Wednesday, 4 April 2012

International Tower Hill Mines says Alaskan pipeline deal a "positive development"

International Tower Hill Mines (ITH)(TSE:ITH)(NYSE:THM) said Wednesday that the State of Alaska has reached a settlement with major oil companies for the study of a liquefied natural gas pipeline at the Point Thompson gas field.

The settlement was reached with BP (NYSE:BP), Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP).

The gold exploration and mining company said that a major gas pipeline in the state would have the potential to significantly reduce power costs in Alaska and positively impact the economics for its 100 percent-controlled Livengood gold project located near Fairbanks, in the Tolovana mining district within the Tintina Gold Belt.

The settlement was officially announced on March 30, and ITH said the deal ends three decades of dispute over Point Thomson, a large oil and gas field located 60 miles east of Prudhoe Bay, located on the North Slope of Alaska's northernmost coast.

"This settlement is a huge step in the right direction for the development of affordable energy in the state of Alaska for both
residents and businesses," ITH president and CEO James Komadina said.

The Point Thomson gas field holds an estimated eight to nine trillion cubic feet of gas, or approximately one fourth of the total 35 billion cubic feet of gas in the North Slope, which contains approximately one-eighth of U.S. total reserves.

ITH said almost 90 per cent of Alaska's gas output, which is produced as part of oil production, is reinjected into the field because there currently is no way to bring the gas to market.

Exxon, BP and Conoco have yet to announce the next steps for the plan, which is expected to include a large gas pipeline to Alaska's southern coast and a plant to liquefy gas for export.

ITH said the proposal, which could cost an estimated $40 to $50 billion and take five to 10 years to develop, still has to clear many commercial and regulatory hurdles.

Komadina said: "This is also an extremely positive development for the Livengood Gold Project as energy costs account for more than 25 percent of our anticipated overall production costs. The construction of a new LNG pipeline has the potential to reduce our energy costs by a significant margin, making our project much more robust economically."

The Livengood project is now in transition from an exploration project to undertaking a pre-feasibility study. Field investigations at the Livengood property are ongoing, with a total of nine drilling rigs working at the site during the summer 2011 program.

In 2012, ITH is focused on the rapid advancement of the Livengood project into a compelling potential development scenario while it continues to expand its current resource and explore its 145-square-kilomtre district for new deposits.

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