August 2010

Prefeasiblity study underway at Galore Creek

Economics favourable for revival of project in northern British Columbia

By P. Caulfield


Geologists at Galore Creek Mine in northwestern BC, one of North America's largest undeveloped copper-gold-silver deposits

NovaGold Resources Inc. and Teck Resources Limited recently announced that a prefeasibility study (PFS) had started at their Galore Creek copper-gold-silver project in northwestern British Columbia. Following one season of construction in 2007, the project was suspended when a review revealed substantially higher capital costs and a longer construction schedule for the project than originally planned.

NovaGold director of corporate and investor relations Rhylin Bailie said NovaGold and Teck have completed optimization studies to simplify the project and expand throughput. In addition, copper and gold prices have risen considerably since 2006, when the original feasibility study was completed. Bailie said there is “exceptional demand” for gold and copper in world markets now.

The PFS is based on a revised mine plan completed by Galore Creek Mining Corporation (GCMC), which manages the project for 50-50 owners NovaGold and Teck. The study will provide capital cost estimates, as well as permitting, construction and production timelines. GCMC expects the PFS, which is usually a stepping stone to a bankable feasibility study, will be completed in the first half of 2011.

The main changes to the Galore Creek project include:

  • Relocation of the tailings facility to allow for the construction of a conventional tailings dam;
  • Relocation of the processing facilities to allow for future expansion;
  • Realignment of the tunnel and access road;
  • Increase of daily throughput to potentially 90,000 tonnes per day.

“We believe we’ve met our objectives of simplifying the design and allowing for expansion,” Bailie said.

According to the new plans, ore will be crushed in the valley and then conveyed through a tunnel and along an access road to the processing plant. From there, concentrate will be piped along the remainder of the access road to BC Provincial Highway 37. The PFS will also consider alternatives for transporting the concentrate to market.

Some components of the revised plan, such as the mill and tailings location, will require new permits or amendments to existing permits. However, most of the permits required for road construction remain in good standing. “In the last two years, we’ve established access approximately halfway to the mine site from Highway 37,” Bailie said.

The project is expected to use electric power primarily, with a power line built along the access road to tie into the 287 kV transmission line that the British Columbia and Canadian governments have pledged to build. On April 15, the governments announced that the power line project had entered the public review process for its Environmental Assessment Certificate.

Galore Creek, which was acquired by NovaGold in 2003, is one of North America’s largest undeveloped copper-gold-silver deposits.  The Galore Creek resource estimate totals measured and indicated resources of 8.9 billion pounds of copper, 7.3 million ounces of gold and 123 million ounces of silver, with additional inferred resources of 3.5 billion pounds of copper, 3.3 million ounces of gold and 61 million ounces of silver.

In February 2006, NovaGold entered into a comprehensive Participation Agreement with the Tahltan Nation, ensuring collaboration between both parties for mine planning, mine operation and environmental protection. Almost 65 per cent of project employees are Tahltan members.

Under the terms of the Galore Creek partnership agreement, Teck is funding all project costs until it completes its financial earn-in for the project. At the end of the first quarter of 2010, Teck had $25 million left to spend. Once that amount is depleted, the costs of the project will be split 50-50 between NovaGold and Teck.

Jason Weber, president and CEO of Kiska Metals Corporation, which has the Grizzly copper-gold porphyry exploration property 52 kilometres east of Galore Creek, said the decision to restart the Galore Creek project is good news for his company.

“It will make it easier for us to find a joint venture partner for Grizzly,” Weber said. “We’re just four kilometres off the access road that’s being completed between Galore Creek and Highway 37. That greatly improves the economics of Grizzly and gives us lots more flexibility.”

Weber said Kiska Metals is not the only exploration company that will benefit from a revived Galore Creek project.  “There are many other projects in the area,” he said. “There’s lots going on there.”

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