NovaGold suspends Galore Creek project

NovaGold Resources has announced the suspension of construction activities at the Galore Creek copper-gold-silver project in north-western British Columbia.

A recent review of the project, which is a 50/50 joint venture with Teck Cominco, suggests that the construction schedule will be much longer than first planned.

The companies have agreed that the project is uneconomical in its current form because of the increase in construction costs, and the impact on profit margins of a strong Canadian dollar.

NovaGold and Teck Cominco still view the prospect as a substantial resource and will undertake a comprehensive review to evaluate alternative development strategies.

AMEC Americas Limited, the engineering firm, has been retained on the project since April 2007.

Having undertaken a review of the 2006 Galore Creek Feasibility Study and commence project engineering, AMEC reported that it expected capital costs to be significantly higher than originally estimated.

NovaGold and Teck Cominco then commenced a project strategy review to assess the AMEC work and estimated costs have continued to increase during the period of this review, with the capital costs of the project now approaching $5 billion.

Don Lindsay, Teck Cominco’s president and chief executive, believes that: “very few copper-gold deposits of this quality have been discovered over the last few years”.

He describes Galore Creek as a substantial resource and pledges to “continue to work to determine how and when it can best be developed.”

Demand for copper and gold is expected to remain strong in the long-term and Galore Creek contains one of the world’s largest undeveloped copper and gold resources.

There are over 400 contractors and employees currently working on the project.