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Mining company says Donlin Creek gold deposit could be state's largest

Posted: Friday, January 25, 2002

FAIRBANKS (AP) -- A California-based mining company has doubled its estimate of the size of a gold deposit in Western Alaska, making it possibly the largest in the state's history.

Tests show Donlin Creek holds 23 million ounces of gold, Greg Johnson, vice president of corporate development for NovaGold Resources Inc, said Thursday. That would be nearly three times the size of the Fort Knox deposit near Fairbanks.

If the Donlin Creek deposit is developed, it could mean hundreds of year-round jobs for the rural area, Johnson said. The San Jose, Calif.-based company is a partner in Donlin and hopes to begin mining in three years, he said.

At 3 grams of gold per ton, the Donlin deposit is three to five times as rich as Fort Knox.

It needs to be rich for development to begin, because the site is remote. Power and transportation will be a challenge, said Stan Foo of the state Division of Mining, Land and Water.

More tests and an economic analysis are needed before a decision is made on whether to go forward with the project.

The Donlin prospect is located near the Kuskokwim River about halfway between McGrath and Bethel. Kuskokwim Village Corp. owns the surface land rights to the area, said KVC president Robert Ballow, and the Bethel-based regional Native company Calista Corp. owns the subsurface rights.

Established international mining company Placer Dome pulled away from the project as gold prices fell in recent years, focusing its exploration dollars around existing mines, said Johnson, a former Placer Dome employee.

He and two other former employees started NovaGold and worked out a deal to continue at the Donlin Creek project, looking for high-grade ore that would make mining profitable. They bought a gravel mine near Nome and used cash from that to finance Donlin exploration.

NovaGold put $2 million into exploration and development last year and will spend $8 million more this year, Johnson said.

Foo said obtaining permits to begin work could take two to three years.

If the economics of the project work out, 500 jobs in construction and mining could be created, Johnson said. The mine could last 10 years, he said, or 50 if more gold is discovered nearby, which is common.

''Those are awfully exciting numbers,'' said George Gardner, president of Chiulista Camp Services Inc., a subsidiary of Calista that supported the exploration with temporary help, housekeeping and catering.

State labor economist Brigitta Windisch-Cole said 500 more jobs in the Bethel region would bump the area's employment by 13 percent. And, she said, the average wage in the gold mining industry is $49,000, nearly twice that of the area.

''We're lacking a Prudhoe Bay or Red Dog or Cook Inlet,'' Gardner said of Western Alaska. Developing natural resources is important for the cash-poor region and people.

''Ain't no social program better than somebody being able to have a job,'' he said.



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