TNR joins NovaGold

Vancouver — At the same time that it is carrying out a feasibility study on the 13-million-oz. Donlin Creek deposit in Alaska, NovaGold Resources (NRI-T) has inked a deal allowing TNR Resources (TRR-V) to earn a half interest in the nearby Rock Creek and Shotgun deposits.

“We’re excited to be able to team up with TNR Resources to accelerate development of two of our other outstanding gold assets,” says NovaGold President Rick Van Nieuwenhuyse. “Both deposits have excellent potential for significant resource expansion, and we believe Rock Creek in particular can be rapidly advanced to become a high-quality, low-cost mine.”

Rock Creek is the most advanced lode gold deposit on the Seward Peninsula, near Nome. It and the nearby Saddle deposit consist of a central, higher-grade series of sheeted quartz veins surrounded by an outer shell of disseminated gold in fractures.

Rock Creek hosts a total resource of 9.3 million tonnes grading 2.85 grams gold per tonne, or 858,000 contained ounces, whereas Saddle hosts 3.6 million tonnes grading 2.23 grams gold, or 260,000 oz. Both deposits remain open along strike and downdip.

Metallurgical tests show that greater than 86% of the gold at Rock Creek is recoverable using conventional and inexpensive gravity methods.

A scoping study of the project used a gold price of US$300 per oz. Results indicate a cash cost of US$153 gold per oz. based on annual gold production of 110,000 oz. The internal rate of return was pegged at 37%; the capital costs, at less than US$40 million.

TNR can earn a 49.9% interest in the project by spending US$10 million over the next three years. Once the deal is approved, the junior will also issue 500,000 shares to NovaGold.

Situated south of the Donlin Creek deposit, the Shotgun property hosts an inferred resource of 32.8 million tonnes grading 0.9 gram gold per tonne using a cutoff grade of 0.5 gram gold per tonne. Using higher cutoff grades of 0.75 and 1 gram gold, the resource shrinks to 16.6 million tonnes grading 1.3 grams and 11.6 million tonnes of 1.4 grams gold, respectively. The higher-grade sections are close to surface, and preliminary pit designs suggest a stripping ratio of about 1-to-1. Early metallurgical tests show recoveries of 90% from cyanide leaching.

The mineralization occurs in the Mose target area as near-surface porphyry stockworks.

NovaGold picked up a 47.5% stake in the project in 1998, and last year completed an agreement with Cominco (now Teck Cominco [TEK-T]) to earn the remaining 52.5%. Under the deal, Cominco retains a 5% net profit interest. TNR can earn a 50% stake in the project by spending US$3 million over four years and issuing 250,000 shares to NovaGold annually over the term of the option. The junior also has the right to earn an additional 20% by spending another US$6 million by December 2008. NovaGold can then elect to regain a 50% stake by spending the next US$8 million on project development over three years. TNR will issue an additional US$1 million worth of shares to NovaGold if the California-based company does not elect to exercise its one-time back-in right.

“We believe that the Rock Creek and Shotgun deposits represent a tremendous opportunity to build new value in the current gold climate,” says TNR President Gary Schellenberg. “An exciting new area play is shaping up in the Kuskokwim gold belt of Southwest Alaska [as a result of] NovaGold’s work at Donlin Creek, Northern Dynasty at the Pebble project and now TNR Resources at Shotgun.”

NovaGold continues to advance the Donlin Creek project, where the company recently tabled a measured and indicated resource of 52.7 million tonnes grading 4.03 grams gold, using a gold price of US$300 per oz go. and a cutoff of 2.5 gram gold. In May, Northern Dynasty Minerals (NDM-V) is expected to start drilling the Pebble deposit, which hosts an inferred resource of 1 billion tonnes grading 0.3% copper and 0.34 gram gold.

In order to fund the initial stages of the exploration programs, TNR has issued 12 million units priced at 10 each. A unit holds one share and one warrant, which is exercisable into a share for one year.