NANA and NovaGold sign joint venture
A long-anticipated agreement on minerals exploration in Northwest Alaska has been signed.
NovaGold Resources Inc. of Vancouver, British Columbia, and NANA Regional Corp., the Kotezbue-based Alaska Native regional corporation, have agreed to jointly explore and develop base metals discoveries on lands held by NANA at Bornite, on the upper Kobuk River east of Kotzebue, and by NovaGold in the Ambler Mining District, which is farther east but nearby.
NANA’s board gave approval to the joint venture agreement earlier this year but the deal was not finalized until Oct 19, Lance Miller, NANA’s vice president for natural resources, told the Resource Development Council.
NovaGold’s holdings are on state lands, while NANA’s lands are its own, selected under the 1971 Native claims settlement act and patented mining claims that were purchased.
The NovaGold land holdings include the Arctic deposit, a high value copper discovery made originally by Kennecott Minerals and sold to NovaGold. NANA owns the Bornite copper deposit, also a discovery made by Kennecott and subsequently sold to NANA.
The two known deposits are about 20 miles apart. Both NovaGold and NANA had active exploration programs in 2011.
The Ambler district hosts world-class volcanogenic massive sulfide deposits that contain copper, zinc, lead, gold and silver over a 70-mile mineralized belt. The Arctic deposit is located within the Ambler district, part of NovaGold’s state and patented mining claims.
“This is an area where there has been a great deal of interest for a long time,” said Marie N. Greene, NANA Regional Corp. president and CEO. “This partnership has the potential to benefit NANA shareholders for generations to come.”
“NovaGold has worked closely with NANA since initiating work on the project in 2004,” said Rick Van Nieuwenhuyse, NovaGold president and CEO. “This agreement ratifies the cooperation that has been and will be essential to the successful development of these significant mineral deposits. Notably, both parties are contributing resources to create the opportunity to take a consolidated and cost-effective approach to exploring and developing one of the richest and most-prospective copper districts in one of the safest geopolitical jurisdictions in the world.”
In a separate development, the state of Alaska is doing preliminary feasibility work on an approximate 200-mile road to the Ambler Mining District from the Dalton Highway, an existing road from Interior Alaska to the North Slope. The road is intended to facilitate mineral exploration and mine development in the region.
In addition to work on the Arctic and Bornite discoveries, other mining companies are exploring two other base metals discoveries in the region, the Sun deposit owned by Andover Ventures Inc. and Smucker, a deposit owned by Teck Alaska. Sun is in the eastern part of the Ambler Mining District, while Smucker is in the west.
NANA is also engaged with Teck Alaska at the Red Dog Mine, a large lead/zinc mine in the DeLong Mountains in the western Brooks Range. Red Dog now produces about 1 million tons a year of lead-zinc concentrates. NANA is the land and royalty owner.
“The agreement consolidates NovaGold’s and NANA’s land holdings into an approximate 180,000-hectacre (446,000 acre) land package and provides a framework for the exploration and development of this high-grade and prospective poly-metallic belt,” NovaGold said in a written release.
The Arctic deposit holds indicated mineral resources of 17 million tonnes grading 4.1 percent copper and 6 percent zinc plus gold, silver and lead. Expressed in terms of copper-equivalent, a way of representing the value of the combined metals, the deposit is 8.3 percent copper-equivalent.
“The Arctic deposit is regarded to be one of the highest grade undeveloped volcanogenic massive sulfide deposits in the world,” NovaGold said in its release.
The Bornite deposit is estimated to hold about 50 million tons of ore with copper grades of 1.2 percent to 4 percent.
NovaGold and NANA both did field work in 2011 at the Arctic and Bornite sites. Work is also planned in 2012 under the joint venture agreement but the details haven’t been worked out yet, Miller said.
NovaGold completed 5,900 meters of exploration drilling on Bornite this summer and anticipates completing a mineral resource estimate for Bornite in the first half of 2012, according to the NovaGold release.
In addition to the Bornite, geotechnical and infill drilling totaling 1,200 meters was completed at Arctic. Additionally, a new 40-person camp was established near Bornite, improving exploration efficiency and reducing helicopter support. Additional engineering and metallurgical work on Arctic is ongoing to support further economic studies and to evaluate overall district development scenarios.
NovaGold will have invested approximately $10 million in exploration and development of the district in 2011.
Highlights of the Agreement, which considers exploration as well as possible development, operations and closure, include:
• An oversight committee with equal representation to regularly review plans and activities on the project;
• The option for NANA to participate as a joint-venture partner or receive a net proceeds royalty upon establishment of any mining operation;
• Commitment on behalf of NovaGold to promote employment for NANA shareholders by fulfilling shareholder hiring and contracting preferences;
• Rights for NovaGold to lease lands for mining operations;
• Payments and net smelter return royalties to NANA for mineral rights and surface use for mine-related infrastructure and facilities;
• A scholarship fund to promote education for youth in the region;
• A sustainability committee to protect subsistence and the Inupiaq way of life; and
• An area of interest within which land acquired by either party will form part of the agreement.