The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
NovaGold agrees to buy Arctic VMS project for US$29 million; opts to focus on environmental studies, Northwest community in 2010
NovaGold Resources Inc. has cut a deal with Rio Tinto subsidiary Kennecott Exploration Co. to purchase 100 percent interest in the precious-metal-rich Ambler copper-zinc property in Northwest Alaska.
The outright purchase overrides a 2004 joint venture agreement in which NovaGold would have earned a 51 percent stake in the property by spending US$20 million and delivering a positive prefeasibility study on the project by 2016.
The junior agreed to pay US$29 million to purchase the 36,670-hectare, or 90,614-acre, Ambler property from its former partner. On Jan. 11 Kennecott received 931,098 NovaGold shares at US$5.37 per share, or US$5 million. NovaGold has agreed to make two additional cash payments of US$12 million each, due in January 2011 and January 2012. Kennecott will retain a 1 percent net smelter return royalty that can be purchased for US$10 million.
The acquisition of this large volcanic massive sulfide property adds an exploration-stage project to the junior's portfolio.
"NovaGold is really going back to its roots by acquiring Ambler. We have a solid record in identifying opportunities, expanding resources and advancing those resources to reserves. NovaGold's exploration team tripled the size of both the Donlin Creek and Galore Creek deposits through focused exploration campaigns. With those projects now at a more advanced stage, we can focus our exploration efforts on Ambler with the goal of adding another world-class property to NovaGold's portfolio," said NovaGold President and CEO Rick Van Nieuwenhuyse.
The nearly 45-mile-, or 70-kilometer-, long Ambler property provides NovaGold multiple prospects to explore including the high-grade Arctic deposit.
"The Arctic deposit ranks among the largest and richest known VMS deposits in the world, based on both total contained metal and value per metric ton. And considerable opportunity exists to identify similar deposits in the region," Van Nieuwenhuyse said
The Arctic jewel
Kennecott discovered the Arctic deposit in 1966 and explored the prospect off and on until 1998. In 2004 and 2005, NovaGold drilled about 6,000 meters with the goal of confirming historical results and expanding the prospect.
A resource estimate completed for the company in 2008 outlined an indicated resource at Arctic of 16.8 million metric tons containing 4.1 percent copper, 6.0 percent zinc, 0.83 grams per metric ton gold 59.6 g/t silver and 0.94 percent lead. The estimate includes an additional inferred resource of 11.9 million metric tons with an average of 3.6 percent copper, 5.0 percent zinc, 0.67 g/t gold, 48.4 g/t silver, and 0.80 percent lead.
"There are other deposits there, but Arctic certainly is the crown in the jewel of that district," the NovaGold CEO told Mining News in November. "It's 4 percent copper and almost 6 percent zinc, so it's a very rich ore."
NovaGold believes there is potential to substantially expand the resource at Arctic. In 2008 NovaGold reported that two holes drilled during 2007 had identified the existence of a deeper limb of a fold structure containing the same stratigraphy as the Arctic deposit. The new prospective area is below and adjacent to the current outlined resource and is not included in the resource.
Plans for 2010
The NovaGold CEO said Arctic will be the priority exploration target at the Ambler property but the company has not yet decided whether it will complete any drilling at the project in 2010.
Establishing environmental baseline studies, conducting engineering and metallurgical studies and community engagement will be top priorities for NovaGold in 2010.
"We may well do some drilling this year, but the primary focus will be on permitting and putting in an environmental baseline for the region," the NovaGold leader explained.
Nieuwenhuyse said gaining permits for underground work at Arctic and establishing a road that links the property to the Bornite area are also on the roster for 2010. The road link will provide access to an established camp and the 5,000-foot, or 1,524-meter, Dahl Creek airstrip.
To accomplish these tasks NovaGold has established a team that will be led by Scott Petsel, a geologist with more than 20 years of experience.
"NovaGold has appointed Scott Petsel as Ambler project manager. Scott has managed exploration and development-stage programs at other NovaGold properties, including Donlin Creek and Galore Creek, and embraces NovaGold's approach of integrating community involvement from the outset at each project. With our track record of success at Donlin and Galore, we intend to turn Ambler into another world-class property," Van Nieuwenhuyse said.
Road to Ambler
The Arctic deposit is as remote as it is rich in minerals. For this reason much of NovaGold's focus at Ambler over the past two years has been working with the Kobuk River villages, the Northwest Arctic Borough, the Native regional corporation, NANA Inc., and the State of Alaska to discuss transportation alternatives and opportunities for synergies in the region.
NovaGold said community engagement will continue to be an important element toward advancing Ambler in 2010.
"A lot of our work will be dialoguing with NANA and Northwest Arctic Borough and the villages towards the expectation of developing the project," Van Nieuwenhuyse said.
Transportation infrastructure linking this remote region of Northwest Alaska to the rest of the world is expected to be one of the primary topics.
One transportation alternative being studied is a road that links Nome to Alaska's contiguous road system about 500 miles, or 800 kilometers, to the east. The State of Alaska has commissioned the Western Alaska Access Planning Study to analyze the potential for constructing the highway.
One transportation corridor being studied would take off from the Dalton Highway north of the Yukon River and run southwest along the southern slopes of the Brooks Range to the road system near Nome. This 700-mile route, which would pass about 50 miles south of the Arctic deposit, was specifically chosen by the state to provide access to the Ambler Mining District.
"A recommended corridor will be identified and an economic benefits assessment will be conducted to present the benefits of the corridor to the region and the State of Alaska," according to the Alaska Department of Transportation Web site.
The results of the study are expected to be made public by the end of January.
"A large part of making this a successful project is getting that road built," Van Nieuwenhuyse said.
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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