NovaGold said it initially budgeted about $42 million in fiscal 2008 to complete construction at the Rock Creek mine near Nome. However, significantly adverse weather conditions combined with weather damage to the water recycle pond and extra work relating to storm-water pollution prevention requirements (compounded by unusually high snowfall) have resulted in extended delays starting up production at Rock Creek. Also, the junior mining company has added another $25 million to the Rock Creek construction budget. NovaGold said construction at Rock Creek should be finished soon and the Company plans to acquire additional mining equipment in the second half of 2008, expand the tailings storage facility for future production and complete additional storm-water prevention measures. These post-completion costs are expected to total about $19 million, it said.

Rock Creek’s difficulties, however, may not be over. In March NovaGold received a Notice of Violation from Alaska regulators related to a lack of preventative measures for storm-water discharges from its construction site. On June 9, the company received a further NOV and on July 7, a draft Compliance Order by Consent from the state.

NovaGold said it is cooperating with state regulators to resolve the problems, but its failure to adequately respond to the NOV and COBC could result in substantial fines, injunctive relief or other enforcement measures, which could materially affect the company’s ability to operate the Rock Creek mine.

Still, NovaGold said it hopes to begin gold production at Rock Creek in 2008 at a rate of 100,000 ounces a year.

The Vancouver, B.C.-based junior is also co-owner of the Donlin Creek gold project in western Alaska and the Galore Creek copper project in northern British Columbia, with Barrick Gold Corp. and Teck Cominco Ltd., respectively.

NovaGold reported a loss of $8 million for the second quarter, compared with $3.2 million during the same three months in 2007. The earlier period benefited from a $4.2 million gain from the sale of its shares of another company.

Revenue totaled $300,000 during the three-month period that ended May 31, compared with $2 million during the second quarter of 2007. NovaGold generates modest revenues from land and gravel sales and gold royalties. The decrease in revenues from the previous period relates mainly to decreased interest income due to lower average cash balances in 2008 as compared to the corresponding period in 2007, the company said.

NovaGold also postponed until July 24 a conference call with analysts originally scheduled for July 17 because of a power failure in downtown Vancouver that knocked out telecommunications in the business district. As a result of the power outage, NovaGold July 16 said its head office had no phone and email service since July 14. Email service was restored July 16.