NovaGold Resources is one of two international mining companies that have partnered to develop the proposed Donlin Gold mine, located in the Yukon-Kuskokwim Delta. In its latest quarterly report, NovaGold says that it recently sold a big mining project, which will free up some cash to spend on Donlin.
NovaGold is staking a lot on the success of the proposed Donlin Gold mine after selling a big asset last year: the Galore Creek project in British Columbia. That’s according to its latest quarterly report, which came out last month.
Donlin Gold will do more work to develop the mine this year, like collecting more rock samples — which means that they will need more money. All that comes with a price tag of $26 million for this year, and NovaGold’s share of that expense is $13 million.
Mélanie Hennessy, NovaGold’s vice president of corporate communications, said that by selling the project in British Columbia, NovaGold doesn’t need to raise more money to cover its expenses.
“In a financial market that might be more challenging, it gives us the opportunity to proceed and advance Donlin without having a need to go back to the market. And what that means: without having to issue shares or go back to our shareholders for a need of money,” Hennessy said.
NovaGold and Barrick Gold are the two companies trying to make the Donlin Gold mine happen. NovaGold is the smaller partner that doesn’t have a developed project yet, and the Donlin mine is a huge asset. Barrick Gold is the biggest gold mining company in the world, and it just completed a merger that made it even bigger.
The Donlin project cleared some major milestones last year. It received federal approval for its lengthy and expensive environmental review. It also got major state and federal permits, bringing the mine closer to development. But how close? The details on the timeline to finish all the permitting, technical, and engineering work before operating the mine are fuzzy.
“I don’t have a timeline,” Hennessy said.
It will cost a lot to develop the Donlin Gold mine. A 2011 feasibility study put the price tag at roughly $6.7 billion, but Barrick Gold and NovaGold are trying to bring that cost down. Hennessy said that selling the Galore Creek project, which had more copper than gold in its deposit, made sense for NovaGold and their shareholders. Hennessy said that NovaGold shareholders are more interested in gold investments.
NovaGold also applauded the local support for the Donlin project in its quarterly earnings call with shareholders. In that call, NovaGold Board Chairman Thomas Kaplan made a curious statement: he said that there is no opposition to the proposed mine. Twelve tribes in the Yukon-Kuskokwim Delta passed resolutions opposing the mine last year, but Hennessy said that Kaplan was referring to the tribes that participated in in the environmental review process that had wrapped up last year, as well as Donlin’s outreach efforts over the past decade. From those efforts, there has not been much broad opposition.
The Donlin Gold mine enjoys a lot of political support in Alaska, including from Gov. Michael Dunleavy, who said that Alaska is “open for business” for natural resource development. NovaGold’s top brass echoed Dunleavy’s “open for business” statement frequently in the earnings call.
Meanwhile, the Alaska Department of Natural Resources is preparing for public comment and hearings over more permits for Donlin in the next couple of months. Those include permits for infrastructure like a road, fiber optic cable, a port, an airstrip and a 315-mile gas pipeline.