Aboriginal Partners in Mining: Alec Aminak - core values
Construction setback at Cigar Lake Project
NovaGold's 800-pound gorilla
By Shirley Collingridge
Despite an “800-pound gorilla” and the Push-Me-Pull-You likeness of recent BarrickGold/NovaGold court battles, NovaGold Resources Inc. (NovaGold) reached several milestones this year.
In the Dr. Dolittle story, Push-Me-Pull-You is created by the fusing of llamas. In our tale, two companies were once fused in a joint venture relationship, but like the Push-Me-Pull-You, they are pulling in different directions. NovaGold President and CEO Rick Van Nieuwenhuyse now refers to former ally Barrick Gold Corporation (Barrick) as “an 800-pound gorilla.”
Donlin Creek and Galore Creek are two of the largest undeveloped gold and copper resources in the world. They are located in the geopolitically stable jurisdictions of Alaska and British Columbia respectively.
Donlin Creek
Barrick Gold Corporation and NovaGold joined forces in a joint venture agreement to develop the Donlin Creek project. With more than 30 million ounces, Donlin is one of the world’s largest gold deposits. NovaGold owns 70% of the Donlin Creek project and Barrick owns 30%.
Terms of the joint venture agreement entitled Barrick to acquire an additional 40% interest – effectively reversing the balance of ownership. First, however, Barrick was required to meet all of the terms and conditions of an earn-in agreement, including a bankable feasibility study and board approval to construct a mine by November 2007.
NovaGold now believes that Barrick cannot meet these objectives. Van Nieuwenhuyse says that both Barrick’s predecessor Placer Dome and Barrick itself have asked NovaGold to renegotiate. “From a court perspective, it seems pretty clear that they cannot earn their interest – otherwise, why would they be renegotiating the agreement?”
The United States District Court of Alaska’s response to NovaGold’s August 25 court application indicated that there is a “genuine dispute” as to Barrick’s ability to meet its conditions. Litigation is still pending.
Hostile Takeover Attempt
Van Nieuwenhuyse says Barrick’s frustrated attempts to renegotiate the agreement impelled Barrick to attempt a hostile takeover of NovaGold itself. A hostile takeover occurs when a company attempts to buy out another – with or without the agreement of the target company’s management. Barrick announced its original hostile offer August 4, extending the offer more than once.
In late October, Barrick increased and extended its hostile offer to purchase all of the outstanding common shares of NovaGold. Its latest offer is US$16.00 per share in cash, scheduled to expire at 9:00 p.m. Toronto time November 7, 2006.
For Barrick, the acquisition of NovaGold would expand its North American Measured and Indicated resources by 54% and expand their Inferred resources by 89%. Van Nieuwenhuyse established NovaGold seven years ago.
“By making an offer for NovaGold, Barrick has clearly acknowledged the quality and calibre of the NovaGold assets. We have assembled one of the best teams in the industry and are confident in our ability to turn these projects into world class producing mines and thereby add shareholder value over the next few years,” he said.
“We do not think they are going to be successful because our shareholders have said ‘No.’ They have said ‘No’ for 14 weeks now,” he said. “This is one of the longer takeover bids out there. I guess Barrick’s position is they just are not going to take no for an answer, but our shareholders’ position is, yes you are.”
At $4.7 million, the lawsuit cost NovaGold its profit during last quarter.
Grace Claims Dispute and Pioneer Metals Purchase
Next door to NovaGold’s Galore Creek are Pioneer Metals Corporation’s (Pioneer) Grace Claims, which NovaGold attempted to purchase. Pioneer’s claim is to mineral rights only. The province owns the surface rights. NovaGold holds an option on the property, enabling it to establish a tailings facility on a portion where there is no viable mineralization. Tailings are waste products consisting of ground rock from which the valuable minerals have been extracted.
“Condemnation drilling was sufficient to categorically indicate that there was no mineralization underneath the portion of the Grace claims that we want to put the tailings facility on,” said Van Nieuwenhuyse.
Pioneer disputed the findings of the condemnation drilling but the court held up those findings. The tailings facility will proceed.
NovaGold also wanted to purchase the Grace claims. On June 14, after unsuccessful negotiations to purchase the claims, the NovaGold Board of Directors approved making an offer to acquire all the outstanding common shares of Pioneer itself.
“We made an offer to Pioneer shareholders but then Barrick came along and trumped our bid,” said Van Nieuwenhuyse.
In June, NovaGold had provided Barrick with certain non-public information about Galore Creek because it planned to partner with Barrick in the project. NovaGold filed its offer for Pioneer June 19; five days later, Barrick announced its own offer for Pioneer, coincident with the announcement of its hostile offer for NovaGold.
Barrick’s Pioneer purchase resulted in another lawsuit by the Push-Me-Pull-You creature. In August, NovaGold announced it had filed a lawsuit in the Supreme Court of British Columbia against Barrick, claiming, among other things, that Barrick misused confidential information belonging to NovaGold when it bid on Pioneer. Barrick successfully purchased 90 per cent of Pioneer. The lawsuit seeks a court order that Pioneer shares purchased by Barrick bid be held under a constructive trust for the benefit of NovaGold.
Milestones
Despite these significant challenges “is having a great year with lots of milestones,” said Van Nieuwenhuyse. “When I started NovaGold, I went back to Alaska and put together some assets I was familiar with and put together a good group of people that I have worked with over a long period of time. We have now assembled a great group of assets, great group of people, we are building our first mine in Nome, Alaska.”
The Rock Creek will produce about 100,000 ounces of gold. The company began construction in August. “We should be pouring gold by May of 2007,” he said.
“Our other big project in Alaska is one of the largest undeveloped gold deposits in the world at Donlin Creek. We have been extremely successful in exploring that project and advancing it along,” said Van Nieuwenhuyse, adding that this joint venture with Barrick is “probably the main reason why they are [attempting to take] us over. . . . They realize they cannot legitimately earn their 70 per cent.”
The company’s other major project, Galore Creek, lies in Tahltan traditional territory. “It is a relatively remote location but it is another giant orebody. It is over a billion tonnes of copper, gold and silver ore,” he said.
The feasibility study was expected at press time.
Van Nieuwenhuyse believes positive relations with the Tahltan helped move the project forward. “We have been working closely with the Tahltan about four years now. . . . We have signed a NovaGold-Tahltan Participation Agreement that outlines how the two groups will work together to ensure that Galore Creek is developed in a way that are going to be a net benefit to the Tahltan.”
“We recognize that there will be an impact, both environmentally and socially, on the Tahltan,” he said. The agreement “accommodates those impacts by having a direct royalty to the Tahltan, recognizing their traditional rights and titles, and a commitment to work with the Tahltan for training purposes. . . . Many are already skilled workers around mining operations. Many of them work already at Eskay Creek which is scheduled to shut down next year.”
“We were able to work with them from the standpoint of developing training programs and . . . to establish businesses that can then provide services to the mine or exploration that is going on,” he said.
Earlier this year, “There was a vote on our participation agreement by the broader Tahltan community. Eighty-five per cent endorsed the participation agreement,” he said.
Van Nieuwenhuyse says NovaGold will continue to continue to consult with the Tahltan on its environmental process. “This will be, not quite forever, but probably as close to forever as you can get during my lifetime. It is a very exciting time for us,” he concluded, “We just have got to get rid of this 800-pound gorilla.” For more information about the company, www.novagold.net.
Aboriginal Partners in Mining:
Alec Amitnak - core values
By Shirley Collingridge
At the Meadowbank gold project located 70 kilometres north of the Hamlet of Baker Lake, Nunavut, Alec Amitnak is known for longevity, thoroughness, and reliability.
“Alec is pretty well our senior employee from Baker Lake,” said Gord Davidson, Exploration Manager, Canada, Cumberland Resources Ltd.
Alec Amitnak (above) examines a core sample for gold. (right)
Born and raised in Baker Lake, Amitnak has worked in the metals and minerals exploration industry since 1988. “At first I was just doing water surveying with a guy at Lone Gull,” he said. “Then I ended up working in camp afterwards.”
“He worked with UG Canada, which has since been taken over by AREVA,” added Davidson, whose path often crossed Amitnak’s. “He worked at several camps in the Kiggavik area, [formerly known as] Lone Gull, about 60 kilometres west of Baker Lake.”
In the early days, the Inuit man “did all sorts of things . . . including core splitting, environmental technician, and camp maintenance. Alec is one of those competent types who can do pretty much anything that has to be done in an exploration camp,” he said.
Today Amitnak is coptered into camp for 20-day in, seven day-out shifts as a core splitter and supervisor at the Meadowbank project. Fellow passengers on the half hour ride may be a handful of employees or a cargo of groceries. Back on the ground, Amitnak rolls up his sleeves to do what he enjoys best: “Just staying busy from early morning ‘til evening.”
He relishes the long hours. “They keep me busy all the time when the core is stripped. I usually go out seven in the morning ‘til six at night – maybe an hour after six,” he said.
Amitnak has company in the heated core shack, supervising as many as five employees at a time – a job he does well. “Alec is fabulous for training and mentoring new core splitters and doing quality controls on all our core shack work,” said Davidson.
While the core splitter describes his tools as humble, “a core splitter and a hammer – that is about it,” Davidson says the man’s job is much more complex and vitally important.
“Core splitting is one of the most critical jobs we do here,” said Davidson. “If it isn’t done properly, we can’t properly determine the amount of gold in the drill core.”
When Amitnak examines a core for gold, says Davidson, “He’s better at it than some of our geologists!”
Depending upon the core, Amitnak typically splits 35 to 40 samples daily. Since there are no assay labs in the North, samples are bagged and ship-ped to Vancouver for analysis.
While Amitnak is good at his job, says the “pay has gotten better,” and enjoys “meeting new people,” he also says long periods apart from family and friends can be trying.
In fact, asked what he would change most about his employment, Amitnak succinctly replied, is “Being away from family and friends.”
Besides seven sisters and two brothers, “I have a 14 year old boy now. I spend a lot of time away from him,” he said. Back at home, he enjoys spending time with his son. “In the fall time, we go out by four-wheeler. We hunt for caribou.”
Just like at work, Amitnak takes on the leadership role. Amitnak chuckled, “He’s getting the hang of it. But I still get to do all the work – skin it, and cutting, butchering.”
He also thrived on fishing until a family member sold the nets. He hopes to get more nets soon so he can continue to bring home lake trout and whitefish. Long winter months during project shutdown give Amitnak this kind of time for leisure, family and friends. If the company offered it, he would also use the time undergo training, perhaps to fulfil a boyhood dream of driving heavy equipment.
“I’ve been on a bit of training but not related to splitting - Class 3/Air Brakes,” he said. “But I’d like to go on to something else. I’m not sure yet. I still have some time. Maybe heavy equipment. If there was a program available, I’d take it.”
Until the project goes into mine mode, on-site training is limited to current needs. Meadowbank is host to Canada’s largest pure gold open pit reserves. Open pit production is estimated at 330,000 ounces per year with an 8-year mine life. Depending on receipt of permits and licences, operations could commence in late 2008 or early 2009.
“They may be opening up the mine here pretty soon but we won’t know until later on this year or next year,” he added.
Once the Federal Minister of Indian and Northern Affairs issues a project certificate and the Company “makes a positive production decision,” explained Davidson, “the terms of the Inuit Impact Benefits Agreement would kick in. This agreement ensures that Inuit from the Kivalliq region benefit from economic activity generated by Meadowbank. Amongst other things, it lays out training provisions.”
But for now, says Davidson, “Cumberland is still at the exploration stage at Meadowbank, and as a junior exploration company without any revenue, we do not have a formal training program for any of our staff – northern or southern.”
Once training does become available, you can be sure the senior employee from Baker Lake will be among the first to reach for his dreams.
Construction setback at Cigar Lake Project
By Shirley Collingridge
October 22 an incident occurred at the Cigar Lake mine when the mine experienced significant water inflow following a rock fall; a portion of the underground development was allowed to fill with water. As a result, construction is expected to be delayed by at least a year. Production startup was previously planned for early 2008.
The remainder of the underground area remains dry. The incident began at 1:10 p.m. in the previously dry future production area. As a precautionary measure, the company temporarily evacuated non-essential personnel. There were no injuries and no environmental impact.
At 8:45 p.m. October 22, in accordance with existing contingency plans, the company decided to close two bulkhead doors to contain the water inflow within the future mining area. Mine Shaft #1, the future processing area, pumps, refuge station and heat exchanger for freezing the ore are being protected from the inflow and will be monitored as the pressure builds up behind the bulkhead doors.
October 23, Cameco Corporation reported further, “All underground areas of the Cigar Lake project are expected to be filled with water following a rock fall yesterday. Efforts to protect the main shaft and key underground infrastructure by closing bulkhead doors were not successful. Everyone was safely evacuated by 11:30 a.m. today. There were no injuries and no impact on the environment.”
Cameco will develop plans to restore access to the area, providing a better estimate of construction scheduling and the new production startup date. Construction delay is estimated to be at least one year. The incident is not expected to impact reserves at Cigar Lake.
Given the expected delay in construction, capital costs are expected to be significantly higher. Once remediation plans are developed, Cameco will provide updated cost estimates and production forecasts.
The company has supply interruption protection in its contracts which provide the right to reduce, defer or cancel volumes on a pro-rata basis due to a meaningful shortfall in planned production. The clause protects about three-quarters of current contracted volumes, which will increase as old contracts expire. All contracts also contain standard force majeure protection Baseload contracts to support the development of Cigar Lake also allow Cameco to reduce, defer or terminate Cigar Lake product deliveries in the event of production delay or shortfall. Consequently, Cameco remains adequately positioned to meet its contractual obligations.
The Cigar Lake project is located 660 kilometres north of Saskatoon with a workforce of about 650 during the construction phase. The Cigar Lake mine is owned by Cameco Corporation (50%), AREVA Resources Canada Inc. (37%), Idemitsu Uranium Exploration Canada Ltd. (8%), TEPCO Resources Inc. (5%).
Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest uranium producer. Cameco's shares trade on the Toronto and New York stock exchanges.
Big Red brings in big green
By Shirley Collingridge
When True North Gems crew members spotted red crystal outcropping at its Aappaluttoq ("Big Red") ruby occurrence in the Fiskenaesset district of Greenland, they immediately recognized their find as exceptional.
“As they pulled it out, it just started to grow and grow and grow and then they realized in actual fact that this thing is about five centimetres by about four centimetres,” said Nick Houghton, director at True North Gems. “There was host rock on it . . . so we couldn’t quite distinguish the exact weight of it but we knew we were looking at least 200 carats.”
That was September 2005.
The company wanted to do something outstanding with this exceptional crystal. It contracted world renowned carver Thomas McPhee – one of the world’s top five gem carvers. That is when the find from Big Red really transformed into the Big Green.
“The ruby crystal itself is made of near gem and gem segments,” explained Houghton. “We wanted to carve it so we could preserve most of the material and also give it some historic carving – which has never been done from anything from a North American piece before.”
McPhee was skilled at emerald and sapphire carving; this would be his first ruby.
“It presented difficulties,” said Houghton, “and True North insisted that the ruby be kept pure and natural. . . . He has worked for many of the royalty families around the world. We knew that he could deliver to us a piece which was brilliant.”
Over the next ten months, McPhee painstakingly produced a two-inch piece with six intricate figurines – the first ever carved Greenland ruby. “We tried to depict . . . the Greenland saga between the maritime and the ocean,” said Houghton. “This involved the sea . . . and the fishermen and the mermaids.”
Besides the intricate oceanic legends as McPhee meticulously liberated the crystal from its host rock, an astounding 440-carat rough ruby also emerged – more than double original estimates. The company now believes it to be the largest ruby ever recorded in the Northwestern Hemisphere.
The ruby market is at an all time high. “At a recent auction for Christies St. Moritz, an eight-carat ruby sold for $425,000 US a carat,” said Houghton.
When the True North had the carving priced, that is when they realized Big Red would really bring in Big Green. Experts “put a dollar value of half a million upon this piece,” he said.
Today, Big Red continues to produce pay dirt. In October, the company recovered 12,060 grams (60,298 carats) rough gem grade ruby and pink sapphire from initial Aappaluttoq stone counts during its 2006 exploration program.
Company geologists classify a significant fraction of the gem grade material as “eye-clean.” Rough ruby and pink sapphire classed in this category produce superior polished gemstones that range from “good” to “extra-fine” and represent the highest value component of the products derived from the 2006 bulk sample. Of the total gem grade ruby and pink sapphire material documented to date, 7.4% is classified as “eye-clean.”
As well, 15,457 grams (77,285 carats) of near-gem ruby and pink sapphire were recovered from the field sort, bringing the total gem and near-gem grade rough material recovered from the 149.9 kilos of field processed ruby and pink sapphire concentrate to 27,517 grams (137,585 carats).
“These initial results are highly encouraging,” said William Rohtert, True North's COO. “They support our preliminary conclusions regarding the importance of hydrothermal provenance evident at Aappaluttoq, to the creation of high-value ruby deposits in Greenland.”
A variety of the mineral corundum, ruby is one of the rarest, most valuable gemstones on earth. Ruby acquires its red colour from the element chromium, which also induces fluorescence in the stone, making the ruby appear to glow from within.
A key element of core logging is ultraviolet light examination, seeking the presence of fluorescent scapolite, a diagnostic indicator mineral associated with the known gem-quality sapphire mineralization. The scapolite exhibits an intense, bright yellow fluorescence, paramount to geological mapping and drill target identification conducted during surveys under Arctic twilight conditions.
True North Gems strives to lead the industry in exploration, discovery and development of coloured gemstone deposits at high northern latitudes. As it seeks the “big three” gemstones – rubies, sapphires and emeralds, the company repeatedly rocks the gemstone world with outstanding discoveries and remarkable creations.
To view video of the carved gem, visit www.b-tv.com/i/videos/ TrueNorthGems.wmv.
True North Gems trades as TGX:TSX-V. For more information about the company, visit www.truenorthgems.com.