Novagold hits new zone at Donlin

Vancouver — An ongoing drill program by NovaGold Resources (NRI-T) has uncovered a new zone of mineralization some 500 metres north of the high-grade Acma deposit, on the Donlin Creek property in Alaska.

Dubbed Akivik, the zone was discovered when the company drill-tested a gold-in-soil geochemical anomaly. Hole 243 cut 6.1 metres grading 3.9 grams gold per tonne, 6.1 metres grading 2.4 grams gold, and 32 metres averaging 2.1 grams gold. The first follow-up hole, no. 688, returned 17.9 metres grading 5.6 grams gold, with complete assay results still pending. Additional drilling will attempt to define the extent of the mineralization.

Earlier this year, an independent scoping study of Donlin Creek proposed annual production of 1 million oz. and a capital investment of $602.1 million.

An open-pit operation would extract 20,000 tonnes of mineralized material per day for 14 years. Life-of-mine cash costs are projected at US$166.57 per oz.; total production costs, at US$241.87 per oz. At a gold price of US$300 per oz., the operation would generate a pretax rate of return of 15.6%, or 10.7% after taxes. The net present value rings in at $164.7 million, using a 5% discount rate. The payback period would be just over five years.

All operating and economic projections are based on near-surface resources totalling 166.4 million tonnes averaging 3.6 grams per tonne. The resource, in turn, is based on a cutoff grade of 2 grams.

NovaGold is earning its 70% interest in the project from Placer Dome (PDG-T). Once NovaGold earns its 70% stake, Placer has three months in which to exercise a back-in right for 70%, remain at the 30% level or convert its interest into a 5% net profit interest.