TNR joins NovaGold in Alaska

Vancouver — Focusing on completing a full feasibility study over the 13-million-oz. Donlin Creek gold deposit, NovaGold Resources (NRI-T) has dealt TNR Resources (TRR-V) the right to earn a 50% stake in the nearby Rock Creek and Shotgun deposits in Alaska.

“We are excited to be able to team up with TNR Resources to accelerate the development of two of our other outstanding gold assets,” says NovaGold’s president, Rick Van Nieuwenhuyse. “Both of these deposits have excellent potential for significant resource expansion and we believe the Rock Creek in particular can be rapidly advance to become a high-quality, low-cost mine.”

The Rock Creek project is the most advanced lode gold deposit on the Seward Peninsula near Nome. It and the nearby Saddle deposit consist of a central, higher-grade series of sheeted quartz veins surrounded by an outer shell of disseminated gold in fractures.

Rock Creek hosts a total resource of 9.3 million tonnes grading 2.85 grams gold per tonne, or 858,000 contained ounces. The Saddle deposit hosts 3.6 million tonnes grading 2.23 grams gold, or 260,000 contained ounces. Both deposits remain open along strike and downdip.

Metallurgical test show that greater than 86% of the gold at Rock Creek is recoverable using conventional and inexpensive gravity methods.

A scoping study of the project used a gold price of US$300 per oz. Results indicate a cash cost of US$153 gold per oz. based on annual gold production of 110,000 oz. The internal rate of return was pegged at 37%; the capital costs, at less than US$40 million.

TNR can earn a 49.9% interest in the project by spending US$10 million over the next three years. Once the deal is approved, the junior will also issue 500,000 shares to NovaGold.

Located south of the Donlin Creek deposit, the Shotgun property hosts an inferred resource of 32.8 million tonnes grading 0.9 gram gold per tonne using a 0.5 gram gold cut-off. Using higher cut-off grades of 0.75 and 1 gram gold the resource came in at 16.6 million tonnes grading 1.3 grams and 11.6 million tonnes averaging 1.4 grams gold, respectively. The higher-grade sections are close to surface and preliminary pit designs suggests a stripping ratio of about 1:1. Early metallurgical test work shows recoveries of 90% from cyanide leaching.

The mineralization occurs in the Mose target area as near-surface porphyry stockworks.

NovaGold picked up a 47.5% stake in the project in 1998 and last year completed an agreement with Cominco (CLT-T) to earn the remaining 52.5%. Under the deal, Cominco retains a 5% net profit interest on the property. TNR can earn a 50% stake in the project by spending US$3 million over 4 years and issuing 250,000 shares to NovaGold annually over the term of the option. The junior also has the right to earn an additional 20% by spending another US$6 million by Dec. 2008. NovaGold can then elect to regain a 50% stake by spending the next US$8 million on project development over three years. TNR will issue an additional US$1 million worth of shares to NovaGold if the California-based company does not elect to exercise its one-time back-in right.

“We believe that the Rock Creek and Shotgun deposits represents a tremendous opportunity to build new value in the current gold climate,” says TNR’s president Gary Schellenberg. “An exciting new area play is shaping up in the Kuskokwim gold belt of Southwest Alaska with NovaGold’s work at Donlin Creek, Northern Dynasty at the Pebble project and now TNR Resources at Shotgun.”

In order to fund the initial stages of the exploration programs, TNR has issued 12 million units priced at 10 each. A unit holds one share and one warrant, which is exercisable into a share for a one-year period at the 10-day average price of its shares after the deal was announce.