NovaGold to decide future of Rock Creek

Vancouver – In its latest quarterly report NovaGold Resources (NG-T, NG-X) lays out plans for 2009 that include making a decision on whether to sell or re-start its Rock Creek gold mine, 12 km from Nome, Alaska.

This fall NovaGold was about a month into production when it chose to shutter the mine following mechanical failures and growing concerns over the efficiency of the mine’s mill and recovery circuits.

Rock Creek was to be a 7,000-tonne-per-day open-pit mine and annually produce 100,000 oz. gold at a cash cost of around US$500 per oz.

NovaGold president and CEO Rick Van Nieuwenhuyse says if it re-started the mine it would consider going it alone or bringing on a partner.

“Partnering with someone who has an operating team certainly might be appealing,” Van Nieuwenhuyse says.

If NovaGold decides not to re-start Rock Creek Van Nieuwenhuyse says it will consider selling the project. He would not comment on a possible sale-price.

It does not, however, appear that NovaGold is about to make a snap decision concerning Rock Creek’s future. “It’s a decision we’ll make this year – not in the next month or two,” Van Nieuwenhuyse says.

Instead he says the focus in the near term will be on finishing a feasibility study for the Donlin Creek gold project, a 50% joint venture with Barrick Gold (ABX-T, ABX-N). NovaGold expects to release the feasibility study by the end of April.

NovaGold and Barrick envision a 50,000-tonne-per-day operation producing between 1 and 1.5 million oz. gold per year over a period of about 25 years. Donlin’s measured and indicated resource is 394 million tonnes grading 2.5 grams gold per tonne for nearly 32 million contained oz. gold.

Van Nieuwenhuyse says the feasibility will primarily be used to initiate the permitting process which he expects to unroll over a three year time period starting in 2009.

Given the project is on private land and NovaGold has agreements in place with First Nations groups that own the surface and subsurface rights, Van Nieuwenhuyse does not foresee major permitting hurdles at the project.

At the same time as it pursues permitting at Donlin Van Nieuwenhuyse says NovaGold has a team actively investigating potential acquisitions. The company is not only looking at properties in North America but considering anything in “friendly jurisdictions.”

“We see some interesting opportunities in Australasia,” Van Nieuwenhuyse says and adds that at this stage he preferred not to go into detail about which prospects NovaGold was looking at specifically.

With more than $70 million in cash and cash equivalents Van Nieuwenhuyse says the company is in good shape financially.

He notes that the NovaGold’s major shareholders own about $90 million worth of warrants and that those shareholders have informed the company that “when you need that money we’ll exercise the warrants.”

On news of the latest quarterly report NovaGold’s share price dropped 19¢ to close at $3.11. It has about 181 million shares outstanding.