New managers to reassess Galore Creek

NovaGold Resources Inc. Jan. 16 announced the appointment of new senior managers for the Galore Creek copper-gold-silver project that it owns jointly with Teck Cominco Ltd. in northwestern British Columbia as the partners launch an effort to re-evaluate and optimize development of the property.

The companies suspended construction activities at Galore Creek in November when an independent engineering firm estimated that capital costs for developing a proposed 65,000-metric-tons-per-day mine could climb to $5 billion, more than double an earlier estimate of $2.23 billion.

NovaGold and Teck Cominco appointed Pol Guzman as president and general manager and Gary Ward as project director of the Galore Creek Mining Corp.

Guzman and Ward will lead an aggressive review of Galore Creek's development with the objective of producing a modified construction approach and execution plan that will deliver enhanced financial returns, the companies said in a joint statement.

Guzman, a mechanical engineer by training, is an internationally recognized senior project executive with in-depth experience in several complex and large-scale mine development projects, including the Escondida and Antamina mines in Latin America.

Ward brings over 40 years of project execution experience and most recently served as project director for the expansion of the Paracatu project in Brazil.

"I am very optimistic that this outstanding leadership team will be able to view the project with a fresh perspective and draw on their extensive experience to identify a path forward that will deliver clear value for both partners," said NovaGold President and CEO Rick Van Nieuwenhuyse.

"The appointment of two professionals with the breadth of experience that Pol and Gary bring to Galore Creek demonstrates clearly that both NovaGold and Teck Cominco remain fully committed to unlocking the potential of the Galore Creek resource as rapidly as possible," said Teck Cominco President & CEO Don Lindsay.

Reserves to be reclassified as resource

NovaGold and Teck Cominco also thanked Doug Brown for his exceptional efforts in leading the Galore Creek project since formation of their partnership in mid-2007.

Teck Cominco and NovaGold said they would re-evaluate Galore Creek's potential but they remained committed to developing the deposit, which is considered one of the largest undeveloped copper-gold properties on earth.

Teck Cominco had already invested $265-million in Galore Creek, while NovaGold has spent $400-million. The companies said they will spend another $100-million together to wind down construction camps and equipment, and would be forced to take write-downs on the project.

Substantial value was added to the project during the 2007 construction season, including clearing 80 percent of the 135-kilometer road right-of-way, completing 66 kilometers of pioneer road, installing a number of key bridges and initiating work on the road access tunnel into the Galore Creek Valley.

During the construction suspension and optimization period, the partners will maintain the existing infrastructure to ensure the project can be restarted quickly and efficiently as soon as a modified construction approach is defined and approved, the companies said.

As a result of the decision to reassess the feasibility study and project economics, all of Galore Creek's proven and probable reserves have been reclassified as measured and indicated resources. As a result, NovaGold said it plans to file a National Instrument 43-101 report prior to Jan. 31.

Meanwhile, information contained in the Galore Creek Feasibility Study completed by Hatch Ltd. in October 2006 should not be relied upon, the company added. That report proposed an open pit mine with the potential to recover at least 5.9 billion pounds of copper, 3.7 million ounces of gold and 40 million ounces of silver.

Teck Cominco has committed to spend $72-million over the next five years "to reassess the project and evaluate alternative development strategies," Lindsay said in November. Future options include developing Galore Creek as a small, high-grade mine or shifting to underground mining from the current open-pit plan.