Novagold Resources Inc. Jan. 25 said the federal permitting process for Donlin Gold is expected to be finalized in the third quarter of this year. In the meantime, the company and its equal partner in the project, Barrick Gold Corp., are completing optimization studies for this 39-million-ounce gold project in western Alaska.

"All of us have been motivated not only to make sure we successfully complete the permitting process for Donlin Gold, but to lay a solid foundation from which this one-of-kind project can be developed," Novagold President and CEO Greg Lang said in the company's year-end report.

The U.S. Army Corps of Engineers is expected to issue a final Environmental Impact Statement for Donlin Gold around the end of March. It is expected to take another four months for the Corps to issue a record of decision, which will wrap up the federal permitting process.

"We are looking forward to securing other key federal and state permits and approvals concurrently with or shortly after the Corps' ROD," said Lang. "The air pollution control permit was issued in June 2017, followed by the release of the draft water discharge and integrated waste management permits for comments in December 2017. By all accounts, permitting is advancing nicely toward completion in 2018."

As the permitting process reaches its conclusion, Novagold and Barrick are continuing to look into ways to optimize the world-class gold mine project.

The 53,500-metric-ton-per-day operation the Donlin Gold partners brought into permitting is estimated to average roughly 1.1 million oz gold annually over a projected 27-year mine-life.

At US$1,200/oz. gold, the base case price used in the study, this operation is calculated to generate after-tax cash flow averaging US$949.5 million annually for the first five years and US$500.7 million annually over the life of the mine.

Under the proposed scenario, the partners would be paid back the roughly US$6.7 billion needed to build the mine in 9.2 years.

Novagold and Barrick believe that a more targeted mining approach could lower the up-front capital costs and make the operation more efficient.

"As part of our ongoing optimization work, we've studied more selective mining methods as a means of enhancing the grade," Lang said.

A 16-hole drill program completed last year is being used to complete this optimization work.

"Assaying of the drill core is ongoing and will be incorporated into the optimization work, which will determine the best path forward for the project," said the Novagold CEO.

With roughly 39 million oz of gold in an ore-body that averages 2.2 grams of gold per metric ton, Lang said the optimization efforts are well justified.

"We clearly have a large and remarkable ore body with exceptional size and grade, yet both owners are striving to optimize its development, such that we can be among the largest producers, but with lower upfront capital, costs, and a robust execution plan," said Lang.

While finalizing permitting and optimization of Donlin, Novagold is looking to monetize Galore Creek, a copper project in northern British Columbia equally owned by Novagold and Teck Resources Ltd.

"Since our primary objective is advancement of the flagship Donlin Gold project, Novagold's intention is to sell all or part of its 50 percent interest in Galore Creek and re-deploy the proceeds toward Donlin Gold," said Lang.

A feasibility study completed in 2011 envisioned a mine at Galore Creek producing 6.2 billion pounds of copper over an 18-year span, which would rank as the largest copper operation in Canada.

Crediting the value of the 4 million oz of gold and 65.8 million oz of silver forecast to be recovered over that mine-life, Galore Creek also would be the lowest cost copper producer in the country.

With copper prices on the rise, Novagold says there is renewed interest in companies looking to acquire the company's share of this world-class copper asset.

"With escalating copper prices, Galore Creek could be a core asset for many major companies," Lang said.

Novagold ended its 2017 fiscal year, Nov. 30, with US$84 million in cash and term deposits, which provides the company with more than enough money to finish up the permitting and optimization work at Donlin Gold, as well as meet its other financial obligations.

The company has budgeted US$28 million for 2018 – US$14 million for its share of permitting and optimization at Donlin Gold; $3 million for ongoing care-and-maintenance at the Galore Creek; and $11 million for general and administrative costs.

-SHANE LASLEY