The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Pact consolidates copper-rich deposits held by companies; provides framework for the exploration and development of Upper Kobuk
NovaGold Resources Inc. and NANA Regional Corp. have forged a landmark partnership to explore and develop the Ambler Mining District - a region of Northwest Alaska renown for a 110-kilometer- (70 miles) long belt of world-class volcanogenic massive sulfide deposits rich in copper, zinc, lead, gold and silver that sweep across its breadth.
The progressive agreement, penned by NovaGold President and CEO Rick Van Nieuwenhuyse and NANA President and CEO Marie Greene Oct. 19, consolidates the Upper Kobuk River region into an 180,000-hectare (445,000-acre) land package and provides a framework for exploration and development of the high-grade mineral belt that cuts across the traditional home of the Inupiat people.
For NANA, the alliance allows the Inupiat-owned Alaska Native regional corporation to be involved in the exploration and development of deposits on NovaGold's Ambler property, including the world-class Arctic Deposit. In return, NovaGold gets the opportunity to investigate the potential of the copper-rich Bornite deposit and explore other mineral prospects on NANA lands in the Upper Kobuk region.
"This will benefit their deposit as much as it will benefit NANA. It is a good fit," Greene told Mining News.
Beyond consolidating land positions in the upper Kobuk region, the alliance benefits from the traditional knowledge, business savvy and political clout of one of Alaska's most successful Native corporations with the geological knowledge, market savvy and business connections of a proven mineral exploration company.
"This agreement ratifies the cooperation that has been and will be essential to the successful development of these significant mineral deposits," said Van Nieuwenhuyse. "Notably, both parties are contributing resources to create the opportunity to take a consolidated and cost-effective approach to exploring and developing one of the richest and most-prospective copper districts in one of the safest geopolitical jurisdictions in the world."
Local support
NANA, which has realized vast economic benefits from its partnership with Teck Resources Ltd. at the Red Dog Mine, sees the development of mineral projects in the upper Kobuk region as a means to sustain Inupiat communities scattered across Northwest Alaska and continue to provide economic opportunities for its more than 12,000 shareholders.
"At NANA, we know our corporation is created as a promise to the shareholders of tomorrow. We are doing all we can to create a basis of wealth for them so that they will have more opportunities than we have today - and our region can continue to build a stronger, better Alaska," NANA Environmental Manager Jason Rutman said upon announcing the signing of the partnership with NovaGold.
NANA's commitment to developing its mineral resources is not a mandate that is handed down from its board and management, but has broad support from its Inupiat shareholders.
"In 2009 we held a shareholder survey and found that 78 percent of the people strongly supported resource development," NANA Vice President of Resources Lance Miller explained.
Before signing the exploration and development agreement, NANA and NovaGold conducted a number of meetings in the villages of Shungnak, Kobuk and Ambler. As a result of this consultation, a committee representing these upper Kobuk villages unanimously passed a resolution in support of responsible resource development and associated infrastructure in their area.
While they largely support mineral development, the Inupiaq see subsistence - hunting, fishing and other traditional activities - as its most valued resource.
In its role as a resource development partner, NovaGold has made a commitment to respect Inupiaq values as it explores and develops mineral resources in the NANA region.
"As an Alaska Native corporation, NANA values subsistence as the best use of its traditional lands, and all development projects must embrace this perspective. NovaGold is committed to respecting and protecting the culture of its community partners and using traditional knowledge to enhance project development," NovaGold told its shareholders.
Rutman, who also serves as NANA's liaison to NovaGold, noted that the Upper Kobuk Mineral Project -the current title of the consolidated property - will be rebranded with an Inupiaq name.
Long time interest
NANA has long known that the upper Kobuk region was rich in copper and other metals.
In the 1960s, Kennecott Exploration Co. explored the Bornite (then known as Ruby Creek) deposit on NANA lands. A resource calculated for the Rio Tinto subsidiary estimated that the carbonate replacement-style deposit contains some 70 million metric tons averaging 1.2 percent copper and at least 454,000 metric tons of higher grade ore averaging around 4 percent copper.
"So there is a small high-grade underground minable deposit, and there would be a larger open-pittable lower grade deposit," Van Nieuwenhuyse said.
Upon the discovery of Arctic in the late 1960s, Kennecott turned its focus to this copper-rich VMS deposit situated 17 kilometers (27 miles) north of Bornite.
"We have always known there are minerals in the Upper Kobuk area. The question has always been: How much is there?" Greene told Mining News in April.
NovaGold's CEO also has a history of interest in the Upper Kobuk region. Working for Anaconda Copper Mining Co., Van Nieuwenhuyse and current Rio Tinto CEO Tom Albanese explored the Ambler Mining District in 1979.
Arctic - the most advanced of the projects NovaGold brings to the partnership - currently has an indicated resource of 16.8 million metric tons averaging 4.1 percent copper, 6 percent zinc. The deposit has an additional 12.1 million metric tons averaging 3.5 percent copper and 4.9 percent zinc in the inferred resource category.
At a copper-equivalent grade of 8.3 percent, Arctic is regarded as one of the highest-grade undeveloped VMS deposits in the world.
A preliminary economic assessment prepared for Arctic early in 2011 envisions a 4,000-metric-ton-per-day-mine producing some 1.7 billion pounds of copper, 2 billion pounds of zinc, 291 million pounds of lead, 266,000 ounces of gold and 22 million ounces of silver over a 25-year mine life.
Using long-term metal prices of US$2.50 per pound copper, US$1.05/lb zinc, US$1.00/lb lead, US$1,100 per ounce gold and US$20/oz silver - Arctic produces a pre-tax net present value (at an 8 percent discount) of US$718 million with an internal rate of return of 30 percent; and a post-tax NPV (8 percent) of US$505 million with an IRR of 25 percent.
"This preliminary economic assessment demonstrates the robust economics of developing one of the highest-grade VMS deposits in the world," Van Nieuwenhuyse said.
2011 milestones
NANA and NovaGold began building a working relationship in 2004, when the Vancouver B.C.-based exploration company entered into a joint venture agreement with Kennecott on the Ambler property. NovaGold purchased 100 percent ownership of the 90,624 acres of state, federal and patented mining claims land package early in 2010; laying the groundwork for the progressive partnership.
"While NANA and NovaGold have been working together for the past several years on the project, several milestones have been reached this year," Rutman said.
In January, 2011, the NANA Board of Directors passed a resolution for the corporation to partner with NovaGold on exploration of the Ambler Mining District.
Working under a tentative agreement NovaGold spent some US$10 million in 2011 at both its own Arctic project and NANA's Bornite deposit.
Though not officially operating under the partnership, an oversight committee with equal representation from both parties guided this year's activities.
To further advance the project toward pre-feasibility, NovaGold completed about 1,200 meters of geotechnical and infill drilling in 2011. Additional engineering and metallurgical work on Arctic is ongoing to support further economic studies and to evaluate overall district development scenarios.
At Bornite, NovaGold completed 5,900 meters of drilling this year aimed at confirming and expanding the historical resource outlined by Kennecott. Assay results from the program are expected to be released in November.
"We are very pleased with the first-year program at Bornite, and we think we have had some good success at coming up with a geological model for the Bornite property and understanding the ore controls. We look forward to a productive drill season next year," Van Nieuwenhuyse reported.
The NovaGold leader said his company will begin exploring some of the outlying prospects on both NANA and NovaGold land in 2012.
"Instead of moving one deposit to prefeasibility, we really want to analyze what the best way to approach the district is," he explained. "It is not like we are necessarily are going to try to drill everything out, but we, at least, want to get an idea where the synergies are - especially between Arctic and Bornite."
Additionally, the explorer established a new 40-person camp near Bornite, hoping to improve exploration efficiency and reduce the need for helicopter support.
Road to Ambler
Though Arctic is considered one of the richest deposits of its type in the world, surface access is an important requirement for development of it and other mineral projects in the Ambler Mining District.
NovaGold and NANA are in ongoing consultation with the State of Alaska to facilitate the building of a road to the upper Kobuk region. In addition to being important to mineral development, NANA sees the infrastructure as a means to reducing skyrocketing energy costs to its residents.
"To help ensure the sustainability of our region's villages and to mitigate the continuing energy crisis, NANA is working with our regional, state and federal partners to create alternative, affordable sources of energy and create important infrastructure in our villages in hopes of spurring economic growth," Rutman explained.
While studying the economics of building a mine at the Arctic deposit, SRK Consulting (U.S.), Inc. determined that a 340-kilometer (211-mile) road stretching west from the Dalton Highway to the village of Kobuk, would be the best route for linking the copper-rich deposit to Alaska's road-system.
For the purposes of the study, SRK assumed that the road would be designed and constructed by the State of Alaska, and NovaGold would then reimburse the state on an agreed-upon basis over the operating life of the mine. A similar arrangement exists between the state and the Red Dog Mine in Northwest Alaska for its road and port facility.
NANA shareholders are warming up to the idea of having a road extending westward into the traditional homeland of its Inupiat owners.
"When we first started having discussions about roads 15 to 20 years ago our region did not support roads, but 15-20 years later that has changed because of our economy, our high cost of energy and the need for more employment," Greene told Mining News.
Alaska Gov. Sean Parnell and the state Legislature approved US$4 million for scoping of the Ambler Mining District Access project in 2010 and an additional US$1.25 million was funded in the current budget to continue this work.
In January, Alaska Department of Transportation completed a round of public meetings in the villages of Ambler, Shungnak and Kobuk in the region where the road is expected to end.
Greene said the meetings went well, and residents are largely in favor of the road as long as their concerns about potential risks to the environment, cultural values and caribou migration are addressed.
Leaders of both NANA and NovaGold have told Mining News that development in the Upper Kobuk is not a "done deal" and stressed the importance of garnering local support as the project moves ahead.
"It has to be done right," Van Nieuwenhuyse said. "NANA and NovaGold share a common vision that we want to develop the mine or mines in cooperation with the local community."
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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