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

Pebble Partnership copper gold molybdenum mine project Alaska Northern Dynasty NAK NDM

By Shane Lasley
Mining News 

Buyer wanted for new gold mine near Nome

Focused on building two mega-mines, NovaGold puts smaller Rock Creek Mine on market; state says operating permits are still valid

 

Last updated 10/31/2010 at Noon



Focused on becoming a million-ounce-per-year gold producer, Novagold Resources Inc. put a "for sale" sign at its Rock Creek gold project on the outskirts of Nome in Northwest Alaska.

A sale of the nearly completed gold mine would provide the Vancouver B.C.-based junior with additional funds and allow its team to concentrate its resources on developing its two enormous assets - a 50 percent interest in the Galore Creek copper-gold project in British Columbia and half ownership interest in the Donlin Creek gold project in Alaska.

"To achieve the objective of advancing our core properties, we are soliciting offers to sell our Rock Creek Project to provide more information to NovaGold's board of directors and maximize value from this asset. While the project could bring good value in the right portfolio, Rock Creek is no longer the right fit for our business model," NovaGold President Rick Van Nieuwenhuyse explained.

During an Oct. 20 interview, the NovaGold president told Mining News that a financial institution is assisting the company in evaluating offers to buy the nearly built gold mine.

"We have engaged a third party, basically a bank, to assist us with assessing offers and looking at expressions of interest from various companies - and certainly there is interest," he said.

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 today's US$1,350 per ounce, gold production at Rock Creek could net around US$85 million per year.

"You have got to figure with US$1,350 (per ounce) gold, there is a lot of interest in a roughly one-million-ounce gold asset," Van Nieuwenhuyse explained.

Handle on water management

NovaGold has been evaluating what to do with Rock Creek since mechanical problems, tight funds and environmental issues forced the company to shut down the mill after a three-month commissioning phase late in 2008.

An unexpected buildup of water behind the tailings impoundment dam after the project was completed added to the complications at Rock Creek.

By expanding its water treatment plant and bringing additional injection wells online, NovaGold said it has made significant strides toward managing the water buildup at Rock Creek. The company budgeted US$19.1 million to continue this work at Rock Creek in 2010.

"We feel good about where the project is," Van Nieuwenhuyse said. "We have got a very good handle on managing the water, being able to have a very predictive water balance model."

Alaska Department of Natural Resources regulators told Mining News that the water treatment system at Rock Creek and other upgrades have significantly improved the project from an environmental standpoint.

DNR Mine Resources Manager Rick Fredericksen said the permits needed to put Rock Creek back into production are in good standing, though they are due for renewal in August 2011.

The state regulators are anticipating the receipt of results from geotechnical studies recently, which is expected to provide information pertinent to the renewal.

Also, according to DNR Large Project Coordinator Jack DiMarchi, an environmental audit of Rock Creek will need to be completed as part of renewing the permits needed to re-commission the mine.

Evaluating other Nome gold assets

NovaGold's other assets in the Nome area - which include Big Hurrah, Nome Gold, a sand-and-gravel business and a considerable land package - will not be included in the sale of Rock Creek. The junior is completing a separate evaluation of the value of these projects.

Big Hurrah - a hardrock deposit about 25 miles, or 40 kilometers east of Rock Creek - hosts 190,000 ounces of gold reserves, 80,000 ounces of indicated resources and 20,000 of inferred resources.

NovaGold had originally considered processing Big Hurrah ore at Rock Creek, but now believes the deposit holds better value as a standalone project.

"We have some other plans for Big Hurrah. We thought at one time there might be synergies, but we think it's actually better off separate," Van Nieuwenhuyse said.

He said the company is considering moving the property into a spin-out company that could advance its exploration. He told Mining News that the Big Hurrah property "is probably more appropriate for an earlier-stage company."

NovaGold also put up a "for sale" sign at its Nome Gold property, a placer gold project with a 1.81-million-ounce resource.

"There is a substantial alluvial gold resource there - nearly 2 million ounces. It has been historically mined so there is a lot of information on it, about 1,800 drill holes that were used to establish the resource," Van Nieuwenhuyse said. That is something we have always sort of had a "for sale" sign on."

 

Reader Comments
(0)

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2019

Rendered 09/21/2019 11:53