NovaGold Suspends Operation at Rock Creek

NovaGold Resources, owner of the Rock Creek gold mine near Nome, Alaska, reported in November that it anticipated significant cash flow problems due, in part, to mechanical problems and severe weather conditions and consequently had decided to suspend operations at the mine, which commissioned in September 2008.

NovaGold said it was required to complete a number of additional environmental and operational tasks following startup to ensure compliance with environmental requirements for the mine. Complications arose in meeting these regulatory requirements and federal and state regulators gave notice that certain conditions in previously granted permits had not been fully met. In addition, the company said Rock Creek had experienced unanticipated problems including an electrical failure with the milling circuit along with ongoing concerns about the efficiency of the process and recovery circuit. These issues were compounded by the effects of extreme arctic weather.

NovaGold did not expect Rock Creek to generate significant net cash flow over the next six months using a $750/oz gold price. As a result of expected capital requirements and operating costs together with the uncertainty regarding the project operation, the company decided to suspend operations at the mine.

As featured in Womp 09 Vol 01 -