Novagold Targets New Donlin Feasibility Study By End 2027: CEO

SEATTLE (Scrap Monster): Novagold Resources (TSX: NG) is pressing ahead with an updated feasibility study for its Donlin Gold project in Alaska now that Barrick Mining (TSX: ABX; NYSE: B) is no longer involved, CEO Greg Lang said.

Vancouver-based Novagold and US hedge fund billionaire John Paulson agreed in April to jointly buy Barrick’s 50% stake in Donlin for $1 billion. The transaction, which closed June 3, boosts Novagold’s stake to 60% while giving Paulson a 40% interest. Paulson paid Barrick $800 million, while Novagold paid $200 million.

 “We are fully aligned with Paulson that the next step for Donlin is to break out of this deadlock we were in with Barrick and move forward with updating the feasibility study,” Lang told The Northern Miner in an interview Wednesday.  “As the 60% owner, it’s incumbent upon us to chart a path forward and begin [the update] – an activity that Barrick, for a variety of reasons, was not able to commit to.”

Located in southwest Alaska’s Kuskokwim gold belt, Donlin is expected to become one of the biggest producers of the yellow metal in the Americas. It has proven and probable reserves of 504.8 million tonnes grading 2.1 grams per tonne gold for contained metal of about 33.9 million oz., according to a recent slide presentation posted on the company’s website.

Novagold wants to pick an engineering firm this year to freshen up the study, which was released in 2011.

“The last look at the feasibility study was many years ago. It’s certainly out of date,” Lang said.

Updating the document will take around two years and cost about $80 million, Lang said. Assuming Donlin’s owners decide to build the mine, construction and engineering would require another four years – meaning that production would start early next decade.

Using a spot gold price of $3,000 per oz. and a discount rate of 5%, Donlin has a net present value of $15.2 billion, Novagold says on its website.

 Courtesy: www.mining.com