Donlin owners hope to resume drilling soon
Update: Donlin Gold workers will begin returning to the project site May 22, accoridng to spokeswoman Kristina Woolston. Donlin with have "an aggressive and measured approach" to prevent the spread of COVID-19 that will include testing for the virus. About 120 people were working there before the camp was shut down in early April.
The owners of the Donlin gold project hope to soon resume drilling work paused in response to the COVID-19 pandemic at the remote mine site and are starting to prepare an updated assessment of the project’s viability.
NOVAGold Resources Inc. CEO Gregory Lang said Donlin Gold started its 2020 drilling campaign in February and worked through March before closing down the camp in early April to comply with state health recommendations and travel restrictions.
Crews used three drilling rigs to complete six boreholes prior to April, according to Lang.
NOVAGold is a 50 percent owner of Donlin Gold in Western Alaska along with mining industry giant Barrick Gold Corp.
He said he believes Donlin’s ambitious drilling program — with 80 holes totaling approximately 22,000 meters — can still be completed this year but when it will resume is unclear.
Company leaders are currently evaluating when workers can pick up where they left off, Lang said during NOVAGold’s annual shareholder meeting call on May 14 .
“They will not return to site until it is safe to do so,” he stressed.
Lang noted that Donlin donated its food supplies to food banks and shelters in area villages when the camp was closed.
Donlin Gold secured several state permits and land-use approvals for an access road, fiber optic cable and other facilities in January. The company is also continuing a multi-year program started last year for the project’s key dam safety permit from the Department of Natural Resources, which is one of the last major approvals on Donlin’s list.
The drilling work, along with engineering and geologic refinements in the project will be added to an updated feasibility study, according to Lang.
“A lot of inputs have gone down since the last study, not very many have gone up,” NOVAGold chairman Tom Kaplan said.
Kaplan said he does not believe the COVID-19 pandemic has pushed gold to more than $1,700 per ounce in recent days, noting it was at roughly $1,600 before the global crisis began.
“It’s accelerating trends which were already in place,” he said.
The price of gold is likely to double or triple from where it is currently, Kaplan contends.
He said there is no defined price that will trigger development of Donlin.
“When Barrick’s ready to move forward, we’ll be ready to move forward,” Kaplan said.
Donlin Gold last performed a comprehensive analysis of its massive project in 2011 when it was concluded the complex undertaking would cost $6.7 billion to complete.
As proposed, the open-pit mine in the upper Kuskokwim River drainage would be one of the world’s largest, producing more than 33 million ounces of gold over an initial 27-year life. A 315-mile natural gas pipeline from the west side of Cook Inlet would fuel a power plant at the mine and fuel storage tanks would be built at Dutch Harbor, in addition to the very large-scale operation at the mine site.
Lang said with 39 million ounces of measured and indicated resources Donlin is roughly five times larger than the average large-scale development-stage gold mines worldwide. The deposit’s average grade of 2.25 grams per ton is also more than double the industry average, which continues to decline, he added.
Additionally, the 39 million-ounce resource is contained to roughly three kilometers of an eight-kilometer mineralized trend, NOVAGold leaders highlighted.
“It’s clear how hard it is to find a resource comparable to what we have at Donlin,” Lang said.
The deposit is on a parcel owned by The Kuskowkim Corp., a Native village corporation and the mineral rights are held by the regional Native corporation Calista Corp, both of which have been strong supporters of the project, although some local village organizations and Tribal governments have become more vocal in their opposition to the mine in recent years.
Opponents contend a mine the size of Donlin adjacent to the Kuskokwim poses an unacceptable risk to the river’s fishery, particularly the salmon runs that are widely depended upon for subsistence harvests.
A group of 13 village and Tribal leaders from the area sent a letter to NOVAGold and Barrick executives May 13 noting the Association of Village Council Presidents formally opposed the project last year and they did not reach the decision lightly.
“We are of course open to responsible resource development in our region when applicants can demonstrate through science that our waters and lands will not be threatened, the Donlin project has failed to meet this bar and thus it is our responsibility to future generations to say no to this risky project,” the letter states.
Donlin and NOVAGold leaders often tout the support they have from The Kuskokwim Corp. and Calista for developing the project. The mining companies have partnered with the Native corporations on workforce development and scholarship programs among other things.
Elwood Brehmer can be reached at [email protected].