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Donlin Creek LLC Initiates Feasibility Revision for Natural Gas Pipeline
May 5, 2010 - Vancouver, British Columbia - NovaGold Resources Inc. (NYSE-AMEX, TSX: NG) today announced that a feasibility study revision has been initiated at the Donlin Creek gold project to consider the construction and operation of a natural gas pipeline to supply project power. Donlin Creek is owned and managed by Donlin Creek LLC ("DCLLC”). DCLLC is owned equally by NovaGold Resources Alaska, Inc. and Barrick Gold U.S. Inc.
The 2009 project feasibility study estimated Donlin Creek's total cash costs for the first full 5 years of operation at US$394/oz using a combination of diesel and wind as the source of on-site power generation. DCLLC has since completed preliminary optimization studies to evaluate the potential of bringing a source of natural gas to the project. Based on these studies, DCLLC has determined that using natural gas to generate on-site power may result in a reduction of power costs, which represent approximately 25% of the projected total operating costs at Donlin Creek under the 2009 feasibility study.
DCLLC is considering the construction of an underground 12-inch pipeline approximately 525 kilometers (325 miles) from the upper Cook Inlet area to the proposed Donlin Creek mine site. Gas from the pipeline would be used to produce electricity at site. The capital cost of the pipeline could be partially offset by cost savings from elimination of the wind cogeneration facility, the potential for a shorter access road and a significant reduction in requirements for diesel storage, with some additional cost reduction opportunities. The potential impact of the pipeline option on capital and operating costs will be addressed in a revision to the project feasibility study.
DCLLC has approved a supplemental budget for 2010 of US$18.7 million (NovaGold's share: US$9.35 million) bringing the total 2010 budget to US$47 million. The 2010 work program will complete the majority of the environmental and engineering studies required to review the pipeline option and revise the feasibility study and mine plan based on on-site power generation using gas. The pipeline studies and feasibility revision will take 12 to 18 months to complete. DCLLC will consult with stakeholders as these studies proceed and solicit feedback from local communities and its Alaskan Native partners as well as State and Federal regulatory agencies. NovaGold anticipates that DCLLC will file permit applications for the Donlin Creek project by the end of 2011.
"A natural gas pipeline has the potential to significantly improve operating costs and reduce operating risk,” said Rick Van Nieuwenhuyse, President & CEO of NovaGold. "We look forward to working with Barrick and our Alaskan Native partners to advance the Donlin Creek project through permitting and toward a construction decision.”
About the Donlin Creek Project
Located in northwest Alaska, Donlin Creek is one of the largest known undeveloped gold deposits in the world, with proven and probable reserves estimated at 33.6 million ounces of contained gold with an additional 4.3 million ounces of measured and indicated gold resources and 4.4million ounces of inferred gold resources. Additional exploration potential remains in the Donlin Creek district. DCLLC continues to review the mine plan in light of prevailing gold prices. The 2009 feasibility study outlined the parameters for a mine estimated to produce more than one million ounces of gold annually for at least 25 years. These production levels would make Donlin Creek one of the world's largest gold-producing mines. The complete Donlin Creek mineral reserve and resource estimate is included in the attached Appendix. Kevin Francis, P.Geo., Vice President Technical Services of NovaGold and a qualified person as defined by National Instrument 43-101, has reviewed the technical information contained within this press release.
About NovaGold
NovaGold is a growth-focused precious metals company engaged in the exploration and development of mineral properties in North America. The Company has a portfolio of mineral properties located in Alaska, USA, and British Columbia, Canada. The Company's largest projects are being advanced with major mining companies. The Donlin Creek project is held by a limited liability company owned equally by NovaGold and Barrick Gold U.S. Inc. The Galore Creek project is held by a partnership owned equally by NovaGold and Teck Resources Limited. NovaGold recently purchased a 100% interest in the Ambler property in Alaska, and owns a 100% interest in the Rock Creek, Big Hurrah and Nome Gold deposits near Nome, Alaska. NovaGold has one of the largest reserve/resource bases of any junior or mid-tier level producing gold company, and trades on the TSX and NYSE-AMEX under the symbol NG. More information is available at www.novagold.net or by email at info@novagold.net.
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