A detailed study to set out the economics and scale of developing the Galore Creek copper and gold property north of here has been approved by its owners, NovaGold Resources and Teck Resources.
The decision was reached based on results of a pre-feasibility study forecasting a mine life of at least 18 years, more ore than previously thought and low operating costs relative to projected income.
If all goes according to schedule, the two owners will have the engineering work done to define the project by year’s end, a July 28 release stated.
An earlier construction attempt by NovaGold and Teck was halted in late Nov. 2007 after a capital budget of $2.5 billion ballooned to twice that amount.
But the NovaGold/Teck partnership committed itself to a five-year reexamination of the project with the goal of lowering costs.
As a result, there’s now a recommendation to move the ore-processing plant out of the Galore Valley where the ore body is located to a location on the planned access road leading to Highway 37 North.
Ore would move from the open pit operation in the valley to the processing plant via a tunnel.
Another recommendation under study would change how concentrate is shipped out.
A pipeline to pump a slurry of concentrate and water from the plant to Hwy37 where the water would be removed and the concentrate then trucked to port facilities at Stewart would be replaced by a plan to truck concentrate all the way from the processing plant to Stewart.
“In an environment of strong copper demand and continued political uncertainty in key copper-producing areas of the world, Galore Creek is well positioned with its safe geopolitical location and low operating costs to take advantage of strong metal price fundamentals,” NovaGold president Rick Van Nieuwenhuyse said in the release.
NovaGold and Teck have also approved a $30.5 million work plan this year to beef up ore reserves.
The mine would draw power from the Northwest Transmission Line and consultants on the pre-feasibility study recommended negotiating connection arrangements with BC Hydro this year.
The access road, started under the original 2007 mine construction project, needs to be completed as well.
Although the project does have provincial and federal environmental approval based on the original 2007 development, NovaGold and Teck anticipate the revived project will need to be reviewed.
“It is expected that the entire environmental assessment review process would take approximately two years from submission of a project description to issuance of new provincial and federal approvals,” the release stated.
NovaGold and Teck have negotiated a wide-ranging agreement with the Tahltan Central Council for jobs, business development and mine revenues.
A timeline sketched out during a July 28 conference call conducted by NovaGold’s Nieuwenhuyse would have an updated project description submitted for environmental review by the end of the year.
Based on a successful review of two years in length and a successful feasibility study that would be undertaken at the same time of the review, approvals would be granted the end of 2013.
And with a four-year construction window to follow, actual mining would not then start until early 2018.
During the conference call Nieuwenhuyse said NovaGold had a high level of confidence about the project.
“It’s about reducing risk,” he said.
“This is a great project with good cash flow potential,” Nieuwenhuyse said in adding there was lots of potential to lengthen the operating life of the operation.
NovaGold and Teck were also focussed on lowering capital costs although they did realize that this might then result in higher operating costs.