Subject to regulatory approval, $991,000 of NovaGold’s outstanding debt will be converted to 1,312,863 common shares, while another $300,000 will be settled in cash, and $135,000 will be retired by promissory notes.
The company says settlement of these accounts alleviates recent cash flow difficulties, and will allow future financing to be directed towards its New Brunswick properties.
Last summer, NovaGold wrote off its Fifteen Mile Stream property in Nova Scotia as uneconomic. Two other exploration properties, Cochrane Hill and Goldenville, were put on hold. “We’ll come back to Cochrane Hill after we get Murray Brook up and running” said William Young, vice-president of NovaGold. “Evaluating the grade of these Nova Scotia deposits is very difficult because of the nugget effect,” he said.
The company ran out of cash before a bulk sample could be taken on its Goldenville property. The old shaft was dewatered and underground workings refurbished, but it has been allowed to flood again.
The company’s current focus is to attain production at the Murray Brook property in New Brunswick and the Summit property in New Mexico.
At Murray Brook, NovaGold is preparing for production from a gold-silver enriched gossan deposit. The deposit is hosted by Ordivician age volcanic rocks of the Tetagouche Group. Gossan is the term given to yellow-colored iron oxide deposits produced near surface by the weathering and leaching of sulphide minerals.
On-site processing of the gossan will be accomplished by indoor vat leaching which will assure year round operation. Feasibility studies indicate recoveries of 80% for gold and 45% for silver. At the proposed production rate of 1,000 tons per day, this should yield 50,000 oz gold and 1,118,000 oz silver over a five year mine life.
“We’ve hired engineer Neil Smith as mine manager at Murray Brook,” Young said. Smith’s experience includes working on a gossan heap leach operation at the Anaconda-Caribou deposit. With the vat foundations expected to be in place by April, the company could have the project up and running by August.
In addition to mining the gossan, NovaGold plans to test a copper-rich massive sulphide zone which underlies the surface gold deposit. A drilling program, expected to commence in March, will further evaluate the copper potential.
The drill program will be funded by a $300,000 private placement of flow-through shares with CMP 1989 Resource Partnership.
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