Pine Cove wins environmental OK, seeks financing

Having won environmental approval for its Pine Cove gold project in Newfoundland, NovaGold Resources (TSE) is preparing to raise $14 million to build a 1,500-ton-per-day vat leach operation.

NovaGold has an option to earn a 70% interest in the Pine Cove property by funding capital costs, after which it will proceed as a joint venture partner with 30%-owner Varna Gold (ASE).

NovaGold vice-president William Young says he hopes the Atlantic Canada Opportunities Agency (ALCOA) will guarantee 85% of the first $10 million that the company is planning to raise. The remaining $4 million will be raised by equity financing, Young told The Northern Miner.

Toronto merchant banker Capital Canada has been hired to arrange financing on NovaGold’s behalf and it will hold talks with the ALCOA board in Newfoundland within the next few weeks.

“We hope to be in a position to begin construction this June and be up and running by the end of the year,” said Young. “The key is to get approval from the ALCOA board.”

NovaGold is planning to use the same indoor vat leaching technology that has already proved successful at its Murray Brook gold mine in New Brunswick where production last year totalled 20,312 oz. gold and 173,915 oz. silver. Before giving the green light at Pine Cove, environmental officials visited Murray Brook to see the vat leach process which involves the use of front end loaders to pile crushed ore into large covered vats. Like heap leaching, cyanide solution is sprayed onto the pads and percolates down through the crushed ore before the pregnant solution, containing gold mineralization, is recovered.

“The vats are like four swimming pools sitting side by side in a large building,” said Young.

Minable reserves at Pine Cove stand at 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 (0.047 oz.) could be mined by open pit methods, according to an independent study by Peak Engineering.

At full speed, NovaGold expects to produce 51,000 oz. annually at a cost of about US$190 per oz. Gold traded recently at US$340 per oz.