Major drilling kicks off at Galore Creek

NovaGold Resources and its Canadian subsidiary SpectrumGold are increasing spending this year for the company's Galore Creek property in remote northwestern British Columbia, kicking off a large, aggressive drilling and advanced exploration program in late May.

Galore Creek, about 37 miles west of the Cassiar Highway and about 46 miles east of Wrangell, Alaska, is a large, well-defined gold-silver-copper resource previously worked by Kennecott.

Three core rigs will work through the summer, completing more than 60,000 feet of samples. NovaGold has increased its exploration budget for Galore Creek, with plans to spend more than $8 million Canadian in 2004.

Last year, NovaGold optioned the property through its Canadian subsidiary SpectrumGold, and completed an eight-hole, 10,000-foot drill program in the fall. That initial work was combined with data taken from more than 300 historical holes to produce a new resource calculation announced May 5.

That new geological estimate, calculated by an independent engineering firm, increased in both the amount of metals contained in the deposit and the amount of higher-grade material that would help pay back initial capital costs of a mine project.

"This updated resource estimate clearly demonstrates that Galore Creek is a very large, high quality, porphyry-related gold-silver-copper deposit," said Rick Van Nieuwenhuyse, president and CEO of NovaGold and SpectrumGold. "The study also confirms that we have already achieved 70 percent of our initial 100 million tonne higher-grade target."

An industry benchmark for large copper deposits involves identifying a minimum of 100 million tons of mineralization grading 1 percent or higher. That initial high-grade material typically will cover initial capital costs, providing the ability to later mine lower grades of mineralization. Galore Creek's new resource identifies 70 million tons of material with grades of one gram per tonne of gold and 1 percent copper.

Estimate grows in copper and gold mineralization

The deposit remains open along strike and down dip. More nearby targets remain unexplored or under explored. Only two of 12 mineralized zones on the property were included in the new resource, according to NovaGold's vice president of exploration, Joe Piekenbrock. "We believe that there is excellent potential to add significantly to the overall resource and expand the higher grade zones of mineralization this season."

The new resource at Galore Creek contains two categories, both using a 0.5 percent copper equivalent cut-off grade. The indicated resource is estimated to contain 4 million ounces of gold, 52.2 million ounces of silver and 4.6 billion pounds of copper. Additional mineralization in the inferred category includes 1.2 million ounces of gold, 17.2 million ounces of silver and 1.3 billion pounds of copper.

The resource increased in the gold category by 15 percent, and in copper, by 14 percent, compared to the historical geological estimate.

Drilling work begins

Drilling work this summer is targeted, in part, to upgrading the inferred resources to the indicated category, as well as expanding the current resource. The company also plans to drill to define the initial 100 million tons of mineralization with 1 gram per tonne of gold and 1 percent copper for the initial payback of mine capital.

NovaGold has also prioritized high-grade targets at Copper Canyon, Junction and the South Zone, as well as on the adjacent Grace property. Finally, the company plans to explore for additional mineralization on several recently identified geophysical targets and known mineralized occurrences.

In addition to the 60,000 feet of drilling, NovaGold plans to complete a detailed, property-wide MAG, CSMAT and 3-D induced polarization geophysical survey program to generate additional drill targets.

Environmental consultants will also be working on the property this summer, according to NovaGold. The Tahltan Nation Development Corp. and Rescan Environmental Services have formed a new joint company called RTEC to carry out baseline environmental work, in preparation for the project's environmental assessment report.

As many as 70 people are expected to be working at Galore Creek this summer, NovaGold said, in preparation for a pre-feasibility study expected to be complete in mid-2005.

Later this summer, NovaGold expects to release a preliminary economic assessment study, being completed by Hatch of Vancouver, the independent engineering firm that calculated the new Galore Creek resource. That new study will consider mine development options, infrastructure, power and access options, site layout, metallurgy, development timetables and capital and operating costs.

Work this summer also will expand the on-site camp facilities, as well as improving existing infrastructure. The existing airstrip will be rehabilitated, a series of bridges will be rebuilt and road access to the Main and Southwest deposits will be repaired.

Company consolidation continues

NovaGold is continuing with plans to acquire the remaining 44 percent of common shares of its Canadian subsidiary, SpectrumGold, bringing the assets of both companies under the NovaGold banner.

A SpectrumGold shareholder meeting and vote is planned for July 8. With the appropriate affirmative vote, the plan to combine the companies will be concluded between July 15 and Aug. 15, the company said in its June 3 press release.