Donlin Gold drills idle due to COVID-19
Dam studies, other work continues ahead of mine decision North of 60 Mining News – April 3, 2020
Last updated 9/26/2020 at 12:45pm
Novagold Resources Inc. April 1 announced that the planned 80-hole drill program at Donlin Gold, a 39-million-ounce gold project owned equally by Novagold and Barrick Gold Corp., has been put on hold due to COVID-19 measures in the Yukon-Kuskokwim region of Southwest Alaska where the proposed mine is located.
A week earlier, Novagold reported that the roughly 22,000-meter drill program was ongoing but the rapidly evolving protocols to prevent the spread of coronavirus, including more rigid travel restrictions, prompted Novagold and Barrick to idle down the drills until the threat has subsided.
"At Donlin Gold, Barrick and Novagold instituted a comprehensive set of testing for symptoms of COVID-19 prior to traveling to the project site, as well as new health, hygiene and behavior guidelines implemented for those working at the project site designed to protect individuals from contracting or spreading the virus," said Novagold Resources President Greg Lang. "As an additional precautionary measure and to align with the state of Alaska Department of Health and Social Services, travel restrictions and other COVID-19 measures in the region, we will temporarily pause the drill program and reduce activities to care and maintenance until it is safe for our employees and contractors to return to site."
In addition to measures put into place to protect workers at Donlin Gold site and nearby communities, which now includes reduced activities, Novagold has policies in place for its office workers that are continuing work needed to ready the mine project for a production decision.
"The key elements of the office policies relate to strongly encouraging everyone to work from home and maintain rigid rules for social distancing, hygiene and travel restrictions," said Lang.
Donlin Gold LLC – the 50-50 joint venture between Novagold and Barrick that is advancing the world-class gold project – has received all federal permits and most state authorizations needed for development and operation of the mine.
In January the JV received authorizations needed to build the infrastructure that will connect Donlin to the rest of the world.
This includes the Alaska Department of Natural Resources' approval of a right-of-way lease to build a 14-inch natural gas pipeline across 207 miles of state lands that lie between Cook Inlet near Anchorage, Alaska and Donlin about 300 miles to the west.
Donlin Gold has already received a right-of-way grant to build and operate a 14-inch natural gas pipeline across federal lands that make up the 100-mile balance of the route.
With the permitting nearly complete, the now temporarily suspended drill program was being carried out to advance and integrate scoping-level optimization work into a feasibility-level study that will serve as the basis for an updated mine development plan for Donlin.
"While many important milestones were achieved during the first quarter 2020, a great deal of that fine work is overshadowed by the stark backdrop of the spread of COVID-19. That was particularly the case in the latter part of the quarter when it became clear that the world, as we knew it, was changing," said Lang.
The JV, however, still needs the Alaska Dam Safety certificates for the tailings storage facility and water retention and diversion structures. These are key permits for the mine and require careful and thorough evaluation before issuance.
A field program, which includes geophysical drilling to collect information for the feasibility level engineering needed for the dam, was started in 2019 and is expected to continue into this year. Novagold said this portion of the site program continues.
Donlin Gold's team continues to advance the project, though most of this work is being done from home offices.
"Novagold is working with Barrick's management and technical team to advance the project in a financially disciplined manner with a strong focus on engineering excellence, environmental stewardship, a strong safety culture and continued community engagement," said Lang.
With US$140.7 million in cash and term deposits at the close of the company's first quarter, which ended on Feb. 29, Novagold is well positioned to advance Donlin Gold while addressing the safety and health of its employees, contractors, partners and communities in which it operates without the distraction of needing to raise additional capital.
In addition, Novagold's current treasury does not include an additional US$75 million the company is expected to receive from Newmont Mining next year and US$25 million in 2023 from the sale of its 50% interest in the Galore Creek copper-gold project in British Columbia, not to mention a US$75 million contingent payment that would be paid to Novagold if and when the Galore Creek project owners approve a construction plan.
"Based on these commitments and projected needs, the company believes it has sufficient funds to advance Donlin Gold without the need to raise capital until markets, and indeed the rest of the world, are considerably healthier and a construction decision is made," said Lang.