VANCOUVER (CP) -- Barrick Gold Corp. [TSX:ABX; NYSE:ABX] and NovaGold Resources Inc. [TSX:NG; AMEX:NG] have increased by 77% the amount of gold estimated to be part of their Donlin Creek project in Alaska.
The companies, which each own half of Donlin Creek, said Thursday the project contains 29.4 million measured and indicated ounces of gold and they foresee producing over one million ounces of gold per year from an open pit mine at the project.
The new estimate of measured and indicated resources is based on an additional 135,000 metres of drilling from 359 holes, incorporating all of the 2006 drill program and about three-quarters of the 2007 drill program at Donlin Creek.
A remaining 20,000 metres of 2007 drill results will be incorporated into future modelling, NovaGold said.
''We believe excellent potential remains to define additional resources in the other major target areas on the property,'' said NovaGold CEO Rick Van Nieuwenhuyse.
''We will continue to examine the Donlin Creek district with the objective of identifying additional high-grade mineralization that may further optimize the overall mine plan.''
The resource estimate was constrained within a conceptual pit based on US$650 per ounce gold and recent estimates of mining, geotechnical and metallurgical parameters.
NovaGold has said work in the first half of 2008 will focus on studies for power, logistics, processing and production.
MGI Securities analyst Paolo Lostritto, who suggested the mine could cost US$3.8 billion to build, said the project could grow even larger as the companies continue to explore the region.
''It continues to point to the asset being of world-class size and grade, offsetting that there were some increased costs that were hinted in the release,'' Lostritto said of the new resource estimate.
''But more importantly the resource that they are presenting has a high probability of being converted into reserves because of those criteria.''
Barrick and NovaGold called a truce late last year to their numerous disputes last month in a deal to form a 50-50 joint venture to develop Donlin Creek, avoiding an almost certain legal battle for control of the project.
The deal ended the acrimony between the companies since Barrick attempted a hostile takeover of the junior company late last year, only to be rebuffed.
Its shares traded Thursday at C$11.22, up 17 cents, at the Toronto Stock Exchange. Barrick shares were at C$48.64, down 15 cents.
(c) The Canadian Press 2008