NovaGold eyes asset spin off

Vancouver Busy advancing its core gold holdings in Alaska, NovaGold Resources (NRI-T) has teamed up with Viceroy Resource (VOY-T) to form a new exploration company focussing on the Yukon and British Columbia.

Dubbed SpectrumGold, the new company will hold all of NovaGold’s Yukon exploration properties, along with Viceroy’s mineral assets in the Yukon and British Columbia. Initially each company will hold a 50% stake in SpectrumGold with NovaGold retaining a 50% equity interest, while Viceroy intends to hold 19%. The balance of the issued shares are earmarked for current shareholders.

Under the agreement, an application will be made to list the shares of SpectrumGold on a senior stock exchange following the completion of the Plan of Arrangement. NovaGold brings to the table its four properties in the Yukon to the new venture: Klondike, McQuesten, Harlan and Sprogge and Viceroy adds its gold resources and exploration rights to the Brewery Creek gold mine in the Yukon, along with other mineral assets in British Columbia

Located near Mayo, the McQueston property is NovaGold’s most advanced Yukon property. Previous drilling identified a large mineralized system hosted within calcareous meta-sediments and intrusive rocks along the McQuesten structural zone.

Back in 2000, Newmont Mining (NEM-N) tested a 1.2-km portion of the structure with 5-holes, as part of an option agreement with NovaGold to earn a 51% interest in the property. All five holes intersected significant mineralization with hole 1 yielding 2.5 metres grading 3.2 grams gold and 6.1 metres grading 2.6 grams gold.

Moving 100 km east of Mayo, the Harlan property hosts a large gold, bismuth, arsenic, antimony and mercury in soil anomaly. Within the anomaly is a 500-by-300 metre area of intensely altered rocks that averages over 1 gram gold in soil. Mineralization is associated with intense alteration and silicification with quartz veining of calcareous chert pebble conglomerate, greywacke, siltstone, and shale, as well as, altered dikes and sills.

The Sprogge property lies 175 km north of Watson Lake along Yukon Highway 10. In 2000, NovaGold punched 4-holes into the property but no significant mineralization was encountered.

The Klondike property is 30-km from the past producing Brewery Creek gold mine along a major east-northeast trending structural trend. Mineralization is associated with altered intrusive dikes and sills and hosted by siltstones, calcareous siltstones, and cherts. The project hosts a 3-by-1.5 km gold-arsenic-antimony-mercury in soil anomaly.Trenches returned 5.9 grams gold over 8 metres, 3.1 grams gold over 10 metres, and 3.2 grams gold over 5 metres.

Some 55 km east of Dawson City in the Yukon, the Brewery Creek mine operated from 1997-to-2001. As of the second quarter of 2002, two million tonnes of ore capacity remain unused on the heap leach pad.

Viceroy and Novagold will each pony up $500,000 to fund the new company, which is expected to be publicly traded later this summer.

In Feb., Placer Dome (PDG-T) exercised its right to increase its interest in NovaGold’s Donlin Creek deposit in southwestern Alaska. Placer elected to earn an additional 40% stake, for a total of 70%. To do so, it must spend a least US$30 million on project development, complete a feasibility study, and build a mine that produces no less than 600,000 oz. gold per year — all within five years.

The move by Placer paved the way for Novagold to move ahead with its Rock Creek property in the Kuskokwim gold belt of Alaska. The company has moved two drill rigs onto the property and plans on launching a 10,000-metre program later this year.

At last count, the measured, indicated and inferred resource at Rock Creek tallied 9.3 million tonnes grading 2.85 grams gold per tonne. The mineralization consists of a central higher-grade series of sheeted quartz veins surrounded by an outer shell of disseminated gold on fractures. Metallurgical test-work gave an 86% gold recovery rate using a 65-mesh crush and conventional gravity methods.