Nova Gold Mining for Finances
By 250 News
Tuesday, November 25, 2008 03:59 AM
Prince George, B.C. – The global economic troubles have surfaced for Nova Gold.
The mining company has a 50% share in the Galore Creek project, a proposed mine that was shelved until the construction costs could be trimmed back.
There are bills coming due at a time when investors and lenders are taking a very close look at where they place their money. Nova Gold has a bridge loan which is due on December 29, it is also looking for funds for its share of commitments to the Galore Creek Partnership and the Donlin Creek project in Alaska.
Nova Gold has spent about $30 (US) million dollars since the start of September on its Rock Creek project near Nome Alaska, and says it is about $20 (US) million over budget.
The company says it will continue to look for ways to come up with the cash, however, it did not meet the cash call (C$1.9 million) for the Galore Creek project which was due yesterday.
Instead, it will be approaching Teck Cominco ( its 50% partner in the project) to “discuss alternatives relating to the settlement of the amount due. If NovaGold does not reach alternative arrangements with Teck Cominco or does not make the payment within five business days of receiving notice of such non-payment, its interest in the Galore Creek Partnership may be diluted to approximately 49.8% from its current 50% interest.”
Tomorrow will mark one year since construction of the Galore Creek mine were put on hold. The partners had hoped to have a new feasibility study done next year which would include updated cost estimates for construction completion.
Meantime, operations at the Rock Creek mine have been suspended because of a variety of reasons including the winter weather, mechanical problems and meeting environmental requirements.
In a release issued by Nova Gold, President and CEO Rick Van Nieuwenhuyse says the decision was not easy “Though this has been a difficult decision with Rock Creek, based on the current economic conditions, and the challenges associated with meeting environmental requirements compounded by working through the arctic winter we believe these actions are in the best interest of the Company at this time He says Nova Gold will focus most of its resources and efforts on its Donlin Creek property while continuing to seek sources of cash and to take steps to reduce costs.”
Nova Gold has accepted the resignation of Carl Gagnier, the Vice President, Operations effective December 31, 2008.
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Posted by: gold_rush on November 25 2008 7:55 AM