Tuesday, November 25, 2008

Galore Creek Project

I have been watching Nova Gold's Galore Creek project for some years now. The project is located in the Northwest of BC about 150 km north of the port at Stewart and 70 km west of highway #37.

The project is in the top ten undeveloped copper/gold plays in the world. It has the potential to be a huge mine and operate for decades. The resource value is on the range of $25 000 000 000 to $35 000 000, more if prices for copper go up again and there has been an up tick lately as stocks seem to have stopped rising. Gold is holding its value as other metals are falling, today it is around $805 an ounce, only 20% off of the peak.

Nova Gold has a set a good corporate example of how to work with First Nations as shown through their agreements with the Tahltan. The mine would have provided long term consistent employment for the aboriginal people of the northwest.

The project would also have been an important boost to the port in Stewart BC. The port is an amazing location but is very isolated from everywhere else expect for the mining region in the northwest. I would love to see a rail line built into Stewart from the region so that the bulk commodities could be moved, there are some nice coal deposits in the region.

The project is a 50/50 partnership between Nova Gold and Teck and was put on hold last year because of the escalating capital costs. Now there seems to be a problem with Nova Gold's own financing as shown in this press release.

If Nova Gold is in trouble, this puts the odds of Galore Creek coming online anytime soon remote. Galore Creek is one of the important projects along highway #37 that could use the extension of the grid. The provincial treasury could use the income from the mine, it would have been over $100 000 000 per year for decades.

The delay of the project holds up development of the whole area and means it will take a lot longer before the infrastructure in the region is upgraded to where it should be. The people of the region will also have to continue leaving to find work, the constant problem in rural BC.
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