Kennecott eyes Alaskan properties

Kennecott Canada Exploration has signed separate deals with NovaGold Resources (NRI-T) to earn majority interests in the Caribou

and Anvil Creek gold projects in Alaska’s Fairbanks and Nome districts, respectively.

The Caribou property, which comprises 48 sq. km of the Tintina gold-belt, was mined historically by placer methods to the tune of more than 50,000 oz. gold, with bismuth produced as a byproduct. In 1998, regional soil geochemical surveys by NovaGold identified several areas anomalous in gold (up to 1.09 grams per tonne), arsenic (greater than 1%), antimony (340 grams) and bismuth (13.8 grams), with a particularly strong signature evident in one zone that measures 600 metres long by 400 metres wide.

The Anvil Creek property covers 40 sq. km of the historic Nome placer gold fields, where more than 5 million oz. gold have been mined since 1898. NovaGold believes the source for most of those placers is a 3.7-km-long-by-1.1-km-wide flexure that is related to the regional Anvil Creek shear zone, and which exists on the property.

Kennecott, a unit of Rio Tinto (RTP-T), can earn a 51% stake in the Caribou property by initially paying US$100,000 in cash and purchasing US$150,000 worth of units and then spending US$5 million on exploration within five years. This can be raised to 65% if the major completes a feasibility study, pays US$1 million and buys US$500,000 worth of units. To increase its interest still more, to 70%, Kennecott would be required to lend NovaGold sufficient funds to finance its share of capital costs should construction be approved.

Equivalent interests can be earned in the Anvil property, following a similar structure. For its full interest, Kennecott must spend US$5 million on exploration, purchase US$2.2 million worth of units, pay US$500,000, complete a feasibility study and arrange project financing to production.

NovaGold will operate both projects during the first option period, with Kennecott taking charge thereafter. Drilling on both properties is to begin shortly.

In related news, NovaGold has added Clynton Nauman and Richard Van Nieuwenhuyse to its board of directors.