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www.MiningNewsNorth.com The weekly mining newspaper for Alaska and Canada's North Week of July 2, 2017

Freeman: new players kicking thetires of big Alaska metals projects

NORTHERN NEIGHBORSCompiled by Shane Lasley

Red Mountain shows feasibilityIDM Mining Ltd. June 26 said the results of a feasibility

study for its Red Mountain confirms the positive economics for

developing a high-grade underground gold mine at this gold

project near Stewart in northwestern British Columbia. The pro-

posed 1,000-metric-ton-per-day year-round operation is expect-

ed to average roughly 78,000 ounces of gold per year over the

nearly six year mine-life considered in the feasibility study.

Initial capital expenditure to fund construction and commission-

ing is estimated at C$135.7 million, with a life-of-mine cost of

C$202.4 million. Life of project direct cash cost is estimated at

US$539 per ounce of gold recovered; net of the silver by-prod-

uct, costs drop to US$492/oz. At a gold price of US$1,250/oz

and an exchange rate of C$1 to US76 cents, the Red Mountain

is calculated to generate a post-tax net present value (5 percent

discount) of C$104 million; an internal rate of return of 32 per-

cent; and is expected to payback initial capital in 1.9 years.

"This study demonstrates a high-margin, low-capex under-

ground gold mine with a short development timeline, producing

over 90,000 ounces of gold per year over the first two years of

operation, with a life of mine average annual production of

78,000 ounces," said IDM President and CEO Robert McLeod.

"With these positive results now in place, our highest priority is

the ongoing exploration and resource expansion drilling adja-

cent to current reserves, with the objective of extending the

potential mine life for Red Mountain." McLeod said the devel-

opment of a mine at Red Mountain would be great for the econ-

omy of his home town of Stewart. ""The project enjoys signifi-

cant support locally and regionally and our goal remains to have

approvals in place for a shovel-ready project by mid-2018," said

IDM Executive Chairman Michael McPhie.

Wellgreen M&I resource growthWellgreen Platinum Ltd. June 26 reported a roughly 10 per-

cent increase in the measured and indicated resources at its

Wellgreen nickel-platinum group metal-copper project in south-

western Yukon. Since the publication of a resource estimate in

2014, an additional 74 holes have been completed at Wellgreen.

Incorporating the results from this work, Wellgreen now hosts

362 million metric tons of measured and indicated resource

averaging 0.26 percent (2.08 billion pounds) nickel; 0.14 per-

cent (1.09 billion lb) copper; 0.015 percent (121 million lb)

cobalt; 0.23 grams per metric ton (2.69 million ounces) plat-

inum; 0.24 g/t (2.84 million oz) palladium; and 0.04 g/t

(468,000 oz) gold. Wellgreen said this roughly 10 percent

increase over the 2014 resource estimate would have been clos-

er to 25 percent if the same costs, metals prices and recoveries

were used. The inferred class of mineralization declined in ton-

nage by approximately 86 percent. Nickel grades, however,

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Underground drilling is testing expansion targets adjacent to thereserves at Red Mountain with the goal of extending the life ofthe mine proposed for this gold project in northwestern BC.

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Drilling has outlined a deposit at Donlin containing 39 million ounces of gold in the measured and indicatedresource category at an average grade of 2.2 grams per metric ton gold. Donlin Gold LLC – equally owned by sub-sidiaries of Novagold and Barrick – will have drills turning at the project this year, the first such program since 2011.

l D E V E L O P M E N T

Back to Donlin GoldWith permitting nearly complete, partners carry out optimization drilling

By SHANE LASLEYMining News

If this year’s US$8 million drill program is any

indication, Barrick Gold Corp. and Novagold

Resources Inc. are getting serious about building “the

largest pure gold mine in the world” at their Donlin

Gold project in Southwest Alaska.

“Donlin Gold’s size, grade, production profile,

exploration potential, mine life, community support

and jurisdictional safety render it a unique asset in the

gold industry,” said Novagold President and CEO

Greg Lang. “Both partners envision Donlin Gold to

be a pacesetter in the mining sector and are complete-

ly aligned in their objectives to optimize the project.”

This will be the first significant field program at

the 40-million-ounce gold project since Donlin Gold

LLC – equally owned by subsidiaries of Novagold

Resources Inc. and Barrick Gold Corp. – completed

a feasibility study in 2011 and submitted the project

for permitting the following year.

Optimizing DonlinThe Donlin Gold mine project outlined in the fea-

sibility study is projected to average roughly 1.5 mil-

lion ounces annually during the first five years of

operation and 1.1 million oz annually over a project-

ed 27-year mine-life.

At US$1,200/oz. gold, the base case price used in

the study, this operation is calculated to generate

after-tax cash flow averaging US$949.5 million

annually for the first five years and US$500.7 million

annually over the life of the mine.

Under this scenario, the partners would be paid

back the roughly US$6.7 billion needed to build the

mine in 9.2 years.

While this project has been working its way

through the permitting process, Barrick and

Novagold have been studying ways to optimize the

world-class gold project.

“The work focused on ways to capitalize on the

flexibility inherent in Donlin Gold’s unique charac-

teristics, identifying opportunities such as employing

modular construction, automation of certain mining

activities and implementation of innovative ideas for

infrastructure development and logistics, among oth-

ers, which will continue to be thoroughly assessed,”

Lang informed shareholders on June 26.

The optimized execution plan resulting from this

work is expected to push down the nearly US$7 bil-

lion in upfront capital needed to develop Donlin and

potentially the operating costs.

“We are encouraged by the prospects to further

optimize the Donlin Gold project, which has the

potential to be the largest pure gold mine in the world

– in one of the safest jurisdictions of the world,” said

Barrick President Kelvin Dushnisky.

Development decisionFollowing the 2017 field work, Barrick and

Novagold will finalize an updated feasibility study

for Donlin. With this information in-hand and the per-

mitting nearly complete, a formal decision on devel-

oping a mine at the Alaska gold project will likely be

made shortly thereafter.

This year’s program, which will include both geo-

logical and geotechnical drilling, will collect infor-

mation needed to inform and potentially implement

the Donlin Gold upgrades.

“As permitting activities approach their conclu-

sion, we believe that the approved field work will

reaffirm Donlin Gold’s status as the asset best posi-

tioned to capitalize on the resumption of the long-

term bull market in gold,” said Lang.

The environmental impact statement for Donlin,

the key piece to the permitting process in the United

States, is on pace to be finalized around March, 2018.

It is expected that it will take the U.S. Army Corps of

Engineers, the lead agency for the Donlin Gold EIS,

another three or four months to write a record of deci-

sion.

All other permits needed for construction to begin

are also expected to be issued by that time.

Donlin Gold also continues to advance permitting

for a 312-mile pipeline to transport gas from Cook

Inlet to the mine site. The partners are timing pipeline

permits to coincide with the expected permits for

mine development.

If all comes together according to plan, Donlin

Gold LLC could be ready to begin developing the

largest pure gold mine in the world by the end of next

year. l

see NORTHERN NEIGHBORS page 10