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July 12, 2012 --- Vol. 06, No. 28July 2012

Barrick, NovaGold agree to permit Donlin Gold

NovaGold Resources Inc. July 11 reported that Donlin Gold LLC – owned equally by NovaGold and Barrick Gold Corp. – has approved the updated Donlin Gold feasibility study completed in December of last year.

This study, compiled by AMEC Americas Ltd., revises the feasibility study completed in 2009 with updated mineral reserves and resources, capital cost and operating cost estimates.

Highlights of the updated Donlin Gold feasibility study include:

• Proven and probable mineral reserves estimated at 33.8 million ounces of gold, representing a 16 percent increase compared to the 2009 feasibility study;

• 27-year mine life assessed on the basis of 53,500 metric-ton-per-day throughput, an increase of six years compared to the previous feasibility study;

• 1.46 million ounces of annual gold production over the first full five years at cash costs of US$409 per ounce; and

• 1.13 million ounces of annual gold production over the life of the mine at cash costs of US$585 per ounce.

One of the primary differences between the current feasibility study compared to the one completed in 2009 is using natural gas to power the Donlin Gold operations, as opposed to the diesel fueled power generation previously considered.

The updated capital cost of US$6.7 billion to build a mine at the Donlin Gold deposit includes approximately US$1 billion to build a 500-kilometer natural gas pipeline to deliver natural gas from the Cook Inlet to the mine site.

Accepting the feasibility study, the Donlin Gold Board of Directors – a four-member panel with equal representation from both partners – has also given authorization to file applications for the permits needed to develop the Donlin Gold deposit, which is expected to be underway shortly.

“The owners of Donlin Gold continue to execute on the strategy of advancing the project up the value chain,” said NovaGold CEO Greg Lang. “After years of in-depth technical analysis, the commencement of permitting at Donlin Gold is a key milestone to bring this important project closer to reality.”

Donlin Gold estimates that it will take about 3 1/2 years to obtain the some 100 permits required to develop the Southwest Alaska project and construction will take about as long – putting production toward the end of 2019.

NovaGold noted that Alaska is the second-largest gold-producing state in the United States. A project of this scale has a structured environmental evaluation process through the National Environmental Policy Act, which will require the preparation of an Environmental Impact Statement. During this NEPA process and permitting period – which NovaGold and its largest shareholders believe will be a bullish gold price environment – Donlin Gold will be working to accentuate returns by looking at various avenues to reduce capital costs and further de-risk the project. As the anticipated operating margins of the project are already robust, NovaGold said the emphasis on reducing up-front capital costs could potentially have a significant impact on Project returns.

At May 31, NovaGold had US$301.2 million in cash and cash equivalents, providing it a strong balance sheet to support its share of activities through permitting and a production decision.

Donlin Gold – with a measured and indicated resource of some 39 million ounces of gold (541 million metric tons at an average grade of approximately 2.2 grams per metric ton gold) – is one of the largest undeveloped open-pit gold known deposits in the world. According to the updated feasibility study, the Southwest Alaska project is expected to produce about 1.5 million ounces of gold per year in the first five full years of production and average more than 1 million ounces of gold per year over a 27-year mine life. Donlin Gold is one of only seven of the world’s gold mines producing or which have the potential to produce in excess of a million gold ounces per year and it is located in North America, one of the safest jurisdictions.

“NovaGold is not only strong financially; its senior management team is well equipped to take Donlin Gold through permitting, development and along the value chain. Our stakeholders – which include the Alaska Native Corporations Calista Corporation and The Kuskokwim Corporation who own the Donlin Gold mineral and surface rights – are our strong supporters,” Lang wrote in July 12 letter to shareholders. “At a recent institutional investor tour of Donlin Gold, we were particularly gratified to hear from important stakeholders that Donlin Gold was a model project for responsible development. And we will strive to deliver no less than that. During the second quarter, the Donlin Gold team completed preparation activities for the permitting application process.”

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