NovaGold to seek financing for work in U.S. southwest

Levesque Beaubien Inc. will test the financial waters “in the next little while,” to raise exploration funds for NovaGold Resources, The Northern Miner has learned.

The geological consulting firm Watts, Griffis & McOuat (wg&m) has recommended a $5-million exploration program on four properties in Nevada and two in New Mexico. NovaGold’s U.S. subsidiary, NovaGold Resources Nevada, picked up the ground in a complicated series of deals between August and November of last year. Since the properties are in the U.S., flow-through funds can not be used.

All six properties are in former mining areas and have bulk-mining/heap-leaching potential. Five of the six have not been explored in detail with modern exploration methods and most have been untouched since the 1940s.

“We picked up about 10,000 acres in the Steeple Rock Mining District of New Mexico alone,” NovaGold President Gerald McConnell says, “all upon the recommendation of Dr Allan Juhas. And we got in well before the geological hordes got interested in the area.”

McConnell is a lawyer who has taken an indefinite leave of absence from his practise in Halifax to run the affairs of NovaGold.

Last week, NovaGold, which has the largest holding of gold exploration properties in Nova Scotia, offered to give shareholders of Northumberland Mines one NovaGold share for every 5 1/2 Northumberland shares held.

“This deal gives Northumberland shareholders the opportunity to participate in the unlimited potential which NovaGold has in the southwestern U.S.,” McConnell says. The market has reacted well to the proposed merger. Northumberland shares traded this week as high as 82 cents while NovaGold shares commanded a $4.80 price.

“We have decided to focus on the Steeple Rock Mining District for the next four months,” McConnell says. About 60% of the $5-million program will be spent on the two properties there.

The property which has the most potential for launching NovaGold into the ranks of gold producers in the southwest, the Summit mine in southwestern New Mexico, may contain several millions of tons of gold mineralization, says Ross Lawrence of wg&m.

Inferred reserves from a fissure vein system identified on the property over a strike length of 1,600 ft, averaging 30 to 100 ft in width, are 1.1 million tons grading 0.062 oz gold and 4.57 oz silver per ton.

NovaGold plans to evaluate the deposit as a bulk tonnage deposit amenable to large-scale underground mining methods and inexpensive heap leaching. A Denver- based firm is carrying out preliminary leaching tests on ore samples from the mine.

The continuity of the mineralization both at depth and along strike will be investigated in the next four months.

Between 1977 and 1980, the Summit mine produced about 30,000 tons of ore from the south end of the deposit. This ore contained 3,104 oz of gold and 148,720 oz of silver.

The company could be making a mine feasibility study on the property by the end of the year.

NovaGold’s other top-priority New Mexico property is the East Camp property, located on the same geological structure, eight miles to the southeast. Between 1932 and 1942, some 30,908 oz of the yellow metal were recovered from mine workings on four levels, which are serviced by a 635-ft shaft. Many of the original stopes could be put back into production once the mine is rehabilitated and dewatered, according to Lawrence.

Drilling is planned to test the extension of known mineralization at depth and along strike.

NovaGold is also conducting aerial geophysical surveys over a 200-sq-mile area of New Mexico to assist in staking additional ground in the area.

The company’s properties in Nevada include the Sawtooth, the Red Butte, the Austin Peak and Horse Thief Spring properties.