Vancouver — NovaGold Resources (NRI-T) will raise $25 million by issuing common shares and share purchase warrants in order to finance exploration of the Rock Creek and Nome properties in Alaska.
The company has entered into an agreement with underwriters to sell 5 million units at $5 each. The units consist of one share of the company and half a share purchase warrant. A whole warrant entitles the holder to acquire a NovaGold share for $7 for five years after the deal closes.
Norwest, an independent engineering services company, performed an economic assessment which indicated Rock Creek is capable of producing 100,000 oz. gold per year at the daily rate of 5,000 tonnes. Total cash costs are pegged at US$197.18 per oz. gold; total production costs, at US$257.56 per oz. The mine would operate for six years and recover 673,900 oz. gold. The stripping ratio is estimated to be 4.4-to-1, and initial capital costs are projected at US$39.2 million.
These estimates are based on a cutoff grade of 1 gram gold per tonne, a gold price of US$325 per oz., and an in-pit resource of 10.7 million tonnes averaging 2.03 grams gold per tonne. Total measured and indicated resources stand at 6.4 million tonnes averaging 2.69 grams gold (555,000 contained ounces) plus an inferred resource of 2.9 million tonnes averaging 3.25 grams gold per tonne (303,000 contained ounces).
About 30% of the resources used in the study were classified as inferred, and further exploration is expected to upgrade them to the measured-and-indicated category. As a result, the company is in the midst of an 8,000-metre program of infill drilling to define the resources in preparation for a feasibility study next year.
The Nome project, near Nome Alaska, hosts an estimated 2.26 million ounces of gold in a 295 million cubic yard sand and gravel aggregate co-product resource.
This area historically produced over 4 million ounces of gold from hand mining methods and bucketline dredging. This gold and gravel resource is located on the Nome coastal plain and is contained in several types of bulk-mineable deposits: these include, ancient beach deposits, ancient deltas, and ancient and modern stream deposits.
NovaGold envisages a large-scale open-pit mining operation that would be accompanied by a simple gravity processes to separate the gold from the sand and gravel.
The company is the largest supplier of sand and gravel aggregates in western Alaska, with more than 26 million cubic yards in existing aggregate stockpiles.
Measured, indicated and inferred resources at Nome, based on 10,000 drill holes, are pegged at 295.5 million cubic yards containing 2.2 million oz. gold.
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