NovaGold seeks permits for Galore Creek

The British Columbia Environmental Assessment Office is seeking public comment on an application for an environmental assessment certificate filed by NovaGold Canada Inc. in May.

The Vancouver, B.C.-based junior mining company proposes to construct and operate a $1.1 billion open-pit mine operation at its Galore Creek Project in northwestern British Columbia east of the Alaska Panhandle.

NovaGold Canada is 100 percent owned by NovaGold Resources Inc, which is also developing the Donlin Creek and Rock Creek mining projects in Alaska.

Located within the historic Stikine Gold Belt, Galore Creek is in Tahltan Traditional Territory near the communities of Dease Lake, Iskut and Telegraph Creek. The 214,000-acre (86,600 hectare) property is about 43 miles (70 kilometers) west of Highway 37 and 90 miles (150 kilometers) northeast of Stewart, B.C., which has a year-round deepwater port available for shipping ore concentrates.

Situated in the rugged Coast Mountain Range, Galore Creek is expected to produce 5.9 billion pounds of copper, 3.7 million ounces of gold and 40 million ounces of silver over the 20-year life of the project. The property's total measured and indicated resource is 12 billion pounds of copper, 13.7 million ounces of gold and 156 million ounces of silver.

Pact with Tahltan Nation

B.C.'s EAO called for public comment during a 60-day period, beginning July 10 and ending Sept. 8.

The project is subject to review under B.C. environmental regulations and Canada's Canadian Environmental Assessment Act. NovaGold also applied for provincial authorizations under the Forest Range and Practices Act, Land Act, Water Act, Environmental Management Act, Drinking Water Protection Act, Transportation Act and Health Act to be reviewed concurrently with the application, the B.C. regulators said.

NovaGold said it has worked since 2003 in cooperation with the Tahltan Nation to develop "Out of Respect," a document that outlines a strategy and program for use by the mining industry to advance Tahltan well-being. The strategy became a foundation for a socio-economic impact assessment and the NovaGold-Tahltan Participation Agreement, ratified by the Tahltan Nation and signed on Feb. 10.

"NovaGold intends the Galore Creek Project to be a showcase of sustainable mining practices. The company commits to make every reasonable effort to minimize long-term environmental impacts while generating substantial income and various ancillary opportunities for shareholders, the Tahltan Nation, employees and the broader community," NovaGold told B.C. regulators.

The promise includes giving preferential hiring and contracting opportunities to members of the Tahltan Nation during construction and ongoing operations phases of the project.

NovaGold expects to employ up to 1,000 people during two years of construction and about 553 permanent workers when the mine project begins full production.

Slurry pipeline proposed

In addition to a mill and processing facilities at the project site, NovaGold also plans to build an 86-mile (140-kilometer) underground pipeline to transport concentrate slurry to a filter plant near Highway 37. A large pump will move concentrate slurry through the pipeline at a rate of 90 tonnes per hour, the company said. Corrosion protection, insulation for sections that cross waterways, five monitoring stations along the route and an emergency drain point are all features of the pipeline, the company told B.C. regulators.

A smaller pipeline will be installed adjacent to the concentrate slurry line with similar protections to haul diesel fuel to the site for power generation, NovaGold said.

Concentrate removed from the slurry solution at the filter plant will be hauled by trucks to the port at Stewart, while cleaned and treated water will be discharged into the Iskut River, NovaGold said.

At the mine site, water used in processing the ore will come from wells dug on site, and residual materials will be removed and placed in a tailings pond. The water will remain in the concentrate slurry, the company said.

NovaGold also aims to use the nearby Grace property as part of a tailings disposal facility for Galore Creek. NovaGold is seeking to acquire the Grace property's owner, Pioneer Metals, in a hostile takeover. The plan resulted in two companies becoming embroiled in litigation.

NovaGold, meanwhile, has become the target of a hostile takeover bid by its partner in the Donlin Creek Project, Barrick Gold Corp.

NovaGold plans to process 65,000 tonnes per day of ore and waste rock, according to a pre-feasibility study published in October. Annual production in the first six years would average over 300,000 ounces of gold, 2.31 million ounces of silver and 370 million pounds of copper.

The study, which was prepared by independent engineering services company Hatch Ltd., estimates that after-tax annual cash flow would total more than $200 million, using long-term average metal prices and over $350 million at current metal prices for the first six years.

Permitting focus of 2006 spending

In its second-quarter financial report, NovaGold said the majority of its spending at Galore Creek in 2006 will relate to finalizing environmental and engineering work for the environmental assessment report application and paying for an independent feasibility study scheduled for completion later this year.

NovaGold plans to spend about $40 million on programs that are planned to lead to completion of the feasibility study in the second half of 2006 and to assist permit completion in 2007. Included in the budget are about 18,000 meters of infill and exploration drilling, continuation of detailed design, particularly of the road access, continued metallurgical testing, monitoring and community projects as well as a $7.5 million property payment due in October. The company is also reviewing activities and the ordering of long-lead time equipment that may be carried out prior to obtaining development permits to assist with the construction timeline of the project.

NovaGold said its board of directors has approved up to $49 million in additional expenditures at Galore Creek in 2006 as the permitting process advances.

NovaGold's timeline for Galore Creek is to submit permit applications in the first half of 2006, complete the final feasibility study in the third quarter, obtain key construction permits in early 2007, start construction in mid-2007 and start commercial production in 2010-11.

Send comments by midnight Sept. 8, to: Anne Currie, Project Assessment Director, Environmental Assessment Office, P.O. Box 9426, Stn Prov Govt , Victoria, BC V8W 9V1; or fax them to: (250) 356-6448. Comments also may be sent by e-mail to eaoinfo@ gov.bc.ca.