Permits issued for Donlin Gold project

The U.S. Army Corps of Engineers and U.S. Bureau of Land Management issued major permits Monday for the Donlin Gold project near the Kuskowkim River about 280 miles west of Anchorage. It is one of the world’s largest undeveloped gold prospects with 39 million ounces of measured and indicated resources.

Barrick Gold and NovaGold Resources, a Vancouver, B.C. junior mining company, are 50-50 owners of the project, but surface lands at the site are owned by The Kuskokwim Corp., which is owned by several Native villages in the region, and the subsurface mineral rights are held by Calista Corp., the Native regional corporation for the Yukon-Kuskowkim region of Southwest Alaska.

If the two mining companies agree to proceed, which will come after a revised feasibility study, the mine would take about four years to build.

The project would require 3,000 workers and 1,500 operations once it is in production, according to the U.S. Army Corps of Engineers.

Donlin Gold would be a large surface mine that includes a 316-mile, 14-inch diameter pipeline built from the Matanuska-Susitna Borough to bring natural gas to the mine.

U.S. Army Corps of Engineers officials said the mine would process 59,000 tons of ore per day and produce about 30 million ounces of gold over 27 years.

Kurt Parkan, a Donlin Gold spokesman, said the companies will now proceed with optimization studies to reduce costs and will update a 2011 feasibility study. Further details on the path forward will come in the fourth quarter, he said.

A decision to build the mine could come in 2019, with construction expected to take about four years.

Earlier estimates put the cost of construction at $6 billion but this will be updated before a final decision is made by the owners.

The permits represent the first time federal agencies have coordinated their environmental reviews so that major regulatory decisions and permits are issued simultaneously.

This is under the President Donald Trump’s One Decision framework for permits, established by presidential executive order to avoid duplications in agencies’ review of projects.

The combined permits for the project issued Monday were a first nationwide for federal agencies. The U.S. Army Corps of Engineers approved the Record of Decision on the Environmental Impact Statement for the mine and at the same time issued permits under Section 404 of the Clean Water Act and Section 10 permit of the Rivers and Harbors Act.

Simutaneously the Bureau of Land Management issued a right-of-way for portions of the pipeline that would cross federal lands.

“This is proof that different agencies within the federal government can work together, speak with one voice and move dirt on major infrastructure projects,” the Assistant Secretary of the Army, R.D. James said in a statement.

Interior Secretary Ryan Zinke praised the coordinated work by the agencies. “This is a great example of cooperation between the Corps of Engineers and the Bureau of Land Management. It demonstrates our agencies’ commitment to executing the principles outlined in the president’s Executive Order 13807 and the ‘One Federal Decision’ framework,” Zinke said in a statement.

“This project includes stipulations for Alaska Native hiring preference and will create good-paying jobs in a region of Alaska with historically high unemployment,” the Secretary said.

“Donlin Gold operates this project under a mining lease with Calista Corp. and a surface use agreement with TKC,” or The Kuskokwim Corp., Parkan said.

“Each of these agreements provides direct economic benefits to Calista and TKC as well as indirect benefits such as contracting and hiring preferences and stringest environmental-stewardship obligations,” he said.

Andrew Guy, Calista’s CEO, said Calista has been actively engaged in promoting and helping plan the project for 40 years. “The project represents a significant and positive opportunity for our region and shareholders,” he said.

Under terms of Section 7(i) of the Alaska Native Claims Settlement Act, under which Calista selected the lands where the gold was found, 70 percent of the mine royalties will be paid to other Native regional and village corporations.

Interestingly, Calista itself discovered the gold deposit. The corporation had sponsored geologic reconnaissance in the early 1970s as an aid in its land selection decisions.

Geologists on the team found the large lode gold deposit, which led to Calista’s selecting the lands under its claims act land entitlement. The corporation then went on to promote the project and find a mining company to explore and develop the deposit.

This occurred over several years with some failures by companies that took on the job but then dropped it. Calista finally formed an agreement with Placer Dome, an experienced mining company, in the 1980s.

Placer Dome was subsequently purchased by Barrick Gold, the world’s largest gold mining company.

NovaGold, a minerals exploration company, also entered the project as a partner.