North of 60 Mining News - The mining newspaper for Alaska and Canada's North

One of British Columbia's largest advanced exploration projects has taken a leap forward this summer, with the camp at Galore Creek expanding from 75 people to 175 people. Vancouver-based Novagold Resources, well-known in Alaska with its Donlin Creek and Rock Creek projects, now has seven core drillings rigs and two geotechnical rigs in operation at Galore Creek. The 74,000-acre property is located within the historic Sitkine Gold Belt of northwest British Columbia, about 90 miles east of Wrangell, Alaska.

"The program has gone exceptionally well, it's gone quite smoothly considering the transition to a larger camp and the large amount of activity going on," Carl Gagnier, NovaGold's general manager at Galore Creek, told Mining News. Gagnier joined NovaGold in January this year after 15 years with Placer Dome in Chile, Costa Rica, Venezuela and Canada. "This is a great group of professionals that I have a lot of confidence in," he said.

NovaGold plans to drill at least 50,000 meters this year on the porphyry-related gold-silver-copper deposit. Galore Creek is not quite as large as the Pebble deposit in southwest Alaska, but it is comparable in size to NovaGold's Donlin Creek project. According to an independent Preliminary Economic Assessment study completed by the engineering firm Hatch in August 2004, at a 30,000 tonne per day mining rate the project has potential for a mine life of more than 20 years and would produce an average of 270,000 ounces of gold, 1.8 million ounces of silver and 200 million pounds of copper per year over the first five years of operation.

Higher cutoff grades than Pebble

"We're reporting much higher cutoff grades than Pebble," Greg Johnson, NovaGold's vice president for corporate communications, told Mining News. Initial metallurgical testing has demonstrated recoveries in excess of 90 percent for copper, 70 percent for gold and 75 percent for silver utilizing conventional metallurgical processes - crushing and flotation. That means a high-quality copper concentrate could be produced with the gold and silver in it, and it would be shipped abroad, probably to Asia, for processing. No cyanide or other chemicals would be used on-site.

NovaGold is employing as many local people as possible, directly and through its drilling, engineering and catering contractors. Galore Creek is in the traditional area of the Tahltan First Nation. The engineering firm at Galore Creek is a joint venture with the Tahltan, who are already involved with mining at the nearby Eskay Creek underground gold-silver mine, operated by Barrick. Eskay Creek has been one of British Columbia's biggest economic generators, but it is scheduled to shut down within the next few years. Almost 40 percent of the workforce at Eskay Creek is Tahltan.

No subsistence resources at Galore

Galore Creek, which would be an open pit mine if developed, is in a remote area with no subsistence resources, Johnson said. The Alaska Department of Natural Resources' Large Mine Permitting team has been invited by the Canadian government to participate in the process of looking at NovaGold's environmental baseline studies. There is a substantial commercial fishery at Wrangell. "We wanted to make sure they collected adequate data on water quality and fisheries," Ed Fogels, head of the Large Mine Permitting team, told Mining News. "We got them to agree to set up a water quality monitoring site on the U.S. side of the border."

NovaGold spent around C$4 million last year on environmental aspects of the project, and C$12 million on the project overall, according to Johnson. This year the company expects to spend C$40 million on Galore Creek. It hopes to complete a final feasibility study by mid-2006. The permitting process should begin in late 2005 and NovaGold hopes to start construction by late 2007 or early 2008. Construction of the mine and related infrastructure would take about three years.

Forty-mile road required

The logistical challenges at Galore Creek will be quite considerable. NovaGold plans to build a 40-mile road east to the Cassiar Highway and a concentrate pipeline that would follow the road. Concentrate would then be hauled by truck to the deepwater port of Stewart. To avoid having to build an even longer road, NovaGold envisions a tunnel through the mountains that would be just over a mile long. The mine will need 100 megawatts of power, and this would be achieved by extending the power line north to tie into the British Columbia hydroelectric power grid.

NovaGold is looking at Galore Creek valley as a tailings disposal site, where an earthen dam would be constructed out of the waste rock from the mine. "The ore is very clean, the deposit doesn't contain any arsenic or mercury," Johnson said. At closure the whole valley would be flooded, filling the open pits, keeping the waste from being exposed to oxygen - which could cause sulfide minerals to create acid - and creating a high alpine lake.

Investment in province up

British Columbia's new minister of state for mining, Bill Bennett, describes himself as a conservationist, but also believes that mining can develop responsibly. Bennett is a former lodge owner and keen hunter, angler and hiker. "We're as serious about our environment here as you are in Alaska," he told Mining News. "Galore Creek is one of the top prospects, there's no doubt about it. The mining industry feels more confident that there's a stable regulatory environment. There was a bias against mining in general by the former government and the mining industry knew that."

Investment in exploration in British Columbia has increased from C$25 million in 2001 to C$130 million in 2004, and is likely to reach C$200 million this year or next year, according to Bennett. Reforms in the province that have benefited the mining industry include "one-stop shop" permitting, the removal of sales tax on the purchase of mining equipment and machinery, and a flow-through share program that makes investment in smaller companies more attractive, Bennett said.

Bennett's electoral district, or riding, as it is called in Canada, in southeastern British Columbia, is home to five coal mines and a number of other mining exploration projects. Teck Cominco's Sullivan lead-zinc mine in Kimberley, which operated for 92 years until its closure in 2001, was also located in the riding. As minister, Bennett's goal is to change the public perception about mining, he said. "Mining is the safest heavy industry in Canada. Mining has come a long, long way, and also in terms of its relationship with First Nations. The public perception lags behind those improvements."