ALASKA – The good news from BARRICK GOLD of Toronto and NOVAGOLD of Vancouver is that they have mutually agreed to drop all litigation aimed at each other. They have agreed to create a 50:50 joint venture to develop the Donlin Creek gold project in western Alaska. Finally, they have agreed to a new ownership of the Grace claims near Galore Creek in British Columbia.
Three agreements from these often-contentious partners is definitely good news. And even better – there is no bad news.
The Donlin Creek agreement creates a new limited liability company, which will be equally owned by Barrick and NovaGold. DONLIN CREEK LLC will initially have a board of four directors, with two nominees selected by each company. All significant decisions related to the project will require the approval of both Barrick and NovaGold. NovaGold has nominated Doug Nicholson, VP NovaGold Resources Alaska, to serve as the initial general manager of the Donlin Creek project until Dec. 31, 2009, and Barrick has approved this nomination.
As part of the restructuring of the Donlin Creek joint venture, NovaGold has agreed to reimburse Barrick over time for approximately US$63.5 million, representing 50% of Barrick’s expenditures April 1, 2006 to Nov. 30, 2007. After NovaGold’s initial contribution, all funding will be shared by both parties on a 50/50 basis.
Barrick (www.Barrick.com) and NovaGold (www.NovaGold.com) have also agreed that GALORE CREEK MINING CORP., a 50:50 partnership between NovaGold and TECK COMINCO, will purchase a 100% interest in the Grace claims located adjacent to the Galore Creek project and held by PIONEER METALS (a wholly-owned subsidiary of Barrick). Galore Creek Mining has deposited Cdn$54 million in escrow concurrent with the execution of the settlement agreement.
I hope both Barrick and NovaGold can now realize considerable savings on their legal bills. That money will be better spent on mine creation than on litigation.