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By Shane Lasley
Mining News 

Seasoned mine builder joins NovaGold

Gil Leathley's five decades of experience is expected to be invaluable as the company continues to build world-class mines


Last updated 1/17/2010 at Noon

NovaGold Resources Inc. tapped a wealth of mining experience recently when it appointed Gil Leathley as senior advisor to the junior's president and CEO, Rick Van Nieuwenhuyse.

"Mr. Leathley is one of the best mine builders in our industry," Nieuwenhuyse said. "He has an unparalleled record of building and operating mines around the world, including Golden Giant in Ontario, Eskay Creek in British Columbia and Ruby Hill in Nevada. Mr. Leathley's pragmatic advice and expertise will be invaluable in developing what we believe to be several of the most significant mining projects of this century."

Van Nieuwenhuyse's new right-hand professional has been involved in all aspects of mine construction and operations as well as evaluation of exploration properties and potential acquisitions. He also has assisted with financial oversight and offers expertise on engagement with investors, analysts and local communities.

"I joined NovaGold because I saw an opportunity for me to put my experience to work with a wonderful group of professionals. I recognize the long-term value in the company and its portfolio of projects," Leathley told Mining News in e-mailed comments Jan. 11.

Challenging projects

Leathley can boast of five decades of experience, including 20 years building and operating mines.

"I bring a wide breadth of experience to the NovaGold team. I got my hands dirty and got mud on my boots working in operations. Over the last 20 years, I've been involved in the design and construction of new mines, and I've also worked on the financial aspects of evaluating new projects," he wrote.

According to Leathley, mega-projects like Donlin and Galore represent the future of the mining industry.

"NovaGold's projects certainly have their challenges, but they also have incredible potential and are located in geopolitically stable countries. The future of the commodity industry is really moving more to these large projects, since high-grade, easily developed mines are extremely difficult to discover," the senior advisor said.

Leathley said having global mining companies as partners, coupled with his connections in the industry, will help NovaGold build these mega-mines.

"NovaGold has strong joint venture partners bringing their expertise to the table, and in addition I have access to a group of recognized industry professionals that we can bring on board when the time comes. I look forward to working with the NovaGold team in the years to come as we move these projects toward production," he added.

Optimizing Donlin Creek

Donlin Creek, which contains an estimated 29.3 million ounces of gold in proven and probable reserves and a further 6 million ounces of gold in measured and indicated resources, is one of the projects where Leathley's know-how could benefit NovaGold

"With Donlin, alone, we're looking to build one of the world's larger gold mines," Leathley said.

A feasibility study prepared in April 2009 puts a US$4.48 billion price tag on construction of a mine at the remote Southwest Alaska gold project.

A 53,500-metric-ton-per-day mine proposed in the feasibility study is expected to produce about 1.6 million ounces of gold per year over its first five years of operation. Based on current reserves, the mine should produce about 26.2 million ounces of gold, or an average of about 1.25 million ounces per year, over a 21-year mine life.

NovaGold and 50-50 joint venture partner Barrick Gold Corp. are currently assessing optimization scenarios with the goal of reducing power and processing costs and further improving the project's economics.

"We are looking at some alternative approaches to getting power out there, so that will be part of our efforts," Van Nieuwenhuyse told Mining News. "We will be initiating the permitting process in fairly short order."

Galore is back on

Galore Creek - which contains a projected 8.9 billion pounds of copper, 7.3 million ounces of gold and 123 million ounces of silver in measured and indicated resources - is NovaGold's other mega-project.

"Galore Creek will be one of the world's large copper-gold producers when it's up and running," Leathley said.

NovaGold and Teck Resources Ltd., its equal partner at Galore Creek, suspended construction activities at the project late in 2007 when an independent engineering firm estimated that capital costs for developing a proposed 65,000-metric-ton-per-day mine could climb to $5 billion, more than double an earlier estimate of $2.23 billion.

Teck completed an optimization study for the enormous copper-gold-silver project during the fourth quarter of 2008. The final configuration resulted in moving the permanent facilities associated with the concentrator and tailings disposal outside the Galore Valley.

In 2009 the partners worked primarily on a realigned access road west from Highway 37 to the mine site. Nieuwenhuyse said the 90-kilometer-, or 55-mile-, long road is about 50 percent complete.

The Galore Creek partners are considering a more aggressive program in 2010 to advance the northern British Columbia copper-gold-silver project.

NovaGold expects to release a new mine plan for Galore Creek early in 2010 that will include updated economics using higher copper and gold prices and an optimized project design. The company hopes to complete a prefeasibility study by the end of the year.

"Galore is back on, and we are looking at getting more information out on that project later in the year," Van Nieuwenhuyse said.

Water falling at Rock Creek

The Rock Creek gold mine near Nome in western Alaska is much smaller than the company's two other advanced projects, but has the potential for near-term production.

The 7,000-metric-ton-per-day mill at Rock Creek is designed to produce about 100,000 ounces of gold annually at an estimated US$500 an ounce. At US$1,000 per ounce, gold production at Rock Creek could put about US$50 million per year back into NovaGold's coffers.

"Rock Creek is smaller but certainly has the potential to bring value to the company," Leathley said.

NovaGold put the mine into limited operation in 2008 but mechanical issues and lack of funds forced it to place the operation on care and maintenance after about three months of testing.

Over the past year the company has been working to reduce unexpected volumes of water from building up behind the tailings dam.

By expanding its water treatment plant and bringing additional injection wells online NovaGold said it has made significant strides toward managing the water behind the tailings dam at Rock Creek.

Van Nieuwenhuyse, who had just returned from a Jan. 7 visit to Rock Creek, told Mining News that "the water level behind the dam is going down at a good rate."

"We are pumping over 400 gallons per minute and have lost over five feet of water over the last couple of months," he reported.

At the current rate, the company should be rid of the water by spring, Van Nieuwenhuyse said.

Alaska Department of Natural Resources regulators confirmed that water levels are falling in the tailings pond.

NovaGold has yet to reveal its plans for Rock Creek. The company has floated ideas such as resuming production at the mine or selling a whole or partial interest in the gold mine.

New opportunities

Leathley's 50 years in mining has failed to dampen his enthusiasm for the industry.

"It's certainly an exciting time to be in the mining industry, with strong commodity prices and expectations that gold will go even higher. And at NovaGold, I'm part of an experienced team with a portfolio of exceptional projects," he wrote.

"Now that we've added Ambler to the mix, NovaGold can focus its exploration expertise on developing another world-class project," he said.

Adding the recently purchased Ambler property to NovaGold's 50 percent ownership share of the three advanced projects, the company's resource base jumped to 24.2 million ounces of measured and indicated gold resources (including 15.2 million ounces of proven and probable gold reserves) and 6 billion pounds of measured and indicated copper resources.

With NovaGold emerging from financial difficulties, Van Nieuwenhuyse also is excited about the future.

The company recently filed a US$500 million prospectus with the United States Securities and Exchange Commission. Proceeds from the sale of securities under the prospectus will be "used for general corporate purposes, including funding potential future acquisitions and capital expenditures."

"We are starting to look at some new opportunities. It is exciting to be back on (our) game plan instead of reacting to somebody else's," Van Nieuwenhuyse added.


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