NovaGold to use vat-leaching on Newfoundland gold project

Halifax-based NovaGold Resources (TSE) plans to apply its vat-leaching techniques, which have been successful at the Murray Brook mine in New Brunswick, to the Pine Cove gold property in the Baie Verte area of Newfoundland.

NovaGold has delivered a positive feasibility study for the deposit to joint venture partners International Corona (TSE) and Varna Gold (ASE). By issuing $700,000 worth of NovaGold shares to Corona by Jan. 17, NovaGold’s subsidiary, Pine Cove Resources, will acquire Corona’s option to earn a 70% interest in the property.

Prepared by Peak Engineering, the independent study confirms minable reserves of 1.64 million tonnes at a diluted grade of 3.62 grams gold per tonne (0.1 oz. per ton). An additional 336,000 tonnes at 1.6 grams could be mined from an open pit. Mill capacity would be 1,500 tonnes per day at recoveries of at least 85%.

At a gold price of US$365 per oz. and operating costs of $20.38 per tonne, the study estimates gross revenues of $36.92 per tonne. NovaGold would realize a net cash flow of $13.4 million over a 4-year production period, after paying capital costs of about $13.7 million.

The project would employ about 70 people in the summer, and 40 people during the winter months, said a spokesman for the company.

Subject to financing, which is currently being negotiated with private bankers and with the Atlantic Canada Opportunities Agency, NovaGold expects to begin production in late 1992. An access road is being constructed to the mine site.

The deposit remains open along strike and to depth adjacent to the proposed pit.

NovaGold says there are a number of other deposits in the Baie Verte area which could be processed using the vat-leaching technique. The company is looking at other acquisitions or joint ventures.

The Murray Brook mine, 80 km from Bathurst, N.B., has responded well to indoor vat-leaching. In 1991, the mine produced 20,312 oz. gold and 173,915 oz. silver at an average cost of US$250 per oz., up from 17,085 oz. gold and 86,012 oz. silver at US$290 in 1990. Recoveries are 85% for gold and 17% for silver.