuesday.
Vancouver-based Teck will also be in a better position to support the project this year than it was 12 months ago, when the Vancouver-based company was still at the beginning of a long journey to shift the $9,8-billion it borrowed to buy Fording Canadian Coal Trust late in 2008.
Teck has since restructured and improved its balance sheet, and started 2010 on a firm footing.
Finally, the recent announcements by the Canadian and British Columbian governments that they will support the construction of the Northwest Transmission line, along Highway 37 in the northwest of the province, was also an important development for the Galore Creek project.
The power line runs along the highway to Bob Quinn, which is the starting point of the Galore Creek access road.
OTHER PROJECTS
Last month, NovaGold announced it would buy the Ambler copper/zinc/gold/silver project, in Alaska, and the firm has now appointed a project team to plan exploration activities, advance environmental baseline studies and conduct engineering and technical studies at the asset.
The most advanced deposit on the Ambler property is the Arctic deposit, which has measured and indicated resources of 1,5-billion pounds of copper, 2,2-billion pounds of zinc, 450 000 oz of gold and 32-million ounces of silver.
The company said on Tuesday it will continue to work with local communities to support the construction of necessary project infrastructure in the region.
Also in Alaska, NovaGold owns 50% of the Donlin Creek project, in Alaska, and Barrick Gold owns the other 50%.
The companies are studying optimisation scenarios aimed at reducing power and processing costs and further improving economics.
Donlin Creek contains 29,3-million ounces of gold in proven and probable reserves and 6-million ounces in measured and indicated resources.
ROCK CREEK

NovaGold started production at a smaller, wholly owned Alaska project, Rock Creek, in 2008, but put the operation on care-and-maintenance a few months later because of higher costs, permitting difficulties and technical setbacks at the mine, as well as the crisis in the financial markets.

Since then, progress has been made to improve water management, plant design “and the overall condition of the property”, to address the permitting problems and ensure the operation is economic if and when it restarts.
For now, the company is focused on making sure the site complies with environmental and water regulations, Bailie said.
It may consider a number of options, including restarting the mine, bringing on a partner or selling some or all of the project, but no decision is expected in the near term, she said.