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Donlin Creek project takes step forward Placer Dome agrees to regain controlling interest of gold prospect by spending $30 million, making mine construction decision in five years Patricia Jones PNA Contributing Writer
Placer Dome Inc. has decided to keep a stake in the mammoth-sized Donlin Creek gold deposit, located in the Kuskokwim Mountains of southwest Alaska, by spending the next $30 million to develop the remote exploration project.
Should the property advance to a mine, it could potentially produce more than 1 million ounces of gold per year, according to the property’s current exploration manager, NovaGold Resources Inc. That anticipated production rate is more than double the 440,000 ounces produced annually at Alaska’s largest gold mine currently operating, the Fairbanks-area Fort Knox.
Donlin Creek, among the world’s 30 largest gold deposits with nearly 28 million ounces of economically recoverable gold currently identified, could be considered a Prudhoe Bay-sized mineral deposit.
NovaGold, a Vancouver, B.C.-based exploration company with other property holdings in Alaska, kept exploration at Donlin Creek alive during sagging gold prices in recent years. In mid 2001, NovaGold inked an exploration earn-in deal with Placer Dome, which had explored the remote Calista-owned property since 1987. NovaGold agreed to spend $10 million in exploration on the property within 10 years, giving it a 70 percent share of Donlin Creek. With an accelerated and successful drilling program in 2001 and 2002, NovaGold completed its spending obligation, earning its 70 percent interest in November 2002. NovaGold’s work grew the estimated gold resource from roughly 13 million to nearly 28 million ounces.
Timeline is five years On Feb. 11, NovaGold said in a press release that Placer Dome decided to regain a controlling interest in the property. To earn back its 40 percent share in Donlin Creek, Placer Dome must spend a minimum of $30 million toward project development, complete a project feasibility study, and make a decision to construct a mine that produces not less than 600,000 ounces of gold per year.
All three must be completed within five years of the effective option date, Nov. 13, 2002.
Placer Dome considered two other alternatives regarding Donlin Creek, according to a prior press release. Placer Dome could remain at its current 30 percent share in the property, funding further development at that percentage. Or it could have converted to a non-contributing 5 percent net profits interest.
“Placer Dome's decision endorses our view that the project has transitioned from advanced exploration to development," said Rick Van Nieuwenhuyse, president and CEO of NovaGold, in the Feb. 11 announcement.
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