Donlin Gold LLC, a subsidiary of Barrick Gold Corp. and NovaGold Resources Inc. has filed permit applications to federal and state agencies for a planned $6.7 billion gold mine on the Kuskokwim River west of Anchorage, a Donlin Gold official said July 27.
It is a milestone for the project, which has been more that two decades in exploration and planning, said Stan Foo, project manager for Donlin Gold. The project is on land owned by Calista Corp. and The Kuskokwim Corp., two Alaska Native corporations.
The permit applications came, however, amid cautionary statements by Toronto-based Barrick on July 26 in briefing to investors that the project, "does not meet our investment criteria at this time," if the decision were made today.
NovaGold Resources, Barrick's 50-50 partner, said in its own statement that it agreed with Barrick that high capital costs will pose challenges.
However, "the timeline for the permitting process means the co-owners have approximately four years to make any major decision on the project," NovaGold said. NovaGold is a Vancouver, B.C.-based "junior" minerals exploration company.
Both companies said the work on permitting will continue, which will take four to five years, Foo said in an interview. The permitting and related environmental impact statement, or EIS, work will require annual spending of about $40 million per year. Barrick said the companies will also continue exploring alternatives to reduce costs.
Foo said applications were made to the U.S. Army Corps of Engineers for a Section 404 permit under the federal Clean Water Act, which also triggers the EIS preparation and review, and to the state of Alaska for permits related to a 300-mile pipeline that would transport natural gas to the mine from producing fields in Cook Inlet.
In a statement, NovaGold, noted the strengths of the project including resources of 39 million ounces of gold in the "Measured and Indicated" category and an additional 6 million ounces in the "Inferred" resources category. The average grade of the known deposit is 2.2 ounces per tonne, which, "makes Donlin Gold one of the highest grade known large open-pit gold deposits," according to the NovaGold statement.
If developed, the project would produce 1.5 million ounces of gold per year for the first five years and about 1.1 million ounces for the remainder of the mine's expected 27-year life, Novagold said in the statement. However, there is potential for expansion of resources, which could extend the mine life.
NovaGold and Barrick, in their statements, both noted that the location of the project in the U.S., in a politically-stable region, was a positive element.
Mineral rights at the mine are owned by Calista Corp., the Alaska Native regional corporation for the Yukon-Kuskokwim region, and surface lands are owned by The Kuskokwin Corp., or TKC, a consortium of village corporations in the middle-Kuskokwim area.
Royalties paid to Calista would be shared with other Alaska Native regional and village corporations under terms of the 1971 Alaska Native Claims Settlement Act.
If constructed, the project would become a major employer. Up to 3,000 workers would be employed in construction over three to four years, and production operations over at least 27 years would employ up to 1,400, Donlin Gold has said.
The mine would also encourage the development of new natural gas resources for Southcentral Alaska. The company's plan is to build a 312-mile 14-inch pipeline to bring gas from Cook Inlet to the mine, so that Donlin Gold would be a large new industrial customer for gas producers in the Inlet or for a pipeline bringing gas from the North Slope.