Vancouver – Adding another large-but-isolated northern project to its portfolio, NovaGold Resources (NG-T) has inked a deal to acquire full ownership of the high-grade Ambler property in northern Alaska from joint venture partner Kennecott Exploration, a subsidiary of Rio Tinto (RTP-N, RIO-L), for US$29 million.
The Ambler property hosts the high-grade volcanogenic massive sulphide (VMS) Arctic deposit, which is one of the world’s largest undeveloped copper-zinc VMS deposits. The Arctic deposit, the most advanced on the property, is one of a number of VMS deposits along the 70-km long Ambler schist belt.
A 2008 estimate pegged Arctic’s indicated resource at 16.8 million tonnes grading 4.1% copper, 6% zinc, 0.83 gram gold per tonne, 59.6 grams silver per tonne, and 0.94% lead. Inferred resources add 11.9 million tonnes averaging 3.6% copper, 5% zinc, 0.67 gram gold, 48.4 grams silver, and 0.8% lead.
Combining the indicated and inferred counts, the Arctic deposit already hosts 2.5 billion lbs. copper, 3.6 billion lbs. zinc, 700,000 oz. gold, 51 million oz. silver, and 560 million lbs. lead. But its location will make it tough for anyone to develop a mine at Ambler.
The project is located near Kobuk, in northern Alaska. It is roughly 450 km northwest of Fairbanks, 300 km southeast of Teck Resources‘ (TCK.B-T, TCK-N) Red Dog zinc-lead mine, and some 200 km east of the nearest inlet to the Arctic Ocean. There is no road access.
NovaGold certainly has experience exploring and advancing isolated projects. The company tripled the resources at its two other major assets, which are also in isolated locale. The massive Donlin Creek gold deposits is 450 km northwest of Anchorage, Alaska, and the Galore Creek copper-gold-silver deposits are 150 km north of Stewart, in northwest British Columbia. NovaGold and joint-venture partner Barrick Gold (ABX-T, ABX-N) completed a feasibility study for Donlin and is working on permitting; at Galore, development efforts were halted after six months when the expected capital costs more than doubled to $5 billion.
NovaGold and Kennecott were already partners at Ambler, pursuant to an deal signed in 2004 that gave NovaGold the right to earn a 51% interest. The new deal, to obtain full ownership of Ambler, will see NovaGold pay US$29 million for the property, in the form of US$5 million worth of shares and two US$12-million cash payments, due one year apart. Kennecott will retain a 1% net smelter royalty that NovaGold can purchase at any time for US$10 million.
Work at Ambler in 2008 and 2009 focused on community engagement. NovaGold participated in the Northwestern Alaska resource transportation study, which also involved the villages along the Kobuk River, the Northwest Arctic Borough, and Nana Native Corporation, and the State of Alaska.
The company plans to continue its community engagement efforts in 2010. The New Year will also see NovaGold appoint a project team to plan exploration activities, advance environmental baseline studies, and conduct engineering and geotechnical studies.
If ever a mining District demonstrated the need for roads in Alaska, the Ambler District does. It has been well known since the 1960’s , was economic to develop with air access only in the early 1970’s , has been in the doldrums ever since, and needs A ROAD, simple and straightforward. One cannot develop base metal mines without reasonable access.
One cannot also support all of the landlocked, isolated communities all over the North American continent indefinitely. The Province of Quebec is one of the few jurisdictions with a pro-active access to resources attitude that needs to spread like wildfire if North America is to remain a part of the competitive world marketplace. We all need to prod our political representatives and educate them to the realities of the mining industry.
Green is great, but only if you are not starving. Servicing mines by aircraft is great, but not if you are paying the bill.