Donlin owners reports strong results from 2020 drilling

  • An exploration rig is seen drilling at the Donlin gold mine site. The prospect owners reported better than expected results from a major drilling program in 2020. (Photo/Courtesy/Donlin Gold)

Despite a slow start, the largest drilling program in more than a decade at the massive Donlin Gold prospect ended with better-than-expected outcomes, according to final results published March 25 by the companies backing the work.

Donlin Gold contacted mineralization zones in both of the deposit areas the joint-venture is targeting; the results beat prior grade-thickness modeling with higher gold grades than initially predicted across much of the 23,000-meter, 85-hole drilling program the company conducted last year.

Mark Bristow, CEO of mining major Barrick Gold Corp., which owns half of the Donlin prospect, said in a prepared statement that the drilling results “represent a major step forward in improving the geological confidence in the Donlin project,” adding the information is an important step in improving the value of the world-scale project.

NOVAGold CEO Greg Lang said a near-surface contact in the northerly Lewis pit intersected nearly 18 meters of gold with an average grade of 10.5 grams per tonne with a nearly four-meter zone averaging 28 grams per tonne.

“On every level, the results of the largest drill program at Donlin Gold in 12 years have been incredibly rewarding for the partnership and all stakeholders. Since we released the initial results in August last year, the assays have consistently revealed higher-grade gold intersections,” Lang said.

Vancouver-based NOVAGold is Barrick’s partner in Donlin Gold LLC. Notable hits in the ACMA pit include a 22.6-meter interval with an average grade of 8.7 grams per tonne and a 10-meter subset with a grade of 15.5 grams per tonne.

“Needless to say, the assay results from the 2020 drill program further strengthen our resolve and belief in the extraordinary nature of Donlin Gold and provide us with a wealth of knowledge to integrate into an updated geologic model,” Lang added.

He and Bristow also highlighted that the work was done without any confirmed COVID-19 cases at the remote Western Alaska camp. Company leaders restarted work in late May after suspending work for roughly six weeks last spring due to the pandemic when about 120 people were working at the camp .

Donlin Gold also secured several state permits and land-use approvals for an access road, fiber optic cable and other facilities last year.

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 supply 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.

State Division of Mining, Land and Water officials on March 11 published the second notice for Donlin’s water-rights applications, key permits that would allow the company to divert and use water from streams at the mine site in the upper Kuskokwim River drainage.

Donlin leaders said the 2020 program and additional drilling this year should lead to a final geologic model for the ore body; the company’s focus will then turn to an updated feasibility study and a final investment decision by the board of directors.

A short sale report issued against Donlin last May by J Capital Research argued company leaders have long inflated the economic viability of the project that is challenged by its remoteness on multiple fronts. The report also claims the $6.7 billion cost estimate to build Donlin is dated and artificially low.

Lang vehemently rebutted the claims in the report and NOVAGold sued J Capital over them June 29 in federal New York District Court. Shares of NOVAGold lost 22 percent of their value in the two weeks following the release of the J Capital report.

That suit is ongoing.

The $6.7 billion construction cost estimate was developed from the last feasibility study done on the project in 2011.

Donlin representatives have long said the project generally needs sustained, high gold prices because of the extensive network of support infrastructure that needs to be developed but have declined to specify what parameters they believe are needed to green-light development.

Spot gold prices have returned to the $1,700 per ounce range after briefly surpassing $2,000 per ounce last summer. The price band over roughly the last 18 months has been significantly higher than prior years when gold was hovering in the $1,200 to $1,400 per ounce range.

Elwood Brehmer can be reached at [email protected].

03/31/2021 - 9:10am