Digging in all the wrong places

Amerigold’s Nome placer lease terminated, NovaGold looks at other options

Patricia Jones

Petroleum News Contributing Writer

Amerigold, a gold placer mining operation working near Nome in western Alaska, recently lost its lease on virgin ground at Dry Creek after starting to dig on the wrong property last year.

NovaGold Resources owns patented Dry Creek ground on the outskirts of Nome; ground it leased to Amerigold in 2001. NovaGold terminated the placer operator’s lease for Dry Creek and Bourbon Creek land this spring, Doug Nicholson, senior projects engineer at NovaGold told Petroleum News on July 8.

“They started operations last year,” Nicholson said. “Nothing was done (on the property) this year.”

That’s because in 2002 Amerigold began stripping overburden — the first step in placer mining to get to loose gold — on the wrong piece of property.

The backhoe and bulldozer work was on the same Dry Creek drainage but on state land, about 1,800 feet from NovaGold’s leased land, said Victor Ross, Nome area project manager for the U.S. Army Corps of Engineers.

Residents in the area notified the landowner, who initially issued a cease and desist order, Ross told Petroleum News on July 9.

“People in Nome are pretty astute,” he said. “They operated only a short period of time — long enough to strip about seven acres of land, which doesn’t take very long using heavy equipment.”

The corps also issued a cease and desist order and required Amerigold to reclaim the area of disturbance, which the company did, he said: “They completed what we required and spent money and time to do so.”

Reclamation work started last year and was completed this spring, Ross said.

Amerigold is also required to complete reclamation dirt work to satisfy the landowner, the Alaska Department of Natural Resources and the Alaska Department of Transportation and Public Facilities, Ross added. Transportation asked Amerigold to construct a stabilizing berm because the initial digging was close to a nearby road.

Representatives from Amerigold could not be reached by phone by press time.

The company still holds a 10-year mining lease on another NovaGold property in the Nome area, ground near the community’s airport on the northwest side of town.

Nicholson said no operation is planned for that property this year, but added that the company “can certainly apply for permits.”

Ross said he has received no other permit applications from Amerigold.

“I know they’ve spent a fair amount of money moving equipment to Nome, and they’re not in production,” he said. “They have a lease but no plan of operation, and a bunch of equipment sitting there in Nome.”

Other placer development considered

“If the ground is viable, we’ll attempt to do something with it and see some value to our company,” Nicholson said. “It is a placer resource and we hope to see it developed.”

Like most typical lease agreements for placer mining, NovaGold received an advance payment and was scheduled to receive royalty payments from Amerigold based on gold produced from the ground.

NovaGold, a junior-sized exploration company with a number of hard rock gold projects — including the 28 million ounce Donlin Creek deposit in southwest Alaska — acquired the Nome area land in its 1999 purchase of the Alaska Gold Co.

Currently, NovaGold holds 14,000 acres of patented ground in and around Nome. In addition to leasing placer gold resources, NovaGold is developing the estimated 1 million ounce gold Rock Creek deposit about seven miles from Nome.

NovaGold also benefits from gravel sales on its Nome-area land, Nicholson said.

“With the pick-up in gold prices, we are looking at the placer ground,” he said. “Potentially we could do something with the placer ground in conjunction with our gravel sales.”