Vancouver — California-based
Situated 480 km west of Anchorage, Donlin Creek hosts a measured and indicated resource of 70.1 million tonnes grading 3.06 grams gold per tonne, based on a cutoff grade of 1.5 grams. Efforts are focused on a high-grade core, where crews have outlined 18.8 million tonnes grading 5.2 grams gold.
The company’s strategy in this depressed gold market is to define a small, but higher-grade, deposit within the larger resource. Toward that end, NovaGold is intent on outlining a 25-million-tonne measured and indicated resource grading 5 grams gold.
“These higher grade zones, the Acma in particular, have held together as we’ve drilled them in tighter spacing,” says Greg Johnson, vice-president of corporate development. “The average grade in our samples is actually higher than the average grade prior to the drilling.”
The company has completed 6,100 metres (37 holes) of its US$3-million drill program. Results indicate that the first 25 holes all intersected high-grade mineralization. Of these, 15 are stepouts that expand the higher-grade mineralization beyond the current resource area. The other 10 are infill holes that will be used to upgrade the resource to the measured and indicated category, from inferred.
When averaged, the 25 holes boast a grade of 6.9 grams over 17.2 metres in 64 intersections. Mineralization remains open to the west, south and east.
“We will probably drill 45 holes in total,” says Johnson. “The plan is to continue drilling through the first part of November, with results expected by month’s end.”
The latest results from the Acma zone are as follows:
– Hole 607 was drilled to test the downdip extension of mineralization encountered in previously reported hole 586 (31.3 metres grading 5.7 grams gold per tonne, 16 metres of 6.3 grams, and 22 metres of 6.7 grams). The more recent hole cut the widest zone of high-grade mineralization to date, returning 69 metres of 14.2 grams gold, including 24.4 metres of 30.4 grams. Within this smaller interval, an 8.4-metre section assayed 58 grams.
– Starting at a down-hole depth of 21.8 metres, hole 608 cut four intervals of gold mineralization: 6.8 metres grading 4.5 grams; 9.3 metres of 8.1 grams; 4 metres of 7 grams; and 9.9 metres of 4.9 grams.
– Hole 609 intersected 23 metres grading 7.1 grams gold, starting at 52 metres down-hole, followed by an 18.1-metre section of 6.4 grams gold. (Additional assays are still pending for this hole.)
– Hole 606 hit 15.6 metres of 3.8 grams gold starting from the surface.
NovaGold hopes to expand the Acma zone downdip to the west, as well as to the south and east between the two areas of denser drilling. The remainder of the drilling will endeavour to link the western and eastern portions of the Acma target.
Drilling is also under way at the 400 target area, 500 metres northwest of Acma. High gold-in-soil anomalies and a few widely spaced drill holes that intersected high-grade mineralization motivated NovaGold to test the target more thoroughly.
Most of Donlin Creek’s resources are hosted by intrusive dykes and sills, plus high-grade stockworks in surrounding sedimentary rocks. Gold mineralization is structurally controlled and occurs as veinlets in association with fine-grained arsenopyrite.
Seven prospects on the 10-km-long mineralized trend at Donlin Creek have yet to be included in the resource estimate.
“Next season, we might start stepout drilling on these other targets,” says Johnson. “They all have pronounced soil anomalies in excess of 100-to-400 parts per billion gold, and they all have at least one drill hole that has better than 4 metres of 5 grams gold.”
The Donlin Creek deposit is in southwestern Alaska, 19 km north of a commercial barge site on the Kuskokwim River in the village of Crooked Creek. An all-season, 75-man camp is serviced by a 1.5-km runway capable of handling aircraft as large as a C-130 Hercules freighter. The property is also accessible by winter road.
As operator, NovaGold stands to earn a 70% interest in the project from
When NovaGold vests its interest, Placer will have three months in which to decide whether to:
– retain its 30% interest and participate on a pro rata basis;
– convert its interest into a non-participating 5% net profit interest; or
– exercise a 70% majority back-in right, with NovaGold retaining 30%.
The back-in option requires that Placer Dome spend three times the amount NovaGold spent on future development, as well as finance a final feasibility study. The major would also have to mine the project at a rate of not less than 600,000 oz. gold per year within the first five years of the back-in.
Placer Dome has spent US$30 million on previous drilling and trenching. Total expenditures since the late 1980s amount to US$37 million, including 110,000 metres of drilling and 25,000 metres of trenching.
Total measured indicated and inferred resources at Donlin Creek weigh in at 136.3 million tonnes grading 2.95 grams gold, or 12.9 million contained ounces. This figure is based on a cutoff grade of 1.5 grams per tonne. Using a 3.5-gram cutoff, the resource shrinks to 33.7 million tonnes grading 5.09 grams gold, or 5.5 million contained ounces. Placer Dome calculated these estimates last year using data from 308 core holes drilled between 1995 and 1999.
Metallurgical tests indicate that mined material is amenable to a conventional sulphide flotation circuit followed by a pressure oxidation and carbon-in-leach (CIL) processing. Overall gold recoveries are in excess of 90% for intrusive material and 83% for sedimentary material. Bio-oxidation and bio-heap recovery techniques will also be considered, as low-cost alternatives.
Next, NovaGold will commission a scoping study, as well as a new resource estimate for the Core zone. Additional engineering studies will begin in the spring of 2002 as part of a prefeasibility study.
The company estimates that an operating cost of US$22 per tonne of ore is possible. The cost includes mining, treatment, administration and reclamation. The total operating cost is pegged at US$150 per oz. gold, and a total costs, including capital investment, are believed to ring in at less than US$195 gold per oz.
Although Donlin Creek is NovaGold’s flagship project, the junior holds a several other million-ounce-plus gold deposits in Alaska, including Nome Gold, Rock Creek and Shotgun.
The Nome deposit contains more than 2.2 million oz. gold in 295 million cubic yards of sand and gravel. It is on the Nome coastal plan, an area that historically has produced more than 4 million oz. gold from hand-mining methods and bucket-line dredging.
The gold and gravel resource is hosted in several types of bulk-minable deposits, including ancient beach deposits, ancient deltas and, to a lesser degree, ancient and modern stream deposits.
The company envisions a large-scale open-pit mine, followed by a conventional washing, screening and gravity separation plant to produce sized sand and gravel products and “co-product gold.” The 20,000-tonne-per-day operation would produce 100,000 oz. gold and 3 million tonnes of co-product sand and gravel annually.
NovaGold is the largest supplier of sand and gravel aggregates in western Alaska, represented by more than 26 million cubic yards in existing aggregate stockpiles.
The Rock Creek project is the most advanced lode gold deposit on the Seward Peninsula. It and the nearby Saddle deposit consist of a central, higher-grade series of sheeted quartz veins surrounded by an outer shell of disseminated gold in fractures.
Rock Creek hosts a total resource of 9.3 million tonnes grading 2.85 grams gold per tonne, or 858,000 contained ounces. The Saddle deposit hosts 3.6 million tonnes grading 2.23 grams gold, or 260,000 contained ounces. Both deposits remain open along strike and downdip.
Metallurgical test show that greater than 86% of the gold at Rock Creek is recoverable using conventional and inexpensive gravity methods.
A scoping study of the project used a gold price of US$300 per oz. Results indicate a cash cost of US$153 gold per oz. based on annual gold production of 110,000 oz. The internal rate of return was pegged at 37%; the capital costs, at less than US$40 million.
Southwest of Donlin Creek is the Shotgun deposit, which is held 95% by NovaGold and 5% (net profit interest) by
In 1998, NovaGold drilled 20 diamond drill holes in a program spanning 3,000 metres. Results were used to outline an inferred resource of 32.7 million tonnes grading 0.93 gram gold, or 980,000 contained ounces. Mineralization is open to the north, west and at depth, and metallurgical tests indicate good cyanide recoveries in excess of 93%.
In neighbouring Yukon, 40 km northeast of the town of Mayo, NovaGold is exploring the McQuesten property. Drilling and trenching completed indicate the presence of a large mineralized system hosted in calcareous metasediments and intrusive rocks along the McQuesten structural zone.
Highlights from previous drilling include:
– 18.3 metres grading 3.74 grams gold per tonne;
– 24.4 metres of 2.16 grams gold;
– 16.3 metres of 2.19 grams gold; and
– 9.6 metres of 2.87 grams gold.
Initial cyanide bottle-roll leach tests recovered up to 84.3% of the gold, and further metallurgical tests are planned.
In October 2000,
The program was focused on a 1.2-km section of the 3-km-long McQuesten structural zone. Here, mineralization consists of disseminated and semi-massive sulphides (pyrrhotite, pyrite and arsenopyrite) in quartz-sericite, skarn alteration packages of sedimentary rocks, and felsic sills and dykes.
Meanwhile, NovaGold is exploring four early-stage projects in the Tintina gold belt, which arcs across the Yukon and Alaska. These include Sprogge, Caribou, Harlan and Klondyke.
NovaGold has no debt, 30.6 million shares fully diluted and US$2.5 million in working capital. The chief executive officer is Rick Van Nieuwenhuyse, a former vice-president of exploration for Placer Dome.
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