Locals still skeptical of Rock Creek

An allegation that NovaGold Resources‘ (NG-T) Rock Creek gold project near Nome, Alaska, violated two environmental acts has been put to rest by a United States appeals court, sending the company’s shares up 14%.

NovaGold was up $1.47 at the end of the day to $11.80 per share on a trading volume of nearly 1.8 million shares.

The U.S. Ninth Circuit Court of Appeals has upheld a June 2007 decision by the U.S. District Court for Alaska related to permitting for the Rock Creek project.

The project, operated by NovaGold subsidiary Appellee Alaska Gold, includes two open-pit gold mines at separate locations. Fill from the mines will be dumped in wetlands covering about 1.4 sq. km.

Bering Strait Citizens for Responsible Resource Development filed a lawsuit asking for a temporary restraining order and a preliminary injunction.

The citizen’s group argued that the Appellee Army Corps of Engineers violated the Clean Water Act and the National Environmental Policy Act by granting the Rock Creek permit.

It’s the Army Corp’s job to issue permits for the discharge of dredged or fill material into navigable waters in the U.S.

NovaGold investor relations manager, Rhylin Bailie, says the original lawsuit delayed the project by about three months.

NovaGold’s permits for Rock Creek were revoked at the end of 2006 while the case was first being reviewed.

“It meant that we couldn’t work in areas that were previously undisturbed,” Bailie says.

The company got the permits back last March, and since then there’s been no real impact.

“It’s more just been the uncertainty,” Bailie says. “I think it may have affected staffing to a certain extent that people were reluctant to come and join because they didn’t know what was going to happen with the project.”

Bailie says now that there’s no threat to the mine permits, the company can move forward.

NovaGold plans to achieve production by the end of the first quarter, reaching full production of about 100,000 oz. of gold per year by the end of the second quarter. The project is expected to last four to five years.

Not everyone feels the resolution.

Vicki Clark, a lawyer with Trustees for Alaska, which represented the Bering Straits citizens’ group, says the ruling was disappointing.

“The federal law failed the public process,” Clark says.

Clark says there was not enough time or effort put into informing the local citizens about the open pit project.

“It was highly technical,” she says of the report. “There are two open pits people haven’t seen that in Nome before it’s a placer mining town.”

Sue Steinacher of the Bering Strait group says the group isn’t antimining – they fear the impact of cyanide on the local environment, especially the watershed.

She says the area where Rock Creek is being built was a pristine area but that it was portrayed as being already destroyed by historical mining.

“We have areas in Nome that are devastated from mining,” Steinacher says. “This wasn’t a heavily mined site.”

She says from this point the Bering Strait group will monitor Rock Creek with hopes that it’s impact is minimal.