NovaGold starts construction of Rock Creek gold mine

Vancouver – The state of Alaska and the U.S. Army Corps of Engineers have issued the necessary permits for NovaGold Resources (NG-T, NG-X) to begin construction of the Rock Creek gold mine near Nome.

NovaGold has already started construction of the mine, which is poised to become its first producer at a rate of about 100,000 oz. gold annually, starting in mid-2007. The open-pit, year-round operation is sized at 7,000 tonnes per day, with capital costs estimated at US$45 million. Total cash costs are expected to be about US$260-285 per oz.

Metallurgical testing has shown that up to 75% of the gold can be recovered by inexpensive gravity methods. Overall recoveries of 88% are expected with additional flotation and cyanidation.

The proposed mine is situated only 12 km from Nome, and is served by power from an existing grid and state-maintained roads. A portion of the lands is owned by two native corporations, with NovaGold operating under a mining lease and surface use agreement with these corporations.

NovaGold has other advanced projects in Alaska, and is also developing its wholly owned Galore Creek deposit in northwestern B.C. The project hosts measured and indicated resources of 6 million oz. gold, 75.4 million oz. silver, 6.8 billion lbs of copper, along with additional inferred resources.

Barrick Gold (ABX-T, ABX-N) recently launched a takeover bid for NovaGold, and for Pioneer Metals (PSM-T), which owns the Grace claims adjacent to Galore Creek. NovaGold had previously launched a bid for Pioneer, and has urged its shareholders to reject the Barrick offer for its own shares.

Pioneer management supports the Barrick bid and has pledged about 40% of shares held by insiders and supporters. Two New York funds recently announced they had collectively acquired 15.6% of Pioneer’s common shares acquired since NovaGold announced its bid for Pioneer.