Mining News: PDAC honors Donlin Creek gold discovery

Garnett, NovaGold will be recognized for role in the discovery and exploration of the massive mineral find in Southwest Alaska

Shane Lasley

Mining News

The Prospectors and Developers Association of Canada is set to recognize Richard Garnett and NovaGold Resources Inc. for their role in the discovery and exploration of the multimillion-ounce Donlin Creek gold deposit in Southwest Alaska.

The Thayer Lindsley Award for an international mineral discovery will be presented to the explorers March 2 at the organization’s 2009 International Convention, Trade Show and Investors Exchange.

This annual award, which honors the memory of one of Canada’s greatest mine finders, recognizes an individual or exploration team credited with a recent significant mineral discovery anywhere in the world.

WestGold explores Donlin

Prior to going to work for Calista, Hickok had researched the property with Alaska Earth Sciences, the geological firm he co-founded. After becoming convinced of the potential at Donlin, Hickok encouraged WestGold to explore what he believed would be an exciting grassroots gold discovery.

In 1988, convinced Hickok was onto something, WestGold acquired the exploration rights to the Donlin Creek prospect, owned by Calista, an Alaska Native regional corporation. That same year, WestGold also acquired placer gold deposits off the shore Nome, Alaska.

WestGold, led by Garnett, began exploring the Donlin Creek property in 1988. During the first year, the company completed an extensive grassroots exploration program that included trenching, rock and soil sampling, mapping, drilling and airborne surveys. The program identified several areas of mineralization, including Lewis, which is now the primary focus of the current resource at Donlin.

WestGold employed a reverse circulation drill rig during its second season on the property. The drilling conducted in 1989 led to the first gold resource calculation at the deposit, but it was the last year of WestGold’s exploration at Donlin. The explorer went out of business the following year and despite the encouraging results only limited exploration was carried out until Placer Dome picked up the prospect in 1995.

Meanwhile, Garnett pioneered the use of an offshore crawler to mine the placers off the beaches of Nome in 1989. His innovative design is still being used to recover placer diamonds off the coast of Namibia, and is considered by many as the best mining system for marine placer deposits.

Placer Dome revives exploration

After looking over the previous work done at Donlin Creek, it did not take Placer Dome director of property acquisition Richard Duncan long to grab the prospect.

Anxious to follow up on WestGold’s work, Placer Dome had the first drill turning on the property in April 1994 and had about six drills turning by fall. Over the next six years, Placer Dome spent about $30 million outlining a 13-million-ounce gold resource.

NovaGold Resources Inc., in a 2001 joint venture agreement with Placer Dome, agreed to spend $12 million over 10 years to earn a 70 percent interest in Donlin Creek.

NovaGold outlines 31.7 million ounces

NovaGold President and CEO Rick Van Nieuwenhuyse and NovaGold Vice President of Strategic Development Greg Johnson are both former members of the Placer Dome Alaska Exploration Team, and founding members of NovaGold. Van Nieuwenhuyse was the vice president of exploration for Placer Dome and Johnson was a geologist at the Donlin Creek project. Another member of the Placer Dome Alaska Exploration Group was NovaGold Vice President of Exploration Joe Piekenbrock.

This continuity, in large part, has contributed to the explorers’ success at Donlin Creek. NovaGold had a phenomenal 2001 season at Donlin Creek. The 42-hole program that year increased the measured and indicated gold resource at Donlin by 92 percent to 4.4 million ounces of gold, and escalated the inferred resource by 161 percent to 6.2 million ounces of gold.

After eight years of exploration, NovaGold has outlined one of the largest undeveloped gold deposits in the world. Recent drill results have identified measured and indicated gold resources of 31.7 million ounces grading about 2.5 grams per metric ton, with an additional 4.2-million-ounce inferred gold resource.

Construction targeted for 2012

In late 2007 the two companies set aside their differences and formed the Donlin Creek LLC, a 50-50 partnership between the junior and the major to advance the development of the multi-million-ounce gold property.

Working together the partners have developed a preferred project design for the world-class gold project and are working on a feasibility study expected to be complete by April. The partners foresee a mine at Donlin producing about 50,000 metric tons per day using onsite diesel and wind cogeneration for power. Using this design, Donlin Creek would operate for more than 20 years and potentially produce 1 million to 1.5 million ounces of gold per year. The companies plan to start permitting by the end of 2009 and begin construction in 2012.

A brief history of the world-class Donlin Creek gold deposit

In 1941 Robert Lyman started the modern era of placer mining on Donlin Creek. Signing away his entire winter salary, the hardworking miner put a down payment on a HD-10 Allis Chalmers tractor and a Gould pump marking the first mechanized placer operations on the creek. Lyman, the second-largest placer gold producer in the Kuskokwim region, continued his operation until 1956.

The first hint of the lode source of the Donlin Creek placers surfaced in 1955 by United States Geological Survey geologist, W.H. Cady. During his mapping and geological survey of the central Kuskokwim region of Southwest Alaska, Cady noted rhyolitic dikes that later led to further interest in the lode source at Donlin.

When Calista Corp. was formed as a result of the Alaska Native Claims Settlement Act in 1971, it selected the land covering the Donlin Creek deposit as part of its settlement.

Calista hired Resources Associates of Alaska to survey its lands for mineral potential. In 1974 the geological firm found gold bearing quartz veins at Donlin. Returning the following year, Resource Associates found gold values ranging from 2 ppm to 20 ppm in trenches dug at the prospect.

While early hints of lode potential were being investigated above Donlin Creek, Robert Lyman’s sons –following in their father’s footsteps – had returned to mine the placers in the valley below. The Lyman heirs mined another decade before interest once again returned to the lode source of the Donlin Creek placers.

The worlds of the Donlin Creek placer miners and the explorers for the lode source converged in 1986. That year Calista’s newly hired lead geologist, Bruce Hickok, and his former partner, Rob Retherford, went to Donlin to follow up on Resource Associates’ earlier findings.

Hickok and Retherford’s investigation confirmed the soil anomalies discovered a decade earlier. While the pair was scouring the hills, the Lyman brothers were drilling a bench above Donlin Creek in search of additional placers. When the Lymans discovered silvery clay they called on the geologists to take a look. The arsenopyrite laden clay convinced the geologists that Donlin Creek deserved further investigation.

The following year, WestGold began exploring what would become one of the world’s largest known gold deposits.

—Shane Lasley