Rich take expected from Donlin Creek gold deposit

Posted: Sunday, March 17, 2002

FAIRBANKS (AP) -- NovaGold Resources Inc. could produce 1 million ounces of gold a year at its Donlin Creek project in Southwest Alaska, officials said.

The bounty could mean a prospective operation for at least two decades, with 18 million of the estimated 23 million ounces of gold economically viable enough to mine.

''We're very optimistic,'' Greg Johnson, NovaGold vice president, told the Fairbanks Daily News-Miner.

Based on results of its 2001 exploration season, NovaGold announced earlier this year that Donlin's estimated gold deposit was nearly double the amount previously estimated.

Donlin Creek is 140 miles northwest of Bethel and south of Holy Cross. The property is owned by Calista Corp. and Kuskokwim Corp., both Alaska Native owned. NovaGold signed an agreement with Placer Dome, a large international gold company, and Calista, in which NovaGold will acquire 70 percent interest in the project if it spends $10 million in exploration and development.

NovaGold has spent $3 million and plans to spend the remaining $7 million by the end of 2002.

The company is a long way from building a mine, but is definitely headed in that direction, Johnson said. Gold production estimates are just one step in the process, he said.

Starting in April, the company will conduct baseline environmental studies along with continuing exploration, Johnson said. Baseline studies are needed for federal and state permits and the company has hired Chris Gates of Anchorage, to oversee permitting work, Johnson said.

It will probably take 18 months before the company conducts a feasibility study on whether or not to build a mining operation, he said. Construction would cost $500 million. Operating a mine would mean between 400 and 600 jobs.

The Donlin Creek gold is in microscopic bits locked in hard rock. It would be milled similarly to the way Fairbanks Gold Mining, a company that owns two gold mines 30 miles north of Fairbanks, produces its gold, Johnson said.

An additional step is required at Donlin. Johnson said the company has to take out the sulfides associated with the gold deposit.

The sulfides and the remote location of Donlin Creek will make the project more expensive but the ore is estimated to be five times as rich as Fort Knox, according to Johnson. The richer-grade ore makes the project more likely to be feasible.

The London fixed price of gold closed on Friday at $289.50 an ounce.

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