The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Toronto heavyweight and Vancouver junior agree on 50/50 partnership to operate world-class gold project in western Alaska
Toronto-based Barrick Gold Corp., the world's largest gold producer, and Vancouver-based junior NovaGold Resources Inc. have agreed to a 50-50 partnership on the world-class Donlin Creek project in western Alaska.
Barrick and NovaGold have agreed to form Donlin Creek LLC. The new company will operate the project and is owned equally by both partners. Donlin Creek LLC will have four board members, with two members selected by each company. NovaGold nominated Doug Nicholson, vice president NovaGold Resources Alaska, to be the general manager of the project until Dec. 31, 2009, and Barrick has agreed to this. All major decisions on the project would require agreements by both Barrick and NovaGold.
The agreement was announced a week before Barrick's deadline to meet certain requirements, including submitting a feasibility study on the project, to raise its ownership stake in the project from 30 to 70 percent.
Since 2003 when Barrick bought Placer Dome, which at the time was NovaGold's joint venture partner in the Donlin Creek project, the major has spent about $127 million on the project. NovaGold will pay back half of that amount as part of the agreement.
Rocky past
The two companies have had a rocky relationship from the start. NovaGold asserted that Barrick was behind schedule in the mine development program and would not be able to make its deadlines. Barrick countered with an unsuccessful takeover bid for NovaGold.
In response to that aggression, NovaGold filed suit in Alaska Superior Court to have the agreement between the companies nullified. This would have given NovaGold a permanent 70 percent share in the project. Barrick and NovaGold have agreed to drop all outstanding litigation.
"This agreement represents the best way forward for the advancement of Donlin Creek," Barrick's President and CEO Greg Wilkins said. "It removes the uncertainty of pending litigation and will allow us to make further progress on the project."
As part of the settlement Barrick has agreed to sell the Grace Claims to Galore Creek Mining Co., which is owned 50-50 by Tech Cominco and NovaGold. The claims lie adjacent to the copper-gold-silver Galore Creek project in northwestern British Colombia.
Moving forward
The companies have said that Donlin Creek LLC will continue to work closely with the two Native corporations in the region, Calista Corp. and Kuskokwim Corp.
Both Calista and Kuskokwim say they support responsible development of Donlin Creek. Calista owns the property on which Donlin Creek sits and would receive royalties generated by the project, which is considered one of the largest undeveloped gold deposits in the world with a measured and indicated resource of nearly 20 million ounces.
Donlin Creek LLC will compile the necessary data to complete a final feasibility study in the first half of 2008, the companies said. Once the feasibility study is complete, the JV said it will pursue necessary permits to move Donlin Creek into production.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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