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MINING NEWS: Drilling at Donlin Creek resumes World’s largest gold producer scrutinizes Yukon-Kuskokwim project; plans site visits this spring; wind power being studied Rose Ragsdale For Mining News
As Barrick Gold Corp. announced completion of its multibillion-dollar acquisition of Placer Dome in mid-March, managers of the Donlin Creek project charged forward with work on several fronts at the southwestern Alaska gold deposit.
Toronto-based Barrick launched a hostile takeover of Placer Dome on Halloween, but later won approval from Placer Dome’s board for a $10.4 billion deal that created the world’s biggest gold miner.
The combined company owns 26 active mines and is the world’s largest gold producer. It expects to gain at least $200 million a year cost savings through the acquisition.
With the purchase of Placer Dome, Barrick assumes management of the Donlin Creek project in the Yukon-Kuskokwim region under terms of a joint venture agreement with Vancouver, B.C.-based junior NovaGold Resources. Ownership change on tap That agreement called for Placer Dome, 30 percent owner and operator of the project, to earn another 40 percent ownership interest in Donlin Creek. The process of acquiring that 40 percent stake and becoming majority shareholder as well as operator at the project should be complete this month, Stan Foo, general manager of the Donlin Creek project said March 17.
NovaGold, meanwhile, praised Barrick’s rapid progress with its transition team at Donlin Creek and the steady advancement of the project toward a production decision by November 2007 under terms of the agreement.
Foo said Barrick is very interested in Donlin Creek, and is currently looking at all aspects of the project.
Core drilling at Donlin Creek resumed in February with four diamond drills on site and the exploration camp running at full capacity with 60-70 people on site at a time and total employment of 120. Ninety percent of the workers at Donlin Creek are local residents and shareholders of Calista Corp., the Native corporation for the region. Bright future envisioned Current plans call for spending more than $30 million on drilling, feasibility studies and permitting at Donlin Creek in 2006, according to NovaGold.
“We hope to complete the pre-feasibility study, start permitting and begin the feasibility study this year,” Foo said.
Barrick officials initially focused on Placer Dome’s active mines, but recently scheduled site visits to Donlin Creek within the next few weeks, according to Foo.
Placer Dome spent $14 million at Donlin Creek in 2005 on drilling, pre-feasibility engineering design and environmental baseline data collection. Over 27,000 meters were drilled in support of moving the project to feasibility. In addition, continued collection of baseline and environmental assessment data was completed for submission of permitting documents in 2006. Drilling has continued to confirm the geologic model and demonstrate expansion potential with more than 3 million ounces of gold recently added to the resource.
Donlin Creek, which has total estimated reserves of 28 million ounces, is expected to produce more that 1 million ounces of gold a year, according to NovaGold. Wind power looks promising Though diesel is the preferred fuel source for power generation at Donlin Creek, Foo said project managers like the idea of augmenting diesel with wind power generation. The company has been studying the feasibility of constructing a wind farm in the hilly terrain near the project site.
“We had four towers set up along various ridge tops, but we had problems with icing and very high winds with two of them,” Foo said. “We made repairs, and we’ve collected six months of data.”
To be valid, the study requires a full-year of data collection, but Foo said the company is very encouraged about its prospects for generating wind power at the site.
“We hope to provide up to 40 percent of the project’s total power needs of 75-80 megawatts with wind power,” he added.
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