Ambler shuffles forward to development

NovaGold Resources is heading towards the Center of the Universe this year. No, the Vancouver-based junior won't be mining in outer space; it turns out that the Center of the Universe is in Alaska - which will come as no surprise to some residents of the 49th state. Astronomers may disagree about the accuracy of the name, but geologists believe that the Center of the Universe deposit could contain healthy reserves of copper, lead and zinc. NovaGold plans a 3,000-meter drill campaign at the deposit this year, as part of its larger Ambler project in northwestern Alaska.

The Ambler property consists of 379 square kilometers including patented lands and State of Alaska claims covering a precious metal-rich, volcanogenic massive sulfide or VMS district. In 2004 NovaGold signed a joint venture agreement with Rio Tinto that gave the junior the right to earn a 51 percent interest in Ambler, although Rio Tinto retains the option to take back the controlling interest if the project moves towards development.

The most promising prospect discovered on the property so far is the Arctic deposit, which according to NovaGold ranks among the largest and richest VMS deposits in the world based on total in-situ metal value and in-situ value per ton. The contained precious metals in this resource total more than 817,000 ounces of gold and 62 million ounces of silver, while the base metals total 3.2 billion pounds of copper, 4.2 billion pounds of zinc and 640 million pounds of lead.

Ambler, Kobuk, Shungnak nearest

The three nearest communities to the Ambler property are Ambler (population 309), Kobuk (population 109) and Shungnak (population 256). There is no road connecting the villages but NovaGold is discussing the possibility of a road with local residents, Doug Nicholson, the company's Alaska general manager, said at the Arctic International Mining Symposium in Fairbanks. The road would also service any mine that might be developed in the area.

"Part of our agreement with Rio Tinto was that we go in and clean up remnants of the historic exploration campaigns - there's quite a bit of old drill steel, vehicles, a lot of stuff left around on the Arctic strip and Arctic itself," Nicholson told the symposium. NovaGold's contractor, Remote Site Services, has removed around 240,000 pounds of material, hauling it to the airstrip at Dahl Creek and flying it out for disposal. About 600 old fuel drums still contained 3,000 gallons of fuel. The contractor pumped out the fuel, cut up and crushed all the barrels and flew them out.

Transportation study looked at logistics

NovaGold hired NANA DOWL, a subsidiary of the regional Native corporation, to do a transportation study that looked at the logistics of getting things into and out of this remote area. Road, rail, air and rivers were examined, including any combination of those routes, with a total of 57 different alternatives being evaluated. "Part of the charge to NANA DOWL was, don't throw anything out or rule anything out. I didn't want to be pre-judgmental in going into it," Nicholson said. The study estimated a cost of $2 million a mile to build a road or $4 million a mile for a railroad.

"Subsistence resources are a very sensitive subject, so we're sensitive to that and we've been out and talking with the folks in the region, we've laid this out for them, talked to them about what our plans are, and solicited their input into this," Nicholson said. "It's a sticky subject."

In the late 1970s and early 1980s Kennecott did a study that looked at using Boeing 747s to fly in and out of the project. "If you can reduce to a metal on-site, it actually does not look all that bad," Nicholson said. "Once it's on an airplane as metal, really, there's no limit to it, you can take it right out of Arctic and it can go right to the smelters in Japan." This would solve the problem of the effect on subsistence resources of people from outside coming in, but going to metal on-site requires much more power generation. The cost of fuel in Kobuk and Shungnak currently is just over $6 a gallon, so a diesel-powered plant would be expensive, according to Nicholson.

Concentrate on site

To produce concentrate on-site, 35 to 40 megawatts of power for a 5,000- to 10,000-tons per day operation would be enough. To reduce the concentrate to a metal, 80 to 100 megawatts of power would probably be required. "It's a substantial investment. Compared against building roads, though, at $2 million a mile, or railroads at $4 million a mile, it may make sense," Nicholson said.

Shaw Engineering conducted a power study for NovaGold's project. Again, all the options were considered, including diesel, wind, putting a power plant on the Dalton corridor or on-site, and using the as-yet undeveloped North Slope coal resource or the potential gas pipeline. "As everybody knows, environmental concerns today rule," Nicholson said. "So (we asked) what was the potential for looking for some sort of renewable-type resource that we could use to help supplement or generate more power on-site. Also we wanted to take a look at what the possibility was for creating power for the region, and being able to share power with the three villages."

The study identified two potential sites for a hydroelectric power facility which could be used for at least six months of the year and supplemented with diesel power, and possibly also wind power. "The wind blows a lot, so there's good potential," Nicholson said. NovaGold plans to put up 30 monitoring stations - 100-foot towers with small wind generators on them - to start collecting wind data. "If you can generate 25 or 30 megawatts of wind power and 25 megawatts of hydro, you're making a significant in-road into the amount of diesel generation that you have to have on-site," Nicholson added.

In addition to the drilling program and logistical research, NovaGold will begin a mine scoping study and conduct environmental baseline and metallurgical test work this year. The company expects that it will be at least 10 years before a mine is operational at Ambler.