NovaGold gets 70% of Donlin

Vancouver With Placer Dome (PDG-T) having until mid-February to decide its role in the Donlin Creek gold project, the major has assigned partner NovaGold Resources (NRI-T) a 70% interest in the promising Alaskan property.

NovaGold earned its stake by spending US$10 million on the property over the past 15 months. Placer Dome must now decide its future level of participation in the project. The major has some 60 days in which to decide on its options, which are:

• 1) to remain at a 30% interest and contribute at that level through the development of the project;
• 2) to convert to a non-contributing 5% net profits interest; or
• 3) to undertake to exercise a back-in right to re-acquire an additional 40% interest in the project by completing all of the following conditions within the next five years — (a) expending a minimum of US$30 million toward project development; (b) completing a bankable feasibility study; (c) committing to build a mine that produces not fewer than 600,000 oz. gold per year.

Regarding the last option, Placer Dome would not earn any additional interest in the project above its 30% unless all of the above conditions are met within the 5-year time frame.

Also, NovaGold would not be required to contribute any additional funding up to the $30 million, and at NovaGold’s election, Placer Dome would arrange construction financing for NovaGold’s share of the mine development costs that would be repaid out of future mine cash flow.

If Placer decides to back in, NovaGold says its shareholders will not have to worry about shareholder dilution through financing. On the other hand, if Placer remains at 30% or converts to a 5% non-contributing net profits interest, NovaGold’s shareholders should see additional share value as the project’s gold resource expands and as the project advances through prefeasibility, feasibility and into production.

Novagold completed its 2002 drill campaign aimed at upgrade the projects’ resource. Based on the results, NovaGold envisions that significant additional resource oz. will be added along with an upgrade in a portion of the new high-grade gold mineralization at the Akivik, Aurora, 400, Acma and South Acma zones to the Measured and Indicated resource categories.

During the 2002 program, NovaGold completed 347 drill holes totalling 51,009 metres. A new resource estimate is expected by Feb. or March of next year.

On the metallurgical front, the junior has hired Denver-based Hazen Labs and Newmont Mining Corporation’s Metallurgical Services to complete a series of additional metallurgical studies to look at process optimization. Initial results, using the patented N2TEC flotation process have yielded recoveries from intrusive material averaging 96% and sediment hosted ore averaging 90%.

The total measured and indicated resource, as defined in the scoping study released in March, was 73.9 million tonnes grading 3.51 grams gold per tonne, or 8.3 million contained ounces. An additional resource of 92.43 million tonnes averaging 3.66 grams gold, or 10.9 million oz., falls in the inferred category.