NovaGold Resources Inc.: Exhibit 99.1 - Filed by newsfilecorp.com
News Release
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NYSE-AMEX, TSX Symbol: NG
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NovaGold Files Galore Creek Prefeasibility Study Technical
Report
All amounts are in Canadian dollars unless otherwise indicated
and shown on a 100% Project basis, of which NovaGold and Teck each hold a 50%
interest.
September 12, 2011 - Vancouver, British Columbia - NovaGold
Resources Inc. (NYSE-AMEX: NG, TSX: NG) NovaGold today filed a National
Instrument 43-101 technical report regarding the Prefeasibility Study on its 50%
owned Galore Creek copper-gold-silver project in Northwestern British Columbia,
Canada. A summary of the technical report was announced on July 27, 2011. The
independent technical report was completed by AMEC Americas Limited (“AMEC”) and
Lemley International (“Lemley”) and was based on the Prefeasibility Study
completed by the Galore Creek Mining Company (“GCMC”).
The Prefeasibility Study outlined a large-scale open-pit mine
with a conventional 95,000 tonne-per-day milling and concentrating facility.
Highlights of the Prefeasibility Study included1:
- Proven and probable mineral reserves totaling 528 million tonnes grading
0.6% copper, 0.32 grams per tonne gold and 6.02 grams per tonne silver.
- Production of 6.2 billion pounds of copper, 4.0 million ounces of gold and
65.8 million ounces of silver over an 18 year mine life.
- Cash costs averaging $0.80 per pound of copper at Base Price Case
assumptions and $0.42 per pound of copper at Current Price Case
assumptions2.
- Construction capital costs of $5,160 million.
- Separating the mine infrastructure from the mill infrastructure, each
located in adjacent valleys thereby increasing flexibility to enable open-pit
mine expansion, higher mill throughput and additional exploration.
- Measured and indicated mineral resources exclusive of reserves totaling
287 million tonnes grading 0.33% copper and 0.33 grams per tonnes gold and
inferred mineral resources totaling 347 million tonnes grading 0.42% copper
and 0.24 grams per tonne gold.
- Exploration on the property remains very prospective both within current
deposit areas and on identified targets in the Galore Valley.
In addition to the Project net present values (“NPVs”)
calculated using discounted cash flow (“DCF”) method that were previously
announced, the technical report also includes an analysis of Project NPV using
the Real Option (“RO”) method. The RO method seeks to dynamically model the
uncertainty of metal prices over time and explicitly risk adjust future cash
flows for metal price uncertainty. The RO analysis uses copper prices that start
at a spot price of US$4.14 per pound and revert to a long-term metal price of
US$2.65 per pound and gold prices of US$1,100 per ounce (the same uninflated
long-term metal prices as were used in the AMEC discounted cash flow analysis).
The RO analysis yields an after-tax NPV for the Project of $811 million versus
$137 million (NPV7%) as determined with the DCF method.
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1 For full details
see press release dated July 27, 2011 available on NovaGold’s at www.novagold.net, SEDAR at www.sedar.com and Edgar at www.sec.gov.
2 Base
Price Case metal prices are US$2.65/lb Cu, US$1,100/oz Au and US$18.50 Ag and
foreign exchange rate of 1.11 CAD/USD. Current Price Case metal prices are
closing prices on July 27, 2011 of U$4.44/lb Cu, US$1,613/oz Au and US$40.34/oz
Ag and foreign exchange rate of 0.949 CAD/USD.
1
NovaGold considers RO analysis as useful additional information
for investors in assessing long-life projects, particularly long-life
polymetallic projects like Galore Creek which have significant diversified cash
flows generated by both copper and gold, and investors are encouraged to read
the RO section in the NI 43-101 technical report in its entirety.
In reviewing the Prefeasibility Study plan and opportunities
identified, the Partners have determined to move forward with an enhanced
project plan (“Enhanced Plan”) for the project description required for
permitting and to support a feasibility decision. GCMC is on track with the
engineering required to define the project description before year-end 2011. The
Enhanced Plan envisions adding mineral resources that are within an optimized
measured, indicated and inferred pit shell but due to comingled inferred mineral
resources were excluded from the optimized measured and indicated pit that was
the basis for clarification of mineral reserves. These mineral resources are
considered to have high potential for upgrading of confidence categories with
additional drilling.3 The Enhanced Plan also considers the addition
of a second Semi-Autogenous Grinding (SAG) mill in the fifth or sixth year of
operations to maintain throughput at or above the nominal 95,000 tonne-per-day
throughput rate as harder rock types are expected to be encountered as the pit
deepens. The Enhanced Plan will also reevaluate two other areas of the PFS Plan:
the use of a pipeline to transport concentrate to the highway; and alternative
port facilities. Both issues are important elements for the project description
and scope for permitting.
The NI 43-101 technical report was authored by Robert Gill,
P.Eng., Jay Melnyk, P.Eng., Greg Kulla, P.Geo. and Gregory Wortman, P.Eng. of
AMEC Americas Limited and Dana Rogers, P.Eng. of Lemley International. The
Qualified Persons were responsible for preparation of the technical report that
is based on the GCMC Prefeasibility Study.
The technical information contained in this press release was
reviewed by Kevin Francis, SME Registered Member, VP, Resources for NovaGold and
a Qualified Person as defined by NI 43-101. Readers are cautioned that the
conclusions, projections and estimates set out in this press release are subject
to important qualifications, assumptions and exclusions, all of which are
detailed in the Prefeasibility Study and technical report. To fully understand
the summary information set out above, the technical report that will be filed
on SEDAR at www.sedar.com and on EDGAR at www.sec.gov should be read in its
entirety.
About NovaGold
NovaGold is a precious metals company engaged in the
exploration and development of mineral properties located principally in Alaska,
U.S.A. and British Columbia, Canada. The Company is focused on advancing its two
core properties, Donlin Gold and Galore Creek, with the objective of becoming a
low-cost, million-ounce-a-year gold producer, and offers superior leverage to
gold and copper with one of the largest mineral reserve and mineral resource
bases of any junior or mid-tier gold company. NovaGold has a strong track record
of expanding deposits through exploration success and forging collaborative
partnerships, both with local communities and with major mining companies. The
Donlin Gold project in Alaska, one of the world’s largest undeveloped gold
deposits, is held by a limited liability company owned equally by wholly-owned
subsidiaries of NovaGold and Barrick Gold Corporation. The Galore Creek project
in British Columbia, a large copper-gold-silver deposit, is held by a
partnership owned equally by wholly-owned subsidiaries of NovaGold and Teck
Resources Limited. NovaGold also owns a 100% interest in the high-grade Ambler
copper-zinc-lead-gold-silver deposit in northern Alaska
and has other earlier-stage exploration properties. NovaGold trades on the TSX and NYSE-AMEX under the symbol NG. More information is available at www.novagold.net or by emailing info@novagold.net.
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3 The mineral
resources are contained within a conceptual measured, indicated and inferred pit
using metal prices for copper, gold, and silver of US$2.50/lb, US$1,050/oz and
US$16.85/oz respectively. Appropriate mining costs, processing costs, metal
recoveries and pit slope angles developed during prefeasibility were used to
generate the conceptual pit. Tonnages are assigned based on proportion of the
block below topography. The overburden/bedrock boundary has been assigned on a
whole block basis.
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# # #
NovaGold Contact
Neil MacRae
Director, Investor Relations
or
Greg Martin
Vice President Business Development & Treasurer
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included herein
including, without limitation, statements relating to NovaGold’s future operating or financial performance, are forward-looking statements. Specifically the information included under Project Economics and Production Estimates in this news
release contain forward-looking information. Forward-looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”,
“estimates”, “potential”, “possible”, and similar expressions, or statements that events, conditions, or results “will”, “may”, “could”, or “should” occur or be
achieved. These forward-looking statements may include statements regarding perceived merit of properties; exploration results and budgets; mineral reserves and resource estimates; work programs; capital expenditures; timelines; strategic plans;
completion of transactions; market prices for precious and base metals; or other statements that are not statements of fact. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will
prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from NovaGold’s expectations include the
uncertainties involving the need for additional financing to explore and develop properties and availability of financing in the debt and capital markets; uncertainties involved in the interpretation of drilling results and geological tests and the
estimation of reserves and resources; the need for continued cooperation with Teck Resources and the Tahltan Nation for development of the Galore Creek property; the need for cooperation of government agencies and native groups in the development
and operation of properties; the need to obtain permits and governmental approvals;; risks of construction and mining projects such as accidents, equipment breakdowns, bad weather, non-compliance with environmental and permit requirements,
unanticipated variation in geological structures, ore grades or recovery rates; unexpected cost increases, which could include significant increases in the capital and operating costs estimated in the prefeasibility study; fluctuations in metal
prices and currency exchange rates; uncertainties and risks regarding the cost estimates and completion schedule for the proposed access tunnel and other risk and uncertainties disclosed in NovaGold’s Annual Information Form for the year-ended
November 30, 2010, filed with the Canadian securities regulatory authorities, and NovaGold’s annual report on Form 40-F filed with the United States Securities and Exchange Commission and in other NovaGold reports and documents filed with
applicable securities regulatory authorities from time to time. NovaGold’s forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made. NovaGold assumes no obligation to update the
forward-looking statements of beliefs, opinions, projections, or other factors, should they change.
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Cautionary Note Regarding Reserve and Resource Estimates
This press release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all resource and reserve estimates
included in this press release have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition
Standards on Mineral Resources and Mineral Reserves. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning
mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and resource and reserve information contained herein may not be
comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. Under U.S. standards,
mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC’s
disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed
with the SEC. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that
all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies
except in rare cases. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted
disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. The
requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported by the Company in compliance with NI 43-101 may not qualify as “reserves” under SEC standards.
Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with U.S. standards.
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Appendix – Reserve & Resource Table
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2. See numbered footnotes below on resource information.
Resources shown in blue are reported as net values to NovaGold after all project
earn-ins.
3. AuEq - gold equivalent is calculated using gold and silver in
the ratio of gold + silver ÷ (US$1023 Au ÷ US$17 Ag) 2008 - 2010 average metal
prices.
4. Rounding as required by reporting guidelines may result in
apparent summation differences betw een tonnes, grade and contained metal
content
5. Tonnage and grade measurements are in metric units. Contained gold
and silver ounces are reported as troy ounces, contained copper, zinc, and lead
pounds as imperial pounds
Resource Footnotes:
(1) The basis for the cut-off grade was an assumed
gold price of US$825/oz. The new reserve estimate represents a 15% increase over
the 29.3 million ounce reserve estimate contained in the 2009 technical report
referenced below , and is based on the inclusion of additional drilling and a
US$100/oz increase in long-term gold price assumptions from that used in 2009.
The increase in reserves is expected to extend the mine life from 21 years to 25
years at the feasibility production rate, and does not materially change the
information contained in the technical report. It is believed that the
additional storage capacity provided for in the 2009 feasibility study w ill
accommodate the increase in tailings and that the w aste rock storage facility
can be modified to contain the additional unmineralized rock material. The
Qualified Person for this reserve estimate is Kevin Francis, P.Geo., NovaGold
Resources Inc.
(2) Mineral Reserves are contained w ithin Measured
and Indicated pit designs using metal prices for copper, gold and silver of
US$2.50/lb, US$1,050/oz, and US$16.85/oz, respectively. 2. Appropriate mining
costs, processing costs, metal recoveries and inter ramp pit slope angles varing
from 42º to 55º w ere used to generate the pit phase designs. Mineral Reserves
have been calculated using a ’cashflow grade’ ($NSR/SAG mill hr) cut-off which
was varied from year to year to optimize NPV. The net smelter return (NSR) w as
calculated as follow s: NSR = Recoverable Revenue – TCRC (on a per tonne basis),
w here: NSR = Net Smelter Return; TCRC = Transportation and Refining Costs;
Recoverable Revenue = Revenue in Canadian dollars for recoverable copper,
recoverable gold, and recoverable silver using metal prices of US$2.50/lb,
US$1,050/oz, and US$16.85/oz for copper, gold, and silver, respectively, at an
exchange rate of CDN$ 1.1 to US$1.0; Cu Recovery = Recovery for copper based on
mineral zone and total copper grade; for Mineral Reserves this NSR calculation
includes mining dilution. SAG throughputs w ere modeled by correlation w ith
alteration types. Cashflow grades w ere calculated as the product of NSR value
in $/t and throughput in t/hr. 4. The life of mine strip ratio is 2.16.
(3) Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability. Inferred Resources are in addition
to Measured and Indicated Resources. Details of Measured and Indicated Resources
and other NI 43-101 information can be found by follow ing the links below to
the relevant Technical Report. Inferred Resources have a great amount of
uncertainty as to their existence and w hether they can be mined legally or
economically. It cannot be assumed that all or any part of the Inferred
Resources w ill ever be upgraded to a higher category. See "Cautionary Note
Concerning Reserve & Resource Estimates" .
(4) A variable cut-off grade has been estimated
based on recent estimates of mining costs, processing costs (dependent upon
sulfur content), selling costs and royalties. Resources are constrained w ithin
a Lerchs -Grossman (LG) open-pit shell using the long-term metal price
assumption of US$900/oz of gold, which is a US$50/oz increase over the long-term
gold price assumption used in the 2009 technical report. Assumptions for the LG
shell included pit slopes variable by sector and pit area: mining cost is
variable w ith depth, averaging US$2.08/t mined; process cost is calculated as
the percent sulfur grade x US$2.7948 + US$12.82; general and administrative
costs, gold selling cost and sustaining capital are reflected on a per tonne
basis. Based on metallurgical testing, gold recovery is assumed to be 89.5% .
The Qualified Person for this resource estimate is Kevin Francis, P.Geo.,
NovaGold Resources Inc.
(5) Mineral resources are contained w ithin a
conceptual Measured, Indicated and Inferred optimized pit shell using the same
economic and technical parameters as used for Mineral Reserves. Tonnages are
assigned based on proportion of the block below topography. The
overburden/bedrock boundary has been assigned on a whole block basis. 4) Mineral
resources have been estimated using a constant NSR cut-off of C$10.08/t milled.
The Net Smelter Return (NSR) w as calculated as follows: NSR = Recoverable
Revenue – TCRC (on a per tonne basis), w here: NSR = Diluted Net Smelter Return;
TCRC = Transportation and Refining Costs; Recoverable Revenue = Revenue in
Canadian dollars for recoverable copper, recoverable gold, and recoverable
silver using silver using the economic and technical parameters mentioned above.
5) The mineral resource includes material within the conceptual M&I pit that
is not scheduled for processing in the mine plan but is above cutoff.
(6) The copper -equivalent grade w as calculated as
follow s: CuEq = Recoverable Revenue ÷ 2204.62 * 100 ÷ 1.55. W here: CuEq =
Copper equivalent grade; Recoverable Revenue = Revenue in US dollars for
recoverable copper, recoverable gold and recoverable silver using metal prices
of US$1.55/lb, US$650/oz, and US$11/oz for copper, gold, and silver,
respectively; Cu Recovery = 100% .
(7) Resources stated as contained w ithin a
potentially economically minable underground shapes above a US$75.00/t NSR
cut-off
(8) NSR calculation is based on assumed metal prices
of US$2.50/lb for copper, US$1,000/oz for gold, US$16.00/oz for silver,
US$1.00/lb for zinc and US$1.00/lb for lead. A mining cost of US$45.00/t and
combined processing and G&A costs of US$31.00 were assumed to form the basis
for the resource NSR cut-off determination.
(9) NovaGold Canada Inc. has agreed to transfer its
60% joint venture interest in the Copper Canyon property to the Galore Creek
Partnership, which is equally ow ned by NovaGold Canada Inc.and a subsidiary of
Teck Resources Limited. The remaining 40% joint venture interest in the Copper
Canyon property is owned by another wholly owned subsidiary of NovaGold. "
Cautionary Note Concerning
Reserve & Resource Estimates
This summary table uses the term “resources”, “measured
resources”, “indicated resources” and “inferred resources” . United States
investors are advised that, w hile such terms are recognized and required by
Canadian securities law s, the United States Securities and Exchange Commission
(the “SEC”) does not recognize them. Under United States standards,
mineralization may not be classified as a “reserve” unless the determination has
been made that the mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. Mineral resources that
are not mineral reserves do not have demonstrated economic viability. United
States investors are cautioned not to assume that all or any part of measured or
indicated resources w ill ever be converted into reserves. Further, inferred
resources have a great amount of uncertainty as to their existence and as to
whether they can be mined legally or economically. It cannot be assumed that all
or any part of the inferred resources will ever be upgraded to a higher
category. Therefore, United States investors are also cautioned not to assume
that all or any part of the inferred resources exist, or that they ounces” is
permitted disclosure under Canadian regulations, how ever, the SEC normally only
permits issuers to report “resources” as in place tonnage and grade w ithout
reference to unit measures. Accordingly, information concerning descriptions of
mineralization and resources contained in this release may not be comparable to
information made public by United States companies subject to the reporting and
disclosure requirements of the SEC.
National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”) is a rule developed by the Canadian Securities
Administrators, which established standards for all public disclosure an issuer
makes of scientific and technical information concerning mineral projects.
Unless otherwise indicated, all resource estimates contained in this circular
have been prepared in accordance w ith NI 43-101 and the Canadian Institute of
Mining, Metallurgy and Petroleum Classification System.
Technical Reports and
Qualified Persons
The documents referenced below provide supporting technical
information for each of NovaGold's projects.
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Project |
Qualifed Person(s) |
Most Recent Disclosure & Filing Date
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Link to Most Recent Disclosure |
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Donlin Gold |
Kirk Hanson P.E., AMEC
Gordon Seibel M.AusIMM, AMEC
Simon Allard, P.Eng.
Gregory W ortman P.Eng., AMEC
Alexandra Kozak P.Eng., AMEC |
Donlin Creek Gold Project, Alaska, USA NI
43-101 Technical Report - April 1, 2009 |
http://www.novagold.com/upload/technical_reports/DonlinCreekFS.pdf
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Donlin Gold |
Kevin Francis, P.Geo., NovaGold Resources Inc.
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March 2010 reserve and resource updates:
NovaGold press release - March 22, 2010 |
http://novagold.com/section.asp?pageid=13238 |
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Galore Creek |
Robert Gill, P.Geo., AMEC
Jay Melnyk, P.Eng., AMEC
Greg Kulla, P.Geo., AMEC
Greg W ortman, P.Eng., AMEC
Dana Rogers, P.Eng., AMEC |
NovaGold Resources Inc., Galore
Creek Copper–Gold Project, British Columbia, NI 43-101 Technical Report on
Pre-Feasibility to be filed with 45 days of July 27, 2011 |
http://www.novagold.com/section.asp?pageid=15854
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Copper Canyon |
Erin Workman, P.Geo., NovaGold Resources Inc.
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Not publicly released - updated March 2008 |
http://www.novagold.net/upload/technical_reports/CopperCanyonFebruary2005.pdf |
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Ambler |
Russ W hite, P.Geo., SRK Consulting |
NI 43-101 Preliminary Economic Assessment,
Ambler Project - May 9, 2011 |
http://www.novagold.com/upload/pdf/Ambler_PEA_May2011.pdf
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Neal Rigby, C.Eng., MIMMM, Ph.D., SRK
Consulting |
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6