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Signs of a Donlin Gold mine decision?

 

Last updated 10/11/2019 at 4:38am

world class gold project in southwest Alaska Barrick

Novagold Resources Inc.

The Donlin Gold camp prior to the 2019 wildfire that forced personnel to evacuate for five weeks. This camp will stay open over the winter months to support crews collecting geotechnical data needed for the detailed design needed for state issued dam safety certificates.

Novagold Resources Inc. Oct. 1 reported that field work will continue throughout the winter months at the 39-million-ounce Donlin Gold project in Southwest Alaska.

This field program, which got underway in the spring, includes site investigation to collect additional geotechnical information needed for the requisite state permits for the dams to be built when a mine is developed at Donlin.

"This program consists of geotechnical drilling (core and direct push) and field testing with installation of monitoring instruments; pumping test program in the tailings storage facility area; excavation of test pits; geophysical surveys (seismic refraction and downhole); and laboratory testing," Novagold Resources President and CEO Gregory Lang penned in a quarterly message to shareholders.

This field work, which got underway in May, was interrupted in late July due to the evacuation of the Donlin Gold camp as a result of a wildfire in the area.

Crews were evacuated for their own safety and to accommodate firefighting crews, which were able to keep the fire from damaging the camp.

"All personnel returned to the site in early September to resume work on the field program which will continue through the winter and is expected to be completed in 2020," Lang wrote.

This is the first time the Donlin Gold camp has remained open through the winter months since 2013-14.

This winter program comes at a time when many market analysts and experts are expecting gold prices to rise.

"During the last quarter, gold has made important strides to resume its upward trajectory within what we are convinced constitutes a long-term secular bull market," Lang wrote.

Novagold Resources Chairman Thomas Kaplan has indicated that the company would wait for such a gold bull market to make a final production decision for Donlin Gold.

In 2015, Kaplan informed his fellow shareholders that Novagold and Barrick Gold Corp., the company's equal partner in Donlin Gold, are not willing to begin developing a mine at the world-class gold deposit until "gold prices have resumed their uptrend in earnest."

The Novagold team believes that gold is poised to surge to multiples of its current price.

"With time, we believe Donlin Gold's scarcity value can only get better as the industry depletes its established endowment in the face of what we expect to be a 'long wave' in gold to rival the first leg that took it from US$250 to US$1,900 per ounce," Lang said earlier this year.

Novagold president and CEO mining executive Donlin Gold Alaska

Gregory Lang

This anticipated next leg up in gold price would also likely spur a significant boost in the Novagold share price, which would provide the company more options when it needs to raise money for funding its half of building a mine at Donlin.

"That's when we ... and Barrick will make a construction decision," said Kaplan.

While neither company has verbally indicated when this decision is coming, having crews work through the winter months to collect the final bits of data needed for finalizing a mine design for the 39-million-oz gold project seems to imply that the partners are getting closer to such a determination.

With roughly US$152.9 million in its treasury, Novagold is set to fund its half of the engineering, optimization, permitting and community outreach programs until the final decision to develop a mine at Donlin is made.

–SHANE LASLEY

 

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