Scoping study, drilling planned at Galore Creek

Geologists working for NovaGold Resources are going to be busy across the border in northwestern Canada this summer.

The company's Canadian subsidiary, SpectrumGold, plans to spend $5 million for its Galore Creek advanced stage exploration project in remote northwestern British Columbia, and up to $1 million on other grassroots properties in the Yukon Territory.

Galore Creek is the "new sexy project for NovaGold," said Doug Nicholson, vice president and general manager of NovaGold's Rock Creek gold project near Nome. "We're planning a big program this year … I think we will do well with it."

The company plans to drill a minimum of 60,000 feet at Galore Creek this summer, following completion of an updated geological model and resource estimate, expected to be released later this month. A preliminary economic assessment study or scoping study is also scheduled to be completed before the summer drilling begins, according to a Feb. 12 press release.

The goal is to identify zones of higher grade material within the existing known deposit, and to test possible mineralization extensions, thereby defining new resources within Galore Creek and in 10 other surrounding target areas, according to a company statement released last fall.

"This is the same type of opportunity as Donlin Creek," Nicholson said. "We take an exploration play from one of the majors and go in with a fresh set of eyes and enlarge the project."

In 16 months of intensive exploration drilling at Donlin Creek in southwest Alaska, NovaGold geologists doubled the size of that gold deposit, producing a resource of nearly 28 million ounces of gold and spending $10 million to do so.

Now Donlin Creek is back in the hands of a major mining company, Placer Dome, which must spend $30 million on development to regain a 70 percent interest in the project.

Expanding Galore Creek

NovaGold hopes to translate that exploration success across the border to the gold-silver-copper deposit at Galore Creek some 37 miles west of the Cassiar Highway, and some 46 miles east of Wrangell, Alaska.

The property has been explored by a number of companies since the early 1960s. Past drilling outlined a resource of 5 million ounces of gold, 60 million ounces of silver and 5 billion pounds of copper. Mineralization occurs at surface and is open at depth.

Current access to Galore Creek is by air, although the scoping study will evaluate in detail access and infrastructure needs, as well as look at the best approaches to mining, processing and transportation of the concentrate product. The study will also estimate capital and operating costs and manpower needed for developing the deposit.

Following the summer drilling program, SpectrumGold plans to complete a pre-feasibility study of Galore Creek in early 2005.

In addition to hiring Hatch Engineering to complete an updated resource estimate, the company has also retained Rescan Environmental to initiate an environmental baseline monitoring program.

Fall drilling successful

Last October, SpectrumGold completed an eight hole, 10,000-foot drilling program on the property, designed to test previous drill results and to better understand deposit variability, zonation and mineralization controls.

Results demonstrated the presence of increased gold and copper grades in the deposit through a focus on potential structural controls; grades were higher than anticipated, according to a company statement accompanying drilling results.

An average of assay intercepts produced three grams (0.09 ounces) per ton of gold equivalent, or 2 percent copper equivalent over 390 feet.

One hole drilled tested both the upper mineralized horizon and a potential lower mineralized zone. Drilling successfully intersected the upper horizon, producing a 520-foot intercept grading 2.6 grams (0.083 ounces) per ton of gold equivalent, or 1.7 percent copper equivalent.

The same hole bottomed in strongly mineralized material, with a 214-foot intercept grading 2.3 grams (0.073 ounces) per ton of gold equivalent, or 1.4 percent copper equivalent.

Yukon property will be worked

SpectrumGold also plans to spend between $500,000 and $1 million on its other grassroots properties in the Yukon Territory. One option is drilling at the Brewery Creek property, work designed to identify a major sulfide gold target along a 15-kilometer mineralized trend.

SpectrumGold also holds a 70 percent interest in the McQuestern gold project located near Mayo, Yukon.