Vancouver — Partners
The deposit, in which NovaGold has a 70% interest and Placer Dome, 30%, now has a measured and indicated resource of 117.5 million tonnes averaging 3 grams gold per tonne, or 11.1 million contained ounces. In addition, the deposit hosts an inferred resource of 142.2 million tonnes averaging 3.1 grams gold, or 14.3 million contained ounces. These figures are based on a cutoff grade of 1.5 grams gold per tonne and a milling rate of 20,000-30,000 tonnes per day.
When a cutoff grade of 3.5 grams gold is used, the measured and indicated resource is pegged at 4.7 million ounces grading 5.1 grams gold per tonne, while the inferred resource is estimated at 6.8 million oz. grading 5.5 grams gold.
NovaGold says 99% of the measured and indicated resource and 90% of the inferred resource can be contained in an open-pit model.
A prefeasibility study is being conducted by AMEC E&C Services.
In order to earn an additional 40% interest in the project, Placer Dome must spend in excess of US$30 million, complete a bankable feasibility study, and decide to construct a mine capable of producing at least 600,000 oz. gold annually.
The base-case mine plan envisages an open-pit operation capable of extracting 20,000 tonnes of mineralized material per day in each of 14 years at an average stripping ratio of 5.9-to-1. Head grades and recovery rates would be higher in the first five years, resulting in just over 10 million oz. of production over the life of the mine. This study was based on a measured and indicated resource of 73.97 million tonnes averaging 3.11 grams gold, or 8.3 million contained ounces, using a cutoff grade of 2 grams per tonne.
The scoping study, also performed by AMEC, suggests Donlin Creek can support annual production of 1 million oz. with a capital investment of US$602.1 million. The cost includes US$79.6 million for contingencies. The payback period would be just over five years.
Cash operating costs are pegged at US$166.57 per oz.; total production costs, at US$241.87 per oz.
The pretax rate of return for the base-case was estimated at 15.6%, based on a gold price of US$300 per oz. At US$350 per oz. the pretax rate of return jumps to 25.3%. The aftertax return ranges from 10.7% to 17.9%, based on gold prices of US$300 and US$350 per oz., respectively.
Most of Donlin Creek’s resources are hosted by intrusive dykes and sills, plus high-grade stockworks in surrounding sedimentary rocks. Gold mineralization is structurally controlled and occurs as disseminations and veinlets in association with fine-grained arsenopyrite.
Results from metallurgical tests indicate that 95-98% of the gold is contained in fine-grained arsenopyrite mineralization. The gold can be recovered through conventional sulphide flotation, concentration, pressure-oxidation and carbon-in-leach cyanidation. Average gold recovery is 89%, and up to 92% with process optimization.
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