Mining News: PEA demonstrates robust economics for NovaGold’s Arctic deposit

NovaGold Resources Inc. April 14 announced the results of a preliminary economic assessment for its Ambler volcanogenic massive sulfide project in Northwest Alaska.

“This preliminary economic assessment demonstrates the robust economics of developing one of the highest-grade VMS deposits in the world,” said NovaGold President and CEO Rick Van Nieuwenhuyse.

NovaGold’s Ambler property comprises 36,670 hectares, or 90,624 acres, of State of Alaska mining claims and Federal patented and unpatented mining claims and hosts a number of deposits, including the high-grade copper-zinc-lead-gold-silver Arctic deposit. Arctic is the focus of the PEA prepared by SRK Consulting (U.S.), Inc.

Highlights from the PEA:

• Indicated mineral resources of 16.8 million metric tons averaging 4.1 percent copper, 6 percent zinc.

• Inferred mineral resources of 12.1million metric tons averaging 3.5 percent copper and 4.9 percent zinc.

• Base case – using long-term metal prices of US$2.50 per pound copper, US$1.05/lb zinc, US$1.00/lb lead, US$1,100 per ounce gold and US$20/oz silver – produces a pre-tax net present value (at an eight percent discount) of US$718 million with an internal rate of return of 30 percent; and a post-tax NPV (eight percent) of US$505 million with an IRR of 25 percent.

• At current metal prices – US$4.31/lb copper, US$1.20/lb zinc, US$1.20/lb lead, US$1,425/oz gold and US$36/oz silver – the project produces a pre-tax NPV (eight percent) of US$2.2 billion with an IRR of 59 percent; and a post-tax NPV (eight percent) of US$1.6 billion with an IRR of 50 percent.

• Underground mining operation with 25-year mine life processing up to 4,000 metric tons per day using a conventional flotation circuit producing three concentrates.

• Average annual payable metal production estimated at 67 million pounds of copper, 80 million pounds of zinc, 12 million pounds of lead, 11,000 ounces of gold and 866,000 ounces of silver

• Life-of-mine payable metal production estimated at 1.7 billion pounds of copper, 2 billion pounds of zinc, 291 million pounds of lead, 266,000 ounces of gold and 22 million ounces of silver.

• Initial startup capital of US$262 million and sustaining capital of US$134 million.

• Operating cost US$99.32/t milled; cash cost US97 cents/lb copper net of byproducts at long-term metal prices. Operating costs include mining and processing costs estimated at $48.6/t milled and $29.7/t milled, respectively.

• Project cash costs – defined as the sum of total operating, freight and marketing, and royalty costs – are estimated at US$132/t milled.

“This economic study provides the market with additional clarity on Ambler’s potential, and we are reviewing options to best realize value from the Ambler project,” said Van Nieuwenhuyse.

In January the NovaGold leader told investors at the Dahlman Rose Emerging Miners CEO Conference that his company is currently in the process of putting together an initial public offering for a new company that will carry on the exploration and advancement of the Ambler project.

“We will probably be calling the company NovaMetals and spinning this asset out, with NovaGold retaining the majority of the shares,” he said.

—Shane Lasley