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NovaGold shifts focus to Nome area Exploration company plans drilling, independent scoping study at Rock Creek, its next best prospect after success at Donlin Creek; construction could begin in 2005 Patricia Jones PNA Contributing Writer
NovaGold Resources Inc., which just completed successful exploration at Donlin Creek, is working a new gold prospect, this one near Nome on Alaska's Seward Peninsula.
Situated among rolling hills about seven miles from Nome, the Rock Creek gold prospect offers the next challenge for the Vancouver, British Columbia-based exploration company, according to Doug Nickolson, senior projects engineer for NovaGold.
He provided an overview of the property, estimated to contain some 1 million ounces of gold in the underground deposit, to the Fairbanks branch of the Alaska Miners Association in late February.
NovaGold’s plans for Rock Creek for the spring and summer exploration season include in-fill and pit definition drilling and completion of a scoping study, to be contracted out with an independent engineering firm.
An exploration budget for 2003 has not been set by NovaGold and its partner in the project, TNR Resources Ltd. TNR, also based in Vancouver, must spend $10 million to earn a 49 percent share of Rock Creek.
“We want to go right to a feasibility study, and will start that hopefully later this year,” Nickolson said. “Should all the stars align, we could start construction in 2005.”
In press releases on Rock Creek the two companies have said they hope to begin gold production at the Nome-area deposit in 2005, an admittedly aggressive development timeline, Nickolson told Petroleum News Alaska.
Focus shifts from Donlin Creek NovaGold has shifted focus to Rock Creek from its most recent exploration success — Donlin Creek in the Kuskokwim Mountains near the tiny village of Crooked Creek.
After spending $10 million in just 16 months on Donlin Creek, NovaGold earned a 70 percent interest in the property, all while increasing the geologic estimate of the underground deposit from 13 million to nearly 28 million ounces of gold.
In mid-February, NovaGold turned over operatorship of that development property to mining giant Placer Dome, which must spend the next $30 million to bring the development property to a mine construction decision. (See story in March 9 issue of PNA.)
That agreement frees NovaGold up to focus on other exploration properties. Rock Creek provides the next best opportunity for the company to quickly bring a property to an operating gold mine.
“Our focus is to get Rock Creek proved up and hopefully into production,” Nickolson said. “Cash flow now is worth more than cash flow later.”
Prospect near infrastructure NovaGold acquired Rock Creek, along with about 14,000 acres of patented land in and around Nome, in its 1999 purchase of Alaska Gold.
“There’s road access to the prospect … along Glacier Creek Road from the Teller Highway,” Nickolson said.
A realignment of that road access is included in the state’s list of road improvement projects, he added.
“The Nome utility company has a power line within five kilometers (of Rock Creek), so it would be very easy when they realign the road to bring power in with it,” Nickolson said. “They have a 12 megawatt generation capacity and their peak load is six megawatts in winter, so they could use another customer.”
Another benefit to a possible mine development at Rock Creek, the area has already been placer mined in the past, Nickolson said. “That is a help — there’s no black spruce there,” he said, referring to a lack of wetlands in the area. Two mineralized areas So far, two mineralized areas have been identified at Rock Creek. Geological work, including drilling, trenching and metallurgy tests, identified 736,000 ounces of gold in the main Rock Creek resource, which runs northwest to southeast. That estimate is based on a one gram per ton cutoff for the mining cutoff, Nickolson said.
He told PNA that the average grade of gold at Rock Creek is 0.08 ounces of gold per ton of rock, almost triple the gold grade at Fort Knox, Alaska’s largest operating gold mine.
A mineralized area nearby, called Saddle, contains an estimated 260,000 ounces of gold, with an average grade of about 0.06 ounces of gold per ton of rock, Nickolson said.
According to a project summary of Rock Creek, drilling suggests mineralization remains open at depth and along strike. Rock Creek gold is associated with arsenopyrite, stibnite, scheelite and lead sulfosalts.
“There are other exploration opportunities within the large lease package,” Nickolson said. “The 12 kilometer long trend contains other prospects we’d like to take a look at.”
The company also holds prospective gold property, including an old stamp mill, the Big Hurrah, some 50 miles east on the Council Highway, Nickolson said. Preliminary development plans NovaGold has conducted chemical tests on resource samples from Rock Creek to determine possible ways of extracting the microscopic gold from its host rock.
“Metallurgy testing to date has been very encouraging,” Nickolson said. “It appears the majority of the gold can be picked up with a gravity process.”
Those gold recoveries range from 87 to 98 percent, depending on the geologic source of the metal within the Rock Creek deposit, according to the project summary.
“We’re looking at a conventional open pit operation, year-round, processing about 10,000 tons (of ore rock) per day,” Nickolson said. “We’re looking at producing about 100,000 ounces a year.”
The company is also considering operating a regional mill at Rock Creek, which could process ore from other hard-rock gold deposits in the area.
The company also owns a huge resource of dredge tailings, about 295 million cubic yards of rock, part of the property purchased from Alaska Gold. Not only does that rock contain an estimated 2.5 million ounces of gold, which could eventually be processed in a hard-rock mill, but those dredge tailings have already provided a revenue stream to NovaGold.
The company has sold some 100,000 cubic yards of tailings a year as a raw gravel source, Nickolson said. Typically, a purchaser will set up a screening plant next to a pile and crush the dredge tailings into gravel for use in construction, he said.
“We’re looking at setting up our own screening plant operation and adding value to the product,” he said.
Those past gravel sales “funded a lot of exploration work,” he added.
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