NovaGold forms Canadian exploration subsidiary

Patricia Jones, Petroleum News contributing writer

NovaGold Resources Inc. has completed organization of a new Canadian exploration subsidiary called SpectrumGold, and expects to have the company listed on a Canadian stock exchange later this year.

To create the regional subsidiary, NovaGold joined with Quest Capital Corp., formerly the Viceroy Resource Corp. which owned and operated the Brewery Creek Mine near Dawson, Yukon Territory.

Viceroy contributed to the new company its shuttered Brewery Creek heap leach oxide gold mining operation, along with some early stage exploration projects in British Columbia, said Greg Johnson, vice president of corporate development for NovaGold.

Viceroy exited the mining business in the late 1990s, he said, after an unsuccessful effort at Brewery Creek. Low market prices for gold hit about the same time the mine came online.

SpectrumGold will explore deeper levels at Brewery Creek, Johnson said, which shows signs of sulfide mineralization somewhat similar to NovaGold’s key development project, the 28 million ounce Donlin Creek deposit in southwest Alaska.

“We’re going to see if perhaps the geology looks the same,” he said. “Brewery Creek has over a 10 mile long system of gold mineralization that has never been tested at deeper levels.”

NovaGold’s contributions to the new company include its Yukon area early-stage exploration projects, including the McQuesten gold property in the historical silver-producing district near Mayo.

Johnson said a 10,000 foot drill program is planned for later this year at McQuesten.

SpectrumGold, which is currently being managed by NovaGold personnel, is finalizing other Canadian exploration land deals, Johnson said.

“Both companies have a lot of exciting things on our plate,” he said.

In addition to the property acquisitions, SpectrumGold has been initially funded with a total of C$2.85 million in cash, according to a July 3 press release. Of that, C$1.5 million was contributed from the two founding companies and management, and C$1.35 million from private investors that will be held in escrow and will be released upon and subject to listing SpectrumGold on a Canadian stock exchange.