NovaGold raises cash for Donlin drilling

Junior NovaGold Resources (NRI-T) has inked private placement agreements to raise nearly $1.9 million for a drilling program on the remote Donlin Creek deposit in southwestern Alaska.

Under the agreements, nearly 2.4 million shares will be subscribed to at 80 apiece. Also included are almost 1.2 million non-transferable share purchase warrants. One warrant allows the holder to buy one NovaGold share for $1 for one year.

The private placement is subject to regulatory approval.

The proceeds include $902,200 from the company’s directors.

Novagold plans a $3-million program of delineation and offset drilling on the higher-grade targets at Donlin Creek. This is slated for commencement Aug. 20. In all, 15,000 metres of drilling are aimed at increasing the drill definition of the higher-grade resource for detailed engineering and prefeasibility studies, which will begin in early 2002.

Donlin’s high-grade resource stands at 33.5 million tonnes grading 5.1 grams gold per tonne, equivalent to 5.5 million oz., based on a 3.5-gram cutoff. Nearly 60% of the resource falls within the measured and indicated category. The remainder is in the inferred category.

NovaGold agreed to acquire a 70% interest in the multi-million-ounce deposit, which lies 500 km west of Anchorage, from Placer Dome (PDG-N) earlier this year. Under the deal, NovaGold will pay Placer US$12 million over 10 years.

Placer can retain a 30% interest or dilute to a net profits interest. The company retains a back-in right to regain control of the property.

Placer spent US$37 million developing the property, including more than 110,000 metres of drilling and 25,800 metres of trenching.