NovaGold Resources’ (TSX:NG) massive Galore Creek copper project in Northwest B.C. is back online nearly four years after the company all but shut the project down due to cost overruns.
Vancouver-based NovaGold published an updated prefeasibility study for Galore on Thursday, envisioning a project that would produce 6.2 billion pounds of copper, 4 million ounces of gold and 65.8 million ounces of silver throughout its 18-year life.
That makes Galore Creek, which is half-owned by mining giant Teck Resources (TSX:TCK.B), potentially the largest copper mine in Canada. But it won’t come cheap.
NovaGold estimates the price tag for the project would exceed $5.16 billion, which is $150 million more than Teck estimated the mine would cost in 2007.
At the time, the cost overrun, which had doubled from earlier projections, forced NovaGold and Teck to shutter the project.
NovaGold’s stock plummeted to $9.25 from $19.96 in a single day in 2007.
NovaGold president and CEO Rick Van Nieuwenhuyse said the updated prefeasibility for Galore Creek is proof the project is economically viable at today’s metal prices, though the company noted that its economics are “highly sensitive to commodity prices.”
The Galore Creek partners say they have committed to further study on the project to enhance its economics.
Still, NovaGold is looking to leverage the updated study to generate a return for shareholders.
The company, which has yet to put a mine into production, said in a separate release Thursday that the size and value in its projects should generate a better return for shareholders.
“Management believes recently completed economic analyses of Galore Creek and Ambler clearly demonstrate that NovaGold’s copper assets are considerably undervalued having regard to their size, favourable geopolitical location, projected long life and low operating cost,” said Nieuwenhuyse.
NovaGold’s shares were down $0.10 to $9.41 at midday trades Thursday.
Joel McKay
Twitter:jmckaybiv