NovaGold revised Galore Creek development plan expected this quarter

In a news release issued Tuesday, NovaGold Resources said the junior miner and joint venture partner Teck "are considering a more aggressive program for 2010" to advance the Galore Creek project toward a construction decision.

NovaGold also announced it had hired former Homestake Mining COO Gil Leathley as a senior advisor to advise the company on mining, technical and operation matters related to the company's advanced projects.

Calling Leathley one of the "best mine builders in our industry," NovaGold CEO Rick Van Nieuwenhuyse said, "Mr. Leathley's pragmatic advice and expertise will be invaluable in developing what we consider several of the most significant mining projects of this century."

However, whether the Galore Creek project is as fabulous as NovaGold management claims is the subject of several shareholder lawsuits.  NovaGold says the Galore Creek deposit contains 8.9 billion pounds of copper, 7.3 million ounces of gold and 123 million ounces of silver in measured and indicated resources. Originally annual production had been estimated at 340,000 ounces of gold, 4 million ounces of silver and 200kt of copper.

Nevertheless, the project was put on hold in late 2007 when Teck management determined the Galore Creek project capex was actually US$5 billion, a substantial increase from the original $2 billion project capex. At the time, Citigroup metals analysts urged NovaGold to sell Galore Creek, declaring "the magnitude of underestimation is shocking to us, even in an industry rife with over-runs, casts a cloud over the equally-challenging yet earlier stage Donlin Creek (AK) gold project."

Recently, however, Canada's provincial and federal governments announced support to build a power line along Highway 37 to Bob Quinn, which is the starting point of the Galore Creek access road.

Meanwhile, due to the strength of copper and gold markets, NovaGold said it will release a new mine plan for Galore Creek early this year "that will include updated economics using higher copper and gold prices and an optimized project design."

NovaGold officials said the company is also working with Donlin Creek joint venture partner Barrick to assess "optimization scenarios with the goal of reducing power and processing costs and further improving project economics."

In April 2009, a feasibility study estimated Donlin Creek would cost US$4.5 billion to build and would produce an average of 1.25 million ounces over a 21-year mine life. NovaGold claims the Alaskan project "contains one of the largest gold deposits in the world with 29.3 million ounces of gold in proven and probable reserves and a further 6 million ounces of gold in measured and indicated resources."

NovaGold also has ready access to capital after filing a US$500 million base shelf prospectus on December 31, 2009.  http://www.proactiveinvestors.com/companies/news/3469/novagold-revised-galore-creek-development-plan-expected-this-quarter--3469.html