EX-99.1 2 exhibit99-1.htm GALORE CREEK PROJECT, BRITISH COLUMBIA - NI 43-101 TECHNICAL REPORT ON PRE-FEASIBILITY STUDY NovaGold Resources Inc.: Exhibit 99.1 - Filed by newsfilecorp.com


CERTIFICATE OF QUALIFIED PERSON

Robert Gill P.Eng.
AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, BC, Canada V6B 5W3
Tel: (604) 664-4204
Fax: (604) 669-9516
robert.gill@amec.com

I, Robert Gill P.Eng., am employed as a Principal Consultant and Study Manager with AMEC Americas Limited.

This certificate applies to the technical report entitled “Galore Creek Project British Columbia NI 43-101 Technical Report on Pre-Feasibility Study” that has an effective date of 27 July 2011 (the “Technical Report”).

I graduated with a Bachelor of Applied Science (Hons) in Geological Engineering from the University of British Columbia in 1985. I am a Member of the Association of Professional Engineers and Geoscientists of British Columbia.

I have practiced my profession since 1985 and have been involved in design, construction, mining operations, health, safety and environmental management, and consulting. I have been involved in Environmental, Geotechnical, and Mining consulting practice for 7 years, including working on both gold deposits and copper deposits for at least 5 years.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I did not visit the Galore Creek Project (the “Project”).

I am responsible for Sections 1, 2, 3, 4, 5, 6, 18 (except Sections 18.8 and 18.9), 19, 20, 21, 22, 23, 24, 25, 26 and 27 of the Technical Report.

I am independent of NovaGold Resources Inc. as independence is described by Section 1.5 of NI 43–101.

Prior to completion of this technical report I have had no other involvement with this project.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com


As of the date of this certificate, to the best of my knowledge, information and belief, the Sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Robert Gill, P.Eng.

Dated: 12 September 2011

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com


CERTIFICATE OF QUALIFIED PERSON

Greg Kulla P.Geo.
Associate, AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, BC, Canada V6B 5W3
Tel: (604) 664-3229
Fax: (604) 664-3057
greg.kulla@amec.com

I, Gregory Kenneth Kulla, P.Geo., am employed as a Principal Geologist with AMEC Americas Ltd.

This certificate applies to the technical report entitled “Galore Creek Project British Columbia NI 43-101 Technical Report on Pre-Feasibility Study” that has an effective date of 27 July 2011 (the “Technical Report”).

I am a member of the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC, member #23492), and of the Association of Professional Geoscientists of Ontario (APOG #1752). I graduated from the University of British Columbia with a Bachelor of Science in Geology degree in 1988.

I have practiced my profession continuously since 1988 and have been involved in precious and base metal disseminated sulphide deposit assessments in Canada, United States, Australia, Mexico, Chile, Peru, and India.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Galore Creek Project (the “Project”) between 21 to 24 September 2010.

I am responsible for Sections 7, 8, 9, 10, 11, 12, 14, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections. of the Technical Report.

I am independent of NovaGold Resources Inc. as independence is described by Section 1.5 of NI 43–101.

Prior to completion of this technical report I have had no other involvement with this project.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com


As of the date of this certificate, to the best of my knowledge, information and belief, the Sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Greg Kulla, P.Geo.

Dated: 12 September 2011

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com


CERTIFICATE OF QUALIFIED PERSON

Gregory Wortman P.Eng.
AMEC Americas Limited
2020 Winston Park Drive, Suite 700
Oakville, Ontario L6H 6X7
Tel: (905) 403-3539
Fax: (905) 829 5401
Gregory.Wortman @amec.com

I, Gregory Wortman P.Eng., am employed as a Technical Director Process with AMEC Americas Ltd.

This certificate applies to the technical report entitled “Galore Creek Project British Columbia NI 43-101 Technical Report on Pre-Feasibility Study” that has an effective date of 27 July 2011 (the “Technical Report”).

I am a member of Professional Engineers, Ontario. I graduated from the Technical University of Nova Scotia in 1968.

I have practiced my profession continuously since 1968 and have been involved in precious and base metal disseminated sulphide deposit assessments in Canada, United States, Chile, Peru, and Russia.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I have not visited the Galore Creek Project (the “Project”).

I am responsible for Sections 13 and 17, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections. of the Technical Report.

I am independent of NovaGold Resources Inc. as independence is described by Section 1.5 of NI 43–101.

Prior to completion of this technical report I have had no other involvement with this project.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

AMEC Americas Limited
2020 Winston Park Drive, Suite 700
Oakville, Ontario L6H 6X7
Tel: (905) 403-3539
Fax: (905) 829 5401                                www.amec.com


As of the date of this certificate, to the best of my knowledge, information and belief, the Sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Gregory Wortman, P.Eng.

Dated: 12 September 2011

AMEC Americas Limited
2020 Winston Park Drive, Suite 700
Oakville, Ontario L6H 6X7
Tel: (905) 403-3539
Fax: (905) 829 5401                                www.amec.com


CERTIFICATE OF QUALIFIED PERSON

Jay Melnyk, P.Eng.
Associate, AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, BC, Canada V6B 5W3
Tel: (604) 317-6170
Fax: (604) 664-3057

I, Jay Melnyk, P.Eng., am employed as an Associate with AMEC Americas Limited.

This certificate applies to the technical report entitled “Galore Creek Project British Columbia NI 43-101 Technical Report on Pre-Feasibility Study” that has an effective date of 27 July 2011 (the “Technical Report”).

I am a member of a Professional Engineer in the province of British Columbia (P.Eng #25975). I graduated from the Montana Tech of the University of Montana with a Bachelor of Mining Engineering degree in 1988 and from the British Columbia Institute of Technology with a Diploma in Mining Technology in 1984.

I have practiced my profession for 22 years. I have been directly involved in open pit mining operations, and design of open pit mining operations in Argentina, Eritrea, Indonesia, Canada, the United States, Chile, Peru and Mexico.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Galore Creek Project (the “Project”) between 27 and 28 September, 2007.

I am responsible for Sections 15 and 16, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections of the Technical Report.

I am independent of NovaGold Resources Inc. as independence is described by Section 1.5 of NI 43–101.

I have been involved with the Project intermittently since 2007, performing mine planning work and reviewing mine planning work performed by others.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com


As of the date of this certificate, to the best of my knowledge, information and belief, the Sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Jay Melnyk, P.Eng.

Dated: 12 September 2011

AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, B.C. V6B 5W3
Tel (604) 664-3030
Fax (604) 664-3057                               www.amec.com



CERTIFICATE OF QUALIFIED PERSON

Dana J. Rogers, P.E.
Lemley International
604 N. 16th Street
Boise, ID 83702
Tel: (208) 345-5226
Fax: (208) 345-5254
djrogers@lemleyinternational.com

I, Dana J. Rogers, P.E., am employed as a Principal Tunnelling Engineer, with Lemley International.

This certificate applies to the technical report entitled “Galore Creek Project British Columbia NI 43-101 Technical Report on Pre-Feasibility Study” that has an effective date of 27 July 2011 (the “Technical Report”).

I am a licensed Professional Engineer, Mining, in the State of Idaho, USA. I graduated from the University of Utah at Salt Lake City, Utah in 1979 with Bachelor of Science Degrees in both Mining Engineering and in Geology.

I have practiced my profession continuously since 1979 and have been involved in the design, construction and construction management of underground mines and tunnels throughout my career.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Galore Creek Project (the “Project”) from 15 to 17 June 2011.

I am responsible for Sections 18.8 and 18.9, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections of the Technical Report.

I am independent of NovaGold Resources Inc. as independence is described by Section 1.5 of NI 43–101.

Prior to preparation of this technical report I have had no other involvement with this project.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

Lemley International
604 N. 16th Street
Boise, ID 83702
Tel: (208) 345-5226
Fax: (208) 345-5254           www.lemleyinternational.com


As of the date of this certificate, to the best of my knowledge, information and belief, the Sections of the Technical Report for which I am responsible contain all scientific and technical information that is required to be disclosed to make the technical report not misleading.

“Signed and sealed”

Dana J. Rogers, P.E.

Dated: 12 September 2011

Lemley International
604 N. 16th Street
Boise, ID 83702
Tel: (208) 345-5226
Fax: (208) 345-5254           www.lemleyinternational.com


IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report for Galore Creek Mining Corporation (GCMC), NovaGold Resources Inc. (NovaGold), and Teck Resources Inc. (Teck) by AMEC Americas Limited (AMEC). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in AMEC’s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by NovaGold, GCMC, and Teck subject to terms and conditions of the respective contracts held by those companies with AMEC. Except for the purposes legislated under Canadian provincial securities law, any other uses of this report by any third party is at that party’s sole risk.


 
Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

C O N T E N T S

1.0 SUMMARY 1-1
  1.1 Key Outcomes 1-1
  1.2 Location, Climate, and Access 1-2
  1.3 Agreements and Royalties 1-3
  1.4 Mineral Tenure and Surface Rights 1-3
  1.5 Environment, Permitting and Socio-Economics 1-4
  1.6 Geology and Mineralization 1-5
  1.7 Exploration 1-6
  1.8 Exploration Potential 1-7
  1.9 Drilling 1-7
  1.10 Sample Analysis and Security 1-8
  1.11 Data Verification 1-10
  1.12 Metallurgical Testwork 1-11
  1.13 Mineral Resource Estimate 1-12
  1.14 Mineral Reserve Estimate 1-13
  1.15 Proposed Mine Plan 1-15
  1.16 Process Design 1-16
  1.17 Tailings Impoundment Management 1-18
  1.18 Planned Project Infrastructure 1-18
  1.19 Markets 1-21
  1.20 Capital Costs 1-22
  1.21 Operating Costs 1-23
  1.22 Financial Analysis 1-23
    1.22.1  Real Option Sensitivity Analysis 1-25
  1.23 Preliminary Development Schedule 1-26
  1.24 Work Plans 1-27
  1.25 Conclusions 1-28
  1.26 Recommendations 1-28
       
2.0 INTRODUCTION 2-1
  2.1 Terms of Reference 2-1
  2.2 Qualified Persons 2-3
  2.3 Site Visits 2-3
  2.4 Scope of Personal Inspections 2-4
  2.5 Effective Dates 2-5
  2.6 Previous Technical Reports 2-6
  2.7 Information Sources 2-7
       
3.0 RELIANCE ON OTHER EXPERTS 3-1
  3.1 Mineral Tenure and Mining Rights Permits 3-1
  3.2 Surface Rights 3-1
  3.3 Agreements 3-2
  3.4 Royalties 3-2
  3.5 Marketing 3-2
       
4.0 PROPERTY DESCRIPTION AND LOCATION 4-1
  4.1 Location 4-1

     
Project No.: 166824
September 2011

TOC i



Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  4.2 Mineral Tenure History 4-1
  4.3 Mineral Tenure 4-2
    4.3.1 Galore Creek Project 4-2
    4.3.1 Other Regional Projects 4-5
  4.4 Property Agreements 4-5
    4.4.1 Pre-NovaGold Agreements 4-5
    4.4.2 SpectrumGold and Stikine 4-5
    4.4.3 SpectrumGold and NovaGold 4-6
    4.4.4 NovaGold and Teck 4-6
    4.4.5 GCMC and the Tahltan Nation 4-7
  4.5 Surface Rights 4-7
    4.5.1 Cassiar Iskut-Stikine Land and Resource Management Plan 4-8
    4.5.2 Guide and Trapping Surface Rights 4-8
  4.6 Water Rights 4-9
  4.7 Royalties 4-9
  4.8 Encumbrances 4-9
  4.9 Permits   4-9
  4.10 Environment 4-9
  4.11 Social and Community Impact 4-9
  4.12 Comment on Section 4 4-9
         
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 5-1
  5.1 Current Accessibility 5-1
    5.1.1 Air 5-1
    5.1.2 Water 5-1
    5.1.3 Road 5-1
  5.2 Climate   5-4
  5.3 Infrastructure 5-5
  5.4 Physiography 5-5
  5.5 Seismicity 5-6
  5.6 Comment on Section 5 5-6
         
6.0 HISTORY   6-1
  6.1 Early Exploration of the Galore Creek Claims 6-1
  6.2 Exploration of the Grace Claims 6-2
  6.3 SpectrumGold/NovaGold Exploration at Galore Creek 6-2
  6.4 GCMC Exploration at Galore Creek 6-3
  6.5 Development Studies 6-4
         
7.0 GEOLOGICAL SETTING AND MINERALIZATION 7-1
  7.1 Regional Setting 7-1
  7.2 Galore Creek Area Geology 7-3
  7.3 Lithological Descriptions 7-6
    7.3.1 Volcanic Rocks 7-6
    7.3.2 Sedimentary Rocks 7-8
    7.3.3 Intrusive Rocks 7-9
  7.4 Structure 7-11
    7.4.1 Faults 7-11
    7.4.2 Folds 7-12
  7.5 Alteration 7-12

     
Project No.: 166824
September 2011

TOC ii



Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  7.6 Genesis 7-13
  7.7 Mineralization 7-14
  7.8 Oxidation 7-14
  7.9 Deposits and Prospects 7-15
    7.9.1 Central Zone 7-15
    7.9.2 Bountiful Zone 7-19
    7.9.3 Southwest Zone 7-19
    7.9.4 Junction and Junction North Zones 7-21
    7.9.5 West Fork Zone 7-23
    7.9.6 Middle Creek 7-26
    7.9.7 West Rim 7-26
    7.9.8 North Rim 7-26
    7.9.9 Butte and South Butte 7-27
    7.9.10 Saddle 7-27
    7.9.11 South 110 Creek 7-28
    7.9.12 Exuberant Zone 7-28
  7.10 Comment on Section 7 7-29
         
8.0 DEPOSIT TYPES 8-1
  8.1 Comment on Section 8 8-2
         
9.0 EXPLORATION   9-1
  9.1 Grids and Surveys 9-1
  9.2 Geochemistry 9-3
  9.3 Geophysics 9-3
  9.4 Underground Sampling 9-3
  9.5 Drilling   9-6
  9.6 Bulk Density 9-6
  9.7 Petrology, Mineralogy, and Research Studies 9-6
    9.7.1 Theses 9-6
    9.7.2 Mineralogy 9-7
  9.8 Geotechnical and Hydrological Studies 9-7
  9.9 Exploration Potential 9-9
  9.10 Comment on Section 9 9-11
         
10.0 DRILLING   10-13
  10.1 Drill Methods 10-13
  10.2 Legacy Drill Data 10-19
  10.3 Geological Logging 10-20
  10.4 Recovery 10-21
  10.5 Broken Rock/Stick Rock Boundary 10-22
  10.6 Collar Surveys 10-25
  10.7 Downhole Surveys 10-25
  10.8 Geotechnical and Hydrological Drilling 10-26
  10.9 Metallurgical Drilling 10-26
  10.10 Sample Length/True Thickness 10-26
  10.11 Drill Intercepts 10-28
  10.12 Comment on Section 10 10-28
         
11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 11-1
  11.1 Sampling Methods 11-1
    11.1.1 Geochemical Sampling 11-1

     
Project No.: 166824
September 2011

TOC iii



Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

    11.1.2 Underground Sampling 11-1
    11.1.3 Drill Sampling 11-2
  11.2 Metallurgical Sampling 11-5
  11.3 Density Determinations 11-5
    11.3.1 Historic Specific Gravity Work 11-5
    11.3.2 Mingold 11-5
    11.3.3 SpectrumGold 11-6
    11.3.4 NovaGold 11-6
    11.3.5 GCMC 11-6
    11.3.6 Density Data Verification 11-7
    11.3.7 Disaggregation Zone Adjustment Factor 11-7
    11.3.8 Moisture Content 11-7
  11.4 Analytical and Test Laboratories 11-8
  11.5 Sample Preparation and Analysis 11-8
    11.5.2 1970s 11-10
    11.5.3 Mingold 11-11
    11.5.4 Kennecott 11-11
    11.5.5 SpectrumGold 11-12
    11.5.6 NovaGold 11-12
    11.5.7 GCMC 11-13
  11.6 Acid-Soluble Copper Determinations 11-13
  11.7 Quality Assurance and Quality Control 11-13
  11.8 Databases 11-14
  11.9 Security 11-15
    11.9.1 Sample Storage 11-15
    11.9.2 Sample Security 11-16
  11.10 Comment on Section 11 11-17
         
12.0 DATA VERIFICATION 12-1
  12.1 2007–2008 AMEC Project Audit 12-1
    12.1.10 Duplicate Performance, NovaGold/SpectrumGold Programs 2003–2006 12-7
    12.1.11 Check Assays NovaGold/SpectrumGold Programs 2003–2006 12-8
    12.1.12 Conclusions of 2008 Audit 12-8
  12.2 2011 AMEC Audit 12-9
    12.2.1 Database Review 12-9
    12.2.2 Legacy Data Review 12-12
    12.2.3 Site Visit 12-13
  12.3 Comments on Section 12 12-13
         
13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 13-1
  13.1 Hazen Research and Britton Research Ltd, 1960s 13-1
  13.2 Dawson Metallurgical Laboratories, 1992 13-2
  13.3 G&T Metallurgical Services, 2003 13-3
  13.4 G&T Metallurgical Services, 2005 13-4
  13.5 G&T Metallurgical Services, SGS Lakefield, SGS MinnovEX, 2006 13-4
  13.6 G&T Metallurgical Services, 2008 13-6
  13.7 G&T Metallurgical Services, 2009 13-6
  13.8 G&T Metallurgical Services, 2010 13-7
  13.9 G&T Metallurgical Services, 2011 13-8
  13.10 Throughput Calculations 13-9
  13.11 Deleterious Elements 13-10

     
Project No.: 166824
September 2011

TOC iv



Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  13.12 Recovery 13-11
    13.12.2 Gold Recovery Estimate 13-12
    13.12.3 Silver Recovery Estimate 13-12
  13.13 Comment on Section 13 13-13
         
14.0 MINERAL RESOURCE ESTIMATES 14-1
  14.1 GCMC Mineral Resource Estimate 14-1
    14.1.1 Basis of Estimate 14-1
    14.1.2 Geological Models 14-1
    14.1.3 Exploratory Data Analysis 14-2
    14.1.4 Density Assignment 14-3
    14.1.5 Acid-Soluble Copper Assignment 14-3
    14.1.6 Composites 14-4
    14.1.7 Grade Capping 14-4
    14.1.8 Variography 14-4
    14.1.9 Estimation 14-4
    14.1.10 Block Model Validation 14-6
  14.2 AMEC Review of GCMC 2011 PFS Estimate 14-7
    14.2.1 EDA Checks 14-7
    14.2.2 Block Model Visual Inspection 14-8
    14.2.3 Comparison of the OK and NN Estimates 14-8
    14.2.4 Comparison of the AMEC and GCMC 2011 Pre-feasibility Study Estimates 14-9
    14.2.5 Grade–Tonnage Curve Checks 14-9
    14.2.6 Drill Hole Spacing Study 14-11
    14.2.7 Review of Classification Criteria 14-11
  14.3 Consideration of Reasonable Prospects of Economic Extraction Criteria 14-11
  14.4 Mineral Resource Statement 14-12
  14.5 Comment on Section 14 14-14
         
15.0 MINERAL RESERVE ESTIMATES 15-1
  15.1 GCMC 2011 Pre-feasibility Study Mineral Reserve Estimate 15-1
  15.2 AMEC Mineral Reserve Estimate 15-1
    15.2.1 Key Assumptions, Parameters and Methods 15-1
    15.2.2 Pit Optimization 15-4
    15.2.3 Production Schedule 15-5
  15.3 Mineral Reserves Statement 15-6
  15.4 Comment on Section 15 15-6
         
16.0 MINING METHODS 16-1
  16.1 GCMC 2011 Pre-feasibility Study Mine Plan 16-1
  16.2 AMEC Mine Plan 16-1
    16.2.1 Optimization 16-1
    16.2.2 Marginal Cut-off Grade Considerations 16-4
  16.3 Proposed Production Schedule 16-5
  16.4 Mining Equipment 16-8
    16.4.1 Loading Fleet 16-8
    16.4.2 Hauling Fleet 16-10
    16.4.3 Support Equipment 16-10
    16.4.4 Drilling 16-11
  16.5 Blasting and Explosives 16-12
  16.6 Comment on Section 16 16-12

     
Project No.: 166824
September 2011

TOC v



Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

17.0 RECOVERY METHODS 17-1
  17.1 Proposed Process Plant Design 17-1
    17.1.1 Primary Crusher 17-3
    17.1.2 Coarse Ore Surge Pile 17-3
    17.1.3 Overland Conveyor System 17-4
    17.1.4 Coarse Ore Stockpile 17-5
    17.1.5 Grinding 17-5
    17.1.6 Rougher Flotation and Rougher Tailings Handling 17-8
    17.1.7 Regrinding 17-8
    17.1.8 Cleaner Flotation and Cleaner Tailings Handling 17-9
    17.1.9 Concentrate Thickening and Pumping 17-10
    17.1.10     Ancillary Services 17-10
    17.1.11     Utilities 17-10
  17.2 Product Handling 17-11
  17.3 Energy, Water and Process Materials Requirements 17-12
  17.4 Comment on Section 17 17-13
         
18.0 PROJECT INFRASTRUCTURE 18-15
  18.1 Infrastructure and Design Considerations 18-15
  18.2 Waste Rock Facilities 18-16
    18.2.1 East Fork NPAG Facility 18-18
    18.2.2 PAG Dump 18-19
    18.2.3 Valley NPAG Dump 18-19
    18.2.4 Closure Dam 18-20
    18.2.5 In-Pit Storage 18-20
  18.3 Tailings Impoundment Management 18-21
  18.4 Tailings Facility Closure Aspects 18-23
  18.5 Water Management 18-24
    18.5.1 Main Diversion Channel 18-25
    18.5.2 Sedimentation Dam 18-27
    18.5.3 Closure Dam 18-27
    18.5.4 Diversion Structures 18-28
    18.5.5 Run-off Diversions 18-29
    18.5.6 Water Balance 18-30
    18.5.7 Water Quality Considerations 18-30
  18.6 Geohazards 18-31
  18.7 Road   18-31
  18.8 GCMC 2011 Pre-feasibility Study Tunnel Design 18-32
    18.8.1 Proposed Layout 18-33
    18.8.2 Excavation 18-34
    18.8.3 Camp and Utilities 18-35
    18.8.4 Water Considerations 18-35
    18.8.5 Acid-Base Accounting 18-36
    18.8.6 Ventilation 18-36
    18.8.7 Communications 18-36
    18.8.8 Traffic Controls 18-37
  18.9 Lemley International Review of GCMC 2011 Pre-feasibility Study Tunnel Design 18-37
    18.9.1 Review of Design Considerations 18-37
    18.9.2 Review of Timeframes and Productivities for Tunnel Construction 18-39
    18.9.3 Review of Budget Estimates 18-42

     
Project No.: 166824
September 2011

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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  18.10 Camps   18-44
    18.10.1 Construction Camps 18-44
    18.10.2 Permanent Camps 18-45
  18.11 Power and Electrical 18-46
    18.11.1 Site Electrical Reticulation 18-47
    18.11.2 Review of the Proposed Electrical Systems 18-48
  18.12 Fuel   18-48
  18.13 Fresh Water Supply 18-49
  18.14 Sewage Systems 18-50
  18.15 Process Control and Instrumentation 18-50
  18.16 Port   18-51
    18.16.1 Design Considerations 18-51
    18.16.2 Facility Design 18-52
    18.16.3 Access Considerations 18-54
    18.16.4 Storm Water Considerations 18-54
    18.16.5 Environmental Considerations 18-54
    18.16.6 Utilities and Facilities 18-55
    18.16.7 Loading Design 18-55
  18.17 Consideration of Logistics 18-56
  18.18 Comment on Section 18 18-57
         
19.0 MARKET STUDIES AND CONTRACTS 19-1
  19.1 Market Review 19-1
  19.2 Galore Creek Concentrate 19-1
    19.2.1 Sales Strategy and Sales Plan 19-2
  19.3 Contracts 19-2
  19.4 Comment on Section 19 19-3
         
20.0 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT 20-1
  20.1 Change of Project Scope 20-1
  20.2 Baseline Environmental Studies 20-2
  20.3 Environmental Liabilities 20-5
  20.4 Closure Plan 20-5
  20.5 Tahltan Nation and Traditional Knowledge 20-6
  20.6 Other First Nations 20-7
  20.7 Cassiar Iskut–Stikine Land and Resource Management Plan 20-8
  20.8 Permitting 20-8
    20.8.1 Exploration 20-8
    20.8.2 Map Reserves 20-8
    20.8.3 Project Development Permitting 20-9
  20.9 Comment on Section 20 20-9
         
21.0 CAPITAL AND OPERATING COSTS 21-1
  21.1 GCMC 2011 Pre-feasibility Study Capital Cost Estimate 21-1
    21.1.1 Labour Assumptions 21-2
    21.1.2 Material Costs 21-2
    21.1.3 Contingency 21-3
    21.1.4 Mine Capital Costs 21-3
    21.1.5 Owner’s Costs 21-4
    21.1.6 Sustaining Capital 21-4
  21.2 AMEC Review of Capital Cost Estimate 21-4

     
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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  21.3 AMEC Review of Sustaining Capital Cost Estimate 21-7
  21.4 GCMC 2011 Pre-feasibility Study Operating Costs 21-7
    21.4.1 Basis of Estimate 21-8
    21.4.2 Mining Operating Costs 21-10
    21.4.3 Mine General 21-12
    21.4.4 Processing Costs 21-12
    21.4.5 Port Costs 21-13
    21.4.6 Infrastructure Costs 21-13
    21.4.7 Site G&A Costs 21-14
    21.4.8 Corporate Costs 21-15
  21.5 AMEC Review of Operating Cost Estimate 21-15
  21.6 Comment on Section 21 21-16
         
22.0 ECONOMIC ANALYSIS 22-1
  22.1 Valuation Methodology 22-1
  22.2 Financial Model Parameters 22-1
    22.2.1 Resource and Mine Life 22-1
    22.2.2 Metallurgical Recoveries 22-2
    22.2.3 Smelting and Refining Terms 22-2
    22.2.4 Metal Prices 22-2
    22.2.5 Operating Costs 22-2
    22.2.6 Capital Costs 22-3
    22.2.7 Royalties 22-4
    22.2.8 Working Capital 22-4
    22.2.9 Taxes 22-4
    22.2.10 Closure Costs and Salvage Value 22-4
    22.2.11 Financing 22-4
    22.2.12 Inflation 22-4
  22.3 Financial Results 22-5
  22.4 Sensitivity Analysis 22-5
  22.5 Real Option Sensitivity Case 22-11
    22.5.1 Comparison of RO and DCF NPV Methods 22-13
    22.5.2 Steps in Ernst & Young’s RO DCF analysis 22-14
    22.5.3 Metal Price Uncertainty Models 22-15
    22.5.4 After-tax operating cash flow uncertainty characteristics 22-18
    22.5.5 RO Evaluation Results - Cumulative net cash flow and net present value 22-19
  22.6 Comment on Section 22 22-22
         
23.0 ADJACENT PROPERTIES 23-1
         
24.0 OTHER RELEVANT DATA AND INFORMATION 24-1
  24.1 Preliminary Development Schedule 24-1
  24.2 Project Opportunities 24-2
    24.2.1 Capital Cost Reduction Opportunities 24-2
    24.2.2 Additional Mineral Resources 24-3
    24.2.3 Waste Considerations 24-4
    24.2.4 Mill and Plant Considerations 24-5
         
25.0 INTERPRETATION AND CONCLUSIONS 25-1
  25.1 Agreements, Mineral Tenure, Surface Rights, and Royalties 25-1
  25.2 Geology and Mineralization 25-1
  25.3 Exploration, Drilling, and Data Analysis 25-1

     
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September 2011

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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

  25.4 Metallurgical Testwork 25-2
  25.5 Mineral Resource and Mineral Reserve Estimation 25-3
  25.6 Mine Plan 25-4
  25.7 Process Design 25-4
  25.8 Infrastructure Considerations 25-5
  25.9 Tunnel   25-6
  25.10 Markets and Contracts 25-6
  25.11 Environmental, Social Issues and Permitting 25-7
  25.12 Capital and Operating Cost Estimates 25-7
  25.13 Financial Analysis 25-8
  25.14 Preliminary Development Schedule 25-8
  25.15 Conclusions 25-9
         
26.0 RECOMMENDATIONS 26-1
  26.1 Phase 1 26-1
    26.1.1 Land Management 26-2
    26.1.2 Drill Programs 26-2
    26.1.3 Mineral Resource Estimation 26-2
    26.1.4 Metallurgy and Process Design 26-3
    26.1.5 Field Investigations 26-3
    26.1.6 Tunnel 26-4
    26.1.7 Engineering Studies 26-4
    26.1.8 Environmental Baseline Studies 26-4
    26.1.9 Environmental and Social Assessment 26-4
    26.1.10 Support Costs 26-4
  26.2 Phase 2 26-4
         
27.0 REFERENCES 27-1

T A B L E S  
     
Table 1-1: Key Outcomes Table 1-2
Table 1-2: Process Recovery Relationships 1-12
Table 1-3: Galore Creek Mineral Resource Table, Effective Date 11 July 2011, G. Kulla, P.Geo 1-13
Table 1-4: Mineral Reserve Statement, Effective Date 11 July 2011, Jay Melnyk, P.Eng. 1-14
Table 1-5: Life-of-Mine Planned Production 1-15
Table 1-6: Life-of-Mine Process Plant Summary 1-17
Table 1-7: Payable Metal Summary 1-17
Table 1-8: Galore Creek Construction Capital Cost Estimate 1-22
Table 1-9: Galore Creek Sustaining Capital Estimate 1-23
Table 1-10: Average Annual Operating Cost 1-23
Table 1-11: Summary of Financial Results 1-24
Table 1-12: Ernst and Young Real Option NPV vs AMEC Discounted Cash flow NPV 1-26
Table 2-1: Study Contributors 2-3
Table 2-2: QPs, Areas of Report Responsibility, and Site Visits 2-4
Table 9-1: Exploration Summary Table 9-2
Table 9-2: Geophysical Surveys Summary Table 9-5
Table 10-1: Summary, All Drill Programs 10-14

     
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September 2011

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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

Table 10-3: Drill Companies Used 2003–2010 10-19
Table 10-3: Drill Intercept Summary Table 10-29
Table 11-1: Analytical Laboratories 11-9
Table 11-2: Metallurgical Laboratories 11-9
Table 12-1: Data Verification Programs 12-2
Table 13-1: Metallurgical Testwork Summary Table 13-1
Table 13-2: Throughput Rates Assumed Based on Geometallurgical Types 13-10
Table 13-3: Deleterious Elements 13-10
Table 13-4: Process Recovery Relationship Models 13-11
Table 14-1: 2010 Outlier Restrictions 14-5
Table 14-2: 2010 Capping Thresholds 14-5
Table 14-3: AMEC Recommended Classification Criteria for the Mineral Resource Estimate 14-11
Table 14-4: Galore Creek Mineral Resource Table, Effective Date 11 July 2011, G. Kulla, P.Geo 14-13
Table 14-5: Galore Creek Mineral Resource Table Restated by Deposit Zone, Effective Date 11 July 2011, G. Kulla, P.Geo. 14-14
Table 15-1: Metallurgical Recovery Equations Used to Support Mineral Reserve Estimation 15-3
Table 15-2: NSR Parameters 15-4
Table 15-3: Gold and Silver Payable Guidelines 15-4
Table 15-4: Operating Costs Used for Pit Optimization and Scheduling 15-5
Table 15-5: Mineral Reserve Statement, Effective Date 11 July 2011, Jay Melnyk, P.Eng 15-7
Table 16-1: Galore Creek Mine Plan Optimization Parameters 16-2
Table 16-2: Operating Costs used for Pit Optimization and Scheduling 16-2
Table 16-3: Gold and Silver Payable Guidelines 16-3
Table 16-4: Planned Pit Schedule 16-6
Table 16-5: Material Throughputs based on 92% Mill Utilization 16-6
Table 16-6: Life of Mine Production Plan 16-7
Table 16-7: Haulage Fleet Requirements over the Life of Mine 16-11
Table 16-8: Support Fleet Requirements 16-11
Table 18-1: Waste Storage Facilities 18-18
Table 18-2: Tunnel Cost Estimate 18-43
Table 19-1: GCMC Preliminary Specification Expectations for Concentrate 19-1
Table 19-2: GCMC Preliminary Geographic Sales Plan 19-2
Table 19-3: GCMC Concentrate Assumptions 19-3
Table 19-4: Marketing Contract Development Milestones 19-3
Table 20-1: Additional Recommended Environmental Data Collection Areas 20-4
Table 20-2: Provincial Permit Requirements for Project Development 20-10
Table 20-3: Federal Permit Requirements for Project Development 20-11
Table 21-1: Corporations Contributing to GCMC Capital Cost Estimates 21-2
Table 21-2: Restated Capital Cost Estimate 21-7
Table 21-3: Sustaining Capital Cost Estimates 21-8
Table 21-4: Restated Operating Cost Estimate 21-15
Table 22-1: Smelting and Refining Terms 22-3
Table 22-2: Metal Price Ranges (base case is highlighted) 22-3
Table 22-3: Tax Assumptions 22-5
Table 22-4: Taxation Payable over the Life of Mine 22-5

     
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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

Table 22-5: Cashflow Summary Table 22-6
Table 22-6: Cashflow Analysis 22-7
Table 22-7: Summary of Cash Costs 22-8
Table 22-8: Sensitivity to Metal Price Changes and Exchange Rates (Base Case is highlighted) 22-11
Table 22-9: AMEC DCF and Ernst & Young RO NPVs 22-20

F I G U R E S    
     
Figure 1-1: After-Tax Net Cash Flow (Undiscounted) 1-25
Figure 2-1: Project Location Map 2-2
Figure 4-1: Mineral Tenure Plan 4-3
Figure 4-2: Plan Showing Main Mineralization Centres in Relation to Claims Boundaries 4-4
Figure 5-1: Proposed Access Road Layout Plan 5-3
Figure 7-1: Regional Geological Setting 7-2
Figure 7-2: Local Geology Plan 7-4
Figure 7-3: Deposit Location Plan 7-5
Figure 7-4: Geological Cross-section, Central Zone 7-17
Figure 7-5: Geological Cross-section, Central Replacement Zone 7-18
Figure 7-6: Geological Cross-section, Bountiful Zone 7-20
Figure 7-7: Geological Section, Southwest Zone 7-22
Figure 7-8: Geological Section, Junction and North Junction 7-24
Figure 7-9: Geological Section, West Fork 7-25
Figure 8-1: Schematic Model of Alkalic Igneous Complexes and Associated Mineralized Systems 8-3
Figure 9-1: Geophysical Survey Locations 9-4
Figure 9-2: Mineralizing Systems of the Galore Creek Area 9-10
Figure 10-1: Drill Hole Location Plan, Galore Creek Deposits 10-15
Figure 10-2: Drill Hole Location Plan, Geotechnical, Hydrological and Condemnation Drilling 10-16
Figure 10-3: Drill Hole Location Plan, Metallurgical Drilling 10-17
Figure 10-4: Drill Plan Showing New Holes Drilled Inside the Area of the Mineral Resource Estimate Since the 2008 Mineral Resource Estimate Update 10-18
Figure 10-5: Stick Rock/Broken Rock Boundary, Isopach Map 10-23
Figure 10-6: Stick Rock/Broken Rock Boundary, Example Long Section 10-24
Figure 10-7: Distribution of Drill Holes with Acid-Soluble Copper Assays 10-27
Figure 14-1: Galore Creek Mineral Resource Estimation Areas 14-2
Figure 15-1: Pit Slope Design Angles 15-3
Figure 16-1: Pit Layout Plan (Year 18) 16-9
Figure 17-1: Proposed Process Flowsheet 17-2
Figure 18-1: Waste Tonnes by Type 18-17
Figure 18-2: Proposed Tailings Impoundment Layout Plan 18-22
Figure 18-3: Water Management Structures Layout Plan 18-26
Figure 18-4: Proposed Tunnel 18-34
Figure 18-5: Planned Loading/Port Facility Design 18-53
Figure 22-1: After-Tax Net Cash Flow (Undiscounted) 22-6
Figure 22-2: Sensitivity of After-Tax NPV Discounted at 7% 22-8
Figure 22-3: Sensitivity of After-Tax NPV Discounted at 7% 22-9

     
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September 2011

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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

Figure 22-4: Sensitivity of After-Tax IRR 22-9
Figure 22-5: Sensitivity of After-Tax IRR 22-10

A P P E N D I C E S
 
Appendix A: Claims List

 


 

     
Project No.: 166824
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Galore Creek Mining Corporation
NovaGold Resources Inc.
Teck Resources Limited
Galore Creek Copper–Gold Project British Columbia
NI 43-101 Technical Report on Pre-Feasibility Study

1.0 SUMMARY
   

Galore Creek Mining Corporation (GCMC), NovaGold Resources Inc. (NovaGold) and Teck Resources Limited (Teck) requested AMEC Americas Limited (AMEC) to prepare a Technical Report (the Report) on the results of a pre-feasibility study (the GCMC 2011 pre-feasibility study) for the Galore Creek Copper–Gold–Silver Project (the Project) in British Columbia, Canada.

 

NovaGold is using the Report in support of a press release dated 27 July 2011, entitled “NovaGold Announces Prefeasibility Study Results for Galore Creek Project”.

 

The Project is a 50:50 partnership between NovaGold Canada Inc. (a wholly-owned subsidiary of NovaGold) and Teck Metals Ltd (a wholly-owned subsidiary of Teck). The partners use an operating company, GCMC, to manage the Project. For the purposes of this Report, GCMC is used as a synonym for the partnership.

 

GCMC commissioned a team of engineering firms and consultants to determine the engineering and environmental requirements, and financial viability of the Project, and collated these data, together with contributions from GCMC, into a pre-feasibility document (the GCMC 2011 pre-feasibility study report). AMEC completed this Report as an independent assessment of the the GCMC 2011 pre-feasibility study report, with the assistance of Lemley International (Lemley) who reviewed the proposed access tunnel design. All monetary units in the Report are in Canadian dollars unless otherwise specified.

 

1.1

Key Outcomes

 

The GCMC 2011 pre-feasibility study report incorporates an increase in scale and redesign of the Project from previous configurations. AMEC reviewed the supporting data in the GCMC 2011 pre-feasibility study report, and has restated the results of the financial analysis as a consequence of this review (Table 1-1).

 

 

Additional AMEC outcomes include:


 
  •  
  • Proven and Probable Mineral Reserves of 528 Mt grading 0.58% Cu, 0.32 g/t Au and 6.02 g/t Ag

         
     
  •  
  • Measured and Indicated Mineral Resources exclusive of Mineral Reserves of 286.7 Mt grading 0.33% Cu, 0.27 g/t Au and 3.64 g/t Ag

         
     
  •  
  • Inferred Mineral Resources of 346.6 Mt grading 0.42% Cu, 0.24 g/t Au and 4.28 g/t Ag


         
    Project No.: 166824
    September 2011

    Page 1-1



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Table 1-1: Key Outcomes Table

        Life of
                   Summary of Financial Results Units Mine
                   Copper payable klb 5,950,000
                   Gold payable koz 3,850
                   Silver payable koz 56,1005
                   Total cash costs $/lb 1.83
                   Secondary metal credit $/lb (1.04)
                   Cash costs net of credits (C1 Net Direct Cash Cost) $/lb 0.79
                   Cumulative net after-tax cash flow $M 5,120
                   After-tax internal rate of return % 7.4%
                   After-tax net present value @ 7% $M 137
                   Mine life (including one year of pre-production) Years 18.5
                   After-tax payback period Years 7.8
                   Total start-up capital $M 5,160
                   Total LOM capital (inc.$88.7 M closure cost) $M 5,840
    • Assumed production rate of 34.6 Mt/a, and a mine life of 17.6 years (not including a year of pre-production, or 18.5 years including a pre-production year

    • Average annual metal production over the life-of-mine (LOM) of 322,000 thousand pounds of copper, 208 thousand ounces of gold and 3,040 thousand ounces of silver

    • Total capital cost of $5,840 M, including start-up capital costs of 5,160 M, sustaining capital costs of $552 M and closure costs of $88.7 M

    • LOM cash cost per pound of payable copper of $0.79

    • After-tax Project net present value (NPV) at a discount rate of 7% is $137 M using Base Case metal pricing of US$2.65/lb Cu, US$1,100/oz Au and US$18.50/oz Ag

    • After-tax internal rate of return (IRR) of 7.4%

    • Cumulative, undiscounted, after-tax cash flow for the Project of $5,120 M

    • After-tax payback period of 7.8 years.

    1.2

    Location, Climate, and Access

       

    The Galore Creek Project is located approximately 70 km west of the Bob Quinn airstrip on Highway 37, 150 km northeast of the Port of Stewart, and 370 km northwest of the town of Smithers, British Columbia, Canada, within the Tahltan Nation Traditional Territory.


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    The Project area is characterized by cold winters and short, cool, summers. Precipitation begins to fall as snow in early October and continues until the end of May. A basin average precipitation for the whole Galore Creek Valley watershed was estimated to be in the order of 3,000 mm.

       

    The Galore Creek Project is currently not accessible by road. The closest Provincial road to the proposed mine site is Highway 37, from which a mine access road will be constructed. The access road will be used to transport employees to and from the mine and plant sites, and to deliver mine capital equipment and mine operating consumables.

       

    The mining operation and associated waste rock facilities will be located in the Galore Creek Valley, whereas the plant and tailings facilities will be in the adjacent West More Valley. A tunnel and a short section of the mine access road will connect the two facility areas.

       

    Smithers is the nearest major supply centre to Galore Creek. At present, most personnel, supplies, and equipment are staged from the Bob Quinn airstrip, on the Stewart-Cassiar Highway (Highway 37) and transported via helicopter to the Galore Creek camp.

       
    1.3

    Agreements and Royalties

       

    On May 23, 2007, NovaGold and Teck announced a 50:50 partnership to develop the Galore Creek property. On August 1, 2007 the Galore Creek Partnership was established to develop the Galore Creek mine and created the jointly-controlled operating company, GCMC. The agreement was amended in 2007, and again in 2009. As Teck has expended the required moneys under the agreement, from June 2011 forward, all costs will be met as equal shares by the Partnership participants.

       

    Upon reaching certain agreed financial targets, and subject to positive mine operating cash flow, the Tahltan Heritage Trust Fund will receive the greater of $1 M or a 0.5% to 1.0% net smelter royalty (NSR) each year. The agreement will remain in effect throughout the life of the Galore Creek Project and will be binding on any future operator of the mine. This NSR payment is incorporated into the Project financial analysis.

       
    1.4

    Mineral Tenure and Surface Rights

       

    The Project consists of 264 mineral claims, totalling 118,911.88 ha, held in the name of GCMC. Contiguous claims within the Galore Creek property have had assessment


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    work filed on them. Assessment work was not filed for claims that were not contiguous.

       

    Information from a land-management expert retained by GCMC supports that the mining tenure held is valid and is sufficient to support declaration of Mineral Resources and Mineral Reserves. Claims are a combination of map-staked and ground-staked.

       

    The Project falls within the boundaries of the Cassiar Iskut-Stikine Land and Resource Management Plan (LRMP) which was finalized in May 2000. Mineral exploration and development are accepted activities within the Coastal Grizzly Salmon Management Zone, including road access where needed.

       

    Two guide outfitter territories and seven registered trap lines overlie the Galore Creek deposits and planned access road.

       
    1.5

    Environment, Permitting and Socio-Economics

       

    The Galore Creek Project received its Environmental Assessment (EA) approval in February 2007. The Project’s first permits were obtained in May 2007, and in June 2007, GCMC received final Federal approval for the Project as envisaged in the 2007 EA. However, the new Project design and configuration is different from that which was permitted under the original EA Certificate and received Federal approval.

       

    It is anticipated that a new EA process will be requested by the regulators. This is likely to require parallel and harmonized reviews by both the BC Environmental Assessment Office (BCEAO) and the Canadian Environmental Assessment Agency (CEAA). A comprehensive study report is also likely to be required through CEAA. It is anticipated that the entire EA review process will require approximately two years from submission of a project description to issuance of a new EA Certificate (by the BC government) and a decision by the federal Minister of Environment.

       

    One significant potential addition to the scope of the EA will be the inclusion of a port facility. This would also require assessing the transportation of the concentrate from the plant site to the port by road, as well as the alternative of using a pipeline. The new EA may include assessing the cumulative effects of the Galore Creek Project in connection with other projects that have been developed or are proposed for development since the previous EA was completed. This will include, at a minimum, the Northwest Transmission Line, the Forrest Kerr hydroelectric project, the concentrate transport from Yukon Zinc’s Wolverine mine, and the Red Chris project.

       

    The existing Special Use Permit (SUP) for construction of the access road remains valid as long as there are no proposed changes to the SUP, thereby permitting GCMC


         
    Project No.: 166824
    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    to continue to build the access road. Existing permits associated with the existing construction camps, including water use and waste discharge, will continue to be maintained. All other Project permits will have to be applied for following completion of the EA process, although the time-critical permits, such as those needed for starting the tunnelling can be prepared concurrent with the EA such that there should be little lag time following EA certification before tunnelling could begin.

       

    The Galore Creek Project is located within the territory of the Tahltan Nation. The Project access route via Highway 37 will be through the Skii Km Lax Ha Traditional Territory and the Gitanyow Traditional Territory to the south. The proposed port facility is in the District of Stewart located in the Nisga’a Nation’s Traditional Territory. . Further along the coast, shipping routes pass through the Gitxaala and Haida Nations Traditional Territories. It will be critical in the period leading up to the EA review process that GCMC meaningfully engages with all communities of interest, including the First Nations, within whose traditional territory Project facilities may be located. Ongoing discussion with the Tahltan community resulted in the signing of a Participation Agreement on February 10, 2006. The presence of additional First Nations interests will necessitate an expanded communications and consultation program.

       

    GCMC have identified the key Provincial and Federal permits that will be required for construction of a mine.

       

    The estimated total reclamation liability for the Project is estimated at $88.7 M at the end of the mine life. This estimate includes a contingency of 35%, because many elements of mine design are conceptual; a placeholder cost has been included for those components that have not been detailed in the GCMC 2011 pre-feasibility study.

       
    1.6

    Geology and Mineralization

       

    The Galore Creek property is interpreted to be an example of an alkalic porphyry copper–gold–silver system.

       

    The Project is situated within the Stikine Terrane, an exotic terrane accreted to the ancestral North American craton. A sequence of Permian, Mississippian and Devonian age calc-alkaline and bimodal flows and volcaniclastic rocks, interbedded carbonate and minor shale and chert, termed the Stikine assemblage, form the basement of the terrane. Unconformably overlying the Stikine assemblage is a succession of Lower to Middle Triassic sedimentary and upper Triassic volcanic rocks.

       

    The Galore Creek Syenite Complex, of Tertiary age, is centered in the west fork of Galore Creek and is 5 km in length and 2 km in width. The deposits are hosted by


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    potassium-enriched volcanic rocks and pipe-like breccias adjacent to syenite stocks and dykes. They are manto-shaped, and trend north to northeast, following either, or both, syenite contacts and structural breaks. To date, 14 deposits and prospects have been identified, five of which, the Central Zone, Southwest Zone, Junction Zone West Fork Zone and Middle Creek Zone are of economic interest.

       

    The Galore Creek property has undergone at least three temporally different mineralizing events. These include the early formation of the nearby Copper Canyon eruptive centre and its associated mineralization; deposition of the Central Zone mineralization at the Central and Junction deposits, and the Butte prospect; and emplacement of the West Fork mineralization at the Southwest and West Fork deposits.

       

    Bornite and generally higher-grade gold are developed in the intense potassic alteration zone, and are associated with magnetite and sparse pyrite. Within the propylitic zone, zones of moderate potassic alteration have developed, and have associated chalcopyrite and pyrite mineralization. External to these potassic zones, but still within the propylitic zone, replacement lodes of gold, silver and base metals have formed.

       

    In the opinion of the QPs, knowledge of the deposit settings, lithologies, and structural and alteration controls on mineralization is sufficient to support Mineral Resource and Mineral Reserve estimation. The mineralization style and setting of the Project deposit is also sufficiently well understood to support Mineral Resource and Mineral Reserve estimation. Prospects and targets are at an earlier stage of exploration, and the lithologies, structural, and alteration controls on mineralization are currently insufficiently understood to support estimation of Mineral Resources.

       
    1.7

    Exploration

       

    Work completed prior to NovaGold acquiring the Project in 2003 consisted of geological mapping, reconnaissance stream sediment surveys, soil sampling, pole- dipole resistivity/IP, magnetics, electromagnetics (EM), radiometrics, very low frequency (VLF) and audio frequency magnetics (AFMAG) airborne geophysical surveys, diamond (core) drilling, underground development work in two adits, access road construction, metallurgical testwork, Mineral Resource estimation and mining studies. Work was undertaken by Kennco Explorations (Western) Limited (Kenncott), Stikine Copper Limited (Stikine), Hudson Bay Mining and Smelting Company Limited (Hudson Bay), and Mingold Resources Inc. (Mingold). Collectively information from these programs is termed the “legacy” data.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    SpectrumGold Inc. (now NovaGold Canada Inc.), NovaGold and GCMC have completed all work on the Galore Creek deposits since 2003. Exploration activities have included core drilling, ground and airborne geophysical surveys, metallurgical testwork, thesis studies, and Mineral Resource estimation. Mining studies were performed in 2004, 2006, and 2008.

       

    In 2010–2011, GCMC commissioned a pre-feasibility study on the Project, which included multiple trade-off option considerations. The remainder of this Report discusses the results of the GCMC 2011 pre-feasibility study and the review completed by AMEC and Lemley on the data and results.

       

    In the opinion of the QPs, the exploration programs completed to date are appropriate to the style of the deposits and prospects within the Project. The exploration and research work supports the genetic and affinity interpretations.

       
    1.8

    Exploration Potential

       

    The Project retains excellent exploration potential. The Project area is host to five defined Mineral Resource areas, seven under-explored copper–gold prospects, and numerous showings and conceptual target areas.

       

    Additional mineralization that supports estimation of Inferred Mineral Resources, but not drilled to sufficient confidence to be included in the GCMC 2011 pre-feasibility study report, exists below the area that hosts the Central Zone Mineral Reserves, and in the Southwest area of the Bountiful Zone.

       

    Alteration and mineralization vectors, together with the lack of precursor intrusions driving the systems at both the Central and West Fork systems, have major exploration significance. GCMC considers that the potential to make a major discovery at depth or even laterally, as with the case of the West Fork deposit, is high.

       
    1.9

    Drilling

       

    Approximately 255,601 m has been drilled in 1,078 core holes on the Project since 1961. Over the Project history, a number of different drill companies have been used. Core drilling has been performed at BQ, NQ, HQ or PQ size (36.5 mm, 47.6 mm, 63.5 mm and 85 mm, respectively).

       

    Limited information is available on the legacy drilling programs. Geological, alteration, and mineralization data, together with some geotechnical data appear to have been collected. Some drill programs have existing collar data, and the 1991 drill program has down-hole survey data. Drilling protocols used in the Stikine and Kennecott


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    legacy programs are assumed to have been in line with industry standards at the time; however, this has not been confirmed.

       

    Core recovery has been evaluated by campaign and generally improves throughout the exploration history of the Project. Recovery is typically poor in the near surface environment where gypsum and anhydrite veinlets have been dissolved and the rock is “broken”.

       

    Standardized logging forms and geological legends were developed for the SpectrumGold, NovaGold, and GCMC drill programs. Geotechnical logs were completed in sequence for these programs prior to the geological logging. SpectrumGold, NovaGold, and GCMC geological logging used standard procedures and collected information on mineralization, lithic breaks, alteration boundaries, and major structures.

       

    Upon completion, drill hole collars from the SpectrumGold, NovaGold, and GCMC were surveyed using a differential GPS. Down-hole surveys were carried out for the SpectrumGold, NovaGold, and GCMC drill programs for dip and deviation using a number of different instruments, including Sperry Sun, IceField, Reflex Easy Shot, and Gyroscope tools. Surveys were performed by a contractor. Magnetic declination factors were applied.

       

    SpectrumGold, NovaGold, and GCMC sample intervals were determined by the geological relationships observed in the core and limited to a 3 m maximum length and a 1 m minimum length. An attempt was made to terminate sample intervals at lithological and mineralization boundaries.

       

    In the opinion of the QPs, the quantity and quality of the lithological, geotechnical, collar survey and downhole survey data collected in the SpectrumGold, NovaGold, and GCMC exploration and infill drill programs completed on the Project are sufficient to support Mineral Resource and Mineral Reserve estimation.

       
    1.10

    Sample Analysis and Security

       

    Kennecott/Stikine, SpectrumGold, NovaGold and GCMC exploration and infill core samples were analysed by independent laboratories using industry-standard methods for gold, copper, and silver analysis. A number of different laboratories have been used on the Project. Since 2004, ALS Chemex Laboratories (ALS Chemex) in Vancouver, BC, has been the primary laboratory. ALS Chemex holds ISO 9001- certification.


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Metallurgical testwork has been completed at a number of laboratories, but primarily by G&T Metallurgical (G&T) laboratories in BC. Metallurgical laboratories typically do not hold accreditations.

    Sample preparation for pre-2003 drill programs are assumed to be in line with industry-standard methods at that time although this has not been confirmed. Information on the QA/QC protocols for legacy programs is currently limited.

    Sample preparation for SpectrumGold, NovaGold and GCMC drill programs are in line with industry-standard methods for porphyry gold–copper–silver deposits.

    For the SpectrumGold, NovaGold, and GCMC programs, samples were crushed, dried, and a 250 g split pulverized to greater than 85% passing 75 µm. Gold assays were determined using fire analysis followed by an atomic absorption spectroscopy (AAS) finish. The lower detection limit was 0.005 ppm Au; the upper limit was 1,000 ppm Au. An additional 34-element suite was assayed by inductively-coupled plasma optical emission spectroscopy (ICP_AES) methodology, following nitric acid aqua regia digestion. The copper analyses were completed by AAS, following a triple-acid digest. Values over the detection limits were rechecked using nitric acid aqua regia digestion of a 0.4 –2.0 g sample followed by AAS finish.

    In 2005, NovaGold obtained a total of 916 acid-soluble copper assays from 31 drill holes. There have been no additional acid-soluble copper assays performed since that date.

    SpectrumGold, NovaGold, and GCMC maintained a quality assurance and quality control (QA/QC) program for the Project. This comprised submission of analytical certified reference materials (CRMs), duplicate and blank samples. QA/QC submission rates meet industry-accepted standards of insertion rates. The QA/QC program results do not indicate any problems with the analytical programs, therefore the gold, copper, and silver analyses from the SpectrumGold, NovaGold, and GCMC core drilling programs are suitable for inclusion in Mineral Resource and Mineral Reserve estimation. Gold, copper, and silver analytical data from the pre- SpectrumGold, NovaGold and GCMC drill programs are sufficiently reliable to support Mineral Resource and Mineral reserve estimation, but due to the lack of appropriate supporting QA/QC results, the data should not be used to support classification of Measured blocks

    No information is currently available for sample security and chain-of-custody protocols used in the legacy drill programs. Sample security for the SpectrumGold, NovaGold, and GCMC drill programs has relied upon the fact that the samples were always attended or locked in the logging facility. Chain-of-custody procedures for the

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    SpectrumGold, NovaGold, and GCMC drill programs consisted of filling out sample submittal forms that were sent to the laboratory with sample shipments to make certain that all samples were received by the laboratory.

       
    1.11

    Data Verification

       

    A number of data verification programs and audits have been performed over the Project history, primarily by independent consultants in support of compilation of technical reports on the Project and in support of mining studies. Data verification checks were performed in 2003, 2004, and 2006 by third-party consultants and in 2008 and 2011 by AMEC.

       

    The 2008 AMEC audit identified some minor errors in the Project database which were considered to require fixing, but the identified errors were typically considered to be non-material for Mineral Resource estimation purposes. Limitations were placed by AMEC on the use of pre-2000 samples due to the lack of QA/QC support and possible grade biases between pre and post 2000 samples. In addition, the data entry error rate in the specific gravity (SG) database was above that considered acceptable for a pre-feasibility or feasibility-level study.

       

    AMEC performed a second audit in 2011. GCMC were found to have reviewed and corrected the SG database. No additional QA/QC data was available to support pre- 2000 samples. A review of possible grade biases for legacy assay results noted in the 2008 audit indicated that no correction should currently be applied for legacy copper, gold, and silver results. The biases interpreted from the AMEC review may, in part, be due to spatial variability (distances >10 m) and lithological variability (composite pairs across lithological boundaries). The copper and gold biases are generally expected to cause an overall underestimation of grade in the Mineral Resource estimate. The high silver bias could result in an overestimation of the containd silver but as silver is considered a minor economic contributor to the project this impact is considered minor. Additional work is warranted to quantify the biases and to confirm the impact on the estimated Mineral Resources.

       

    Conclusions of the 2011 audit were that the Galore Greek drill collar, down-hole survey, and assay data were of sufficient quality to support Mineral Resource and Mineral Reserve estimation.

       

    Pre-2000 samples were considered suitable to support Mineral Resource estimations but with limitations. Estimated blocks supported primarily by pre-2000 samples are limited to Indicated classification.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Sample data collected adequately reflect deposit dimensions, true widths of mineralization, and the style of the deposits. Drill data are typically verified prior to Mineral Resource and Mineral Reserve estimation, by running a software program check to ensure the estimation data are free from errors such as overlapping intervals, and drill hole depths that are greater than the survey depth.

       

    AMEC considers that a reasonable level of verification has been completed, and that no material issues would have been left unidentified from the programs undertaken. The QPs, who rely upon this work, have reviewed the appropriate reports, and are of the opinion that the data verification programs undertaken on the data collected from the Project adequately support the geological interpretations, the analytical and database quality, and therefore support the use of the data in Mineral Resource and Mineral Reserve estimation.

       
    1.12

    Metallurgical Testwork

       

    Since 2003, the majority of metallurgical testwork was completed at G&T Metallurgical Services laboratories in Kamloops, British Columbia. GCMC representatives were involved in all aspects of the testwork, including sample selection, test design, and data review and interpretation. Periodic laboratory visits were completed in 2010 to verify that tests were being carried out at an acceptable standard, and no issues were identified. All tests have been documented according to standard G&T Metallurgical standard practices. Standard tests completed included open circuit rougher-cleaner flotation tests, locked cycle tests, Bond ball mill work index determinations, SMC hardness determinations, and JK drop-weight test index determinations. All tests were completed using industry standard methods.

       

    The design for the process plant is based on processing the ore through a conventional crushing, grinding and flotation plant using standard proven processes and equipment. The plant is designed to handle a blend of ore from the various zones of the Galore Creek deposit.

       

    Using results of flotation tests conducted during three campaigns in 2005/6, 2008/9 and 2010, empirical relationships to estimate recoveries for copper, silver, and gold were derived as a function of head grade. Separate models were prepared for material types defined as Standard or Oxidized/Near Surface material consistent with the geological block model.

       

    The recovery relationships are shown in Table 1-2. The recovery relationships in Table 1-2 are different to those used by GCMC in the GCMC 2011 pre-feasibility study report. AMEC adjusted the average recovery estimates of GCMC down by 1% for copper, 3% for gold and 7% for silver. AMEC recommends that additional


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    metallurgical tests be completed to establish recovery curves to support more detailed studies.

      Table 1-2: Process Recovery Relationships

    Recovery    
    (%) Standard Material Oxidized/Near Surface Material
    Copper 7.66*Ln([Head Cu(%)] )+94.34 (cap at 95%) ([OxRConc]*([Head Cu(%)]-0.18)/([Head Cu(%)]*([OxRConc]-0.18))*94.8 where: ([OxRConc] =7.2*[Head Cu(%)]+1.6 (cap at 95%)
    Gold 8.1*Ln [HeadAu(g/t)]+78 (cap at 90%) 8.1*Ln [HeadAu(g/t)]+78 (cap at 90%)
    Silver 19.7* Ln( [HeadAg(g/t)])+26 (cap at 90%) 14.5* Ln([HeadAg(g/t)])+28 (cap at 75%)

    1.13

    Mineral Resource Estimate

    Five zones were modelled: the Central Zone (including the Bountiful deposit), Southwest Zone, Junction/North Junction Zone, Southwest Zone, and West Fork Zone.

    Grade estimations for copper, gold and silver were completed utilizing ordinary kriging (OK) methods. An inverse distance to the second power (ID2) and nearest-neighbour (NN) models were constructed as checks.

    After review of the Mineral Resource estimate, AMEC revised some criteria supporting the conceptual pit shell, including drill spacing for classification purposes, the commodity prices, and NSR value; metallurgical recoveries were also revised downward. Commodity prices used by AMEC to state the Mineral Resources were US$2.50/lb copper, US$1,050/oz gold, and US$16.85/oz silver, and the NSR cut-off was $10.08/t milled. As a consequence, AMEC updated the Mineral Resources which were used in the GCMC 2011 final pre-feasibility study report.

    Mineral Resources take into account geological, mining, processing and economic constraints, and have been confined within appropriate Lerchs–Grossmann (LG) pit shells, and therefore are classified in accordance with the 2010 CIM Definition Standards for Mineral Resources and Mineral Reserves.

    Mineral Resources, exclusive of Mineral Reserves, are stated in Table 1-3 using an NSR cut-off grade of $10.08/t milled.

    The Qualified Person for the Mineral Resource estimate is Greg Kulla, P.Geo., an AMEC employee. Mineral Resources have an effective date of 11 July 2011. Mineral

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Resources that are not Mineral Reserves do not have demonstrated economic viability.

    Factors which may affect the Mineral Resource estimates include: commodity price and exchange rate assumptions, assumptions used to estimate metallurgical recoveries, pit slope angles, and SG values assumed for the broken rock.

    A legacy pulp re-assay program intended to quantify negative assay biases for copper and gold, and positive biases for silver was initiated in July 2011 and may result in elimination of the biases or support development and application of a correction factor for the legacy assay results. This may result in local changes to the classification assigned to some Mineral Resource blocks.

    Table 1-3: Galore Creek Mineral Resource Table, Effective Date 11 July 2011, G. Kulla, P.Geo.

    Category

    Tonnage
    (Million
    tonnes)
    Cu Grade
    (%)
    Au Grade
    (g/t)
    Ag Grade
    (g/t)
    Contained Cu
    (Billion
    pounds)
    Contained Au
    (Million
    ounces)
    Contained Ag
    (Million
    ounces)
    Measured 39.5 0.25 0.39 2.58 0.22 0.50 3.27
    Indicated 247.2 0.34 0.26 3.81 1.85 2.04 30.26
    Total Measured
    and Indicated

    286.7

    0.33

    0.27

    3.64

    2.07

    2.53

    33.54
    Inferred 346.6 0.42 0.24 4.28 3.23 2.70 47.73

    Notes to Accompany Mineral Resources Table

      1.

    Mineral Resources are exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability

      2.

    Mineral resources are contained within a conceptual Measured, Indicated and Inferred optimized pit shell using the same economic and technical parameters as used for Mineral Reserves. Tonnages are assigned based on proportion of the block below topography. The overburden/bedrock boundary has been assigned on a whole block basis. Commodity prices used to constrain the Mineral Resources are US$2.50/lb copper, US$1,050/oz gold, and US$16.85/oz silver

      3.

    Mineral resources have been estimated using a constant NSR cut-off of C$10.08/t milled. The Net Smelter Return (NSR) was calculated as follows: NSR = Recoverable Revenue – TCRC (on a per tonne basis), where: NSR = Diluted Net Smelter Return; TCRC = Transportation and Refining Costs; Recoverable Revenue = Revenue in Canadian dollars for recoverable copper, recoverable gold, and recoverable silver using silver using the economic and technical parameters used for mineral reserves.

      4.

    Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content

      5.

    Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces, contained copper pounds as imperial pounds.


    1.14

    Mineral Reserve Estimate

       

    Mineral Reserves were modified from Measured and Indicated Mineral Resources by taking into account geologic, mining, processing, and economic parameters and therefore are classified in accordance with the 2010 CIM Definition Standards for Mineral Resources and Mineral Reserves.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    AMEC restated the Mineral Reserves which were used in the GCMC 2011 final pre-feasibility study. Changes included resource model classification revisions, different commodity prices, NSR cut-off value, and a downward revision of metallurgical recoveries.

    Mineral Reserves are reported at commodity prices of US$2.50/lb copper, US$1,050/oz gold, and US$16.85/oz silver, and have an effective date of July 11, 2011.

    The Qualified Person for the Mineral Reserve estimate is Jay Melnyk, an AMEC Associate. Mineral Reserves are summarized in Table 1-4.

    Factors which may affect the Mineral Reserve estimates include commodity price and exchange rate assumptions, mill throughput of the identified ore types may prove to be higher or lower than modelled, and variations from the 2011 GCMC pre-feasibility study infrastructure design, construction schedules, and budget estimates.

      Table 1-4: Mineral Reserve Statement, Effective Date 11 July 2011, Jay Melnyk, P.Eng.

      Tonnes Diluted Grade      



    Mt

    Cu
    (%)

    Au
    (g/t)

    Ag
    (g/t)
    Contained
    Cu (Billion
    pounds)
    Contained
    Au
    (Million
    ounces)
    Contained
    Ag
    (Million
    ounces)
    Proven 69.0 0.606 0.520 4.94 0.9 1.15 11.0
    Probable 459.1 0.582 0.291 6.18 5.9 4.30 91.2
    Total Proven and Probable 528.0 0.585 0.321 6.02 6.8 5.45 102.1

    Notes to Accompany Mineral Reserves Table

    1.

    Mineral Reserves are contained within Measured and Indicated pit designs using metal prices for copper, gold and silver of US$2.50/lb, US$1,050/oz, and US$16.85/oz, respectively

    2.

    Appropriate mining costs, processing costs, metal recoveries and inter ramp pit slope angles varying from 42º to 55º were used to generate the pit phase designs

    3.

    Mineral Reserves have been calculated using a ’cashflow grade’ ($NSR/SAG mill hr) cut-off which was varied from year to year to optimize NPV. The net smelter return (NSR) was calculated as follows: NSR = Recoverable Revenue – TCRC (on a per tonne basis), where: NSR = Net Smelter Return; TCRC = Transportation and Refining Costs; Recoverable Revenue = Revenue in Canadian dollars for recoverable copper, recoverable gold, and recoverable silver using metal prices of US$2.50/lb, US$1,050/oz, and US$16.85/oz for copper, gold, and silver, respectively, at an exchange rate of CAD$1.1 to US$1.0; Cu Recovery = Recovery for copper based on mineral zone and total copper grade; for Mineral Reserves this NSR calculation includes mining dilution. SAG throughputs were modeled by correlation with alteration types. Cashflow grades were calculated as the product of NSR value in $/t and throughput in t/hr

    4.

    The life of mine strip ratio is 2.16

    5.

    Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content

    6.

    Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces, contained copper pounds as imperial pounds.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    1.15

    Proposed Mine Plan

    The proposed Project will be a conventional, large-tonnage, open-pit operation with approximately 528 Mt of ore processed over the life-of-mine, at a nominal daily throughput of 95,000 t/d.

    Because of the revised Mineral Resource estimate, and changes to the metallurgical recovery assumptions and different commodity price assumptions, AMEC redeveloped the mine plan for the Project.

    The mine plan for Galore Creek deposits was based on mining six separate phases that were developed from detailed designs based on optimized WhittleTM pit shells for four open pits, at Central, Junction, West Fork, and Southwest.

    The production schedule contains one year of pre-production and envisages a mine life of 17.6 years, exclusive of that pre-production year. Annual mine production of ore and waste will peak at 136 Mt/a with a LOM waste/ore stripping ratio of 2.16 -to-1 (refer to Table 1-5).

      Table 1-5: Life-of-Mine Planned Production



    Mine Life
    Average LOM
    Cut-off Grade
    ($/hr)
    Total Moved
    over LOM
    (kt)
    Total LOM
    Waste
    (kt)

    LOM PAG
    Waste (kt)
    LOM NPAG
    Waste
    (kt)
    LOM
    Overburden
    Waste
    (kt)
    17.62 30,726 1,666,811 1,138,842 283,547 719,691 135,605
                 

    LOM Ore to mill
    (kt)
    LOM Ore to
    Stockpile
    (kt)
    LOM Reclaimed
    from Stockpile
    (kt)


    LOM Strip Ratio
    LOM
    Copper
    Grade (%)

    LOM Gold Grade
    (g/t Au)
    LOM Silver
    Grade
    (g/t Ag)
               
    527,969 24,988 24,988 2.16 0.59 0.35 6.02

    The waste/ore split is defined within the scheduling process to maximize NPV. Broken ore represents approximately 35% of the total ore feed. Lower-grade ore that must be released at the same time as higher-grade ore will be sent to a coarse ore stockpile near the crusher and will be milled later in the schedule or during weather and operations delays.

    A variable cut-off grade strategy was used to design the life-of-mine. The cut-off grade strategy incorporates a stockpile capacity of 20 Mt. In order to properly reflect the high variability in mill throughput for the different rock types, a cash flow grade item was

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    calculated, which is a function of both the NSR and the mill throughput by rock type, and has units of $/SAG mill hour.

    The marginal cut-off grade equation is:

    Marginal cut-off grade = $0/hr (NSR = $3.37/t)

    and is the theoretical minimum grade of material that can be processed as it ensures that variable costs are covered. The variable cut-off grade strategy ensures that the mill is processing material in a manner that maximizes the NPV of all future cash flows.

    Accompanying the six mining phases are two non-potentially acid-generating (NPAG) dumps and three potentially acid-generating (PAG) dumps, all of which will be located in close vicinity to the Central pit at Galore Creek. The NPAG waste dumps will initially be situated out of the valley floor until PAG rock is mined then PAG waste will be deposited in the valley bottom which will be flooded at mine closure.

    Mining equipment selection was based on the mine production schedule and equipment productivities, as well as consideration of workforce and operating hours. The operation will use a conventional truck-and-shovel fleet. In the opinion of the AMEC QPs, the fleet is appropriate to the planned production schedule.

    Water management of the Galore Creek watershed will be a major design challenge. A number of water control structures are planned, including diversion channels, and closure and sedimentation dams. Based on preliminary modelling, water quality will be suitable for direct discharge with no requirement for water treatment.

    Geohazards are present in the Galore Creek Valley and will require careful consideration in waste and water management throughout the life of the mine and during the reclamation and closure period.

    1.16

    Process Design

    The design criteria for the process plant were based on processing ore through a conventional crushing, grinding and flotation plant using conventional processes and equipment. The plant is proposed to handle a blend of ore from the various zones of the Galore Creek deposits. A no-stockpile blending strategy will be utilized to deliver consistent copper grades to optimize process plant performance.

    A production summary for the process plant is included as Table 1-6 and a payable metal summary for the Project is included in Table 1-7.

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Run-of-mine (ROM) ore will feed a single gyratory crusher in the Galore Creek Valley. Crushed ore will then be transported via three overland conveyors from Galore Creek Valley, through the access tunnel to the West More Valley, to a single coarse ore stockpile near the mill site that will be adjacent to the proposed West More tailings facility.

    Apron feeders will reclaim ore from the coarse ore stockpile to feed a semi-autogenous grinding (SAG) mill. SAG discharge material will be screened, with coarse pebbles reporting to two cone crushers before reporting back to the SAG feed stream. SAG discharge undersize material will be split between three ball mills in closed circuit with hydrocyclones. The hydrocyclone overflow, with a target 80% passing size of 200 µm, will report to flotation for further processing.

    Standard process reagents will be added prior to flotation to allow efficient separation of valuable minerals. Some ores will require the addition of a talc depressant to maximize recovery while achieving acceptable concentrate grades.

    The flotation circuit will consist of two parallel rougher banks, with the rougher concentrate reporting to regrinding. Regrind will occur in four vertical tower mills, with a gravity concentrator installed parallel to the tower mills to remove any build up of high-density material in the regrinding circuit. The gravity concentrate will report to the final copper concentrate stream.

      Table 1-6: Life-of-Mine Process Plant Summary

        Copper
    Parameter Unit Concentrate
    Concentrate produced kt (dry) 10,002
    Moisture content % 8.0
    Copper recovery % Cu 91
    Gold recovery % Au 73
    Silver recovery % Ag 64
    Concentrate grade of copper % Cu 28
    Concentrate grade of gold g/t Au 12.4
    Concentrate grade of silver g/t Ag 205
    Recovered copper M lbs Cu 6,174
    Recovered gold 000 oz Au 3,983
    Recovered silver 000 oz Ag 65,829

       Table 1-7: Payable Metal Summary

      Copper Gold Silver
      (000 lb Cu) (000 oz Au) (000 oz Ag)
    First Five Years Average 383,199 262 3,427
    Life of Mine Average 343,767 223 3,233
    Life of Mine Total 5,947,946 3,849 56,125

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    The remainder of the flotation circuit will consist of three stages of cleaning utilizing mechanical tank-type flotation cells with forced air. Third-cleaner concentrate will report to a concentrate thickener for dewatering.

       

    Rougher tailings will report by gravity to the tailings storage facility, either directly or through a hydrocyclone system that will produce a coarse sand product for tailings dam construction. Cleaner tailings will be deposited sub-aqueously as a separate stream in the tailings storage facility.

       

    Process water for the mill facility will be reclaimed from the tailings pond, with minimal fresh makeup water being supplied by wells located in the vicinity. The wells will also be used for the production of potable water, mixing of reagents, and other uses. Mill reagents, grinding steel, and maintenance supplies will be delivered to the site by transport truck and stored within the mill as required.

       

    Thickened concentrate will be pumped approximately 71 km to a remote filter plant and truck-loading facility to be located near the junction of the mine access road and Highway 37. The filter plant facility will use recessed plate pressure filters to remove water from the concentrate to reach moisture levels below transportable limits. Water produced from the process will be treated in a water treatment plant, complete with multiple stages of filtration for solids removal, to meet discharge water quality standards. Treated water will be discharged to the Iskut River. Filtered concentrate will be loaded onto trucks for transportation to a port facility to be constructed in the town of Stewart, BC for shipment to various international destinations.

       
    1.17

    Tailings Impoundment Management

       

    The West More tailings facility will be located at the upper limits of the More Creek watershed at elevations above 1,100 m. The proposed configuration of the West More tailings facility includes three dams, a Main Dam and two saddle dams, the East and West Saddle dams. Submergence of the cleaner tailings is all that will be required to mitigate acid-rock drainage (ARD) risk for the West More tailings impoundment.

       

    The dams and impoundment will accommodate up to 678 Mt of tailings, although storage for only 510 Mt is required for the current mine plan.

       
    1.18

    Planned Project Infrastructure

       

    The Project will require construction of significant infrastructure to support the planned producing facilities.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    The Project is currently not accessible by road. The closest Provincial road to the mine site is Highway 37. A controlled-access road is planned from this highway to the proposed mine site, a road distance of 69 km. Controlled access is required in order to protect the health and safety of company personnel and the public, and to protect the environment.

    GCMC has an existing Special Use Permit for the construction of the access road following the route permitted under the existing EA. A section of the access road from Highway 37 (Km 0) to approximately Km 40 was constructed during a previous Project phase and is currently in service. The entire road would require upgrading to meet final design criteria; the first 8 km would be upgraded to a dual-lane route to access the filter plant at Kilometre 8 and fuel off-loading facility. The balance of the access road would be single-lane, with occasional pullouts.

    The requirement for the mine access and ore conveyor tunnel to provide both permanent access for large components of mining equipment for start-up and ongoing operations, as well as conveyor haulage during mining operations, has necessitated the need for a large tunnel. The GCMC 2011 pre-feasibility study design consists of a 13.6 km-long tunnel from a South Portal located in a limestone cliff face on the side of a bluff at the upper end of the Sphaler Creek valley, to a North Portal located in a sloping volcanic rock outcrop in the upper reaches of the East Fork of Galore Creek. The proposed tunnel is aligned under high rock cover of more than 600 m over a significant portion (75%) and with a maximum rock cover of 1,250 m.

    The approach GCMC describes for constructing the tunnel would be to drive headings from both ends, using an open gripper, high-performance, main beam tunnel boring machine (TBM) starting from a 165 m-long, conventionally-mined starter tunnel at the South Portal (access road end) and a helicopter-supported, drill and blast heading from the North Portal.

    Lemley reviewed the tunnel construction plans. Lemley considered that while the risks identified point to a very challenging tunnelling project, there is nothing inherent in these risks that has not been dealt with successfully on other projects, using either drill/blast and/or TBM methodologies, or which would cause Lemley to render an opinion that the Galore Creek tunnel is not constructible using the approach described by GCMC.

    Lemley’s opinion is that additional time should be added to the original schedule outlined in the GCMC 2011 pre-feasibility study report; this results in an approximate four-year long construction period. Lemley estimates a total of 37 months should be allocated for boring/excavating the tunnel and that a 49-month overall tunnel construction duration is appropriate. Lemley advises that the changes adding time to

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    the tunnel construction schedule resulted in a corresponding increase in the cost estimates for the tunnel.

    Lemley also judges that there are greater cost risks and schedule risks associated with the use of a TBM on this Project than there would be with two opposing drill and blast operations. Future studies should evaluate replacing the TBM drive with a second high-speed drill and blast heading as a way to reduce risks and better plan a predictable and successful completion for the tunnel. Lemley concluded that if a TBM is used, then that section of the tunnel should be constructed up-grade rather than using the GCMC 2011 pre-feasibility study down-grade design.

    Logistically speaking, the most complex and challenging construction phase will be related to the work required in the Galore Creek Valley during tunnel excavation as only air support is available until tunnel break-through. The previous construction activities carried out in the Galore Creek Valley in 2007 utilized construction equipment flown in by helicopter to support the earlier tunnel drill and blast operations which followed a different tunnel alignment that has since been superceded. Helicopter transport will be needed to fly manpower, additional equipment, fuel, and construction materials into the Galore Creek Valley. This will enable activities other than the tunnel drill-and-blast operation to proceed immediately upon receipt of the construction permits.

    GCMC will construct a new 287 kV transmission line to supply the power demand at the proposed Galore Creek development. Power for the Project will be provided from the Northwest Transmission Line (NTL) currently being constructed by the Provincial electrical authority, BC Hydro. The 69 km-long power distribution line will run adjacent to the access road.

    The transmission/distribution lines will have sufficient capacity to service the power demand for mining and process equipment throughout the life of the mine. The tunnelling operation is a high consumer of power and initially diesel. The tunnel boring machine (TBM) will require 10 to 15 MVA of power, which will be provided from the 287 kV power source. The development of the 287 kV line from Bob Quinn and the 287 kV substation at West More are both activities that require early completion to help reduce the overall diesel consumption. Diesel generators will be required to provide power in the initial stages of construction. Early engineering of the 287 kV substation at West More will enable early procurement of the long delivery substation electrical equipment (i.e., transformers and switchgear in the substations), which will allow power to be connected to the south portal at the earliest opportunity. However, construction of the West More substation will require EA approval.

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    There will be three permanent camps at the Galore Creek Project. West More will support operations and maintenance personnel associated with the main concentrator facilities and administration building; the Galore Creek Valley camp will support mine operations, and the Km 8 camp will support the filter and dewatering plant.

       

    A diesel storage and pumping facility will be located at Km 8. Diesel will be delivered to the facility by trucks, and then pumped to fuel storage tanks at West More, then delivered by pipeline to the mine site. The supply of diesel to support early construction is critical to both the Galore Creek Valley and West More areas. Prior to any construction work commencing, a secure supply of diesel will need to be established via a long-term supply contract.

       

    Freshwater will be provided from wells. Process water is projected to be sourced from tailings reclaim.

       

    The port site proposed in the GCMC 2011 pre-feasibility is the former Arrow Dock facility, a causeway made of reclaimed land to the southeast of Stewart. The port site will include a concentrate storage and shiploading system. Habitat compensation is considered a key environmental consideration for the development of the port.

       

    It is envisaged that the construction time for the Project will be approximately four years, from the commencement of tunnel boring until the beginning of pre-operational commissioning activities for the mill and associated facilities.

       
    1.19

    Markets

       

    GCMC requested a market opinion on the copper concentrate market balance and demand outlook from Teck’s internal marketing experts. Teck is of the opinion that the copper concentrate market will remain tight to 2020 due to an increase in smelting capacity ahead of mine production growth. With copper demand projected to grow at a rate of 3.1% per annum out to 2020, Teck predicts that demand will exceed refined production by close to 6.5 Mt in 2020, and therefore that additional mine production will be required to satisfy projected demand.

       

    The conceptual production level will be an average of over 600,000 dmt of copper concentrates produced annually over the Project life. The only element that is of concern as an impurity is fluorine, a low-level deduction for fluorine has been assumed to apply.

       

    The sales plan is to establish long-term contracts for approximately 75% of its minimum long-term production quantity in order to provide stable and reliable sales. GCMC plans that contract durations may extend for as long as 10 years, with most


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    terms fixed in the contract. The marketing strategy will focus on the major custom smelting companies in the world that are logistically practical for the delivery of concentrates. GCMC has not sought expressions of interest or letters of intent from smelters. This will be required to support feasibility-level studies.

       
    1.20

    Capital Costs

       

    The capital cost estimate for the Project was developed by GCMC, with input from consultants for specific areas. The capital cost estimates are based on a combination of quotes, vendor pricing, and experiences with similar-sized operations. Capital cost estimates in the GCMC 2011 pre-feasibility study report were noted by GCMC to be reported at a pre-feasibility level where the estimate accuracy range is defined as +25%/-20% (including contingency) and are consistent with an AACE Class 4 estimate. The GCMC 2011 pre-feasibility study estimate includes an 18% contingency allocation.

       

    AMEC considered that the earthworks and tunnelling costs were underestimated in the GCMC 2011 pre-feasibility study and made an upward adjustment of $140 M to cover these areas. This increased the capital cost estimate to $5,115.2 M. Due to changes in the mine plan, AMEC also re-estimated the sustaining capital costs.

       

    When sustaining capital ($552 M) and closure costs ($89 M) are incorporated, the total Project capital cost estimate as restated by AMEC is $5,840 M.

       

    Capital costs, as endorsed by AMEC, are summarized in Table 1-8. Sustaining capital costs are included as Table 1-9.


      Table 1-8: Galore Creek Construction Capital Cost Estimate

      Initial Capital Estimate
     Description ($ millions)
     Mine 357
     Plant 835
     Tunnel 580
     Infrastructure 697
     Total Direct Costs 2,470
     Mine and Pre-production Costs 582
     Indirect Costs 1,320
     Owner’s Costs 111
     Contingency 678.
     Total Capital 5,160
    Note: Numbers may not sum due to rounding.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      Table 1-9: Galore Creek Sustaining Capital Estimate

      Sustaining Capital Estimate
     Description ($ millions)
     Mine 163
     Plant 66
     Tailings 212
     Infrastructure 110
     Total 552
    Note: Numbers may not sum due to rounding.

    1.21

    Operating Costs

       

    Operating costs were based on estimates performed by GCMC from first principles for major items, and included allowances or estimates for minor costs. The assumed power cost in the GCMC 2011 pre-feasibility study report is $50/MW-hr and the assumed diesel fuel cost is $1.04/L. Manpower requirements were based by GCMC on industry experience with similar-scaled operations.

       

    AMEC reviewed these estimates, and as a consequence of changes to the mine plan, revised sections of the estimate. AMEC has restated the estimated life-of-mine operating cost as $15.10/t milled.

       

    Operating costs, as endorsed by AMEC, are summarized over the life-of-mine in Table 1-10.


      Table 1-10: Average Annual Operating Cost

     Area $/tonne milled
     Mine 6.70
     Process 5.76
     Port 0.16
     Site G&A 1.56
     Other 0.89
     Total 15.10
    Note: Numbers may not sum due to rounding.

    1.22

    Financial Analysis

       

    The results of the economic analysis represent forward-looking information that are subject to a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those presented here.

       

    Forward-looking information includes Mineral Reserve estimates, commodity prices and exchange rates, the proposed mine production plan, projected recovery rates,


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    uncertainties and risks regarding the estimated capital and operating costs, uncertainties and risks regarding the cost estimates and completion schedule for the proposed Project infrastructure, in particular the proposed access tunnel, and the need to obtain permits and governmental approvals.

    Financial analysis of the Galore Creek Project was carried out using a discounted cash flow (DCF) approach. This method of valuation requires projecting yearly cash inflows (or revenues) and subtracting yearly cash outflows (such as operating costs, capital costs, royalties, and taxes). The resulting net annual cash flows are discounted back to the date of valuation and totalled in order to determine the Net Present Value (NPV) of the Project at selected discount rates. The internal rate of return (IRR) is expressed as the discount rate that yields an NPV of zero.

    The payback period is the time calculated from the start of Project cash flows until all initial capital expenditures have been recovered.

    The financial analysis for the Galore Creek Project, using a discount rate of 7%, indicates that the after-tax Project NPV is $137 M and the IRR is 7.4% . The cumulative undiscounted after-tax cash flow value for the Project is $5,120 M and the payback period is 7.8 years.

    The financial results are summarized in Table 1-11 for the life-of-mine (LOM). C1 cash costs are as defined by Brook Hunt and are shown as costs per pound of payable copper. The after-tax annual cash flows and cumulative cash flow are depicted in Figure 1-1.

      Table 1-11: Summary of Financial Results

    Summary of Financial Results Unit LOM
    Copper payable klb 5,950,000
    Gold payable koz 3,850
    Silver payable koz 56,100
    Total cash costs $/lb 1.83
    Secondary metal credit $/lb (1.04)
    Cash costs net of credits (C1 Net Direct Cash Cost) $/lb 0.79
    Cumulative net after-tax cash flow $M 5,120
    After-tax internal rate of return % 7.4%
    After-tax net present value @ 7% $M 137
    Mine life (including one year of pre-production) Years 18.5
    After-tax payback period Years 7.8
    Total start-up capital $M 5,160
    Total LOM capital (inc. $88.7 M closure cost) $M 5,840

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      Figure 1-1: After-Tax Net Cash Flow (Undiscounted)

    The Project is most sensitive to changes in metal price, secondly to changes in exchange rate, less so to changes in operating cost and least sensitive to capital cost changes.

      1.22.1

    Real Option Sensitivity Analysis

    An alternative sensitivity case for the economic analysis using a method called “Real Options” was assessed. Real Options is an alternative method of calculating the NPV of a proposed project. The Real Option method calculates a NPV (Real Option NPV) value using the same inputs as the more common method of discounted cash flow, but with adjustments for uncertainty and time.

    Ernst & Young LLP (Ernst & Young) was retained by NovaGold to develop an evaluation model that calculated a Real Option NPV for the Project using the same Project capital and operating inputs as used in the AMEC financial model, which was created using discounted cash flow assumptions.

    Table 1-12 presents after-tax cumulative net cash flow and the after-tax conventional discounted cash flow and Real Option NPVs estimated for the Galore Creek Project by

         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    the Ernst & Young evaluation model. The Ernst and Young Real Option after-tax NPV is $811 M, as compared to the $137 M AMEC Base Case after-tax NPV.

    The Ernst & Young after-tax cumulative net cash flow is higher than the AMEC cumulative after-tax net cash flow, primarily because the Ernst & Young Real Option NPV model uses a higher, January 01, 2011 copper spot price as a starting price for the simulation and is modeled to revert back to the AMEC model’s long-term forecast price. For the initial years of production, expected copper prices in the Ernst & Young model are higher than the AMEC long-term forecast price assumptions.

    AMEC notes that discounted cash flow NPV and real option NPV are different methods for calculating NPV and the reader needs an understanding of their differences to compare them between projects.

      Table 1-12: Ernst and Young Real Option NPV vs AMEC Discounted Cash flow NPV

    Item Ernst and Young AMEC
      Real Options Discounted Cashflow
      NPV(C$ million) NPV(C$ million)
    Cumulative After Tax Net Cash Flow 5,755 5,118
    After Tax Net Present Value 811 137

    1.23 Preliminary Development Schedule
       

    A preliminary Project development schedule has been generated. The schedule includes consideration of early work requirements, the EA assessment process, EPCM and construction activities. Critical items identified in the construction schedule are the tunnel, supply of power, and diesel usage. An efficient and well-executed construction strategy will be integral to the fiscal approval of the Project. A specific constraint on maintaining the schedule will be completion of activities in the Galore Creek Valley prior to tunnel completion.

     

     

    The development schedule planned indicates that Project success will dependent in part on developing a practical and efficient logistics plan for the movement of manpower and materials to site during the construction and the subsequent operating phases of the Project.

     

    A statement of work for the planned feasibility study on the Project has been issued, with requests for proposals from sub-consultants expected to be issued in October, 2011. GCMC will be preparing the Project description for the prior to the end of 2011 for submission of the EA document to the relevant authorities.


         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    1.24

    Work Plans

    The GCMC 2011 pre-feasibility study identified opportunities that could be evaluated to potentially expand the mine life, improve the production profile, and reduce likely capital costs. GCMC has reviewed sections of these opportunities in order to outline an “Enhanced Plan” for consideration during future work. The Enhanced Plan incorporates considerations of Inferred Mineral Resources in the mining plan and capital and operating costs estimates that have a lower confidence than required for a prefeasibility level study.

    Mine plan studies indicate that estimated Mineral Resources in the Bountiful area could become part of the mine plan using long-term price assumptions. The Mineral Resources lie approximately under the current exploration camp, and were excluded from consideration in the GCMC 2011 pre-feasibility study due to perceived high strip ratio requirements. If the currently estimated Inferred Mineral Resources can be successfully converted to Measured and Indicated Mineral Resources so that they may then be used as part of an appropriately engineered Mineral Reserve pit, then there is potential for the Bountiful area to be added to the mine plan.

    Inclusion of this material in the Enhanced Plan would result in generation of additional waste tonnes, requiring some modification to the waste rock management plan that is currently envisaged for the Galore Creek Valley.

    In order to provide sufficient space for waste rock storage, the access causeway and ore conveying systems would need to be relocated from the East Fork area. The Enhanced Plan includes the extension of the access tunnel by an additional 4 km to allow the entire East Fork area to be utilized as waste rock storage. The tunnel extension would increase the initial capital required for the Project. In addition, a substantial amount of additional PAG waste rock would need to be re-handled during the mine closure period in order to submerge the PAG waste rock during future mine rehabilitation and reclamation programs.

    The Enhanced Plan lengthens the mine life sufficiently that mill expansion would be undertaken mid-mine life. The mill expansion would require some additional initial capital in order to design the coarse ore stockpile to eventually feed two SAG mills, and would require additional sustaining capital to install a second SAG mill. The addition of a SAG mill would increase the total site power requirements and annual operating costs, but would reduce the overall operating costs on a unit basis.

    The Enhanced Plan also seeks to reduce capital costs, particularly in the areas of the proposed Stewart port facility and the concentrate transportation and filtration system, by reviewing potential design and assumption re-configurations. Options include

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    relocating the filter plant to a location adjacent to the mill at the West More site, and using trucking transport for the dry concentrate. Effects of such changes include upgrading the current road access design, incorporation of a water treatment plant, and increased accommodation requirements at the West More camp.

       

    The relocation of the filter plant to the mill site could result in a net reduction in capital cost, partially offset by increased operating costs, primarily as a result of the additional costs of trucking fuel and concentrate along the access road.

       

    Additional work is required to better define this scenario such that it is an appropriate approach to be taken during future more detailed Project studies.

       
    1.25

    Conclusions

       

    AMEC considers that the scientific and technical information available on the Project can support proceeding with additional data collection, trade-off and engineering work and preparation of more detailed studies. However, the decision to proceed with a Feasibility Study on the Project is at the discretion of GCMC and the partners.

       
    1.26

    Recommendations

       

    AMEC recommends that GCMC consider the recommendations in this section as activities which may support Project advancement should the partners and GCMC determine that a Feasibility Study is warranted. The Project is located in a remote area, with significant logistics considerations. These factors indicate that completion of any Feasibility Study will require significant expenditure.

       

    As part of the recommended work program, the following areas of work should be considered: additional drilling, topographic surveys, geotechnical studies, engineering and metallurgical studies, land management, including applications for mining leases where appropriate, additional baseline studies, and environmental and permitting activities. Additional areas for work are also likely to be identified as activities progress. AMEC’s recommendations do not include provision for pre-construcion and construction activities for site and access infrastructure such as the road and tunnel.

       

    The program is envisaged as a two-phase program, with all elements of the first phase of the program to be conducted concurrently. The outcome of the work will be included in Phase 2, which will consist of completion of a Feasibility Study.

       

    The Phase 1 activities include data collection, trade-off studies and investigations and studies and activities to support EA and public consultation processes. Some more specific recommendations for work focus have also been included for mineral resource


         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    estimation, tunnel design, and plant design purposes. The total cost of these activities is estimated to be between about $31 M and $39 M.

    The Phase 2 activity comprises completion of a Feasibility Study, estimated at between about $11 M and $13 M, and including a contingency provision.

    Total program costs for Phases 1 and 2 are likely to range between approximately $42 M and $52 M.

    AMEC notes that GCMC has already commenced some initial work, which includes geotechnical drilling for both the tunnel and the open pits, sample collection and re-assaying, discussions relating to port usage, and review of information and recommendations arising from the 2011 GCMC pre-feasibility study report.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    2.0 INTRODUCTION
       

    Galore Creek Mining Corporation (GCMC), NovaGold Resources Inc. (NovaGold) and Teck Resources Limited (Teck) requested AMEC Americas Limited (AMEC) to prepare a Technical Report (the Report) on the results of a pre-feasibility study (GCMC 2011 pre-feasibility study) for the Galore Creek Copper–Gold-Silver Project (the Project) in British Columbia, Canada (Figure 2-1).

     

    The Project is a 50:50 partnership between NovaGold Canada Inc. (a wholly-owned subsidiary of NovaGold) and Teck Metals Ltd (a wholly-owned subsidiary of Teck). The partners use an operating company, Galore Creek Mining Corporation (GCMC) to manage the Project. For the purposes of this Report, GCMC is used as a synonym for the partnership.

     

    NovaGold is using the Report in support of a press release dated 28 July 2011, entitled “NovaGold Announces Prefeasibility Study Results for Galore Creek Project”.

     

    2.1

    Terms of Reference

     

    The GCMC 2011 pre-feasibility study was completed in June, 2011, and was a compendium of different studies by a number of companies, as indicated in Table 2-1.

     

    The overall study was collated by GCMC personnel. The geology and mining sections of the study were completed by GCMC personnel, with contributions from both Teck and NovaGold personnel.

     

    AMEC used the information completed by these contributors to support information in the current Report. AMEC’s QPs performed or commissioned independent due diligence reviews on the information supplied by GCMC and made adjustments to the results of the GCMC 2011 pre-feasibility study report based on the outcome of those reviews.

     

    Lemley International Ltd (Lemley) was retained by GCMC at AMEC’s request to perform an endorsement-level review of all pertinent Project technical information for the tunnelling section of the GCMC 2011 pre-feasibility study report and provide their professional judgment as to the suitability of that work to meet the requirements of a pre-feasibility study. Lemley’s expertise includes tunnel design, tunnel construction and program/construction management of tunnels and other large infrastructure projects. Jack Lemley was the CEO of Transmanche-Link, the tunnel contractor consortium that successfully built the Channel Tunnel between England and France. Lemley suggested adjustments to the tunnelling section of the 2011 GCMC 2011 pre- feasibility study report based on the outcome of their review.


         
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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Figure 2-1: Project Location Map


    Note: Figure courtesy GCMC, NovaGold and Teck. Note that the Copper Canyon deposit is currently not part of the Galore Creek Project, and is illustrated on this figure for reference purposes only.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      Table 2-1: Study Contributors

    Consulting Firm or Entity Area of Responsibility in GCMC 2011 Pre-Feasibility Study Document
       
    GCMC Third-party Consultant Plant infrastructure, capital and operating cost estimates, execution plan and schedule
    GCMC Third-party Consultant Tunnel
    Ausenco PSI Concentrate pipeline
    WorleyParsons Canada Services Ltd Port
    Knight Piésold Ltd Transmission line
    Tahltan-Allnorth Limited Partnership Access road
    AMEC E&E Services Inc. Tailings, waste rock and water management, geochemistry
    Brodie Consulting Ltd Closure plan
    Lorax Environmental Services Ltd. Water quality modeling
    G &T Metallurgical Services Ltd. Metallurgical services and metallurgical testwork
    Rescan Tahltan Environmental Consultants Ongoing baseline studies
    Consulting Firm or Entity Area of Responsibility in Review of GCMC 2011 Pre-feasibility Study Document
    Lemley International Tunnel
    AMEC Americas Ltd. All other areas
    Note: the consulting firm or entity noted as a “GCMC Third-party Consultant” is unable to be identified under the terms of their contracts with GCMC

    The Report uses Canadian English. Unless specified in the text, monetary amounts are in Canadian dollars (C$) and units are metric.

    2.2

    Qualified Persons

         

    The following people served as the Qualified Persons (QPs) as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects, and in compliance with Form 43-101F1:

         
  •  
  • Robert Gill, P.Eng, Principal Consultant and Study Manager, AMEC Vancouver

  •  
  • Jay Melnyk, P.Eng., AMEC Associate Engineer, Vancouver

  •  
  • Greg Wortman, P.Eng., Technical Director, Process, North America, AMEC Oakville

  •  
  • Greg Kulla, P.Geo., Principal Geologist, AMEC Vancouver

  •  
  • Dana Rogers, P.Eng., Principal Tunnelling Engineer, Lemley International.

         
    2.3

    Site Visits

         

    QPs conducted site visits to the Project as shown in Table 2-2.


         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      Table 2-2: QPs, Areas of Report Responsibility, and Site Visits

    Qualified Person                              Site Visits Report Sections of Responsibility
        (or Shared Responsibility)
    Robert Gill No site visit Sections 1, 2, 3, 4, 5, 6, 18 (except Sections 18.6 and 18.7), 19, 20, 21, 22, 23, 24, 25, 26 and 27.
    Jay Melnyk 27 to 28 September, 2007 Sections 15 and 16, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections.
    Greg Kulla 21 to 24 September 2010 Sections 7, 8, 9, 10, 11, 12, 14, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections.
    Greg Wortman No site visit Sections 13 and 17, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections.
    Dana Rogers 15 to 17 June 2011 Sections 18.6 and 18.7, and those portions of the Summary, Interpretations and Conclusions and Recommendations that pertain to those Sections.

    2.4

    Scope of Personal Inspections

    Mr Kulla, during a September 2010 site visit, undertook a helicopter inspection of the proposed road and power transmission routes, the Espaw exploration camp, and the Galore Greek valley. A total of 47 drill sites were inspected in the field, during a traverse through the West Fork, Southwest, and Central Replacement zones. Collar locations were checked using a hand-held GPS, and within the limits of such instrumentation, collar locations matched those of the 2007 drill database. Several zones of outcrop were inspected, including a zone of “broken rock”. At AMEC’s request, Erin Workman, a resource geologist with GCMC, pre-selected several drill holes representing the various mineralized areas of the deposit for review; some drill holes selected by AMEC were not able to be located.

    There was no active drilling, logging or sampling in progress during the site visit. Logging and sampling facilities were shut down and locked. Mr Kulla also held meetings with GCMC Project staff including Clair Chamberlain (Senior Geologist), Barry Duff (Logistics Manager) and Peter Wells (Design Manager).

    Mr Melnyk visited site during September 2007. During the site visit, he undertook a high-level review of the Project geology, inspected drill core, viewed the Project topography and the locations of existing infrastructure, including road cuts and borrow pits, and the locations and outlines of the surface drainages.

         
    Project No.: 166824
    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Mr Rogers during a June 2011 site visit performed a visual, on-the-ground inspection of surface conditions at both portal sites. He also conducted a visual inspection of core recovered from the three tunnel borings, and undertook a helicopter traverse along tunnel alignment, including landing and on-the-ground visual inspection of surface conditions near the location of borehole GCT 10-2, which is the boring located near the midpoint of the alignment. A general reconnaissance of the Project area via helicopter was also undertaken. Mr Rogers also held meetings with GCMC Project management including Henri Letient (Project Director), Peter Wells (Project Manager) and Paul Cocklin (Construction Manager/ Mine Manager Designate).

    In addition to these visits, other AMEC personnel have visited site, and have provided input to the AMEC QPs in the areas of core splitting and sample preparation, tailings, waste rock, and water management, and geochemistry.

    2.5

    Effective Dates

         

    The Report has a number of effective dates, as follows:

         
  •  
  • Effective date of the Mineral Resources: 11 July 2011

  •  
  • Effective date of the Mineral Reserves: 11 July 2011

  •  
  • Effective date of the tenure and surface rights data: 27 July 2011

  •  
  • Effective date of the financial analysis: 27 July 2011.

         

    The overall effective date of the Report, based on the date of the financial analysis and provision of information on mineral tenure and surface rights, is 27 July 2011.

         

    GCMC have commenced an infill drill program in the Bountiful area that is designed to support potential upgrades in the confidence categories of the Mineral Resources in this area. This drilling was ongoing at the effective date of the Report.

         

    There has been no material change to the scientific and technical information on the Project between the effective date of the Report, and the signature date.


         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    2.6

    Previous Technical Reports

    NovaGold has previously filed the following technical reports on the Project:

    Francis, K., 2008: Galore Creek Property NI 43-101 Technical Report British Columbia – Canada: unpublished technical report to NovaGold Canada Inc., effective date 25 January 2008.

    Rustad, B., Gray, J., Lechner, M., Teh, H., Bruce, I., Parolin, B., Guy, A., Boychuck, K., Brox, B., and Holborn, D., 2006: Galore Creek Project Feasibility Study Northwestern British Columbia: unpublished technical report to NovaGold Canada Inc. by Hatch Ltd., effective date 31 October 2006.

    Giroux, G.H. and Morris, R.J., 2005: Geology and Resource Potential of the Galore Creek Property: unpublished technical report to NovaGold Canada Inc by Hatch Ltd., GRTechnical Services Ltd. and Giroux Consultants Ltd., effective date 18 May 2005.

    Hosford, P., 2004: NovaGold Resources Inc. & NovaGold Canada Inc. Preliminary Economic Assessment for The Galore Creek Gold - Silver – Copper Project: unpublished technical report prepared by Hatch Limited for NovaGold, effective date 5 August 2004.

    Lacroix, P.A., 2004: Update on Resources Galore Creek Project, British Columbia: unpublished technical report to NovaGold Resources Inc. and SpectrumGold Inc. by Associated Mining Consultants Ltd., effective date June 3, 2004.

    Prior to NovaGold’s interest in the Project, SpectrumGold filed the following technical report:

    Simpson, R.G., 2003: Independent Technical Report For The Galore Creek Property Liard Mining Division British Columbia: unpublished technical report to SpectrumGold Inc., effective date 11 August 2003.

    GCMC is not a listed entity.

    Teck has not filed a technical report on the Project.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    2.7

    Information Sources

    The primary data source for this Report is the GCMC 2011 pre-feasibility study, entitled:

    Galore Creek Mining Company, 2011: Galore Creek Project Prefeasibility Study Report, Including Appendices A to J: unpublished internal report prepared by GCMC, dated June 2011, 3,643 p.

    Reports and documents listed in the Section 3, Reliance on Other Experts and Section 27, References sections of this Report were also used to support preparation of the Report. Additional information was sought from NovaGold, Teck, and GCMC personnel where required.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    3.0

    RELIANCE ON OTHER EXPERTS

       

    The QPs have relied upon the following other expert reports, which provided information regarding mineral rights, surface rights, property agreements, and marketing sections of this Report as noted below.

       
    3.1

    Mineral Tenure and Mining Rights Permits

       

    The QPs have not reviewed the mineral tenure, nor independently verified the legal status, ownership of the Project area, underlying property agreements or permits. AMEC has fully relied upon, and disclaims responsibility for, information derived from GCMC experts and experts retained by GCMC for this information through the following documents:

       

    Letient, H., 2011: Galore Creek Project: letter from Henri Letient, Project Director Galore Creek Project, GCMC, to Robert Gill, AMEC, regarding mineral tenure, surface and water rights, agreements and proposed marketing strategy options, 9 September 2011.

       

    This information is used in Section 4.3 of the Report and was also used to support considerations of reasonable prospectsof economic extraction and declaration of Mineral Resources in Section 14.3 and 14.4, and for consideration of appropriate modifying factors for declaration of Mineral Reserves in Section 15.3.

       
    3.2

    Surface Rights

       

    The QPs have fully relied upon and disclaim responsibility for information supplied by GCMC staff and experts retained by GCMC for information relating to the status of the current surface rights as follows:

       

    Letient, H., 2011: Galore Creek Project: letter from Henri Letient, Project Director Galore Creek Project, GCMC, to Robert Gill, AMEC, regarding mineral tenure, surface and water rights, agreements and proposed marketing strategy options, 9 September 2011.

       

    This information is used in Section 4.5 of the report and for consideration of appropriate modifying factors for declaration of Mineral Reserves in Section 15.3.


         
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    September 2011

    Page 3-1



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    3.3

    Agreements

       

    The QPs have fully relied upon and disclaim responsibility for information supplied by GCMC staff and experts retained by GCMC or NovaGold for information relating to the status of the current Property Agreements as follows:

       

    Letient, H., 2011: Galore Creek Project: letter from Henri Letient, Project Director Galore Creek Project, GCMC, to Robert Gill, AMEC, regarding mineral tenure, surface and water rights, agreements and proposed marketing strategy options, 9 September 2011.

       

    This information is used in Section 4.4 of the Report and was also used to support considerations of reasonable prospectsof economic extraction and declaration of Mineral Resources in Section 14.3 and 14.4, and for consideration of appropriate modifying factors for declaration of Mineral Reserves in Section 15.3..

       
    3.4

    Royalties

       

    The QPs have fully relied upon and disclaim responsibility for information supplied by GCMC staff and experts retained by GCMC for information relating to the status of the current royalties payable as follows:

       

    Letient, H., 2011: Galore Creek Project: letter from Henri Letient, Project Director Galore Creek Project, GCMC, to Robert Gill, AMEC, regarding mineral tenure, surface and water rights, agreements and proposed marketing strategy options, 9 September 2011.

       

    This information is used in Section 4.7 of the report and was also used to support considerations of reasonable prospectsof economic extraction and declaration of Mineral Resources in Section 14.3 and 14.4, and for consideration of appropriate modifying factors for declaration of Mineral Reserves in Section 15.3.

       
    3.5

    Marketing

       

    The QPs have fully relied upon and disclaim responsibility for information supplied by GCMC staff and experts retained by GCMC for information relating to the status of the potential Projecgt marketing regime as follows:

       

    Okamura, H., 2010: Galore Creek Prefeasibility Marketing Study: unpublished marketing study prepared by H. Okamura, Director, Concentrate Sales at Teck, for GCMC, 16 March 2010, 15 p.


         
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    September 2011

    Page 3-2



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    This information is used in Section 19, and was used to to support considerations of reasonable prospectsof economic extraction and declaration of Mineral Resources in Section 14.3 and 14.4, declaration of Mineral Reserves in Section 15.3, and the cashflow analysis in Section 22.

         
    Project No.: 166824
    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    4.0

    PROPERTY DESCRIPTION AND LOCATION

       
    4.1

    Location

       

    The Galore Creek Project is located approximately 70 km west of the Bob Quinn airstrip on Highway 37 and 150 km northeast of the port of Stewart, and 370 km northwest of the town of Smithers, British Columbia, Canada, at approximate latitude 57° 07'30"N and longitude 131°27'W (UTM NAD83, Zone 9 (m) coordinates 6334850N, 351200E).

       

    Smithers is the nearest major supply centre and has an airport with regularly scheduled flights to and from Vancouver, BC. In Alaska, the closest community is Wrangell.

       
    4.2

    Mineral Tenure History

       

    The Galore Creek Property was discovered in 1955, and originally staked by Stikine Copper Ltd., a joint venture between Kennecott Canada Inc. (Kennecott), Hudson Bay Mining and Smelting Co. Ltd. (Hudson Bay) and Cominco Ltd. Until 1968, Kennecott was operator. From 1972 to 1976, Hudson Bay was operator. Mingold Resources Inc. (an affiliated company of Hudson Bay) explored during 1989. In 1991, Kennecott resumed as operator, but work was only completed on the Project by Kennecott during that year.

       

    SpectrumGold Inc. (a separately-listed subsidiary of NovaGold Resources Inc., which in turn is a wholly-owned subsidiary of NovaGold) signed an option on July 31, 2003 with Stikine Copper Limited, QIT-Fer et Titane Inc. (a Kennecott subsidiary), and Hudson Bay to acquire a 100% interest in the Galore Creek Property. In mid-2004, NovaGold acquired all outstanding shares in SpectrumGold Inc. and transferred all Project rights to NovaGold Canada Inc.

       

    In 2005, NovaGold reviewed the status of all Galore Creek property mineral claims and recommended that legacy claims be converted to cell claims as allowed by the amended BC Mineral Tenure Act. All parties agreed to this conversion and signed the Galore Creek Legacy Claim Cell Conversion Agreement dated June 30, 2005.

       

    Between July 6–11, 2005, NovaGold converted the Galore claims with the exception of claims located adjacent to third-party cell claims.

       

    On December 18, 2007 GCMC applied drilling expenditures incurred on the Galore Creek property as assessment work to advance all claims contiguous with the Galore Creek property to an expiry year of 2017 or 2018; different expiry years were


         
    Project No.: 166824
    September 2011

    Page 4-1



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    applicable to different claims. This was the maximum allowed under the Mineral Tenure Act. Assessment work was not applied to claims that were legally surveyed and being considered for mining lease application.

    On March 28, 2007, NovaGold exercised the Stikine option, and acquired 100% of the Project as at June 1, 2007. Teck Cominco Ltd became a 50:50 partner in the entire Galore Creek Project with NovaGold on August 1, 2007; under the agreement Teck has certain funding and other obligations to retain its interest. The remaining 50% is held by NovaGold. The joint venture partners created the jointly-controlled operating company, the Galore Creek Mining Corporation (GCMC).

    In October 2007, all Galore Creek mineral claims held by NovaGold Canada Inc. were transferred to GCMC.

    In November 2007, NovaGold and Barrick Gold Corporation (Barrick) as the successor company to Pioneer Metals Ltd (Pioneer) reached an agreement regarding a group of claims known as the Grace Claims, which are situated immediately to the north of hte current Mineral Resources, and the five claims were sold to GCMC on 3 December 2007. These claims are now part of the Galore Creek Project.

    During March 2008, GCMC acquired additional mineral claims in the Scud River area, Stikine River area and north of the West More area to support Project infrastructure development, in particular, the access road.

    4.3 Mineral Tenure

      4.3.1

    Galore Creek Project

    The Project consists of 264 mineral claims, totalling 118,911.88 ha, held in the name of GCMC. A list of the claims with their expiry dates is included as Appendix A. A tenure location plan is included as Figure 4-1. Figure 4-2 shows the location of the mineralized centres in relation to the claims boundaries that host mineralization. Mineralization is almost all contained within Claim 546459.

    Contiguous claims within the Galore Creek property have had assessment work filed on them. Assessment work was not filed for claims that were not contiguous. The dates marked in Appendix A against the claims as “good to” represent the dates for which assessments have been filed and the assessment reports approved by the Mineral Titles division of the BC Government.

    Claims are a combination of map-staked and ground located.

         
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    September 2011

    Page 4-2



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Figure 4-1: Mineral Tenure Plan


    Note: Figure courtesy GCMC, NovaGold and Teck. Yellow line on plan is the trace of the proposed access road; the green line is the proposed tunnel alignment. Red polygons on plan are the proposed open pit outlines.

         
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    September 2011

    Page 4-3



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Figure 4-2: Plan Showing Main Mineralization Centres in Relation to Claims Boundaries

    Note: Figure courtesy GCMC, NovaGold and Teck

         
    Project No.: 166824
    September 2011

    Page 4-4



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      4.3.1

    Other Regional Projects

    The Inferred Mineral Resource contained within the Copper Canyon property is owned 70% by NovaGold and 30% by Teck.. The property is surrounded on three sides by land owned by GCMC but the property concessions are not currently consolidated into the partnership or the Galore Creek Project.

    NovaGold has offered the Copper Canyon property to Teck to vend 100% of the property into the partnership, but until a decision on the offer is made by Teck, the Copper Canyon deposit is not considered part of the Galore Creek Project.

    4.4

    Property Agreements


      4.4.1

    Pre-NovaGold Agreements

    The claims that cover the core of the Galore Creek property were owned by Stikine Copper Ltd (Stikine). Stikine was incorporated in 1963, and consolidated the regional holdings of Kennecott Canada Inc. (76% and operator), Hudson Bay Mining and Smelting Company Limited (19%), and Consolidated Mining and Smelting Company of Canada Limited (5%; Barr, 2004). Stikine was controlled by QIT-Fer et Titane Inc. (55%; a wholly-owned subsidiary of Rio Tinto Ltd.) and Hudson Bay (45%).

    The Galore Creek property consisted of 292 two-post claims, of which 39 were fractions, all of which were held in the name of Stikine.

      4.4.2

    SpectrumGold and Stikine

    In August 2003, SpectrumGold Inc. entered into an option agreement to acquire Stikine. The agreement included completion of a pre-feasibility study on the project and making payments to the parties totalling US$20.3 M within a period of eight years. Payments of US$0.3 M in aggregate were required over the first three years of the option, with the remaining US$20 M to be paid over the following five years. There was to be no retained interests, royalties or back-in rights on the project.

    On 28 March, 2007, NovaGold acquired the Galore Creek property by exercising its option to purchase 100% of Stikine; full acquisition was completed on July 1, 2007. In June 2007, six mineral claims held by Stikine Copper Limited were transferred to NovaGold Canada Inc.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      4.4.3

    SpectrumGold and NovaGold

    In July 2004, NovaGold Resources Inc. acquired the balance of SpectrumGold Inc. that it did not own, and SpectrumGold Inc. was renamed NovaGold Canada Inc. Agreements with Stikine, Pioneer Metals Corporation and Eagle Plains Resources, (now Copper Canyon Resources Ltd.) were transferred to NovaGold.

      4.4.4

    NovaGold and Teck

    On May 23, 2007, NovaGold and Teck Cominco Ltd. (now Teck Resources) announced a 50:50 partnership to develop the Galore Creek property. On August 1, 2007 the Galore Creek Partnership was established to develop the Galore Creek mine and created the jointly controlled operating company called the Galore Creek Mining Corporation. In October 2007, all Galore Creek claims held by NovaGold Canada Inc. were transferred to the Galore Creek Mining Corporation.

    To earn its 50% interest in the Galore Creek partnership, Teck was to fund approximately $520 M in construction costs, with each company responsible for its pro rata share of funding thereafter. In addition, NovaGold was to receive up to US$50 M of preferential distributions when Galore Creek was fully operational, if the Project exceeded certain agreed upon minimum revenues in the first year of commercial production.

    On 26 November, 2007 NovaGold and Teck suspended construction of the Galore Creek Project. In light of this development, NovaGold and Teck agreed to amend the terms of Teck’s earn-in obligations in connection with the Project. Under the amended arrangements, Teck’s total earn-in was $430 M. Teck agreed to invest an additional $72 M in the partnership to be used over the following five years principally to reassess the Project and evaluate alternative development strategies. In addition, NovaGold and Teck agreed to share the next $100 M of Project costs 33% and 67%, respectively, and proportionately thereafter.

    On 11 February 2009, NovaGold and Teck further amended certain provisions of the Partnership Agreement. Under the agreement, Teck agreed to fund 100% of all costs incurred by the Partnership from 1 November 2008 until the aggregate additional amount contributed by Teck, including certain amounts previously spent to fund optimization studies, equalled $60 M. If any portion of the $60 M was not contributed by 31 December 2012, Teck agreed to contribute in cash any shortfall on that date to the partnership.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    In June 2011, the $60.0 M commitment was met, and from June 2011 forwards, the partners are obligated to contribute equally to any share of costs associated with Project development.

      4.4.5

    GCMC and the Tahltan Nation

    On 13 February 2006, NovaGold announced that it had entered into a comprehensive agreement with the Tahltan Nation for their participation in, and support of, the development of the Galore Creek Project. When GCMC was formed, the Participation Agreement with the Tahltan Nation was transferred from NovaGold to GCMC.

    The agreement covers all claims, infrastructure, equipment, plants and facilities held, controlled or acquired by GCMC to explore, develop, construct, operate and reclaim gold-silver-copper within the Galore Creek Valley, including any ancillary or related activities or operations that support the mine processing facilities such as the access road. The agreement does not include material changes to the Project or any proposed additional development by GCMC which required an additional or separate Environmental Approval to that envisaged in 2006.

    Financial contributions will be made by GCMC to the Tahltan Heritage Trust Fund, which is set up so that funds in the trust will be used to mitigate any adverse social and cultural impacts of mine development. During any mining operations, Trust Fund payments are guaranteed to be no less than $1 M annually. Upon reaching certain agreed financial targets, and subject to positive mine operating cash flow, the trust will receive the greater of $1 M or a 0.5% to 1.0% net smelter royalty (NSR) each year. The agreement will remain in effect throughout the life of the Galore Creek Project and will be binding on any future operator of the mine.

    4.5

    Surface Rights

    The mineral claims are on Crown land. Access, power, and pipeline facilities cross mineral claims held by third parties. Mineral claims do not confirm exclusive surface rights to a mineral claims holder.

    GCMC presently has a Special Use Permit (SUP) which entitles the partnership to the right-of-way for the access road corridor, in accordance with the original road layout design permitted under the current Environmental Assessment approval. A small portion of the new road layout and the new tunnel alignment fall outside of that SUP (refer to Sections 5.1, 18.2 and 18.3) .

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Because the new Project design and configuration is different from that previously permitted, new Environmental Assessment approval is likely to be required. This is likely to include the area of the Galore Creek Valley access tunnel and road. When Environmental Assessment approval is forthcoming, an amendment to the SUP will be applied for.

    A portion of the Galore Creek Valley access tunnel passes through mine claims held by NovaGold Canada Inc., a wholly-owned subsidiary of NovaGold.

    Except for the access corridor which is covered by the SUP, all other infrastructure, including the processing plant and tailings area in the West More Valley and the proposed filter plant area near Km 8 are located within GCMC’s mineral claims.

    GCMC intends to file for mining leases to secure the surface rights for these areas.

      4.5.1

    Cassiar Iskut-Stikine Land and Resource Management Plan

    The Project falls within the boundaries of the Cassiar Iskut-Stikine Land and Resource Management Plan (LRMP) which was finalized in May 2000. The approved plan supports further exploration and development of the areas mineral resources by providing information to be considered during the permitting and impact assessment processes. The LRMP is primarily in territory claimed by the Tahltan First Nation. The Tahltan Joint Councils, representing the Tahltan Band from Telegraph Creek and the Iskut Band, were full table members throughout the process and endorse the LRMP. Neighbouring First Nations include the Nisga'a, Kaska, and Tlingit Nations.

    The LRMP identifies 15 geographic resource management zones, covering 31% of the plan area. One of these, the Lower Stikine–Iskut Grizzly Salmon Management Zone, includes the valley of the Stikine River from the Chutine confluence to the US border, and the lower Iskut River west of the Craig River. It also includes the Scud River into which Galore Creek drains. Mineral exploration and development are accepted activities within the Coastal Grizzly Salmon Management Zone, including road access where needed.

    Logging is only allowed for the purposes of mineral exploration and/or mine development and for localized use.

      4.5.2

    Guide and Trapping Surface Rights

    Two guide outfitter territories and seven registered trap lines overlie the Galore Creek deposits and planned access road.

         
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    September 2011

    Page 4-8



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    4.6

    Water Rights

         

    Currently, GCMC has short-term water approvals for exploration, access road, and camp use, granted through Section 8 of the BC Water Act. GCMC intends to apply for water licences under the Water Act as required to support Project development and operational activities.

         
    4.7

    Royalties

         

    There are no third-party or Government royalty obligations associated with the Galore Creek Project other than a net smelter return royalty payable to the Tahltan nation, under the Tahltan Agreement, the details of which are discussed in Section 4.4.5 and Section 20 of this Report.

         
    4.8

    Encumbrances

         

    There are currently no encumbrances associated with the Project. On December 21, 2007 two Builders Liens/Encumbrances (Event Numbers 4186086 and 4186084) were filed on selected GCMC claims. Both of these liens were discharged on January 31, 2008 under Event Numbers 4193255 and 4193252.

         
    4.9

    Permits

         

    Permits required to support Project development are discussed in Section 20.

         
    4.10

    Environment

         

    Environmental studies, closure plans and costs, and environmental liabilities and issues are discussed in Section 20.

         
    4.11

    Social and Community Impact

         

    The potential social and community impact assessments of the Project are discussed in Section 20.

         
    4.12

    Comment on Section 4

         

    In the opinion of the AMEC QPs, the following conclusions are appropriate:

         
  •  
  • Information from GCMC experts supports that the mining tenure held is valid and is sufficient to support declaration of Mineral Resources and Mineral Reserves


         
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    September 2011

    Page 4-9



    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study
    • The mineral concessions have been surveyed in accordance with relevant BC regulations in the case of the 17 remaining legacy claims, and are otherwise map- staked

    • Annual claim-holding fees have been paid to the relevant regulatory authority where exploration work on the claims was insufficient to have met the required assessments. All of the claims that host mineralization have appropriate work assessments filed and are current until 2018. Other claims within the land package are current to 2017

    • The Copper Canyon property has been offered to the partnership; but until a decision on the offer is made by Teck, the Copper Canyon deposit is not considered part of the Galore Creek Project

    • Mineral claims are on Crown land. GCMC presently has a SUP which entitles the partnership to the right-of-way for the access road corridor. Modifications to the road design may require application for modification to the SUP

    • Because the new Project design and configuration is significantly different from that previously permitted, new Environmental Assessment approval is likely to be required from both Provincial and Federal authorities

    • Water rights are granted under short-term approvals. Additional water licences will be applied for to support Project development

    • There are no Government royalty obligations

    • Financial contributions will be made by the Galore Creek Partnership to the Tahltan Heritage Trust Fund. During mine operations, Trust Fund payments are guaranteed to be no less than $1 M annually. Upon reaching certain agreed financial targets, and subject to positive mine operating cash flow, the trust will receive the greater of $1 M or a 0.5% to 1.0% net smelter royalty each year. The agreement will remain in effect throughout the life of the Project and will be binding on any future operator of the mine

    • Exploration activities to date have been conducted within the regulatory framework required by the BC Government

    • Additional permits will be required for Project development.

         
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    September 2011

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    Galore Creek Mining Corporation
    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    5.0

    ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

       
    5.1

    Current Accessibility


      5.1.1

    Air

    The town of Smithers, located 370 km to the southeast, is the nearest major supply centre to Galore Creek. Most personnel, supplies, and equipment are staged from the Bob Quinn airstrip, on the Stewart-Cassiar Highway (Highway 37) and transported via helicopter to the Galore Creek camp.

    Bob Quinn is serviced by contract flights from Smithers and Terrace, each of which has daily flights from Vancouver. Flight time from Vancouver to Smithers/Terrace is about 90 minutes, then an additional 45 minutes to Bob Quinn. The helicopter flight from Bob Quinn to the Galore Creek camp is about 30 minutes.

    The main helicopter landing pad for the Galore Creek Valley is constructed about 500 m southwest of the Galore Creek exploration camp.

      5.1.2

    Water

    The Stikine area was accessed by shallow draft barges and riverboats, in particular during the Stikine–Cassiar and Klondike gold rushes of the late 19th century, but continuing to the late 1960s. These boats were used to transport goods from Wrangell, Alaska to Telegraph Creek, British Columbia, a distance of 302 km. The Stikine River remains navigable for this type of watercraft from about mid-May to October. The nearest point on the Stikine River to the Project is the mouth of the Anuk River, about 16 km west of the camp.

      5.1.3

    Road

    Proposed Access Road

    A report for the Galore Creek mine access road was prepared by Allnorth (2010). Allnorth utilized a report prepared in 2005 by McElhanney Consulting Services Ltd as a basis for the study, but updated the current as-built road conditions in the road status report and utilized TNR Bridge Construction Limited Partnership (TNR) to update the report and cost estimates for the bridges and culverts.

         
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    The route selected starts at the junction of Highway 37 and proceeds west across the Iskut River, up More Creek, over the More Canyon bridge, around the new tailings location at Round Lake and then down Sphaler Creek to the South Portal (Figure 5-1).

    The initial 8 km of the road will be double lane, narrowing to a single-lane (6 m wide) resource access road. The road is planned to support construction of the diesel supply line, concentrate pipeline, and the power transmission line and provide supplies, equipment, and crew transport during construction and operation of the mine. The road will be constructed with less than 15% grades and an average design speed of 40 km/h. The road is intended to be a low-impact road within the utilities corridor.

    Bridges and culverts are designed for a 200-year and 100-year instantaneous flood, respectively, with a minimum 1.5 m clearance to the underside of the bridge girders unless additional clearance is required for navigable waters or geotechnical requirements. The bridges and culverts are all rated for a maximum load of 100 t.

    A summary of the current access road status is:

    • Over the section of road from the Highway 37 (Km 0 to Km 40), preliminary construction has been completed and the road is currently in service. Even though this section of the road is in service, it will require upgrading to the final design and the first 8 km will be upgraded to dual lane

    • The section of road from Km 40 to Km 48 has been cleared, but construction has not commenced

    • The More Canyon bridge is located at Km 48. The basic design of the bridge has been completed; however, detailed engineering, design procurement and construction is required prior to the access road linking the north and south sections of the road, thus enabling road access from Highway 37 to the proposed plant, tunnel and mine

    • The section of the road from Km 48 to Km 71.5 has been cleared, but construction has not commenced

    • The section of road from Km 71.5 to Km 78 is currently completed and in service as per the original design. Due to the relocation of the tailings storage facility, however, this section will eventually be flooded and a tailings perimeter road will need to be constructed. The new tailings perimeter road will need to be completed prior to the commissioning of the cofferdam required for construction of the main tailings dam. The tailings perimeter road will also incorporate the East and West Saddle dams. This new road has not been permitted

         
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    Figure 5-1: Proposed Access Road Layout Plan

    Note: Figure courtesy GCMC, NovaGold, and Teck

         
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    • The section of road from Km 78 to Km 80 has been partially completed

    • The final section of the access road from where it meets the stockpile feed conveyor to the South Portal has not commenced and is not permitted.

    Kennecott Road

    During early exploration efforts in the 1960s, Kennecott constructed 48 km of road from the mouth of the Scud River to the exploration camp in the Galore Creek Valley. The road is in very poor condition and would require repair along the Scud River and portions of the Galore Creek Valley before it could be used. No plans exist to conduct this work.

    5.2

    Climate

    The Project area is characterized by cold winters and short, cool, summers.

    Within the Galore Creek Valley, mean monthly temperatures range from -8.2ºC during the winter to 12.4ºC during the summer, with January and July typically being the coolest and warmest months, respectively. In the Upper West More Valley area, monthly average temperatures range from -8.9ºC in the winter to 7.9ºC in the summer.

    Precipitation begins to fall as snow in early October and continues until the end of May. A basinal average precipitation for the whole Galore Creek Valley watershed was estimated to be in the order of 3,000 mm (Rescan, 2006a). June and July tend to receive the least amount of precipitation on an annual basis (typically 40 to 60 mm of rain per month).

    Surface run-off across the Project area is relatively high compared to other regions of BC and Canada. The hydrological regime of the region is very dynamic and temporally and spatially variable. The estimated annual average run-off for the Galore Creek Valley watershed (drainage area is about 145 km2) is 2,340 mm (Rescan 2006a). Based on site-specific data, annual run-off in Galore Creek has ranged from 1,760 to 3,830 mm. The More Creek Valley, which is located further east than Galore Creek Valley, experiences lower annual run-off, which has been observed to range from 1,410 to 2,773 mm.

    Glacial melt processes are dominant in Galore Creek, while snowmelt processes dominate in More Creek. This is reflected in the run-off data, with Galore Creek experiencing more consistent run-off from July through to September. More Creek, on the other hand, produces a relatively higher proportion of run-off earlier in the season during the months of June and July. Across the Project area, annual low flows

         
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    generally occur in late March when the majority of available water is stored within the snowpack. The onset of spring freshet typically takes place by early May. Peak flows are largely dependent on significant rainfall storm events, which can take place at any time during the summer months.

       

    Strong winds generally occur in all seasons at high elevations.

       

    Any future mining operations will be conducted year-round.

       
    5.3

    Infrastructure

       

    The nearest large communities to the Project site are Terrace and Smithers.

       

    The current exploration and construction camps can host 810 persons. Power is currently supplied to the exploration camp via diesel generators. The Galore Creek Project communicates to the outside world using voice-over-internet protocols (VOIP) for telephones) and Internet protocols (for regular computer business) over a satellite link. The satellite link terminates in Langley, BC, where it connects to regular land lines.

       

    Infrastructure requirements for Project development as detailed within the GCMC 2011 pre-feasibility study are discussed in Section 18 of this Report.

       
    5.4

    Physiography

       

    The Galore Creek Valley is a U-shaped glacially-scoured valley with thick glacial and glacio-lacustrine deposits covering the lower elevation slopes. The material has been reworked by fluvial action and then overridden in places by colluvium. The surrounding terrain is mountainous and covered by glaciers and ice fields. Glaciers exist in the East and West forks of Galore Creek, but are currently retreating. The steep upper slopes are generally comprised of exposed bedrock.

       

    The area is a transitional landscape between Coast and Mountain, Sub-Boreal Interior and Northern Boreal Mountains ecosystems. Typical biogeoclimatic zones (geographic areas having similar patterns of vegetation and soils as a result of a homogenous climate) range from Coastal Western Hemlock and Mountain Hemlock zones to the west of the Galore Creek property and the Interior Cedar Hemlock and Engelmann Spruce–Subalpine Fir zones to the east. Alpine tundra is present at higher elevations.

       

    The Project lies within a regional structure known as the Stikine Arch. Medium to steep slopes characterize the local terrain in the central and northern parts of the


         
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    Galore Creek property. The surrounding topography is mountainous. The elevation of the tree line is variable, but alpine vegetation predominates above 1,100 m. The forests below consist of Balsam fir, Sitka spruce and cedar. A variety of unique habitat types exist within the larger regional project area, including extensive floodplain habitat and wetlands, moist alpine meadows and mature and old-growth forest.

       

    The Project area includes major watersheds of both the Stikine and Iskut river drainages. The Stikine watershed is recognized as a major wilderness area of significant ecological value to both Canada and the United States.

       

    The Stikine, Iskut, More, Sphaler, and Porcupine valleys are relatively pristine areas with road access currently limited to the upper reaches of the Iskut Valley. The Stikine and Iskut rivers and their tributaries provide important habitat for all five species of Pacific salmon as well as other resident fish species such as Dolly Varden. The area is also one of the more important remaining grizzly bear habitats in British Columbia. Wetlands along the Porcupine and Stikine rivers provide breeding habitat and migration staging areas for waterfowl. The valleys and associated floodplains provide important moose winter range and the rugged Coast Range supports high densities of mountain goats. There are resident populations of black bears, wolves, foxes, martens and other mammals.

       
    5.5

    Seismicity

       

    As part of geotechnical studies performed on waste and water management in 2006, BGC assessed the seismic risk for the Project (BGC Engineering Inc, 2006b). The Galore Creek area is located in a moderately high seismic zone.

       

    The national seismic hazard map produced by the Geological Survey of Canada for use in the 1995 National Building Code of Canada, indicates that the Project is located in acceleration zone 2, characterized by a peak horizontal ground acceleration (PGA) of 0.8 g1 to 0.11 g with a 10% chance of exceedance in 50 years (1 in 475).

       

    Revised seismic hazard maps for incorporation into the 2005 National Building Code of Canada show that the site has a PGA of approximately 0.1 g to 0.2 g with a 2% chance of exceedance in 50 years (1 in 2,475).

       
    5.6

    Comment on Section 5

       

    In the opinion of the AMEC QPs, the existing and planned infrastructure, availability of staff, the existing power, water, and communications facilities, the methods whereby


         
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    goods could be transported to any proposed mine, and any planned modifications or supporting studies are reasonably well-established, or the requirements to establish such, are reasonably well understood by GCMC, NovaGold and Teck, and can support the declaration of Mineral Resources and Mineral Reserves.

    Within the ground holdings of GCMC, there is sufficient area to allow construction of all required Project infrastructure. Except for the access corridor which is covered by the SUP, all other infrastructure, including the processing plant and tailings area in West More and for the Filter Plant Area near Km 8 are located within GCMC’s mineral claims. GCMC intends to file for mining leases to secure the surface rights for these areas.

    Surface rights are held by the Crown. GCMC considers it a reasonable expectation that surface rights usages will be granted the Project.

    It is expected that any future mining operations will be able to be conducted year-round.

     
    1 g is the the acceleration due to Earth's gravity

         
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    6.0

    HISTORY

       
    6.1

    Early Exploration of the Galore Creek Claims

       

    Mineralization was first discovered in the upper Galore Creek Valley in 1955 by M. Monson and W. Buchholz while prospecting for a subsidiary of Hudson Bay. Staking and sampling were completed in the area in 1955. Work in 1956 included mapping, trenching and diamond drilling. No further work was undertaken and most of the claims were allowed to expire.

       

    In 1959, reconnaissance stream sediment surveys were carried out by Kennco Explorations (Western) Limited (the Canadian subsidiary of Kennecott Copper, now Rio Tinto Ltd.) in the Stikine River area. Results prompted Kennco to stake mineral claims around the remaining 16 Hudson Bay claims the following year. Four of the original claims were subsequently optioned by Consolidated Mining and Smelting Company of Canada Limited (Cominco) from W. Buchholz. Late In 1962, the three companies agreed to participate jointly in future exploration work. As a result, Stikine Copper Limited was incorporated in 1963, on the basis of the following interests: Kennco Explorations, (Western) Limited (Kennecott; 59%), Hudson Bay Mining and Smelting Company Limited (Hudson Bay; 34%) and Consolidated Mining and Smelting Company of Canada, Limited (Consolidated; 5%).

       

    Work conducted since discovery in 1955 outlined a significant gold–silver–copper mineralized zone in the Central Zone and identified several satellite mineralized zones, most importantly the Southwest, West Fork, North Junction and Junction Zones. This work included soil sampling, pole-dipole resistivity/IP, magnetics, electromagnetics (EM), radiometrics, very low frequency (VLF) and audio frequency magnetotellurics (AFMAG) airborne geophysical surveys, and drilling.

       

    From 1960 to 1968, the exploration on the property was performed by Kennco. Exploration work during this period included 53,164 m of diamond drilling in 235 holes and 807 m of underground development work in two adits. The Central Zone was the focus of most of this work. During the same period, a road was constructed from an airstrip at the confluence of the Stikine and Scud rivers along the Scud River and up Galore Creek to the then exploration camp.

       

    No work was done between 1968 and 1972. In 1972, Hudson Bay became operator and in 1972 and 1973 an additional 25,352 m of diamond drilling was completed in 111 holes. This work concentrated on the mineralization in the Central and North Junction Zones. A further 5,310 m of diamond drilling was completed in 24 holes in 1976.


         
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    In 1989, Mingold Resources Inc. (an affiliated company of Hudson Bay) operated the property in order to investigate its gold potential. In 1990, Mingold completed 1,225 m of diamond drilling in 18 holes.

       

    Kennecott resumed as operator of the Project in 1991 and completed 13,830 m of diamond drilling in 49 holes. An airborne geophysics survey and over 90 line km of induced polarization (IP) survey were also completed. At the end of this initial exploration phase, a total of 12 prospects and deposits had been identified: Central, Junction, North Junction, West Rim, Butte, Southwest, Saddle, West Fork, South Butte, South 110, Middle Creek, and North Rim.

       
    6.2

    Exploration of the Grace Claims

       

    The Grace Claims are a unit of five claims to the north of the area where Mineral Resources have been estimated, and became part of the Galore Creek Project in 2007. NovaGold acquired an interest in the claims in 2004, and the claims became part of the Project in 2007. Prior to that date, the claims had been subject to a different set of exploration programs to those conducted on the main Project claims.

       

    In 2006, NovaGold completed six NQ-size diamond holes for 1,785 m. Holes were drilled as condemnation holes to verify there was no economically significant copper or gold mineralization in the area proposed to be covered by a tailings site for Galore Creek (Petsel, 2006). Additional geotechnical and hydrological work has been undertaken on the claims in support of development of potential tailings dams for the Galore Creek deposits (Petsel, 2006).

       

    In 2007, 21 holes totalling 6,840 m were drilled on the Grace claims. Drilling on the property was designed to meet initial earn-in requirements for 60% interest in the property and to further condemn the low level targets of the tailings impoundment area. No significant mineralization was encountered.

       
    6.3

    SpectrumGold/NovaGold Exploration at Galore Creek

       

    In August 2003, SpectrumGold Inc. (now NovaGold Canada Inc., and a wholly-owned subsidiary of NovaGold) entered into an option agreement to acquire a 100% interest in the Galore Creek property from Stikine Copper Limited, a company owned by QIT- FER et Titane Inc. (a wholly-owned subsidiary of Rio Tinto Ltd.) and Hudson Bay. From September–October 2003, SpectrumGold carried out a 10-hole, 2,950 m diamond drill program on the property. The work program was directed toward verifying grades of copper and gold mineralization defined by previous drilling in the Central and Southwest Zones.


         
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    In 2004, NovaGold carried out a 79 hole, 25,976 m diamond drill program to upgrade and expand the existing resource. Drilling was also conducted on exploration targets to test several peripheral occurrences and nearby properties in which NovaGold has an interest. Extensive geophysical surveys were conducted to assist the exploratory drilling. The results of the 2004 drilling program provided the basis for geological modeling, resource estimation, preliminary mine planning and economic evaluation at Preliminary Assessment (PA) level.

       

    The aim of the 2005 Galore Creek exploration program was to test for extensions of known mineralization, and to explore for new targets within the Galore Creek Valley. Additional drilling was utilized for engineering and environmental testing. Mapping focused on defining drill targets, major structures, and alteration assemblages, as well as recognizing sedimentary facies transitions. The geophysical program included a wide-spaced Vector IP reconnaissance program and induced polarization surveys both south of the Central Zone and along the East Fork of Galore Creek.

       

    During 2006, 33,574.70 m of NQ and HQ-sized diamond drilling, in 57 holes, was completed. The 2006 drilling tested new exploration targets based on geophysical anomalies and new geologic interpretations, and included step-out drilling by expansion and/or extension of known mineralization, delineation drilling of proposed pit boundaries, and infill drilling of areas of known mineralization in an attempt to upgrade the resource estimation categories.

       

    Drilling on the main Galore Creek property during 2007 totalled 4,547 m in 17 drill holes. The drilling was distributed among many areas, including the Southwest zone, the Central Zone, the Lower Butte Zone and in some reconnaissance areas. Initially discovered in 2005, work at Lower Butte was a follow-up to the minimal drilling on the zone done in prior years and was focused to help expand the extent of the deposit. Further efforts were directed toward using the results in the completion of a 3D model to be used in preliminary resource estimates. Additional holes were drilled in and around the Central Zone to spot test areas of potential expansion of the resource and to identify controls on mineralization, particularly in the Dendritic Creek area of the Central Replacement Zone of the Main deposit. Additional, but minor, geotechnical drilling was completed around the Southwest and Central Zones.

       
    6.4

    GCMC Exploration at Galore Creek

       

    In 2008, GCMC carried out a nine hole, 2,050 m diamond drill program on the main Galore Creek property to obtain acid–base accounting (ABA) data in the area of the proposed Central, Southwest, North Junction and Junction pits. Grades of the legacy


         
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    assays in the area of the proposed Junction pit were verified and metallurgical data were collected from the Central Replacement Zone and North Gold Lens.

         

    In 2010, Galore Creek Mining Corporation (GCMC) carried out a nine hole, 2,803 m diamond drill program on the main Galore Creek property to obtain metallurgical and in-fill data in the Central deposit. Drill holes targeted mineralization that is likely to support the first five years of planned production within the South Gold Lens and Central Replacement Zone (named subdomains of the Central Zone).

         
    6.5

    Development Studies

         

    An assessment of the development potential of the deposits was completed by Mine Reserve Associates, Inc. for Kennecott in 1992. A number of pit shells and pit designs were completed. In 2002, Kennecott reclassified the Project Mineral Resources in accordance with NI43-101 guidelines. As this work has been superseded by the GCMC 2011 pre-feasibility study, no further information on the Kennecott work is included in this Report.

       
    A PA study was completed for NovaGold on the Galore Creek Project by partners Associated Mining Consultants and Hatch Limited (Hatch) in 2004 (Hosford, 2004), returning positive economics for the Project, and supporting ongoing studies.
       
    A feasibility study on the Galore Creek Project was compiled by Hatch in October 2006 (Rustad et al, 2006), and incorporated a first-time declaration of Mineral Reserves for the Project.
       

    In April 2007, AMEC was contracted to review capital and operating costs, and work completed on the Project. The review covered the entire Project with a focus on construction of the mine facilities and tailings and water management structures. In October 2007, AMEC’s preliminary work indicated that capital costs would be significantly higher than originally estimated in the feasibility study. The Project was also impacted by the rapidly escalating capital costs affecting major construction projects worldwide. This, combined with reduced operating margins because of the stronger Canadian dollar, made the Project uneconomic as conceived and permitted from the October 2006 feasibility study. The feasibility study update was discontinued. In light of the economic status of the Project at the time, NovaGold and Teck agreed to reclassify Mineral Reserves as Mineral Resources, in compliance with NI 43-101 requirements.

         

    In January 2008, NovaGold updated the Galore Creek Mineral Resource estimate to include drilling completed during 2007 and to support the reclassification of the Mineral Reserves as Mineral Resources.


         
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    GCMC asked AMEC to undertake a two-phase optimization study during 2008, in an effort to reduce capital, mitigate the Project’s risk, and improve the Project schedule, constructability and financial profile. The November 2007 basic engineering report served as the basis of this 2008 optimization study. At the end of Phase 2, two options were identified as having the most potential for a path forward:

    • Case 35 – Mining, crushing and grinding in Galore Creek Valley, 9.2 km tunnel, flotation near Km 81 of the access road, tailings storage facility (TSF) at West More Area (Km 77), concentrate pipeline to Stewart, and filtration and new load-out facilities at Stewart

    • Case 37 – Mining and crushing in Galore Creek Valley, grinding and flotation near Km 91 of the access road, 11.6 km tunnel, TSF at West More Area, concentrate pipeline to Stewart, and filtration and new load-out facilities at Stewart.

    In 2010–2011, GCMC commissioned a number of third-party consultants to assist GCMC in preparing a pre-feasibility study on the Project, which included multiple trade-off option considerations. The remainder of this Report summarizes the results of the GCMC 2011 pre-feasibility study and discusses modifications to the GCMC 2011 pre-feasibility study made by AMEC and Lemley.

         
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    7.0

    GEOLOGICAL SETTING AND MINERALIZATION

         
    7.1

    Regional Setting

         

    During the Late Palaeozoic to Late Mesozoic, the Canadian Cordillera was formed as an assemblage of oceanic and near-continental terranes accreted onto the western margin of the North American craton. The accreted terranes form five morphogeological belts, namely the Foreland, Omineca, Intermontane, Coast, and Insular belts. The Intermontane belt consists of the Stikinia, Cache Creek, Slide Mountain and parts of Quesnellia and Yukon-Tanana terranes (McMillan, 1991).

         

    Similarities in rock type and geological history between the Stikinia and Quesnellia terranes have led a number of researchers to consider that the two terranes are segments of the same Triassic arc (e.g. Wernicke and Klepacki, 1988; Nelson and Mihalynuk, 1993; Mihalynuk et al., 1994). The Galore Creek district is one of seven major mineralized alkalic porphyry systems in the Stikinia–Quesnellia arc.

         

    The Stikinia terrane consists of four early Devonian to middle Jurassic arc-related mafic to felsic volcanic rocks, co-eval plutons, and sedimentary rock sequences that are separated by unconformities (Figure 7-1) as follows:

         
  •  
  • Late Palaeozoic to Middle Jurassic island arc volcano-plutonic and sedimentary rocks of the Stikine assemblage, the Stuhini Group and Hazelton Group

  •  
  • Middle Jurassic to early Upper Cretaceous basin sedimentary rocks of the Bowser Lake Group

  •  
  • Upper Cretaceous to Tertiary continental arc volcanic rocks of the Sloko Group

  •  
  • Late Tertiary to Recent post-orogenic plateau basalts of Edziza and Spectrum Ranges.

         

    The terrane has been affected by three major periods of intrusive activity, which in the Galore Creek area include:

         
  •  
  • Upper Triassic to Lower Jurassic intrusion that include the calc-alkaline Hickman pluton and the Galore Creek alkalic suite

  •  
  • Upper Cretaceous to Palaeocene Coast plutonic complex that occurs as several granite bodies west of Galore Creek

  •  
  • Tertiary quartz monzonite, diorite stocks and mafic to felsic dykes that occur within west- and north-striking extensional structures.


         
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    Figure 7-1: Regional Geological Setting


    Note: Figure from Byrne (2009), and modified after Wheeler and McFeely 1991; Gabrielse et al. 1991; Logan and Koyanagi, 1994; and Enns et al., 1995

         
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    7.2

    Galore Creek Area Geology

    Syenite, monzonite and monzodiorite dykes and stocks of the multiphase Galore Creek alkalic complex are hosted within Stuhini Group rocks. The highest concentration of intrusions occurs in the west fork of the Galore Creek Valley, where the intrusive complex, consisting of composite dykes and stocks. The intrusions are considered to be sub-volcanic, and co-eval and co-magmatic with the younger units of the Stuhini Group. Figure 7-2 shows the local geology of the mineralized portion of the Galore Creek Valley. Timing relationships of mineralization to the various intrusive units suggests at least two distinct periods of hydrothermal activity punctuated by intrusion of voluminous, megacrystic, orthoclase-phyric syenite and monzonite dykes.

    In the Galore Creek Valley, the Stuhini Group comprises a lower unit of submarine basaltic to andesitic volcanic rocks interspersed with locally derived sandstones and siltstones (Allen et al., 1976) and an upper unit of partially subaerial, compositionally distinct, alkali-enriched, volcanic and volcanogenic sedimentary rocks.

    The Galore Creek district is interpreted to have undergone early and broad-scale Triassic north–south compression followed by post-early Jurassic development of northerly-trending folds and thrust faults (Logan and Koyanagi, 1994). Small displacement reverse faults cut the Stuhini Group rocks, the intruding syenite and monzonite intrusions, and the mineralized zones.

    Mineralization is developed in potassium-enriched volcanic rocks and pipe-like breccias adjacent to syenite stocks and dykes. Deposits are manto-shaped, and trend north to northeast, following either, or both, syenite contacts and structural breaks.

    The largest deposit is the northerly-elongated Central Zone that is divided into the North Gold Lens, Central Replacement Zone and the South Gold Lens, and has the Bountiful zone partially superimposed. Smaller deposits peripheral to the Central Zone are also known, these include: Southwest Zone, Junction, Butte, West Rim, West Fork and the Saddle zones (Figure 7-3).

    Most zones, including the Central, North Junction, Junction, Middle Creek, West Rim, Butte and South 110, occur in highly-altered volcanic rocks and to a lesser degree in syenite intrusions. The Southwest, Opulent Vein, and Saddle zones are hosted by breccias and the North Rim and West Fork zones occur within syenite intrusions.

         
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      Figure 7-2: Local Geology Plan


    Note: NGL = North Gold Lens; CRZ = Central Replacement Zone; SGL = South Gold Lens; SWZF = Southwest Zone Fault; WFF = West Fork Fault; BF = Bountiful Fault; EF = East Fault. Figure from Byrne (2009).

         
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      Figure 7-3: Deposit Location Plan


    Note: Photograph looks west. As the photograph is a perspective view to show the relative locations of the various prospects and deposits to the Galore Creek Camp and Valley, no scale is included. Figure courtesy NovaGold.

         
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    7.3

    Lithological Descriptions

    A total of 107 geological codes are used to describe the geology of the Galore Creek area during drill hole logging. About 30 different primary rock types have been determined; subdivisions of these primary types, based on textural differences or temporal (cross-cutting) relationships, account for the remaining codes. Stikine Copper Limited delineated the first 100 codes in 1991. Seven additional codes were created in 2004 by NovaGold.

      7.3.1

    Volcanic Rocks

    At Galore Creek the volcanic rocks are defined by four main classifications and numerous sub-types based on texture and mineral content. From youngest to oldest they include the following:

    • V5/S6-7 – Intermediate volcanic rocks and sediments characterized by re- sedimented pyroclastic rocks and flysch turbidites

    • V3 – Orthoclase-bearing volcanic rocks characterized by orthoclase-rich pyroclastic rocks and reworked sediments

    • V2 – Pseudoleucite-bearing volcanic rocks characterized by trachytic pseudoleucite-rich lavas

    • V1/V4 – Augite-bearing mafic volcanic rocks characterized by mafic lavas and reworked equivalents.

    Augite-Bearing Volcanic Rocks (Rock Code V1)

    A heterogeneous sequence of augite-bearing mafic flows, flow breccias and volcaniclastic rocks are interbedded with pseudoleucite volcanic rocks in the northern portion of the Central Zone. These rocks generally host only weak to moderate mineralization in comparison to the pseudoleucite-bearing rocks.

    Augite-bearing flows contain porphyritic and, infrequently, amygdaloidal textures. Interbedded with the augite-bearing flows are augite-bearing volcaniclastic rocks in the form of fine and coarse lapilli tuffs, tuff breccias and flow breccias containing sub-angular to sub-rounded fragments of augite porphyry. These volcaniclastic rocks are generally matrix-supported.

         
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    Pseudoleucite-Bearing Volcanic Rocks (Rock Code V2)

    Pseudoleucite-bearing trachytes occur as moderately west-dipping sequences interbedded with augite-bearing units, intermediate and lesser mafic volcanic rocks. The original textures are often obliterated by intense orthoclase and sericite alteration. Copper and gold mineralization appears to occur preferentially in these rocks. In the Central Zone, fragments of pseudoleucite-bearing volcanic rocks are present in mineralized hydrothermal breccias that also contain abundant garnet.

    Orthoclase-Bearing Volcanic Rocks (Rock Code V3)

    Orthoclase-bearing volcanic rocks are predominantly fine and coarse crystal lithic tuffs with possible subordinate flows, and are common in the southern part of the Central Zone, where they crop out on surface and are often seen in drill core. In this area, they are often strongly mineralized with disseminated bornite, chalcopyrite and gold. They appear to be cogenetic and coeval with dark syenite porphyry intrusive bodies, which may be their subvolcanic equivalents.

    Undifferentiated Volcanic Rocks (Rock Codes V4, V5, V6)

    In some areas, intense alteration has obliterated original textures resulting in the more generic classification of “undifferentiated volcanics”. Such rocks have been classified on the basis of colour and association.

    Mafic volcanic rocks (V4) are dark green, chlorite-rich flows and tuffs, and are common in the north part of the Central Zone. These are interbedded, and may, in part, be correlated with unit V1. Porphyritic and amygdaloidal flow textures have been preserved locally, and volcanic clasts are sometimes preserved in pyroclastic rocks.

    Intermediate volcanic rocks (V5) are very common in the Central Zone. These rocks are medium-greenish-grey volcaniclastic rocks and flows, and may be aphyric equivalents of the V2 unit. Included in this unit are possible trachy-andesites containing sub-rounded orthoclase phyric fragments. Secondary biotite occurs both as a spotted to patchy alteration and as coarse aggregates and veins.

    Intense orthoclase flooding has resulted in pale grey, felsic volcanic rocks (V6) which are fine- to medium-grained volcaniclastic rocks and flows. V6 rocks are present in the north and central part of the Central Zone, often interbedded with pseudoleucite volcanic rocks that may be their equivalent.

         
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      7.3.2

    Sedimentary Rocks

    Sedimentary rocks, such as diamictites and epiclastic rocks, derived from re-worked volcanic material are often found interbedded with their volcanic equivalents. Minor siltstone, argillite, greywacke and conglomerate are common immediately to the north of the Central Zone. Sedimentary structures such as graded bedding, flame structures and channel scour features have been observed in drill core north of the Central Zone, from outcrop in North Rim Creek and more rarely in drill core from the Central Zone. Where observed in outcrop, tops indicators show the sequence is younging upward.

    Conglomerate (Rock Code S1)

    Conglomerates are common north of the Central Zone, in North Rim Creek and North Rim Zone, and in the North Junction Zone. The unit is heterolithic and unsorted. Fragments of volcanic and syenitic rocks are present and comprise up to 30% of the rock. Conglomerate contains local intercalations of argillite and greywacke. Channel scours and load casts are common.

    Greywacke (Rock Code S2)

    Grey-green, poorly sorted, medium- to coarse-grained greywackes are common north of the Central Zone, in North Rim Creek. They also appear rarely in drill core within the Central Zone as intercalations with lapilli tuffs.

    Siltstone (Rock Code S3)

    Siltstone is fine-, to medium-grained, grey, massive- to well-bedded and locally contains graded bedding.

    Argillite (Rock Code S4)

    Argillite occurs as alternating medium- to dark-grey and black, aphanitic, well-bedded sequences. Beds vary in thickness from 0.5 to 1 cm.

    Limestone (Rock Code S5)

    Micritic or crystalline limestone is primarily sedimentary in origin, and includes many variations of grain size and bed thickness. It is most commonly found in Copper Canyon (see Section 7.3) .

         
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    Epiclastic Sediments (Rock Code S6)

    This unit is a composite lithology consisting primarily of reworked volcanic material. It includes clay-rich (lacustrine) beds, siltstone, fine-, to coarse-grained sandstone, and conglomerate.

    Diamictite (Rock Code S7)

    The diamictite consists of unsorted, mono- or polylithic fragments that are matrix-supported. The matrix consists of a mixture of clay, silt or sand. It commonly shows either normal or reverse grading, and may have formed as a result of mass gravity flows such as lahars or debris flows.

      7.3.3

    Intrusive Rocks

    The Galore alkaline intrusive complex underlies the district and controls the known Cu-Au mineralization. The intrusions occur primarily as sills but also form dikes and stocks. The suite of intrusions can be broadly characterized into five distinct magmatic pulses, from oldest to youngest, as follows:

    • Early pseudoleucite-bearing porphyries of which I4 is the first major magmatic pulse

    • A subsequent suite of more equigranular to weakly porphyritic syenites

    • A relatively late voluminous event characterized by very distinctive megaporphyries

    • A late trachytic syenite porphyries as thin dykes and sills

    • A series of thin aphantic felsic to mafic dykes.

    The Galore Creek intrusive rock classification scheme including over 30 intrusive rock types was built by Kennecott in the 1990s, based on observed field relationships particularly temporal relationships implied by pre- and post-mineral cross-cutting relationships in the various intrusions. Recent recognition by GCMC of overlapping mineralized systems along the end of the Central deposit will simplify the previous magmatic complexities arising from the Kennecott framework, and is expected to result in a more coherent interpretation.

    Multiple intrusive phases are present in the complex and divided into pre-, inter-, late- and post-mineralization phases. The classification is based on crosscutting relationships, together with the degree of alteration and mineralization characteristics.

         
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    Petrological examination (Enns et al, 1995) has shown that the Galore Creek intrusive rocks contain variable proportions of orthoclase, plagioclase (oligoclase or albite), pseudoleucite, melanite, clinopyroxene, biotite and hornblende phenocrysts in a matrix of pilotaxitic K-feldspar, disseminated magnetite, apatite and titanite.

    Early intrusive units (rock units I1 through I5) consist of K-feldspar and pseudoleucite porphyritic dykes and sills. These are followed by relatively equigranular intrusions (I6 and I8), K-feldspar porphyritic and megaporphyritic units (I9–I11), and a relatively equigranular intrusion (I12). This apparent oscillation between porphyritic and equigranular textures may reflect variations in the volatile fugacities of the melts. The modal change in the primary mineral assemblage of the Galore Creek intrusions, from syenitic to monzonitic, back to syenite and finally to quartz syenite, suggests differences in the compositions of the parent melts.

    Pre-Mineralization Intrusions (Rock Codes I1 to I3)

    Pseudoleucite porphyries and mega-porphyries (I1 and I2) are relatively rare, and occur most often as thin, steeply-dipping dykes in the Central Zone. Distinct chill margins are often observed at contacts.

    Early mapping and logging includes a Grey Syenite Porphyry (I3), also shown on historic drill sections as “Dark Syenite Porphyry”. Work by NovaGold from 2003 to 2005 did not substantiate the existence of this unit.

    Inter-Mineralization Intrusions (Rock Codes I4a and I4b)

    Dark orthoclase syenite, both early (I4a) and late (I4b), is the most common syn-, to late-mineral intrusive in the southern part of the Central Zone. The unit is also common in the West Fork Zone, where it occurs unmineralized near surface, and as a mineralized, flat-lying, tabular body at depth.

    Late-Mineralization Porphyries (Rock Codes I5 to I12)

    Dykes and/or sills of late-mineralization porphyries intrude the Central and Junction and North Junction zones and may also constitute a large stock between these zones. These phases are easily recognized because of the lack of mineralization and the propylitic alteration assemblage. The most common phases are grey equigranular to porphyritic, medium-grained syenite (I8), mega-porphyry (I9a and I9b), grey medium-grained syenite porphyry (I11a) and lavender porphyry (I12). Minor phases include dykes and small stocks of fine-grained syenite and syenite porphyry (I6 and I7), plagioclase syenite porphyry (I10) and medium-grained syenite porphyry (I11).

         
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    Minor mineralization associated locally with these dykes suggests that they are either syn-mineral, or that minor late mineralization was introduced with them.

    Breccias (Rock Codes B1 to B3)

    Diatreme, hydrothermal, and orthomagmatic breccias (B1, B2 and B3 rock codes, respectively) are distinguished at Galore Creek mainly by clast shape and lithology, matrix composition, alteration assemblage and the presence of mineralization.

    The mineralization in the Southwest Zone is hosted by an unbedded, polylithic, matrix-supported breccia. Several relatively small bodies of orthomagmatic breccia carrying copper–gold–silver mineralization were emplaced during the latter intrusive phases of the system. Breccia bodies south and west of the Central Zone carry clasts of propylitized, late-mineralization mega-syenite porphyry.

    Other orthomagmatic breccias include the mineralized Saddle Zone breccia and the West Fork breccia. The latter was found to contain clasts of unaltered intrusive phases including I11, suggesting that it formed late in the intrusive sequence.

    7.4

    Structure

    The oldest Palaeozoic rocks (pre-Upper Triassic) have widespread penetrative planar fabrics, north to northwest-trending isoclinal folding (D1), northwest-trending upright open folding (D2), and west to northwest-trending chevron folds and kink bands (D3). D1 and D2 are characterized by regional metamorphism to greenschist facies.

    The earliest structures are syn-metamorphic, pre-Triassic, potentially Carboniferous age. These structures, and related northeast-striking penetrative foliations, are deformed by west-trending folds that are interpreted to be of post-Triassic age. Two post-Early Jurassic events are recognized, one is characterized by north-trending southwest-verging folds and reverse faults; and the younger is characterized by northeast-verging kink folds.

      7.4.1

    Faults

    The Galore Creek area is a mosaic of fault-bound blocks, controlled by five major fault sets (Logan and Koyanagi, 1994). From oldest to youngest these include: north-trending vertical faults; east and west-dipping reverse faults, northwest-striking vertical faults in part coeval with, but also truncated by the north-trending structures; west-trending vertical shear zones and normal, generally north-side down, extensional faults and northeast striking sinistral shear zones and vertical normal faults (Logan and Koyanagi, 1994).

         
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    Cataclasite zones are associated with all but the youngest northeast-trending faults. These have channelled fluids and alteration has obliterated protolith rocks in zones up to tens of metres wide (Logan and Koyanagi, 1994).

      7.4.2

    Folds

    Upper Triassic strata are folded about two virtually orthogonal axes. The older folds are generally west-trending, the younger are north to northwest-trending. However, no folded cleavages or refolded folds have been noted in mapping (Logan and Koyanagi, 1994).

    7.5

    Alteration

    Alteration and mineralization are contemporaneous, and spatially overlap. Four main alteration facies have been described at Galore Creek. The extent of alteration was indicated in Figure 7-2.

    Potassic alteration associated with the introduction of copper sulphides is the most widespread, and dominant, alteration type. K-feldspar flooding, most intense in the Central Zone, affects the volcanic and early intrusive rocks in all areas of the deposit. Biotite alteration is present and is closely associated with copper mineralization and sheeted gypsum fracturing. The combined occurrence of gypsum fractures and fine-grained biotite cause mineralized outcrops to weather recessively.

    Within the core region of the Central Zone a “Ca–K-silicate” assemblage exists which is characterized by the presence of dark brown garnet with locally occurring diopside, epidote and plagioclase. This alteration most probably occurred when the potassic “K-silicate” altering fluids encountered more calcic mafic rocks, derived excess Ca and precipitated garnet. Garnet alteration decreases from the core region of the Central Zone toward the north and south, and is accompanied by increasing magnetite and early hematite.

    Magnetite is an abundant accessory in the syenite porphyries. When present, the copper sulphide most commonly associated with it is chalcopyrite (Proffett, 2005). Magnetite is also present as disseminations and veinlets throughout altered volcanic rocks at Galore Creek. The greatest concentrations of magnetite occur in magnetite breccias at the Saddle Zone and the West Fork Zone.

    The second alteration phase is a later potassic phase. In the later porphyries, such as I8 and I11, plagioclase that is only partly altered to K-feldspar is usually present, and because the relict plagioclase is a source of calcium, epidote may be common. Mafic

         
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    minerals are usually altered to secondary biotite that is distinctly green compared to the biotite of the more intense potassic alteration, which is black under a hand lens (Proffett, 2005).

    Sericite–anhydrite–carbonate (SAC) alteration overprints the dominant early alteration phases and is locally extensive. In the southern part of the Central Zone it is accompanied by late hematite. In the northern portion it is marked by increasing pyrite ± hematite and decreasing bornite-chalcopyrite, suggesting that copper was remobilized during SAC alteration. In the core of the Central Zone, SAC alteration is patchy and more common on the periphery. The later hydration of anhydrite to gypsum by groundwater action and consequent volume increase has resulted in intense sheet fracture development in parts of the Central Zone to depths of as much as 213 m below surface. The gypsum has been leached out to depths ranging from 30 to 122 m, leaving loose crumbly sheets of rock. The broken rock boundary is defined by an abrupt change in rock quality designation (RQD) values and generally mimics the topography. The sheet fractures are best developed in volcanic rocks.

    Salmon-coloured alteration with abundant carbonate is common in several zones up to several metres wide, especially along fault zones. The presence along late faults indicates that this alteration is late. Other minerals that may be present are sericite, specular hematite, pyrite and chlorite. K-feldspar and chalcopyrite may also be present, but these minerals may be relicts from earlier assemblages. Bornite is rarely, if ever present, and any bornite that may have been present in the rock before this alteration occurred was apparently sulphidised to chalcopyrite (Proffett, 2005).

    7.6

    Genesis

    The current genetic model for the Galore Creek Project is being refined, based on student research commissioned by NovaGold and ongoing review of drill core and geophysical data. The following presents the current interpretations by GCMC on deposit genesis.

    Multiple stages of intrusive activity have resulted in nested porphyries and overlapping mineralized systems in the Galore Creek district.

    The earliest intrusive system and mineralizing event in the district is interpreted to be the emplacement of the Copper Canyon porphyries which is interpreted as an eruptive volcanic centre along the Triassic magmatic arc. This shed debris laterally into the Galore Creek basin.

    Mineralization related to the Central system including Junction and the Butte zone is characteristically hosted in intensely-altered volcanic and volcaniclastic rocks filling the

         
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    active Galore Creek basin to the west of Copper Canyon. The causative magmatic pulse driving this mineralizing event is as yet unrecognized. The moderately- voluminous I4 porphyry which is weakly mineralized on its margins was emplaced just after the Central Zone mineralizing event on the southwest margin of the deposit.

       

    The Southwest and West Fork deposits are related to a third mineralizing event which post dates the earlier events and is centered to the south of those deposits in the headwall of the Galore Creek Valley. Voluminous sills, dykes and breccias crosscut the Central deposit mineralization but in turn are mineralized by fluids of the younger West Fork system. The causative magmatic phase responsible for the West Fork system has not yet been identified, but a unique mineralized phase informally termed the “West Fork porphyry” has been encountered in drill core, and could be the progenitor of the mineralized system.

       

    The Central and West Fork systems overlap along the southern margin of the Central deposit and have greatly complicated interpretation of the district but represent exploration potential for the Project.

       
    7.7

    Mineralization

       

    Disseminated pyrite is the most abundant sulphide mineral. Chalcopyrite and bornite in the ratio 10:1 are the main copper minerals. Sphalerite and galena are associated with garnet-rich areas and trace amounts of molybdenite, native silver, native gold and tetrahedrite have been noted (Allen, 1966). Magnetite occurs in veinlets with or without chalcopyrite, and often cements breccias. Secondary minerals identified include chalcocite, cuprite, native copper and tenorite.

       

    Bornite and generally higher-grade gold are developed in the intense potassic alteration zone, and are associated with magnetite and sparse pyrite. Within the propylitic zone, zones of moderate potassic alteration have developed, and have associated chalcopyrite and pyrite mineralization. External to these potassic zones, but still within the propylitic zone, replacement lodes of gold, silver and base metals have formed.

       

    In general, mineralization shows a progression from bornite laterally to chalcopyrite with increasing pyrite peripheral in the system. Isolated intervals of anomalous gold occasionally >1 g/t Au have been encountered.

       
    7.8

    Oxidation

       

    Where surface exposures have been mapped in the Central deposit, malachite, azurite, hematite, and limonite, occurring both as locally pervasive disseminations and


         
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    as widespread fracture-controlled infills, have been noted. Rare chalcocite and native copper were also noted. Typically, chalcopyrite and bornite are also found with the copper oxides. Drill core logs from Central have identified an oxide zone with average depths of 20 m below the overburden surface; however, weak fracture-controlled oxidation has been logged to depths of ≥ 200 m. The oxide zone mimics the topography, weakens down-hole, and rarely reaches the broken–stick rock surface.

    Oxidation is variable outside of the Central Zone. The Junction and West Fork deposits show trace to minimal oxidation. The Southwest Zone shows minimal oxidation and the Middle Creek deposit shows significant oxidation.

    7.9

    Deposits and Prospects

    A map of the deposits and prospects identified within the Galore Creek Property as at the effective date of this Report was included as Figure 7-2.

      7.9.1

    Central Zone

    The Central Zone consists of the North Gold Lens, the Central Replacement Zone, and the South Gold Lens, which are differentiated based on gross differences in mineralogy.

    The long axis of the Central Zone deposit has an orientation of 015° and dips steeply to the west. It is 1,700 m long, 200 to 500 m wide and has been traced to a depth of 450 m and remains open at depth. Mineralization crops out in the southern part of the zone, but elsewhere is covered by up to 75 m of glacially-derived material (Workman, 2006a).

    The deposit plunges gently to the north and at its maximum thickness is 335 m. It comprises several parallel, en-echelon copper zones centred on a steeply-dipping breccia pipe. Mineral zoning consists of an intense potassic core zone, which hosts the mineralization, and a spotty propylitic alteration zone which occurs mainly along the eastern edge of the deposit.

    The mineralization in the Central Zone is primarily disseminated and fracture-controlled chalcopyrite with subordinate bornite. The main hosts for copper mineralization are volcanic and volcaniclastic rocks with some mineralization occurring in the early intrusive rocks. Chalcopyrite mineralization occurs throughout the Central Zone accompanied by locally abundant bornite in the north and south parts of the deposit. Gold occurs in association with bornite. Elevated disseminated pyrite, reaching concentrations up to 5%, occurs in the footwall and is associated with a transition boundary between the Central Zone potassic alteration and the propylitic

         
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    alteration halo. Pyrite mineralization in the Central Zone is not constrained by rock type. Magnetite occurs disseminated throughout the volcanic rocks; however, it is most abundant in the north part of the deposit. Secondary copper mineralization (malachite, azurite, and chrysocolla) is relatively minor and occurs primarily on fractures within 20 m of the surface.

    The intensity of copper mineralization is mainly influenced by lithology. The pseudoleucite-bearing volcanic rocks in the north and the dark crystal tuffs in the south are the most favourable hosts to mineralization. Augite-bearing volcanic rocks appear to have been less receptive to mineralization. The copper mineralization is broadly conformable to volcanic stratigraphy in the northern half of the deposit. In the south, pod-shaped zones of disseminated chalcopyrite and bornite generally reflect the distribution of volcaniclastic host rocks (Workman, 2006a).

    The North Gold Lens is characterized by K-spar, biotite and magnetite alteration with elevated gold and bornite. The Central Replacement Zone is characterized by lesser K-spar and biotite and the presence of abundant garnet. Mineralization is dominated by chalcopyrite and pyrite and lower gold values. Mineralization is interpreted to be more distal and gives way to strong propylitic alteration with epidote and pyrite further to the east. The alteration and mineralogy of the South Gold Lens is similar to that of the North Gold Lens with elevated gold and bornite and is interpreted as a proximal higher temperature assemblage.

    An early suite of syenite porphyries (i1–i4a) are moderately to intensely altered and mineralized. The younger dark syenite porphyry (i4b), so abundant in the southern part of the Central Zone, is generally, weakly mineralized. Late mega-porphyry intrusive bodies (i8, i9b) are weakly mineralized to barren. They cut mineralized bodies, and are considered a late-mineral intrusive phase (Workman, 2006a).

    The eastern boundary of the Central Zone mineralization lies near the surface projection of a major, steeply west-dipping, brittle, normal fault. In the west and south, mineralization is partially truncated by post-mineral mega-porphyry dykes. In the north, mineralized volcanic rocks end abruptly against a thick sequence of weakly to unmineralized epiclastic sedimentary and volcanic rocks as a result of a west–northwest-oriented post mineral fault.

    Geological sections through the Central Zone are shown in Figure 7-4 and Figure 7-5.

         
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      Figure 7-4: Geological Cross-section, Central Zone


    Note: A) North Gold Lens (section 6335547), B) Central Replacement Zone (section 6335100); and C) the South Gold Lens (section 6334100). Figure from Micko (2010).

         
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      Figure 7-5: Geological Cross-section, Central Replacement Zone


         
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      7.9.2 Bountiful Zone

    Discovered by deeper than average drilling beneath the eastern margin of the South Gold Lens of the Central Zone in 2003, the Bountiful Zone consists of chalcopyrite and pyrite mineralization hosted by pseudoleucite-bearing volcaniclastic rocks, overlying siltstone and sandstones, and a hydrothermally-cemented polylithic breccia. The mineralization is generally pod shaped with the long dimension in a north–northeast–south–southwest direction.

    The deposit is rather large, approaching 500 m x 500 m x 1,000 m with the top of mineralization typically intersected at 350 m to 400 m from surface. Gold assays are typically low. A pod-shaped hydrothermal breccia occurs within the center of best copper mineralization. Clast size in the breccia decreases towards the center of the breccia body.

    The relationship between the un-mineralized rock and the breccia has not been established, as unequivocal intrusive contact relations have not been identified. The spatial relationship and the presence of pseudoleucite megacrystic syenite clasts suggest that the latter intrusive may be associated with the breccia as the candidate causative intrusion for Bountiful Zone mineralization.

    It is unclear whether the South Gold Lens and the Bountiful mineralized zones are related genetically or whether one is older or younger. Mineralization at Bountiful may represent a slightly later event or a lower temperature expression of the chalcopyrite–pyrite mineralization of the South Gold Lens.

    The East fault cuts through the middle of the Bountiful Zone but does not appear to offset it.

    Figure 7-6 is a section through the Bountiful Zone.

      7.9.3 Southwest Zone

    The Southwest Zone is located about 600 m southwest of the south end of the Central Zone and contains some of the highest grade near-surface gold mineralization. Drilling has outlined an elongate pod-shaped body that trends roughly east–west and dips approximately 60° to the south. The zone is up to 400 m long and may be as wide as 140 m. It is still open at depth, and from 2005 drilling, may also be open along strike.

         
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      Figure 7-6: Geological Cross-section, Bountiful Zone


    Note: pit outline shown on the figure is superceded. Figure courtesy NovaGold

         
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    Primary hosts for the Southwest mineralization are a diatreme breccia and an early-phase syenite intrusion. The main zone of mineralization strikes east to southeast and dips steeply south. Sulphides and magnetite occur as disseminations, fracture fillings and replacements. Localization of high-grade copper–gold–silver mineralization within the breccia appears to be related to a combination of structural traps.

    Located primarily on the footwall side of the Southwest Fault, the deposit is zoned from a central copper–gold core out to a gold halo. Pyrite occurs in the hanging wall as a disseminated halo adjacent to the chalcopyrite and bornite rich core. Copper mineralization in the Southwest Zone occurs mainly as fine-grained, disseminated and blebby chalcopyrite within the breccia matrix, or as narrow fracture fillings within the orthoclase syenite megaporphyry (i9) country rock. Bornite is rare, and unlike the Central Zone, gold mineralization is not necessarily associated with it.

    Pyrite occurs in the hanging wall as a disseminated halo adjacent to the chalcopyrite and bornite rich core. It is more abundant in the Southwest Zone (4–6% Cu) than in the Central Zone, and is the cause of a strong IP anomaly in the Southwest area. The majority of pyrite mineralization is hosted in the i9 country rock, and is associated with near surface grades of >0.35 g/tonne Au and <0.35% Cu; suggesting a local gold–pyrite relationship.

    Examination of the Southwest drill core suggests a structural control to mineralization; however, the source of the mineralizing fluids is still unknown (Workman, 2006a).

    Figure 7-7 is a geological section through the Southwest Zone.

      7.9.4

    Junction and Junction North Zones

    The Junction and North Junction Zones lie about 2 km northwest of the Central Zone and are about 460 m higher in elevation than Central. Both deposits have similar geological characteristics to the Central Zone.

    The Junction deposit is a tabular northeast-striking, northwest-dipping body. It can be traced from surface exposures and drill holes 700 m along strike and 200 m down dip. The North Junction deposit, 350 m to the east, is podiform with the long axis plunging to the northwest.

    Copper mineralization is well exposed on the slopes of Junction Creek, where the stream cuts through the Junction deposit. Mineralization is partially controlled or bound by Junction Porphyry and syenite dykes that parallel the deposit. On the south end of the deposit, the Junction Porphyry marks the hanging wall of the mineralization.

         
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      Figure 7-7: Geological Section, Southwest Zone


    Note: Figure courtesy GCMC, NovaGold, and Teck

         
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    The footwall is limited by either the Junction Porphyry, syenite porphyry dykes, or assay limits.

    The mineralization, consisting of disseminated chalcopyrite and bornite, is hosted in both the Junction porphyry (JP) and the Late Junction porphyry and orthoclase syenite mega-porphyry. K-silicate alteration consisting of pervasive hydrothermal biotite and K-feldspar flooding is associated with the mineralization. A large mass of late-mineral mega-porphyry truncates the zone on the west. A brittle–ductile fault marks the southern limit of North Junction mineralization.

    Mineralization at the North Junction Zone is primarily disseminated, and to a lesser degree vein-like, chalcopyrite and bornite mineralization. Mineralization is associated with zones of texturally destructive alteration. Petrography indicates mineralization resides within cores of relict mafic crystals.

    Figure 7-8 shows a cross-section through the Junction and North Junction Zones.

      7.9.5

    West Fork Zone

    The West Fork Zone (also known as the West Fork Glacier Zone) lies in the valley floor less than 1 km south of the Central Zone and less than 50 m higher in elevation than Central. West Fork contains two adjacent but distinctly different styles of mineralization (Figure 7-9): disseminated sulphide replacements similar to portions of the Central Zone, and massive veining (Opulent Vein). Higher grade disseminated zones appear to be controlled by structures, though distinct veining is absent.

    There are four distinct zones of mineralization, the Opulent Vein, the Upper Opulent Zone, the Lower Opulent Zone, and the Lower West Fork Zone. The first three mineralized zones are hosted in a breccia unit. The Opulent Vein is north–south-trending and steeply west-dipping. The high-grade mineralization is defined by a massive magnetite–bornite–chalcopyrite assemblage which is hosted in a near surface magnetite breccia. The Upper and Lower Opulent Zones parallel the Opulent Vein and are characterized by less intense bornite and chalcopyrite mineralization. Sulphide textures indicate fissure-style fillings of open space, but associated calc-silicate gangue minerals, possibly tremolite, indicate replacement. The known extent of the Opulent vein is limited within a breccia mass and strikes approximately 355° with a steep westerly dip. The extent of the zone is 150 m in length and 100 m in depth.

         
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      Figure 7-8: Geological Section, Junction and North Junction


    Note: Figure courtesy GCMC, NovaGold, and Teck

         
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      Figure 7-9: Geological Section, West Fork


    Note: Figure courtesy GCMC, NovaGold, and Teck

         
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    The Lower West Fork Zone is east–west striking and moderately north-dipping and is characterized by disseminated chalcopyrite and bornite replacement. The Lower West Fork Zone is unusual, because it has not been constrained by any lithological boundaries. Pyrite concentrations average between 0.2 –1% on the hanging wall side of the Southwest Fault, and appear to halo the late syenite porphyries and breccia.

      7.9.6

    Middle Creek

    Limited exploration has been completed over this prospect. Middle Creek is located approximately 1 km west of the Central Zone. In 1991, field mapping found mineralization reported by prospectors in the mid 1960s.

    Mineralization is characterized by finely-disseminated bornite, chalcopyrite and magnetite associated with pervasive fine-grained biotite and garnet alteration, hosted in a breccia or volcaniclastic unit. Middle Creek is the most oxidized zone discovered to date on the Galore Creek property. Drilling during 2005 encountered malachite and native copper mineralization (Workman, 2006a).

      7.9.7

    West Rim

    The West Rim Zone is about 700 m due west of the Junction Zone. It lies in the west margin of the Galore Creek intrusive complex. Mineralization occurs in pervasive, intense biotite-altered volcanic tuffs. The outer limits of the West Rim zone are based on exposed mineralization along the creek gullies.

    The zone is 250 m long, has a northeast orientation and appears to be wider at the north, perhaps due to offset by faulting.

      7.9.8

    North Rim

    The North Rim Zone lies in the northeast corner of the North Junction grid. It is an early-stage exploration target, defined by the presence of widespread scattered malachite in poorly-exposed outcrops, a large, coincident copper and gold soil anomaly, and a large, strong, chargeability anomaly that is broadly coincident with the soil anomaly. One large and two smaller breccia bodies were mapped in the area. Two clast types are present: late megaporphyry (i9b) and equigranular syenite (i8). Chalcopyrite accompanied by biotite and sometimes bornite are locally present either as veins or more frequently as an accessory in the breccia matrix.

    Mineralization at an old cross-shaped trench, within the North Rim Zone, consists of disseminations and veins of chalcopyrite and bornite. The mineralized veins and

         
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    fractures are locally 1 to 2 cm thick and occur with veins consisting of dark green diopside, biotite, and magnetite.

    Chalcopyrite accompanied by biotite and sometimes bornite are locally present either as veins or more frequently as an accessory in the breccia matrix, in two of the mapped breccia bodies in the prospect area.

      7.9.9

    Butte and South Butte

    The Butte deposit crops out on the west edge of the syenite complex, 2 km west of the Central Zone. It is localized along a west-dipping faulted contact between altered volcanic rocks and syenite intrusions.

    The South Butte deposit crops out on a nunatak in the West Fork Glacier, 4 km south of the Central Zone. North-trending dykes and mineralized shear zones cut the altered host volcanics, but most of the chalcopyrite and pyrite mineralization is fracture-controlled.

    Copper mineralization occurs as disseminated, fine-grained bornite, subordinate chalcopyrite and minor chalcocite in three northeast oriented bands. Mineralization is sometimes difficult to see due to its fine-grained nature in a mottled, dark, pseudoleucite-bearing tuff host. This peculiar, altered, pseudoleucite-bearing tuff is the preferred host to bornite mineralization at Butte.

      7.9.10

    Saddle

    The Saddle deposit crops out on a steep slope, 2.6 km southeast of the Central Zone. It trends easterly and dips northerly at 50° along the contact between buckshot syenite and green syenite porphyry. Primary mineralization is contained within a magnetite-cemented breccia body; secondary copper minerals extend beyond the breccia. The breccia contains angular fragments of buckshot syenite and green syenite porphyry and metavolcanic rocks. Graded beds and flow textures suggest that some of the green syenite represents potassium-metasomatized volcanic extrusive rather than intrusive rocks.

    A strong quartz–sericite–pyrite alteration zone extends down the north-facing flank of Saddle Ridge to Jack Wilson Creek. Discontinuous mineralized shears and narrow sigmoidal chalcopyrite–pyrite–quartz veins are exposed at upper elevations of the Saddle Ridge area.

    The Spire zone is an east-trending zone of propylitic alteration and disseminated chalcopyrite cropping out at 1,065 m to 1,370 m elevation on Saddle Horn Ridge. In

         
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    the creek valley, gold values are associated with sericitized, pyritized and silicified zones in andesites.

    Although localized chalcopyrite mineralization is recorded in the northern portion of the Saddle ridge, copper mineralization is largely restricted to the southern end of the Saddle Zone. Here, the strongest zones of mineralization are found in the oldest rocks, the epiclastic sediments (S6), which are replaced by extensive secondary biotite and a localized texturally-destructive assemblage of secondary orthoclase-magnetite. The main stage of mineralization correlates well with the orthoclase-magnetite ± biotite ± magnetite assemblage.

    Near 352779mE, 6331946mN and 352885mE, 6331882mN, outcrops of epiclastic sediments, near the contact with i8, contain noticeable copper mineralization. Here, orthoclase–chalcopyrite veins have a marked east–west trend and contain 3–4% vein-hosted and disseminated chalcopyrite. Although the younger i8 is generally less well mineralized, it contains a local zone of well mineralized magnetite breccia (B2a) with the best mineralization (2–5% chalcopyrite) occurring at 352770mE, 6332336mN. The breccia infill or matrix mineralogy consists of massive euhedral magnetite ± chalcopyrite.

      7.9.11

    South 110 Creek

    The South 110 Creek deposit is exposed between 1,220 m and 1,300 m elevation on the west slope of 110 Creek, 500 m north of the Saddle deposit. Disseminated mineralization trends north, along the fractured contact between buckshot syenite, green syenite porphyry and metavolcanic rocks. Magnetite and sulphides are intimately associated as at the Saddle deposit.

      7.9.12

    Exuberant Zone

    The Exuberant zone lies on the northern margin of the Southwest deposit. The prospect comprises a late silica-rich flooded zone with high gold and low copper values.

         
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    7.10

    Comment on Section 7

    In the opinion of the AMEC QPs:

    • Knowledge of the deposit settings, lithologies, and structural and alteration controls on mineralization is sufficient to support Mineral Resource and Mineral Reserve estimation

    • The mineralization style and setting of the Project deposit is sufficiently well understood to support Mineral Resource and Mineral Reserve estimation

    • Prospects and targets are at an earlier stage of exploration, and the lithologies, structural, and alteration controls on mineralization are currently insufficiently understood to support estimation of Mineral Resources.

         
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    8.0

    DEPOSIT TYPES

    Alkalic porphyry copper deposits tend to form in orogenic belts at convergent plate boundaries, commonly oceanic volcanic island arcs overlying oceanic crust. In British Columbia, the deposits are restricted to the Late Triassic/Early Jurassic (215–180 Ma), and have only been identified to date in the Stikinia and Quesnellia Terranes.

    Host rocks range from fine- to coarse-grained, equigranular to coarsely porphyritic and occasionally pegmatitic, high-level stocks and dyke complexes of gabbro to syenite composition. The intrusive rocks frequently display multi-phase emplacement, and produce a wide range of breccias. Coeval volcanic rocks are basic to intermediate alkalic varieties of the high-K basalt and shoshonite series.

    Deposits can form as stockworks and veinlets, minor disseminations and replacements throughout large areas of hydrothermally-altered rock. They are frequently co-incident either wholly, or partly, with hydrothermal or intrusion breccias. Deposit boundaries are normally based on economic criteria, as large areas of low-grade, laterally-zoned mineralization are common.

    Typical alteration minerals include biotite, K-feldspar, sericite, anhydrite/gypsum, magnetite, hematite, actinolite, chlorite, epidote and carbonate. Garnets, if present, are typically Ti-enriched. Mineralization typically forms with early-stage potassic alteration. This central potassic zone commonly contains K-feldspar and generally abundant secondary biotite and anhydrite. Zones with relatively high-temperature calc-silicate minerals such as diopside and garnet can form within the potassic zone. Outwards from the potassic zone can be flanking zones in basic volcanic rocks that contain abundant biotite which grades into extensive, marginal propylitic zones. Older alteration assemblages can be overprinted by phyllic sericite–pyrite alteration and, less commonly, sericite–clay–carbonate–pyrite alteration.

    Mineralization consists primarily of chalcopyrite, pyrite and magnetite, with lesser bornite, and chalcocite. Pyrite is less abundant than chalcopyrite in most mineralized zones. Rare mineral assemblages include galena, sphalerite, tellurides, tetrahderite, gold and silver. The deposits are characteristically enriched in silver and gold, and are particularly silver-rich in comparison with calc-alkaline porphyry deposits (Sinclair et al., 1982).

    Gangue minerals associated with the sulphides include biotite, K-feldspar and sericite, garnet, clinopyroxene (diopsidic) and anhydrite.

         
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    Examples of economically-significant alkalic porphyry copper deposits include the deposits of the Iron Mask batholith in British Columbia, such as the Afton, Ajax, Mount Polley, and Mount Milligan deposits.

    8.1

    Comment on Section 8

    In the opinion of the AMEC QPs, the deposits of the Project area are considered to be examples of alkalic porphyry copper deposits, based on the following:

    • Associated with orthoclase–porphyritic syenite intrusions within the Stikine assemblage; associated with four distinct intrusive pulses of syenite

    • Hosted by potassium-enriched volcanic rocks and pipe-like breccias adjacent to the syenite stocks and dykes

    • Alteration assemblages are zoned, and include potassic alteration (K-feldspar flooding), Ca–K-silicate assemblages, sericite–anhydrite–carbonate (SAC) alteration, carbonate alteration, and propylitic alteration

    • Higher-grade mineralization is associated with the zone of potassic alteration

    • Mineralization primarily consists of disseminated pyrite, chalcopyrite, and bornite. Lesser sulphides include sphalerite, galena, molybdenite, native silver, native gold and tetrahedrite

    • Replacement lodes of gold, silver and base metals have formed within the propylitic zone.

    Figure 8-1 shows the projected genetic setting of the Galore Creek deposit in relation to global examples of calc-alkalic porphyry deposits.

         
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      Figure 8-1: Schematic Model of Alkalic Igneous Complexes and Associated Mineralized Systems


    Note: Figure from Micko, 2010, and redrafted after Jensen and Barton (2000).

         
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    9.0

    EXPLORATION

       

    Exploration commenced on the Galore Creek Project in 1955. Table 9-1 shows a summary of the exploration work completed at Galore Creek to May 2011. Exploration has been undertaken by GCMC, NovaGold, predecessor companies such as Kennecott, or by contractors (e.g. geophysical surveys).

       
    9.1

    Grids and Surveys

       

    Historical geology and topographic data for Galore Creek have used various survey grids which have been converted to a single grid for consistency.

       

    The initial digital elevation model (DEM) for the Project was generated by Eagle mapping as contracted by Kennecott Minerals in 1991 from government-issued aerial photos flown in the 1950s. The survey control for these photos was based on an historical iron pin located 800 m west of the Central Zone by traditional transit and plumb-bob survey methods and was tied into pre-existing control points in Telegraph Creek and Dease Lake.

       

    In August 2003, NovaGold contracted Eagle Mapping of Vancouver, BC to acquire new aerial photography and to generate a more accurate DEM file for the Project. Survey control for the aerial photography was placed as visible crosses by NovaGold personnel using an Ashtech DGPS system. The aerial photography was taken at a resolution of 2 m using a single-frequency digital global positioning system instrument (DGPS) for control. The resulting DEM surface was different in elevation and accuracy from the historically-generated topography.

       

    On 3 October 2004, a higher resolution, 1 m aerial photo set with dual-channel DGPS was flown for Rescan Environmental services by Eagle Mapping. The control point used for the aerial photography was set by Peter Walcott of Peter E. Walcott and Associates. Walcott noted that the 2003 in-house surveying had not accounted for a provincial datum correction related to the NAD 83 conversion. The 2004 DEM showed a -15 m difference from the increased accuracy of the control work that generated it.

       

    In October 2005, a registered professional land surveyor, Peter Thomson BCLS CLS, verified the accurate locations of the control points used to provide survey control of the DEM and air photos and that no significant differences were found in the X and Y coordinates; however, a difference of about 1 m was determined in the elevations. No adjustments were made to the digital elevation model or base station control points based on his findings.


         
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      Table 9-1: Exploration Summary Table

                  1966                                
    Work Completed 1960 1961 1962 1963 1964 1965 to 1972 1974 1976 1988 1989 1990 1991 1997 1999 2003 2004 2005 2006 2007 2008 2010
                  1967                                
    Geologic Mapping (sq km)                                              
      196.8 51.8 15.5 5.2 5.2               x 31.1 x     5.2 10.4, x 3.4 4.6    
    Geophysical Surveys (line km)                                              
    Dip Needle 4                                            
    Airborne Geophysics   270                       459       1,552     14.9    
    Ground magnetics   55         x           18 85                  
    Ground VLF-EM                       11 11 70                  
    Induced polarization   43 42 30     x                     28 2        
    Induced polarization (sq km)                                     42        
    Remote sensing                               x              
    Geochemistry (No. of Samples)                                              
    Stream sediment 47 45                   157                      
    Soil   700   250               729 37 600                  
    Rock     149       x         210 13 63           4 127    
    Reassay of old core                     459 219 232 18,000                  
    Underground Drilling (m)                                              
    Underground Drilling             163                                
    Underground Drifting (m)                                              
    Underground Drifting             850                                
    Surveys and Boundaries                                              
    Linecutting (line km)   53 21 32                           28 2     2  
    Post Location         267   14                                
    Boundary Surveys         21 47 3                                
    Airstrip construction                                              
    Galore Creek (520 m x 30 m)         1 1                                  
    Scud River (1,500 m x 45 m)         1                                    
                                                  GCMC and third-
    Project Evaluations                 Wright               Hatch Hatch Hatch Hatch AMEC AMEC party consultants

    Note: An “x” in the table denotes that work was performed, but program details such as numbers of samples or areas covered are not available

         
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    The primary control for this confirmatory survey was provided by the Geodetic Survey of Canada station 75C134, which is approximately 7 km south of the Bob Quinn airstrip along Highway 37. This station was used as the origin of coordinates and elevations. The primary control was extended into the vicinity of Galore Creek using static observation techniques.

         

    This was validated by looping the control survey back to Highway 37 by another route, again using static observation techniques. The closure obtained was 0.02 m horizontal and 0.04 m vertical. An additional check was performed by processing eight hours of data on Station 268 with the Precise Point Positioning service of the Geodetic Survey of Canada.

         

    Terra Remote Sensing Inc. completed a light detection and ranging (LIDAR) survey in September 2006 around the then-proposed Galore Creek tailings dam area, More Canyon crossing, and the filter plant area. DEMs and 1 m-contour maps were created for each area based on the results of this survey.

         

    Mineral Resource models use the 2004 topography lowered by 15 m.

         
    9.2

    Geochemistry

         
    A summary of the geochemical sampling completed on the Project is included in
         

    Table 9-1. Information generated from the sampling programs were used to vector into copper–gold anomalies. However, due to a lack of sufficient soil development to allow for soil sampling to act as a mineralization vectoring tool, sampling was discontinued in the early 1990s in favour of drill data.

         
    9.3

    Geophysics

         
    A number of different geophysical survey methods have been utilized at Galore Creek.
         

    Areas covered by the surveys, where known, are indicated on Figure 9-1 and are summarized in Table 9-2. Geophysical surveys were used as vectors for exploration programs, and provided drill targets that were tested using core drilling.

         
    9.4

    Underground Sampling

         

    Haste Mine Development drove an adit into the Central Zone during August 1966 to January 1967. A total of 799 m were driven in a 2 x 2 m underground drift. Samples were collected from four cross-cuts to make up a 50-ton bulk sample.


         
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      Figure 9-1: Geophysical Survey Locations


    Note: Figure courtesy GCMC, NovaGold, and Teck. Copper Canyon is included for reference purposes only, and is not currently part of the Galore Creek Project

         
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      Table 9-2: Geophysical Surveys Summary Table

    Year   Company     Survey           Comments  
    1961 H.W. Fleming of Toronto vertical magnetic field survey area of 22 km2 on a line spacing of 800 feet (244 m)
    1961 and 1963 Aero Surveys Limited McPhar Geophysics Ltd. airborne magnetic survey pole-dipole resistivity/IP, VLF and AFMAG surveys area of 64 km2 using 270 m-spaced lines area of 20 km2 with line spacings of 122 and 244 m for the VLF and AFMAG surveys respectively. Dipole lengths used were 30, 60 and 120 m. A total of 71.80 miles (115 km) of IP were run. Lines were generally oriented east–west
    1966   Asarco     Ground magnetic and IP surveys              
    1960s Kennecott in-house, natural-source, scalar AMT receiver. Electric fields were measured with a 100 t (30 m) dipole
    1990
    1991
    Gigi Resources Ltd Aerodat Limited Airborne magnetic survey; ground geophysical surveys airborne geophysical survey including magnetics, EM, radiometrics and VLF area of 35 km2 using a line spacing of 100 m east– west and 150 m north–south
    1991 Lloyd Geophysics combination of pole-dipole, resistivity/IP, VLF and total magnetic surveys area of 5.5 km2 on lines spaced 100 m apart. Dipole spacing was 60 m
    1999 Earth Resource Surveys Inc Remote sensing study
    2004 Fugro Airborne Surveys magnetic and radiometric surveys 1,072 line km Three magnetic targets: north of the Central Zone, an area 2–3 km northwest of the Copper Canyon deposit, and magnetic high/low boundaries along the margins of the East Fork of Galore Creek, northwest of the Copper Canyon deposit
    Zonge Engineering dipole IP/Resistivity 28 linear km on 17 lines using a 100 or 150 m dipole–dipole array combined with 2D IP/Resistivity modeling and used to extend the depth of mineral exploration
        Frontier Geosciences     seismic refraction surveys     10.5 km on 11 lines using 10 m-spaced geophones        
        Aurora Geophysics     ground magnetic survey     25 m line spacing with 5 m stations     Opulent Vein area  
        NovaGold     High-resolution helicopter-borne magnetometer and radiometric survey     480 line km; dipole-dipole IP survey (14 line km)        
    2005 Frontier Geoscience Vector IP pole-dipole IP/resistivity 55 wide-spaced IP and resistivity stations in an area of 40 km2 2 km line of 100-metres spacing East Fork of Galore Creek. Identified three resistivity lows: a zone 500 m northwest of North Rim, a zone 1 km southeast of West Fork, and the South 110 Creek Zone, which only has a single drill hole located in the western margin of the anomaly
    3D IP pole transmitter and 100 and 200 m receiving dipoles 1.5 x 1.5 km survey south of the Central Zone

         
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    At the North Junction Zone, a smaller, 4 ft x 7 ft (1.2 m x 2.1 m) adit was collared in badly fractured and altered tuff. After driving through 26 m of material grading about 0.5% Cu, a low-grade dyke was encountered. The total length of the adit was 51 m.

       

    Sampling of the adit and drift walls was carried out over continuous horizontal 10 ft (3 m) intervals plus vertical channels alongside the traces of diamond drill holes. Although commonly referred to as “channel” samples, the sampling was more typically chip sampling. The vertical samples taken adjacent to the drill hole traces correlated within 0.1% Cu. When compared to horizontal samples on the opposite side of the drift, significant variation was found in higher-grade areas (>1.5% Cu) where massive blebs of chalcopyrite were encountered. In these areas variations often exceeded 0.4% Cu for opposing walls. Subsequent check sampling along some of the same channels verified this variation.

       
    9.5

    Drilling

       

    Drilling completed on the Galore Creek Property is discussed Section 10 of this Report.

       
    9.6

    Bulk Density

       

    Bulk density determinations are discussed in Section 11 of this Report.

       
    9.7

    Petrology, Mineralogy, and Research Studies


      9.7.1

    Theses

    Four theses have been completed on aspects of the geology and mineralization of the Galore Creek Property:

    Allen, D.G., 1966: Mineralogy of Stikine Copper’s Galore Creek Deposits: unpublished M.Sc. thesis, University of British Columbia, 38 p.

    Holbek, P.M., 1988: Geology and Mineralization of the Stikine Assemblage, Mess Creek Area, Northwestern British Columbia: unpublished M.Sc. thesis, University of British Columbia, 174 p.

    Byrne, K., 2009, The Southwest Zone Breccia-Centered Silica-Undersaturated Alkalic Porphyry Cu- Au Deposit, Galore Creek, B.C: Magmatic-Hydrothermal Evolution and Zonation, and a Hydrothermal Biotite Perspective: Unpublished M.Sc. thesis, The University of British Columbia, 169 p.

         
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    Micko, J., 2010. The Geology and Genesis Of The Central Zone Alkalic Copper-Gold Porphyry Deposit, Galore Creek District, Northwestern British Columbia, Canada: Unpublished Ph.D thesis, University of British Columbia, 387 p.

      9.7.2

    Mineralogy

    Petrographical analyses were completed in 2004 on 45 samples by Vancouver Petrographics; these include Galore Creek and Copper Canyon 2004 drill core and historic drill core samples. During 2005, 17 drill core samples were subject to petrographical description by Vancouver Petrographics.

    Thesis studies have included electron-microprobe analysis, fluid halogen fugacity estimates, geochronological analysis (SHRIMP-RG), and evaluation of S-isotopic data and whole rock geochemical data.

    9.8

    Geotechnical and Hydrological Studies

    During 1967, a series of geotechnical studies on overburden, bedrock, massive (intact) rock and reservoir slope stability were completed by Golder, Brawner and Associates.

    A geotechnical study was carried out in 1991 (Heah, 1991). A total of 381 structural measurements were collected from cliff faces in the northwestern part of the Central Zone. Particular attention was paid to fractures steeper than 30° (the assumed dry friction angle), which dip easterly. In addition, exposed, easterly dipping fractures were also noted. Lastly, the presence of faults, possible release surfaces, and major groundwater seeps were recorded. Rock hardness was also tested.

    In 2004, BGC Engineering Inc. (BGC) completed a scoping level study on the location of a proposed tailings facility and access road to the Galore mine site (BGC, 2005). Later the same year, BGC completed site investigations for two proposed tailings impoundment sites: Galore Creek Valley and West More Creek headwaters (BGC 2006a). A total of 17 boreholes were completed during this period – nine boreholes in the Galore Creek Valley and eight boreholes at the headwaters of West More Creek. Geological outcrop mapping and 11 seismic refraction traverses were also undertaken comprising 4.3 kilometres of traverse at West More Creek and 6.1 kilometres within the Galore Creek Valley.

    Between June and October 2005, BGC completed site investigations for a proposed tailings facility, waste dumps, open pits and plant site foundations in the Galore Creek Valley (BGC, 2006b). A total of 47 geotechnical boreholes were completed during this period - 37 boreholes to investigate tailings/plant sites and 10 boreholes to investigate the area of proposed open pits. Geological mapping, seven additional seismic

         
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    refraction traverses (total of 6.7 kilometres of survey line), and 13 test pit excavations near the camp were also conducted.

    During 2006, BGC conducted geotechnical and hydrogeological field investigations that included geotechnical drilling, test pit excavations, hydrogeological data collection, surficial (soil and rock) mapping, photogrammetric mapping, a grout injection test under the proposed tailings dam site, and pump testing for a potable groundwater evaluation (BGC, 2007).

    A total of 39 geotechnical boreholes were drilled in the vicinity of a proposed tailings dam and other freshwater diversion dams, plant site, filter plant, and various potential impervious borrow areas (BGC, 2007). A total of 110 test pits were also completed, primarily in areas that might be required for borrow material, and water diversion channels (BGC, 2007).

    Hydrogeological investigations in 2006 comprised packer testing during drilling, piezometer installation, falling/rising head testing, water level measurements, and pump testing (BGC, 2007). Surficial (soil and rock) mapping and photogrammetry were conducted.

    A two day field grout injection test was completed by Eco Grouting Specialists Ltd. in July 2006 (BGC, 2007). The test was conducted in borehole DH-BGC06-20.

    During 2008, AMEC investigated the foundation conditions at the proposed tailings dams alignments, evaluated potential borrow material for construction of the proposed dams, and identified and evaluated potential karst features at West More Creek area where underlain by limestone (AMEC, 2008).

    Ten vertical and inclined boreholes were drilled with a total of 315 m of drilling at West More Creek area. Hydrogeological testing (packer tests) was conducted to estimate hydraulic conductivity at selected intervals within the boreholes. Three test pits were excavated to evaluate borrow material for the construction of proposed tailing dams (AMEC, 2008).

    Geophysical surveys comprising seismic refraction, resistivity and ground penetrating radar (GPR) surveys were performed to establish the bedrock profile, characterise subsurface soil stratigraphy and to evaluate potential karst features within limestone at the West More Creek area (AMEC, 2008).

    Surface geologic mapping was undertaken in the West More Creek area. Rock mass fabric data collected during large scale mapping was processed by employing “Dips”

         
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    software to characterize bedrock structures and to identify main orientations (AMEC, 2008).

    Index laboratory tests were performed to classify soil stratigraphy and to estimate geotechnical characteristics of the soils encountered during drilling (AMEC, 2008).

    During 2010, six boreholes were completed in the West More Creek area to better define the persistence and depth of potential karst features in the west ridge area. Downhole geophysical surveys were conducted by Frontier Geoscience Inc. in the West More boreholes.

    One additional geotechnical borehole was drilled in the Galore Creek Valley a location under consideration for construction of a water-retaining dam. Three hydrogeological boreholes were sited in the area of the proposed Central Open Pit in Galore Creek Valley, for the purposes of installing standpipe piezometers to be used in the monitoring of pump tests undertaken in the summer of 2010.

    9.9

    Exploration Potential

    The Galore Creek Project is host to seven under-explored copper-gold prospects, five defined Mineral Resource areas, and numerous showings and conceptual target areas. The discussion on the exploration potential of the Project which follows is based on the latest GCMC interpretations.

    GCMC considers that the Galore Creek property has undergone at least three temporally different mineralizing events (Figure 9-2). These include the early formation of the Copper Canyon eruptive centre and its associated mineralization; deposition of the Central Zone mineralization at the Central and Junction deposits and Butte prospect; and emplacement of the West Fork mineralization at the Southwest and West Fork deposits.

    Micko (2010) concluded that erosional levels of the Galore mineralizing system are minimal and have only exposed high level magmatism characterized by widespread sill and dyke emplacement in coeval volcanic and sedimentary rocks.

    GCMC consider that alteration and mineralization vectors and the underlying thermo-chemical gradients controlling those vectors are typical of porphyry-style deposits.

         
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      Figure 9-2: Mineralizing Systems of the Galore Creek Area


    Note: Figure courtesy NovaGold: Copper Canyon is not part of the Project area, but is shown on this figure to indicate the different mineralizing systems in the vicinity of Galore Creek.

         
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    Proximal mineralization in the Galore porphyry systems is dominated by intense potassic or K-silicate alteration with higher-grade gold and copper (as bornite) related to strong K-spar, biotite and magnetite alteration.

    Marginal to the potassic zones are typical calcic and sodic alteration haloes characterized by the K–Ca–silicate zones with elevated garnet and albite. Outboard the systems zone into typical marginal propylitic alteration assemblages.

    GCMC is of the opinion that these vectors along with the lack of progenitor intrusions driving the systems at both the Central and West Fork systems has major exploration significance. GCMC considers that the potential to make a major discovery at depth or even laterally as with the case of the West Fork deposit is high. GCMC notes that some of the most significant discoveries of the last two decades such as Grasberg, Oyu Tolgoi and Pebble all discovered higher-grade progenitor porphyries at depth late in each deposit’s exploration history.

    Potential exists to increase the known extent of the mineralizing systems within the Central Zone area at the North Gold Lens and within the Bountiful deposit. The Bountiful deposit remains open, although there are some indications that the mineralization is becoming lower-grade at depth. There is also potential to identify strike extensions at Butte and on the Southwestern–Junction Trend, and in the vicinity of the West Fork–South West–Middle Creek system.

    A conceptual exploration target identified by GCMC is to undertake alteration modeling, which could be used to vector in on higher-temperature gold and bornite mineralization that may be developed beneath the I9 high-wall sill. The Lower V1/V2 contact is as yet undrilled to the south under the Central Replacement Zone, and GCMC considers that it also represents a conceptual exploration target.

    Devonian carbonates in the basement are exposed in over-thrusts on the east and west margins of the district, where they lie beneath the V1 stratigraphy. In GCMC’s opinion, there is potential that deep AMT modeling might identify a conceptual, deep, carbonate-hosted (skarn) target.

    9.10

    Comment on Section 9

    In the opinion of the AMEC QPs:

    • The exploration programs completed to date are appropriate to the style of the deposits and prospects within the Project

         
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    • The exploration and research work supports the interpretations of the of the deposits

    • The Project retains significant exploration potential, and additional work is planned.

         
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    10.0

    DRILLING

       

    Approximately 255,601 m has been drilled in 1,078 core holes on the Project since 1961. Details of the various drilling programs are summarized in Table 10-1, and drill hole locations are shown in Figure 10-1. In this table, drill holes completed for metallurgical purposes are classed as exploration drill holes. Table 10-2 shows the drill holes which are used to support the Mineral Resource and Mineral Reserve estimates.

       

    Figure 10-2 shows geotechnical, hydrogeological, and condemnation drill holes. Figure 10-3 shows the location of the metallurgical drill holes. Drill holes completed in the area of the Mineral Resource estimate since the last technical report filed on the Project in 2008 are shown in Figure 10-4.

       

    The drilling between 1961 and 1976 was for early-stage, exploration-focused programs and for initial resource estimates. From 1990, drilling was designed primarily to support Mineral Resource estimation, and define deposit limits. In 2006, a minor amount of prospect and exploration drilling occurred. Drilling at the Grace Claims has either been for exploration or condemnation purposes; to date, no mineralization of significance has been outlined in drilling on the claims.

       
    10.1

    Drill Methods

       

    Over the Project history, a number of drill companies have been used. Where these are known, they are summarized in Table 10-2.

       

    Drill holes completed from 1963 to 1965 during the Stikine drill campaigns included AQ (27 mm), BQ (36.5 mm), and BTW (42 mm) core sizes. From 1966, holes were typically BQ or NQ (47.6 mm) size. From the 1970s to the 1990s, HW (77.8 mm), NQ and BQ core was drilled.

       

    Drill holes completed from 1961 to 1965 by Kennecott included AQ, BQ, and BTW core sizes. From 1966, holes were typically BQ or NQ size. From the 1970s to the 1990s, HW, NQ and BQ core was drilled.

       

    Core drilling has been performed at BQ, NQ, HQ (63.5 mm) or PQ size (85 mm) during the SpectrumGold, NovaGold and GCMC campaigns.


         
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      Table 10-1: Summary, All Drill Programs

    Program by Company and Year Number of Holes Drilled Metres
    Kennco 1961 5 363
    Kennco 1962 40 4,697
    Kennco 1963 49 11,261
    Stikine 1963 2 470
    Kennco 1964 54 11,117
    Stikine 1964 1 245
    Kennco 1965 8 1,525
    Stikine 1965 80 17,174
    Stikine 1966 30 7,482
    Stikine 1972 50 10,416
    Stikine 1973 61 14,689
    Silver Standard Mines 1974 4 430
    Stikine 1976 25 5,317
    Stikine 1990 20 1,925
    Trophy Gold 1990 4 829
    Kennecott 1991 49 13,820
    SpectrumGold 2003 10 2,950
    NovaGold 2004    
    exploration 70 22,311
    geotechnical 17 488
    well monitoring 4 50
    NovaGold 2005    
    exploration 211 60,590
    geotechnical 37 1,628
    well monitoring 10 242
    NovaGold 2006    
    exploration 59 34,322
    geotechnical 58 2,856
    condemnation 2 495
    NovaGold 2007    
    exploration 36 12,517
    geotechnical 25 2,258
    Barrick 2007 13 5,207
    GCMC 2008    
    exploration 9 2,050
    geotechnical 14 1,345
    GCMC 2010    
    exploration 9 2,803
    geotechnical 12 1,729
    Total 1,078 255,601

         
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    Figure 10-1:         Drill Hole Location Plan, Galore Creek Deposits


         
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      Figure 10-2: Drill Hole Location Plan, Geotechnical, Hydrological and Condemnation Drilling


         
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      Figure 10-3: Drill Hole Location Plan, Metallurgical Drilling


         
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      Figure 10-4: Drill Plan Showing New Holes Drilled Inside the Area of the Mineral
        Resource Estimate Since the 2008 Mineral Resource Estimate Update


    Note: new drill holes shown as red circles. WR= West Rim, NJN = North Junction, JN = Junction, MC = Middle Creek, CZ = Central Zone, SW = South West, WF = West Fork. Map north is to top of plan.

         
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      Table 10-2: Drill Companies Used 2003–2010

    Drilling Company Year Drill Rigs
    T. Connors Diamond Drilling Company 1961 Rig type unspecified
    Midwest Diamond Drilling Company 1962–1965 BBS 14 and BBS 20 diesel drill rigs
    unspecified
    Latter part of
    1962–1965
    Rotary overburden drill to facilitate drilling in areas of deep
    overburden
    Boyles Brothers 1963 Boyles wire-line drill
    Quest Canada Drilling 1991 Rig type unspecified
    Britton Bros. Diamond Drilling Ltd 2003 Longyear 38; Britton Bros. 2500
    Britton Bros. Diamond Drilling Ltd 2004 Skid-mounted and helicopter-portable drill rigs
    Cyr Drilling International Ltd 2005 Skid-mounted Longyear 38s
    Hy-Tech Drilling Ltd 2005 Custom-built S-5, S-10 and B-15, helicopter-supported fly rigs
    Cyr Drilling International Ltd 2006 Boyles Brothers model 56
    Hy-Tech Drilling Ltd 2006 Custom-built S-5 helicopter-supported fly rigs
    Hy-Tech Drilling Ltd 2007 Custom-built S-5 helicopter-supported fly rigs
    Foundex 2008 Custom-built fly rig
    Black Hawk Drilling Ltd 2008 Custom-built fly rig
    Black Hawk Drilling Ltd 2010 Custom-built fly rig

    10.2

    Legacy Drill Data

         

    Yarrow and Enns (1992) note that all drill data collected during the Kennecott programs at Galore Creek were logged on paper drill logs. No records are available as to the methods of data collected prior to 1991 for any other operator, or for operators other than SpectrumGold, NovaGold, and GCMC prior to 2003.

         

    Marr (1992) noted that information on legacy drilling during the Kennecott programs was entered into computer databases during four separate periods:

         
  •  
  • Drill holes GC1 to GC235 were entered by Kennecott’s Computing Centre in 1966

         
  •  
  • Drill holes GC236 to GC369 were entered by Rocky Mountain Data Control in Salt Lake City on behalf of Kennecott during 1990

         
  •  
  • Data for drill holes GC370 to GC387 were obtained on-line from MinEn Laboratories, and data-entered into the database by Kennecott personnel during 1990

         
  •  
  • Data for drill holes GC388 to GC435 were entered by Galore Creek project staff during 1991.

         

    Kennecott noted that for drill holes GC001 to GC369, drill hole identifiers, from, to, copper, silver, and composite gold data were directly entered from the original drill logs, and subject to data entry validation. Sample numbers were apparently omitted from the original data entry, and subsequently added.

         

    All of these data were merged into a single database, audited, and converted from Imperial units to metric units during 1991–1992 (Marr, 1992).


         
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    During the 1991 Kennecott drill program, logging data collected included geological information such as lithologies, alteration, mineralization, preparation of a graphic log at 1:200 scale, and geotechnical data such as percent core recovery, rock quality designation (RQD), hardness and degree of breakage (Yarrow and Enns, 1992). AMEC has assumed that standard logging practices were employed during the original Stikine and Kennecott drill programs.

       

    Much of the drill core that still existed in 1991 was relogged by Kennecott staff based at Galore Creek. Lithological, alteration and fault-block data were entered into separate databases, which were subsequently provided to Kennecott and all data converted to numeric codes for modelling purposes (Yarrow and Enns, 1992).

       

    During the Kennecott drill programs, drill holes averaged depths of about 209 m; the deepest hole was 598 m, the shallowest 11 m. Azimuths were variable, although again a southerly direction predominated. Dips ranged from vertical to -36º.

       

    Very limited information is available on original downhole and collar survey data collected prior to 1991 for any operator other than Kennecott, or for operators other than SpectrumGold, NovaGold, and GCMC prior to 2003. Drill collars for the 1966 Stikine program were surveyed by personnel from Underhill and Underhill, who were professional surveyors. During the 1991 Kennecott drill program, all but eight of the drill collars were located using a TDM Total Station 20 instrument. For the remaining legacy data, the original collar survey method is unknown.

       

    A Sperry Sun single-shot down-hole survey unit was used for all holes drilled in the Central and Southwest Zones, and acid-etch dip tests were completed on the reconnaissance drill holes (Yarrow and Enns, 1992). Approximately 150 legacy drill holes were not surveyed down-hole. Most of these holes are vertical in orientation. Database records for inclined holes drilled prior to 1991 show no change in azimuth. AMEC has assumed that these drill holes were surveyed for dip only using a method such as the acid etched tube test. For the remaining legacy data, the original down- hole survey method is unknown.

       

    AMEC has no information as to core photography, or QA/QC for the legacy drill programs.

       
    10.3

    Geological Logging

       

    Workman (2005) codified the logging procedures used in all SpectrumGold, NovaGold, and GCMC drilling. A reference core library is maintained of all lithology types encountered in drilling. Geotechnical data are recorded according to procedures documented in a site-specific geotechnical manual (BGC, 2005).


         
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    The core boxes are initially checked for driller errors, run-block positions are recorded, and blocks are converted from feet to metres, if needed. Box “from–to” lengths are determined and boxes are labelled.

       

    A geotechnician records geotechnical information such as recovery, rock quality designation (RQD), number of fractures, joint condition, and joint alteration. These data are written up on a specifically-designed geotechnical log sheet.

       

    The core-logging geologist records geological information about the core, commencing with looking over the core for mineralization, lithic breaks, alteration boundaries, and major structures. Sample intervals are determined and alteration, mineralization, rock units, and structures are described and recorded. The complete log includes a graphic log, descriptive section, and coded alteration and mineralization information.

       

    Core is moved into the core photography tent where specific gravity and rock strength is tested. Wet core is then digitally photographed, three boxes at a time, and subsequently moved to the saw shack lay-down area. Core photographs are uploaded to a computer, and filed under folders that are named with the appropriate drill hole identifier.

       

    The completed logs are given to the data entry clerks who enter the information into an Access database using the in-house front-end data entry program DDH-Tool. Once the data are in the database, each geologist signs a “data verification” form to validate that data collection/entry for the appropriate hole is complete and checked.

       

    Working cross-sections are maintained for each drill hole, where the drill hole trace, lithological contacts, major structures, and mineralized zones are plotted on the appropriate cross section at the completion of the drill hole log. As completed, each drill hole is correlated on these sections with adjacent drill holes.

       

    The original geological log, geotechnical log, and downhole survey for each drill hole are filed in a designated filing cabinet in the geology office onsite at Galore Creek. Digital back-up copies of the geological logs are maintained.

       
    10.4

    Recovery

       

    Core recovery has been evaluated by campaign and generally improves throughout the exploration history of the property.

       

    Recovery is typically poor in the near surface environment where gypsum and anhydrite veinlets have been dissolved and the rock is broken (“broken rock”). Below


         
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    this interface, where the core is more competent (“stick rock”), better recoveries are returned.

       

    A weak relationship between copper assays and recovery has been identified by GCMC but has not been shown to date to be material and all assays, regardless of recovery percentage, were accepted for Mineral Resource estimation.

       
    10.5

    Broken Rock/Stick Rock Boundary

       

    The transition from broken rock to stick rock is commonly abrupt and can usually be identified accurately from a change in RQD from less than 25% RQD (broken rock) to greater than 75% RQD (stick rock). The broken rock/stick rock boundary surface roughly parallels the topography and occurs at depths commonly in the range of 80 m to 150 m, with rare depths as deep as 410 m (Workman, 2006a).

       

    Figure 10-5 is an isopach map of the deposit areas that shows the depth of the broken rock/stick rock boundary in the areas of the Mineral Resource and Mineral Reserve estimates. Figure 10-6 is a long-section through the area between the West Fork and Central Replacement Zone deposits, and provides an example of the variations of depths in the boundary zone.

       

    Workman (2006a) reports that much of the broken rock zone can be attributed to persistent, closely-spaced fracture cleavage, ubiquitous within near surface bedrock of the Galore Creek deposits. This sub-horizontal fracturing is characterized by millimetre-scale spacing and is commonly filled with gypsum; however, the gypsum is commonly leached by meteoric waters. Fracture cleavage is pervasive through volcanics, early intrusives, and brecciated lithologies but is not well developed in late- mineral to postmineral dikes (D1–D4) and intrusions (i9 and i9b). It is currently interpreted as a late stage feature localized in the Galore Creek Valley.

       

    Some of the modeled broken rock zone is attributed by GCMC to a blockier fracture style. In these zones, the fracture style differs, with greater fracture spacing occurring at a number of orientations, and fractures are generally not associated with gypsum infill Workman (2006a).


         
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      Figure 10-5: Stick Rock/Broken Rock Boundary, Isopach Map


    Note: Figure from Workman (2006a) .

         
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      Figure 10-6: Stick Rock/Broken Rock Boundary, Example Long Section


    Note: Long section through the Central Zone and West Fork Zone looking West showing the broken -stick rock surface, and topography. The red drill hole intervals represent RQD <25%, and the white intervals represent RQD >75%. Figure from Workman, 2006a.

         
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    The origin of the fracture cleavage (termed sheet fractures for mining engineering purposes) was described by Allen (1971), who recognized a depth zonation from open sheet fractures near surface, to gypsum-filled fractures, to a deeper zone characterized by the presence of anhydrite veining and the absence of sheet fracturing. Allen attributed the formation of these fractures to the hydration of anhydrite by meteoric waters, which caused a volume increase of up to 67% that allowed fractures to develop. The fractures filled with gypsum which was re-deposited from anhydrite dissolution Allen (1971).

    A contributing factor may have been that fracture cleavage orientation was enhanced by, or possibly as a result of, glacial unloading Workman (2006a).

    10.6

    Collar Surveys

    Proposed drill sites were initially located in the field by a geologist using a hand-held GPS unit; a pad was then built for the drill, and the drill rig placed on the site by helicopter or dragged into position using a bulldozer. The orientation of the drill hole was set by the geologist with a set of pickets to provide the azimuth for the angle hole. The inclination (dip) of the drill hole was also noted on the alignment pickets. Typically most drills were checked by a geologist before drilling began to verify azimuth and inclination. Upon completion, drill hole collars were surveyed using a differential GPS with an Ashtech receiver. Nominal accuracy of these positions is “capable of delivering centimetre level static post produced point reconnaissance” (Workman, 2006a).

    In most cases the drill pipe was removed from the hole with surface casing occasionally left to mark the hole location. When casing was not left in the hole a cement plug and wooden stake were used to identify hole locations.

    A total of 544 drill holes have been surveyed by SpectrumGold, NovaGold and GCMC, representing the 2003 to 2010 field seasons.

    10.7

    Downhole Surveys

    NovaGold collected down-hole survey data using various methods and instrumentation from 2003 to 2006. The methods are as follows:

    • 2003: Sperry Sun - entered to Excel spreadsheets

    • 2004: IceField Tool – data stored on electronic data files (only a subset of data could be located from archives)

         
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    • 2005–2010: Reflex EZ Shot and/or Gyroscope – data entered from original downhole survey records included with scanned drill logs.

    Magnetic declination correction factors were applied for all drilling between 2003 and 2010; corrections were between 22°E and 24°E, depending on the year.

    10.8

    Geotechnical and Hydrological Drilling

    Most geotechnical holes and all water-monitoring holes completed on behalf of NovaGold and GCMC were drilled with two HT-750 top drive rotary drill rigs, provided by Foundex Explorations Ltd. of Surrey, BC. Artesian holes were plugged and capped to minimize surface water flow in the area.

    To increase sample recovery of the soils, overburden coring was conducted in the majority of the holes. Standard penetration testing (SPT) was carried out in select holes where required. When bedrock was encountered, triple tube coring with either an HQ3 core barrel (61 mm diameter core) or PQ3 core barrel (83 mm diameter core) was used. Representative soil and rock samples were collected during drilling for laboratory index and strength testing.

    Holes were primarily drilled vertically, ranging from 26 to 200 m in total length (average length of 67 m). Three deep inclined boreholes were also drilled: boreholes PC06-019 and PC06-021 at the proposed tailings dam; and GC06-0726 in the planned Central pit highwall. These holes ranged from 240 to 402 m (average of 314 m) in length and were drilled 50º to 65º from the horizontal. To better characterize the orientation of major and minor discontinuities under the tailings dam, boreholes PC06-019 and PC06-021 were oriented where possible using the Ezy-mark system.

    10.9

    Metallurgical Drilling

    The metallurgical drilling, on which the testwork described in Section 13 was performed, comprises selected drill samples from the 2005 and 2008 drill programs. Drill hole locations were indicated in Figure 10-3.

    The locations of the core samples that were used to generate the soluble copper assays are shown in Figure 10-7.

    10.10

    Sample Length/True Thickness

    Sample intervals were determined by the geological relationships observed in the core and limited to a 3 m maximum length and 1 m minimum length. An attempt was made to terminate sample intervals at lithological and mineralization boundaries.

         
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      Figure 10-7: Distribution of Drill Holes with Acid-Soluble Copper Assays


    Note: Figure courtesy GCMC, NovaGold and Teck.

    The term “true thickness” is not generally applicable to porphyry-like deposits as the entire rock mass is potentially ore-grade material and there is often no preferred orientation to the mineralization.

    Because of the potential of ore-grade material through the entire length of the hole, sampling was generally continuous from the top to the bottom of the drill hole. The mineralization is generally confined to three main lithologies: volcanic rocks, intrusive rocks, and breccias. These lithologies form large massive bodies within the Galore Creek deposit.

         
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    10.11

    Drill Intercepts

         

    Table 10-3 presents an example of the types of drill intercepts that have been returned for the Galore Creek deposit areas. Drill hole orientations are indicated on the cross- sections included in Section 7 of this Report.

         
    10.12

    Comment on Section 10

         

    In the opinion of the AMEC QPs, the quantity and quality of the lithological, geotechnical, collar and downhole survey data collected in the exploration and infill drill programs completed by NovaGold and GCMC are sufficient to support Mineral Resource and Mineral Reserve estimation as follows:

         
  •  
  • Core logging meets industry standards for copper, gold, and silver exploration within a porphyry setting

         
  •  
  • Collar surveys have been performed using industry-standard instrumentation

         
  •  
  • Downhole surveys were performed using industry-standard instrumentation

         
  •  
  • Recovery data from core drill programs are acceptable

         
  •  
  • Geotechnical logging of drill core meets industry standards for planned open pit operations

         
  •  
  • Drill orientations are generally appropriate for the mineralization style, and have been drilled at orientations that are optimal for the orientation of mineralization for the bulk of the deposit area

         
  •  
  • Drill orientations are shown in the example cross-sections included in Section 7, and can be seen to appropriately test the mineralization

         
  •  
  • Drill hole intercepts as summarized in Table 10-3 appropriately reflect the nature of the copper, gold, and silver mineralization. The table demonstrates that sampling is representative of the copper, gold, and silver grades in the deposits, reflecting areas of higher and lower grades

         
  •  
  • No material factors were identified with the data collection from the drill programs that could affect Mineral Resource or Mineral Reserve estimation.


         
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      Table 10-3: Drill Intercept Summary Table

    Hole ID Easting Northing Elevation  Azimuth Dip From To Length (m)  Cu (%)  Au (g/t) Ag (g/t) Comment
    Bountiful                        
    GC06-0740 351300.181 6334083.447 785.985 0 -90 345 797.27 452.27 0.67 0.25 6.2  
    GC06-0741 350978.882 6333844.579 767.636 0 -90 350.66 668.42 317.76 0.72 0.21 7.2  
    GC06-0743 351120.186 6333848.213 771.284 0 -90 398.07 658.7 260.63 0.59 0.26 4.9  
    GC06-0748 350827.194 6333895.793 796.496 0 -90 522 555 33 0.72 0.32 5.9  
    GC06-0749 351281.051 6333833.907 822.135 0 -90 346.05 580.2 234.15 0.55 0.18 3.7  
    GC06-0753 351168.356 6334303.927 739.703 90 -70 438 681 243 0.25 0.05 4.3  
    GC06-0754 351086 6333713.554 771.091 0 -90 414 629 215 0.73 0.30 5.1  
    North Gold Lens                        
    GC66-0225 351399.61 6335503.99 714.361 0 -90 68.9 131.7 62.8 1.31 1.26 9.2  
    GC65-0204 351282.15 6335498.55 725.632 90 -58 82.3 188.7 106.4 0.81 0.43 5.1  
    GC06-0734 350962.704 6335602.372 862.801 0 -90 608.3 697.7 89.4 0.60 1.38 4.5  
    GC06-0727 351626.125 6335736.835 694.193 0 -90 48.0 82.0 34.0 0.32 0.23 1.8  
    GC05-0625 351585.081 6335493.495 697.803 0 -90 44 187.9 143.9 1.12 0.64 9.9  
    GC05-0606 351341.695 6335447.857 717.131 0 -90 102 336.5 234.5 0.84 0.42 5.7  
    Central Replacement Zone                        
    GC91-0431 351067.99 6334625.36 735.24 90 -75 18.3 75.0 56.7 2.04 0.34 11.5  
    GC66-0224 351372.83 6335399.56 712.662 0 -90 94.5 484.6 390.1 0.65 0.22 6.2  
    GC66-0221 351340.73 6335289.4 717.867 0 -90 137.2 317.0 179.8 0.76 0.17 9.0  
    GC66-0220 351289.8 6334865.93 670.47 0 -90 216.8 381.0 164.2 0.72 0.15 9.6  
    GC65-0217 351714.87 6335083.29 660.865 272 -35 21.3 101.7 80.3 0.46 0.12 4.9  
    GC06-0733 350906.515 6334820.659 709.071 0 -90 310.3 359.3 49.0 0.30 0.08 2.6  
    GC06-0732 351106.249 6334838.273 689.569 0 -90 192.1 317.0 124.9 1.01 0.37 12.0  
    South Gold Lens                        
    GC06-0746 351267.252 6334203.39 747.421 90 -70 299.0 706.0 407.0 0.64 0.26 6.6  
    GC06-0737 351082.322 6333949.708 767 90 -66 297.0 588.0 291.0 0.73 0.26 6.2  
    GC65-0215 350854.24 6334128.9 779.593 265 -41 9.1 91.4 82.3 0.98 0.56 4.6  
    GC65-0206 350959.67 6334346.88 758.916 275 -44 48.8 173.0 124.2 1.18 0.20 6.8  
    GC06-0731 350934.228 6334046.261 767.168 90 -67 333.5 708.9 375.4 0.60 0.17 5.9  
    GC06-0725 351164.697 6334100.706 795.137 0 -90 344.5 641.1 296.6 0.74 0.26 6.9  
    GC05-0660 351356.563 6334429.013 745.165 139 -60 394.0 459.0 65.0 0.50 0.25 7.0  
    Junction                        
    GC91-0408 349396.57 6335956.15 1145.642 100 -55 305.0 395.0 90.0 0.36 0.23 2.7  
    GC91-0407 349785.93 6336033.94 1178.188 130 -50 92.0 134.0 42.0 0.55 0.19 4.6  
                            Au assay interval of 140.21
    GC73-0313 349622.97 6336344 1262.246 0 -90 151.9 347.5 195.5 1.03 0.68 not assayed m of Cu interval 207.26 to
                            347.47
    GC66-0229 349650.31 6336064.98 1162.234 282 -65 33.5 136.8 101.7 1.53 1.17 10.7 1.53 m interval no recovery
    GC05-0567 349632.285 6336251.134 1233.112 132 -75 82.9 282.7 199.8 1.41 0.61 12.7  
    GC05-0558 351132.801 6335547.417 758.344 250 -75 273 357.0 84.0 1.15 0.96 7.0  

         
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    Hole ID Easting Northing Elevation  Azimuth Dip From To Length (m)  Cu (%)   Au (g/t)  Ag (g/t) Comment
    West Fork                        
    GC06-0751 350578.919 6333148.243 833.618 250 -67 270.4 460.6 190.3 0.68 0.50 4.3  
    GC05-0707 350670.805 6332935.96 804.554 70 -70 191.0 250.0 59.0 0.62 0.32 2.9  
    GC05-0703 350602.688 6333094.59 822.039 270 -82 201.3 242.0 40.7 0.53 0.38 2.9  
    GC05-0685 350715.824 6333063.786 801.234 0 -90 287.0 341.0 54.0 1.26 0.86 22.2  
    GC05-0648 350659.511 6333047.602 813.699 0 -90 229.7 275.6 45.9 0.79 0.49 6.9  
    GC05-0648       0 -90 340.5 414.4 73.9 0.64 0.28 5.0  
    GC05-0638 350533.061 6333030.498 852.298 0 -88 268.5 334.0 65.5 0.64 0.35 3.4  
    GC04-0480 350787.278 6332990.032 789.518 255 -77 26.4 60.0 33.6 14.33 1.62 86.5 Opulent
    Southwest                        
    GC04-0502 350012.617 6333532.971 938.363 0 -75 212.2 370.8 158.6 0.96 0.78 5.5  
    GC91-0406 350117.71 6333413.52 925.49 0 -60 283.0 319.0 36.0 0.75 0.80 7.0  
    GC91-0403 349872.58 6336618.65 1298.461 0 -61.5 187.0 244.0 57.0 0.51 0.25 3.9  
    GC91-0398 349992.18 6333524.15 941.706 0 -61.5 160.8 256.8 96.0 1.05 0.82 5.2  
    GC91-0395 351190.9 6334941.94 730.408 0 -61.5 47.1 380.3 333.2 0.89 0.46 9.4  
    GC90-0383 350003.41 6333623.88 936.385 0 -61.5 30.2 159.7 129.5 0.85 1.12 3.7  
    Middle Creek                        
    GC91-0419 350238.72 6335208.89 939.57 270 -65 124 141.8 17.8 1.77 3.68 12.4  
    GC05-0580 350053.015 6335249.139 983.195 145 -70 55.5 105.0 49.5 1.11 1.69 6.8  
    GC05-0569 350400.223 6335254.679 918.309 160 -60 78 108.0 30.0 0.72 0.71 3.0  
                             
    GC05-0545 350253.164 6335161.173 923.76 0 -88 28.5 87.0 51.0 0.63 1.02 3.8 7.5 metres unassayed
                            within interval
    GC05-0516 350079.001 6335153.197 958.628 120 -60 147 160.8 13.8 0.61 0.11 3.0  
                            15.15 metres unassayed
    GC05-0513 350236.599 6335201.804 942.41 0 -90 110 175.5 50.3 1.32 2985.38 12.5 within interval

         
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    11.0

    SAMPLE PREPARATION, ANALYSES AND SECURITY

       
    11.1

    Sampling Methods


      11.1.1

    Geochemical Sampling

    There is no information that was made available to AMEC for the various geochemical sampling programs. As the data has been superseded by underground and surface drill hole sampling, it is not considered further in this Report.

      11.1.2

    Underground Sampling

    Underground sampling in 1966 and 1967 used two methods, and had two different purposes, which included:

    • Provide sufficient material that a metallurgical composite could be prepared from drift round samples

    • Completion of channel sampling for determination of grade.

    The following notes on the underground sampling program have been compiled from McAusland (1967).

    Drift Sampling

    Approximately 56 tons (50.8 t) of metallurgical sample were taken from four crosscuts in the west section of the Central Zone, plus two locations in the adit. These samples were taken from ore that had been dumped off a trestle, then hauled and stockpiled by the round in cones containing about 30 tons (27.2 t) of ore. The metallurgical sample was bagged from a 2-foot (0.61 m) deep channel cut up the side of the cone. A sample splitter was tried but found to be unsatisfactory for several reasons: the available loader was unsuitable, split muck had to be moved three times, the splitter was easily plugged in snowy weather, and sample material stuck to the splitter in cold weather. All bags were marked as to round location and were flown to Terrace prior to shipment by railway to the Kennecott Research Centre’s pilot plant in Salt Lake City. This composite is not used to support Mineral Resource estimation.

    Channel Sampling

    Continuous 10 ft (3 m) channel samples were taken on all drift walls, plus vertical channels alongside the traces of diamond drill holes. Correlation across the drifts to within 0.10% Cu was maintained in low-grade (less than 1% Cu) zones, but where

         
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    massive chalcopyrite occurred and assays exceeded 1.50% Cu, there were often variations exceeding 0.40% Cu for opposing walls. Samples taken alongside core drill holes were found to agree to within 0.10% Cu. The channel samples have been converted into “pseudo drill holes” and are used in the resource estimation database.

      11.1.3

    Drill Sampling

    Historic Sampling

    1960s

    Prior to 1964, drill core was halved and then split in 10 ft (3 m) lengths. Samples were despatched to the now closed Coast Eldridge laboratory in Vancouver for copper analysis. Gold analysis was completed on some intervals.

    In 1964, a small assay laboratory was constructed on site and during the first season of operation, processed 3,747 samples. Half of the split core was crushed on site to ¼ inch (6.3 mm) then a 0.75 lb (340 g) split was separated using a Jones splitter.

    1970s

    During the 1970s, the onsite laboratory at Galore Creek was still in use. Half core samples were crushed to ½ inch (12.7 mm) and split to obtain a 0.75 lb (340 g) sample. This was further crushed in a cone crusher then placed in Kraft paper bags and shipped by air in locked metal boxes to either the Kennco Exploration Laboratory in North Vancouver or Chemex Laboratory, also in North Vancouver, for assay. Kennco Exploration Laboratory was used during 1972–1973, whereas the Chemex laboratory was used in 1974.

    Mingold

    During the 1990 Mingold program, half of the split core was crushed on site at the Galore Creek Laboratory to ¼ inch (6.35 mm) and a 300–325 g split was taken and shipped to the former Mineral Environments Laboratories (Min-en Laboratories) in Smithers, BC for further processing and assaying.

    SpectrumGold

    Drill core sampling occurred within a minimum of 3.2 feet (1 m) and a maximum of 10 ft (3 m) intervals. Drill core in mineralized intervals was generally sampled on approximately 6.5 ft (2 m) intervals. Where core was considered to be unmineralized, sample intervals were increased to 3 m. Sampling also honoured lithological,

         
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    mineralogical and major structural changes in the drill core, leading to sampling lengths that were longer or shorter than the average.

    All core samples were tagged by the geologist that logged the hole. All the drill core samples were split using a rock saw. One half of the core was returned to its original box (5 ft or 1.5 m long wooden box) for long-term storage. The remaining half was sealed in a polyethylene bag for direct shipment to the ALS Chemex laboratory in Vancouver for analysis.

    Sampling protocol called for the geologist to insert three control samples; a blank, a standard and a duplicate for every 20 samples to be submitted to the lab for analysis. The 20 sample size equates with the size of the sample batch grouped for analysis at the laboratory. The placement of all control samples was essentially random within the 20-sample batch. Blanks, which consisted of non-metalliferous marble, were inserted as determined by the geologist and bagged during the core splitting and sampling collection. Duplicate sample locations were marked by the geologist. Empty bags with duplicate tags were submitted to the laboratory to indicate the sample was to be split for duplicate analysis.

    Shipment of core samples from the Galore Creek camp occurred on a hole by hole basis. Rice bags, containing four poly-bagged core samples each, were marked and labelled with the sample numbers and the ALS Chemex address. Rice bags were assembled into sling loads for transport by helicopter to the Bob Quinn airstrip, where they were stored in a secure metal container. Subsequently, the samples were transported by truck by Banstra Freight Forwarders, and delivered directly to the laboratory.

    NovaGold

    The NovaGold programs used protocols developed during the SpectrumGold work.

    All drill core was transported by helicopter or truck in secure core “baskets” to the Galore camp for logging and sampling. Sample intervals were determined by the geologist during the geological logging process. Sample intervals were labelled with white paper tags and butter (aluminum) tags which were stapled to the core box. Each tag had a unique number which corresponded to that sample interval. Core was brought into the saw shack where it was split in half by the rock saw, divided into sample intervals, and bagged by the core cutters. Not all core was oriented; however, core that had been oriented was identified to samplers by a line drawn down the core stick. If core was not competent, it was split by using a spoon to transfer half of the core into the sample bag.

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    Sample intervals were determined by the geological relationships observed in the core and limited to a 3 m maximum length and 1 m minimum length. An attempt was made to terminate sample intervals at lithological and mineralization boundaries. Sampling was generally continuous from the top to the bottom of the drill hole. When the hole was in unmineralized rock, the sample length was generally 3 m, whereas in mineralized units, the sample length was shortened to 2 m.

    One sample for approximately every 10 m of core was selected for point load testing and specific gravity measurements. Once the core was sawed, half was sent to ALS Chemex Laboratories (Vancouver) for analysis and the other half was stored at the Galore Creek camp.

    Shipment of core samples from the Galore Creek camp occurred on a drill hole by drill hole basis. Rice bags, containing four poly-bagged core samples each, were marked and labelled with the sample numbers and the ALS Chemex address. Rice bags were assembled into sling loads for transport by helicopter to the Bob Quinn airstrip, where they were stored in a secure metal container. Subsequently, the samples were transported by truck by Banstra freight forwarders, and delivered directly to the laboratory. In 2005, security tags were strapped onto the rice bags as a means of verifying that the bags were not opened prior to their arrival at ALS Chemex.

    In addition to the core, control samples were inserted into the shipments at the approximate rate of one standard, one blank and one duplicate per 20 core samples:

    • Standards: 10 standards were used at Galore Creek. The core cutter inserted a sachet of the appropriate standard, as well as the sample tag, into the sample bag

    • Blanks: were composed of an unmineralized landscape aggregate. The core cutter inserted about 150 grams of blank, as well as the sample tag, into the sample bag

    • Duplicates: the assay laboratory split the sample and ran both splits. The core cutter inserted a sample tag into an empty sample bag.

    GCMC

    The GCMC programs used the NovaGold protocols. During the 2010 campaign, logging and sampling was executed from the Espaw camp; core was flown to the Galore Creek Valley core-yard for long-term storage.

         
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    11.2

    Metallurgical Sampling

    No information on the sampling methods used for metallurgical samples is available for the legacy metallurgical testwork, with the exception of the information in Section 11.1.2 on the drift sampling.

    Depending on the date of the program, NovaGold and GCMC samples could be either half-core splits, or complete core. For the 2010 metallurgical program, the following metallurgical compositing was undertaken at G&T Laboratories (Kamloops):

    • A list of 138 sample intervals was provided that included samples from six drill holes, holes 794 through to 799. The intervals averaged 4 m in drill depth, but varied between 2 m and 12 m

    • Each interval was hand split into two equal portions, one for ore hardness testing and the other for assaying and metallurgical testing. The intervals were divided by selecting approximately 10 cm of drill core for ore hardness testing and the next 10 cm for metallurgical testing, until the interval was completed. Competent sections of core were split using a chisel and a hammer when there were no natural breaks that satisfied the 10 cm division target

    • The interval portions for assaying and metallurgical testing were first crushed to -6 mesh and a sub-sample split out for head assay.

    11.3

    Density Determinations


      11.3.1

    Historic Specific Gravity Work

    A total of 563 specific gravity (SG) measurements were made on the total Galore Creek property during the 1966–67 drill campaign by measuring the weight of the sample and dividing by the volume of water it displaced.

      11.3.2

    Mingold

    A total of 1,337 specific gravity determinations were collected using the water displacement method:

    (weight of sample in air) ÷ (volume of water displaced by sample when immersed)

    Documentation of SG determinations can be verified against scans of the original drill logs. An additional 164 specific gravity determinations were collected from the 1960s, 1970s and 1990s drill campaigns; however, the methodology and name of who conducted the work is unknown.

         
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    Teck Resources Limited
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      11.3.3

    SpectrumGold

    During the 2003 and 2004 drill programs, 80 specific gravity determinations were made by ALS Chemex using Specialty Assay Procedure OA-GRA08.

      11.3.4

    NovaGold

    A total of 12,599 SG determinations were collected by water immersion methods.

    Specific gravity determinations were collected at a rate of one sample per approximately every 10 m of drilling. The weight of unbroken pieces of core less than 15 cm long was determined both in air (dry) and in water (wet) by the geotechnical staff during the core photography process. Hard tap water was used for the measurement. Samples were not wax-coated; this can result in a slight increase in final specific gravity readings due to water being retained in microfractures, voids and pores within the drill core. Results were written on data entry sheets, which are located with the scanned logs on the GCMC ftp, and were entered by a data entry clerk in the NovaGold SG-Point Load Access database.

    In 2005, NovaGold collected specific gravity values for materials above and below the disaggregation zone (the point at which anhydrite first becomes visible in core) by collecting data from test pits and split tube core measurements.

    Ten small test pits were constructed across the exposed and backhoe accessible portions of the West Fork and the South Gold Lens areas. The average specific gravity for the pits was 2.01, but ranged from 1.39 in Pit 3, to 2.6 in Pit 10 (Lechner, 2006). Pit values were considered to bias low on the specific gravities, due to difficulties in determining appropriate water-fill levels, collapsing of test pit walls. In addition, the ten determinations do not provide a statistically meaningful sample.

    Split tube measurements were completed on the entire diamond core of three drill holes, and comprised measuring the weight of an empty tube barrel, and subtracting this from the weight of a tube barrel with core. Corrections were made for recovery; the volume of rock in the core tube was estimated based on the core tube length, and core recovery. Excess water was drained from the tube prior to weighing. The weight was then divided by the estimated volume to produce a density value. Specific density values ranged from 2.28 to 2.57.

      11.3.5

    GCMC

    During 2010, GCMC collected 255 specific gravity determinations from drill core. Sampling protocols were identical to NovaGold sampling procedures.

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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      11.3.6

    Density Data Verification

    During the fall of 2008, Mr. Rex Turna, a geologist and NovaGold employee seconded to GCMC, conducted a 100% audit of the NovaGold era (2003–2007) specific gravity measurements in response to concerns raised during an audit conducted by AMEC (2008).

    Mr. Turna compared original SG logs to the database and made corrections where data entry errors were apparent, as well as entered data that had originally been omitted.

    Mr. Turna conducted his audit using the software DataLogger, as the Galore Creek database had been converted to DataShed™ format during the spring/summer of 2008.

    Elimination of suspect or erroneous specific gravity determinations (SG values <1 and/or >6) reduced the database to 14,722 records that could be used to support Mineral Resource estimation.

      11.3.7

    Disaggregation Zone Adjustment Factor

    Split tube measurements were completed on the entire diamond core of three 2005-era drill holes. Only two of the three drill holes pierced the 2005 pit shells, thus only these measurements were used to calculate the disaggregation adjustment factor of 9.3% .

    Because the 9.3% reduction factor is significantly greater than the deposit average reduction factor of 4.65%, and because this factor is based on only two drill holes located in the Central Replacement Zone and South Gold Lens, as opposed to >5,000 samples scattered throughout the deposit, it is suggested that additional measurements be collected of specific gravity values within the broken rock.

      11.3.8

    Moisture Content

    Historically all specific gravity measurements at Galore Creek have been completed with core samples that have not been dried in an oven and therefore the question of latent moisture in pore space affecting the bulk density must be accounted for. The moisture content of the deposit has been measured in rock samples submitted for metallurgical study at G&T Metallurgical Laboratories. A variety of near-surface “broken rock” samples (48 samples) were collected from representative rock types throughout the deposit and analyzed for moisture content. The moisture content for

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    these samples ranged from 0.8% to 4.29%. The average moisture was 0.89%. No statistical trends were found relative to association with deposit area or rock type.

       

    Bulk density values were determined by adjusting specific gravity values below the broken rock–non-broken rock surface by -0.5% to account for moisture content.

       
    11.4

    Analytical and Test Laboratories

       

    The laboratories used during the various exploration, infill and step-out drill analytical programs completed on the Galore Creek Project are summarized in Table 11-1.

       

    Metallurgical testwork has been completed at a number of laboratories, but primarily by G&T Metallurgical (G&T) laboratories in British Columbia. Laboratories used are summarized in Table 11-2.

       

    Metallurgical laboratories are not typically accredited or certified.

       
    11.5

    Sample Preparation and Analysis


      11.5.1

    1960s

    From 1961 to 1963, core samples were assayed for copper at the Coast Eldridge laboratory in Vancouver. Gold was assayed on 100 ft (30 m) composites for select drill hole intervals.

    In 1964, the Galore Creek assay laboratory was constructed on site. Drill core samples were split in half and one half was crushed to nominal ¼ inch.

    A 340 g split of this material was then crushed to -10 mesh, pulverized to -100 mesh, and assayed for copper using a double digestion with titration and colorimetric determinations. Samples reporting assays greater than 0.4% copper over intervals of 40 to 60 ft (12 to 18 m) were composited and shipped to Coast Eldridge to be assayed for gold and silver. The assay methods employed for gold and silver at Coast Eldridge are not known by GCMC. It is not known if these pulps were rehomogenized before compositing. Security measures taken during this program are also unknown.

         
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      Table 11-1: Analytical Laboratories

    Laboratory Name Location Years Accreditation Comment
        Used    
    Coast Eldridge Vancouver, BC 1961 to 1963 Accreditations are not known Primary laboratory. Also performed verification checks in 1964
    Galore Creek Onsite preparation facility 1964 Accreditations are not known
    Kennecott Explorations North Vancouver 1964 Accreditations are not known Verification checks
    Hawley and Hawley Assayers & Chemists Tucson, Arizona 1964 Accreditations are not known Verification checks
    Kennecott Bear Creek laboratory Denver, Colorado 1964 Accreditations are not known Verification checks
    Coast Eldridge Sudbury 1967 Accreditations are not known Verification checks
    Kennco Exploration Vancouver 1972– 1973 Accreditations are not known Primary laboratory
    Chemex Laboratories Vancouver 1974 Accreditations are not known Primary laboratory
    Mineral Environments Laboratories Smithers, BC 1990– 1991 An ISO 17025-certified laboratory, though GCMC does not know whether it was certified at the time the assays were performed Primary laboratory
    Eco Tech Laboratory Ltd Kamloops 1991 An ISO 9001-registered assay laboratory, though GCMC does not know whether it was registered in 1991 Verification checks
    ALS Chemex Vancouver 1994 An ISO 9001-certified laboratory; though GCMC does not know whether ALS Chemex was certified at the time the assays were completed Primary laboratory
    ALS Chemex Vancouver 2004– 2010 In 2004, ALS Chemex held ISO 9002 accreditation, this changes to ISO 9001 accreditations from late 2004; ISO/IEC 17025 accreditation was obtained in 2005 Primary laboratory

      Table 11-2: Metallurgical Laboratories

    Laboratory Name Location Years Used Comment
    Hazen Research Inc. Unknown, but likely to be the Denver/Golden Colorado facility 1960–1967 Comminution, flotation, pilot plant on bulk sample
    Britton Research Laboratories Vancouver, BC 1960s Grinding and flotation on low grade samples
    Dawson Metallurgical Laboratories Salt Lake City, Utah 1992 bench flotation tests
    G&T Metallurgical Services Ltd Kamloops, British Columbia 2003–2011 and ongoing Primary testwork facility
    SGS Lakefield Toronto, Ontario 2006 Comminution and flotation simulation tests, CEET modelling (grinding)
    SGS MinnovEX Toronto, Ontario 2006 Comminution and flotation simulation tests, CEET modelling (grinding)

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    Significant differences were noted between the pre-1964, 100 ft (30 m) composite gold assays and the later 40 to 60 ft (12 to 18 m) composite gold assays. These long composites are predominantly outside of the resource in unmineralized intrusive rocks; therefore, they are not material to the resource, but nevertheless, long composites have not been used to support the Mineral Resource estimates.

    In 1991, Kennecott re-assayed approximately 64% of the sample intervals from 1960s drilling using acceptable QA/QC protocols.

    In 1964, checks of Galore Creek laboratory copper assays were reportedly carried out by the in-house Kennecott Explorations laboratory in North Vancouver, Coast Eldridge, Hawley and Hawley Assayers & Chemists and the in-house Kennecott Bear Creek laboratory. These data were not made available to NovaGold or GCMC.

    In 1967, 140 samples originally assayed by the on-site laboratory were assayed for copper at a number of other laboratories: Coast Eldridge, Sudbury, and three in-house Kennecott laboratories. Galore Creek laboratory copper assays were found to agree well with the copper assays at the other laboratories.

    Security measures taken during these programs are unknown to NovaGold or GCMC. NovaGold is not aware of any reason to suspect that any of these samples have been tampered with.

      11.5.2

    1970s

    Core from the 1970s drill campaigns was split in half, and one half was crushed to nominal ½ inch (13 mm) on site and split to obtain a ¾ lb (0.3 kg) sub-sample. This material was then further crushed in a cone crusher, placed in Kraft paper bags, and shipped in locked metal boxes for assay. The in-house Kennco Exploration laboratory served as the primary laboratory for 1972 to 1973, and Chemex Laboratories served as the primary laboratory in 1974.

    The assay methods employed for copper and gold during this time period are not known by GCMC. Gold and silver were assayed on composited intervals where copper assayed greater than 0.4% . Quality control procedures and security measures employed during these programs are unknown to GCMC.

    In 1991, Kennecott re-assayed approximately 95% of the sample intervals from 1970s drilling using QA/QC protocols that GCMC considers to be acceptable.

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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      11.5.3

    Mingold

    During the 1990 drill program, drill core was split in half and one half was crushed to nominal ¼ inch (6 mm) on site, split to generate a 320 g to 325 g sub-sample, and sent to Mineral Environments Laboratories (Min-En) for assaying. Gold was assayed by fire assay pre-concentration and atomic absorption finish on a 30 g sub-sample. Samples reporting greater than 1.0 g/t Au were assayed a second time. Metallic screen assays were performed on samples reporting greater than 0.1 oz/ton Au (3.11 g/t Au) by fire assay. Metallic screen assays at Min-En were performed by pulverizing the coarse reject for the interval to -102 mesh, recombining this material with the previous pulp portion, and sieving the recombined sample with a 120 mesh screen. The assay from the +120 mesh fraction and two assays from the -120 mesh fraction were then weight-averaged to produce a net gold value.

    Copper and silver assays were performed on a 2 g sub-sample split from the initial pulp. The assay methods employed are unknown to GCMC. Quality control procedures and security measures employed during this program are unknown to GCMC.

    In 2006, the accuracy of the 1990s copper assays were checked by NovaGold and found to be biased high.

      11.5.4

    Kennecott

    In 1991, Min-En was again used as the primary laboratory, but the sample preparation procedures were improved over the methods used in previous years. Core was split in half and one half was crushed to nominal 1/8” (3 mm) before a 500 g split was taken, pulverized to 95% passing -120 mesh, and rolled and bagged for analysis.

    Gold was assayed by standard fire assay on a one assay ton sub-sample (29.166 g). Internal QA/QC procedures at Min-En included one blank and one standard in each assay batch of 24 samples. Where the value of the standard fell outside the 95% confidence limit, the entire batch was re-run. The top 10% of gold assays on each assay page were rechecked and reported in duplicate along with the standard and blank results.

    Check assays were performed on every 20th sample by Eco Tech Laboratory Ltd. (Eco Tech). Comparison by NovaGold of 571 check assays against original assay values in NovaGold’s opinion showed reasonable correlation for copper and fairly good correlation for gold greater than 0.25 g/t Au, although Eco Tech assays tended to be marginally higher. Gold grades less than 0.25 g/t Au showed considerable variation.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    Kennecott also undertook a major resampling program in 1991 to replace gold assays from large composite intervals from the 1960s and 1970s drill campaigns. A total of 100 t (18,784 samples) of drill core and coarse reject samples were shipped from the property to Min-En for gold assay. Approximately 64% of 1960s sample intervals and 95% of 1970s sample intervals were re-assayed as part of this program. This re-assay campaign included quality control procedures and the resulting assays replaced the original gold assays in the Galore Creek resource database.

      11.5.5

    SpectrumGold

    Samples were logged into a tracking system on arrival at ALS Chemex, and weighed. Samples were then crushed, dried, and a 250 g split pulverized to greater than 85% passing 75 µm.

    Gold analysis was undertaken on a 30 g sample, using fire analysis, followed by atomic absorption spectroscopy (AAS). Lower and upper detection limits were 0.005 ppm Au and 10 ppm Au, respectively. Values over the detection limits were rechecked using nitric acid aqua regia digestion of a 0.4 –2.0 g sample followed by AAS finish.

    An additional 34-element suite was assayed by inductively-coupled plasma optical emission spectroscopy (ICP_AES) methodology, following nitric acid aqua regia digestion. Analytical results were corrected for inter-element spectral interferences.

    Pulp and reject samples from the 2003 program are stored at the Main Staging area.

      11.5.6

    NovaGold

    Sample preparation methods during the NovaGold 2004–2007 programs were similar to those developed by SpectrumGold.

    Samples were logged into a tracking system on arrival at ALS Chemex, and weighed. Samples were then crushed, dried, and a 250 g split pulverized to greater than 85% passing 75 µm.

    Gold assays were determined using fire analysis followed by an AAS finish. The lower detection limit was 0.005 ppm Au; the upper limit was 1,000 ppm Au. An additional 34-element suite was assayed by ICP_AES methodology, following nitric acid aqua regia digestion. The copper analyses were completed by atomic absorption (AA), following a triple acid digest.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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      11.5.7

    GCMC

    Sample preparation methods during the GCMC 2008 and 2010 programs were similar to those developed by NovaGold.

    Samples were logged into a tracking system on arrival at ALS Chemex, and weighed. Samples were then crushed, dried, and a 250 g split pulverized to greater than 85% passing 75 µm.

    Gold assays were determined using fire analysis followed by an AAS finish. The lower detection limit was 0.005 ppm Au; the upper limit was 1,000 ppm Au. An additional 34-element suite was assayed by ICP_AES methodology, following nitric acid aqua regia digestion. The copper analyses were completed by AA, following a triple acid digest.

    11.6

    Acid-Soluble Copper Determinations

    Acid-soluble (oxide) copper is irregularly distributed in the near-surface environment of Galore Creek. In 2004–2005, NovaGold obtained a total of 916 acid-soluble assays from 31 drill holes. There have been no additional acid-soluble assays performed since that date. With the exception of the Junction and Butte Zones, every zone has at least one drill sample analyzed for soluble copper. Acid-soluble copper grades are particularly high in the Middle Creek area. The low acid-soluble copper grades in the West Fork area may be related to having been covered by glacial ice until recent times.

    Acid-soluble copper assays were performed by ALS Chemex, using an ore-grade Cu preparation method (non-sulphide) by sulphuric acid leach, with an AAS finish.

    Workman (2006a) notes that the average solubility of all samples taken from the Central Zone, Middle Creek area, and Southwest Zone, above the oxide surface and with grades ≥ 0.35% total Cu is 27.7% soluble. The result was determined by:

    % soluble = (soluble Cu) ÷ (total Cu) x 100

    Sulphide samples, even at depth, showed a consistent solubility of about 5–6% (Workman 2006a).

    11.7

    Quality Assurance and Quality Control

    The quality assurance and quality control (QA/QC) programs for the Project are discussed in the sub-section on sample preparation (Section 11.1) .

         
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    11.8

    Databases

    All drilling related data are stored in a Microsoft Access database. There are currently three Access databases for Galore Creek:

    • GaloreCC DDH2: This database has 20 tables: Alteration, Assay Composites, Certificate Data, Certificate Header, Collar, Core Photos, Corrections, Descriptions, Geotech, Grids, Litho, Minerals, Pima, Quicklog, Remarks, SG, Soluble Cu, Structs, Survey, Units, Various

    • SG_PointLoad: This database has one table: Point Load

    • GaloreDrillStatus: Project and Rig Geologists use this database to monitor drill site status.

    All data collected in the field is transferred into the database via a set of prescribed steps, outlined in detail within the Galore Creek Procedures Manual (Workman, 2005).

    The following methodologies were used for the NovaGold and GCMC dataflows:

    • All data collected in the field is transferred into the database via a set of prescribed steps, outlined in detail within the Galore Creek Procedures Manual (Workman, 2005)

    • Geological (including lithology, mineralization, alteration, structure etc.) and geotechnical data (RQD, recovery, fracture, weathering, hardness, etc.) is collected and recorded on paper logging sheets by on-site geologists and geotechnicians

    • For the NovaGold programs, these sheets were transferred to two data entry personnel who input the data into the Access database via a Visual Basic interface, DDH-Tool, a proprietary internal software program developed in 1995. DDH-Tool produces an entry log which is saved along with each zipped and date tagged version of the database. Data entry was overseen by the Database Manager, to verify that proper procedures were utilized for data entry

    • For the GCMC programs, drill data were input into DataLogger, a user-friendly data-entry interface. DataLogger generates an export file which is uploaded to the Database Manager who updates the central DataShed™ database. DataShed™ is a commercial data management software package

    • Survey data are entered in the same manner to the geological data, although the original data are produced and recorded by the drillers, and is transferred to the data entry personnel via the drill foreman and geologists

         
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    Teck Resources Limited
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    • At the end of each field season, a 100% line-by-line check of all database tables is conducted, comparing values in the database to the those recorded on the original documents (which were scanned and filed at camp), to verify that the data transfer was accurate and that no errors had been introduced during data entry and upload

    • Assay data is received from the laboratories via comma-separated value (CSV) data files. These files are compiled and imported by the Database Manager using Excel importers, text files and another Visual Basic interface called Import Edit Log. For the GCMC programs, assay data are input individually by certificate. After data are imported, visual checks are done to verify that data placement was correct within the various database fields. After each update, assay data together with all geologic data is loaded and visually validated in MineSight©, a commercial 3D mine planning software package.

    All drilling-related data are currently stored in a DataShed™ database which resides on the NovaGold DataShed™ server in Vancouver B.C. and copies are stored on both GCMC and Teck servers.

    11.9

    Security


      11.9.1

    Sample Storage

    Historic drill core has been stored in either plastic, galvanized steel or wooden boxes. All have been marked with metal tags inscribed with the drill hole number and interval. An estimated 1,500 m of core was spilled in 1972 due to the collapse of a core storage rack. In the winter of 1976 one core shed collapsed and although most of the core was rescued, a number of intervals were not salvageable.

    Core from the Central Zone was largely re-logged as part of the 1991 exploration program. It was stacked on pallets from 1991 to 2005, and exposed to the elements. The top layers have suffered deterioration from weathering. Several intervals have also been removed in the past for the purposes of metallurgical testing. Other intervals have been quarter-split for check assaying.

    During 2004 to 2007, NovaGold expended considerable effort to recover as much historic core as possible. Stacks of unorganized core trays and boxes from Galore Creek were pulled out of overgrown areas in the camp and reorganized in an orderly manner. Some drill core was not recaptured as the original boxes were spilled or tipped over by animals. The rest were restacked and stored in a temporary location in camp until 2005 when all core was transported to a designated storage area.

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    During the 2010 site visit, AMEC noted that the core is in an unprotected area and may be at risk of being destroyed due to weather, exploration or construction work.

    Rejects from the Mingold drilling program do not exist. The drill core from this program is stored at Galore Creek, and is basically intact, apart from those intervals used in sampling.

    Drill core from the SpectrumGold, NovaGold and GCMC programs are stored onsite at Galore Creek. Core is stored in an orderly, catalogued manner in the core yard. Post-assaying, all pulps from the SpectrumGold, NovaGold and GCMC programs are stored onsite at the Main Staging area.

    All reject material was disposed of during the fall of 2010.

      11.9.2

    Sample Security

    For all SpectrumGold, NovaGold and GCMC drill programs, the core cutters and the Saw Shack Manager verified in the Galore Creek saw shack that samples were properly cut and bagged and that any relevant information was recorded. Samples are placed into plastic bags, numbered with the sample tag inserted in the bag. Four of these sample bags were placed into one larger white rice bag, along with an Assay Instruction sheet. The outside of the bag had the sample numbers, hole number, and shipping address printed on the side. Beginning in 2005, the rice bag was secured using a red tamper-proof, numbered security tag. That tag number was recorded by the Saw Shack Manager, along with the sample numbers and hole number for that white rice bag.

    There were typically as many as 40 rice bags per drill hole, depending on the drill hole depth. Typically up 20 white rice bags were bundled onto a pallet, depending on the weight of the core, and wrapped in polyurethane. The batch of core was labelled with an arbitrary batch number (which was also recorded along side the security tag number, hole, and sample numbers), and the address to ALS Chemex for assay. The batches were then strapped with metal banding.

    2003 to 2006

    Rice bags were assembled into sling loads for transport by helicopter to the Bob Quinn airstrip, where they were stored in a secure metal container. The samples were then transported by truck by Banstra freight forwarders, and delivered directly to the laboratory.

         
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    Galore Creek Copper–Gold Project British Columbia
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    2007 to 2010

    The batches were shipped via helicopter to the Staging Area and Filter Camp, and placed out of the way in a lay-down area, usually near the propane tanks until shipment. The shipment agent from 2005 to 2010 has been Canadian Freightways. During 2003 to 2004, and on one occasion in 2007, Bandstra was the shipping agent.

    Core was not stored in a secured area; however, access to the area is limited to authorized employees. Upon arrival of the core at Staging, the warehouse attendants would record the batch and drill hole numbers of the core, as well as the condition in which it arrived and the date it was shipped out. The attendants would take the corresponding receipt with a way-bill number from Canadian Freightways and send a copy of that along with their other recorded info to the Saw Shack Manager at Galore Creek camp, where it is filed for tracking purposes. Using the way-bill number, GCMC could track the core via their website, or by calling Canadian Freightways if need be.

    ALS Chemex and Canadian Freightways were instructed to contact GCMC if there was a problem with a broken security tag or bag; to date there have been no reported problems.

    At Terrace the samples were stored at the ALS Chemex receiving facility. Unless specifically checking on a sample shipment with ALS Chemex or Canadian Freightways, GCMC would not receive notification of the sample arriving in Terrace until ALS Chemex started preparing the samples for assay.

    11.10

    Comment on Section 11

    Sample collection, preparation, analysis and security for all SpectrumGold, NovaGold and GCMC drill programs are in line with industry-standard methods for porphyry gold–copper–silver deposits:

    • SpectrumGold, NovaGold and GCMC drill programs included insertion of blank, duplicate and standard reference material samples

    • SpectrumGold, NovaGold and GCMC QA/QC program results do not indicate any problems with the analytical programs

    • SpectrumGold, NovaGold and GCMC data is subject to validation, which includes checks on surveys, collar co-ordinates, lithology data, and assay data. The checks are appropriate, and consistent with industry standards

         
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    • Independent data audits have been conducted, and indicate that the sample collection and database entry procedures are acceptable

    • All core has been catalogued and stored in designated areas but is not being appropriately safeguarded against damage by weather or machines.

    Sample collection, preparation, analysis and security for pre- SpectrumGold, NovaGold and GCMC drill programs are in assumed line with industry-standard methods for porphyry gold–copper–silver deposits but have not been verified with appropriate supporting QAQC results.

    The AMEC QPs are of the opinion that the quality of the gold, copper, and silver analytical data from the SpectrumGold, NovaGold and GCMC drill programs are sufficiently reliable to support Mineral Resource and Mineral reserve estimation without limitation.

    The AMEC QPs are also of the opinion that the quality of the gold, copper, and silver analytical data from the pre- SpectrumGold, NovaGold and GCMC drill programs are sufficiently reliable to support Mineral Resource and Mineral reserve estimation, but due to the lack of appropriate supporting QA/QC results, the data should not be used to support classification of Measured blocks.

    Section 12 discusses findings associated with the pre- SpectrumGold, NovaGold and GCMC data, where a potential positive bias for low-grade copper and gold assays, and a potential negative bias for silver values may exist.

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    12.0 DATA VERIFICATION
       

    A number of data verification programs have been undertaken on the Project data by independent consultants other than AMEC, and by NovaGold and GCMC personnel. This work is summarized in Table 12-1.

     

    AMEC performed a data audit in 2007–2008 in support of Mineral Resource estimation and a second audit in 2011. The 2011 audit examined data collected or amended since the 2008 review.

     

    12.1

    2007–2008 AMEC Project Audit

     

    An audit was completed by AMEC during 2007–2008 on the Project database, and consisted of a review of the drill data collected by Kennecott, examination of drill collar and down-hole survey data, a QA/QC review, and review of density data. Check sample results were also examined.


      12.1.1

    Database Audit – Legacy Data

    AMEC randomly selected and checked a minimum of 10% of collar surveys, down-hole surveys, drill logs, and copper and gold assays from all legacy drilling campaigns against source documentation. These checks were completed to verify that sample data used in Mineral Resource estimation accurately represented the original logs, surveys, and assay certificates. AMEC found the Galore Creek resource database to be acceptably error-free. Error rates for the surveys, logs, and assays were found to be below 1.0%, the threshold commonly used by AMEC to indicate an acceptably error-free database.

    The error rate for historic assays was determined to be acceptable at 0.9% . Errors found were typically typographic errors, resulting in small discrepancies in copper and gold assays. In AMEC’s opinion these errors are not likely to significantly affect resource estimation. Though assays for historic drill holes were typically recorded in the margin of drill logs, as was commonly the case during this time period, original certificates were also present in the files for most drill holes.

    The error rate for collar locations was also acceptable at <0.9% . Collar elevations on drill logs did not match values in the resource database; however, a check of collar elevations against the digital topographic surface shows that the elevations used in the database are acceptably correct. AMEC understands that several corrections have been applied to the drill hole elevations over the Project history.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      Table 12-1:         Data Verification Programs

    Year   Review     Work Conducted     Findings  
        Party              
    1992 Kennecott Assay database check of 375 assay files representing approximately 7,500 samples. The most common mistakes that were found consisted of typographical errors and missing assay data. There was also some confusion because of missing prefixes in check samples from Eco Tech All previous data were merged into a single database, audited and converted from imperial to metric units
    2003 Ron Simpson Spot checks on the 1991 re-assay program by comparing values from the original assay certificates and digital assay files to the digital database used in the 2003 resource model A significant number of discrepancies were discovered, however, none of them were in intervals containing significant mineralization. The majority of issues related to approximate drill collar co-ordinates. Data were considered acceptable for use in Mineral Resource estimation.
    2004 Peter Lacroix Review of assay, collar and downhole survey data, with about 15% of all data spot- checked. All of the data were screened automatically by the modeling software (Medsystem®/Minesight®) for missing intervals and values outside the normal range of data. Some errors and discrepancies noted with analyses, collars, and downhole surveys. Data were considered acceptable for use in Mineral Resource estimation.
    2006 Mike Lechner Review of assay data for 10 core holes; comparisons of collar elevations from the electronic database with the NovaGold supplied topographic surface; Collar elevation discrepancies were primarily due to older drill holes having been collared on top of a glacier which has since retreated giving the appearance that the drill hole collar was too high. Data were considered acceptable for use in Mineral Resource estimation.
    2008 GCMC Response to AMEC 2008 audit. All NovaGold era drill logs were visually verified against the database which resolved some differences between scanned logs and the database that were identified by AMEC. The Galore Creek database was migrated into Datashed database software to screen for errors in drill hole depths, gaps between intervals, overlapping intervals, etc. A 100% review of the 2003–2007-era SG data was completed (refer to Section 11.3.6). Data were considered acceptable for use in Mineral Resource estimation.
    2011 GCMC Review of pre-1990 gold data collected from 100 ft composites A gold field that contained all gold data (10 ft and remnant 100 ft) was modelled. A gold field that had the ≥0.01 oz/t Au historic data factored down by 37% was also modelled to analyze potential bias effects. Neither of these models showed a material difference from the model constructed using only new data.
    Detailed review of the copper and gold information collected prior to 2007 The check led to the correction of 93 copper records from a total of 90,082. The errors were predominantly typographical errors from the 1960s and 1970s drill holes. From a total of 89,965 gold records, 684 were corrected.
    Full review of the pre-2010 drill hole survey data used in the 2010 Resource Update including 1,017 pre-2008 drill hole records from the 2007 Access database, 11 of the 2008 drill hole records from the NovaGold Datashed database and nine metallurgical/resource definition holes drilled in 2010 No changes were made to the drill hole collar locations; however, it appears the 2007 and 2008 drill hole collars average ~12 m higher in elevation than the topographic surface. Check of the drill hole lengths identified edits to 13 records where the maximum value in the Lithology or Assay field was greater than the collar data. Review of the down hole surveys located 88 records identified with negative codes (-9, -19, -39) and

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    Year Review Work Conducted Findings
      Party    
    described as “unreliable records”; these records were excluded from the mineral resource estimate database. Drill hole azimuth and down hole survey checks for holes dipping shallower than -80º identified 24 records from nine drill holes which had extreme and erratic (i.e. extreme one direction then returning the other) azimuth or dip deviation of >10º per 100 m. These records were also excluded. A simple validation of the lithology table determined records at the end of drill hole GC72-0271 contained an overlap due to relogging. Duplicate records were removed

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Historic logs did not exactly match logged intervals in the resource database, mainly because Kennecott relogged most historic drill holes in 1991 and these re-logs were loaded into the resource database. These Kennecott re-logs were not made available to AMEC. Therefore, the AMEC audit of historic lithological logs was limited to checking for obvious interpretations errors. AMEC found no obvious interpretation errors in the historic logs checked and thus finds the lithology information acceptable for modeling and resource estimation.

    Down-hole survey measurements from historic drill holes were loaded into the Galore Creek resource database from digital files acquired from Kennecott. Down-hole surveys were not recorded on most historic drill logs from the 1960s and 1970s. AMEC was therefore not able to audit the down-hole surveys from this time period.

    Down-hole surveys from the 1990 campaign matched values in the resource database. Down-hole surveys from the 1991 campaign were found to have discrepancies in azimuth of 1.5 degrees.

    AMEC performed an analysis of drill hole deviation based upon vertical drill holes that had been surveyed down-hole. Drill holes were found to deviate, on average, 2.2 m per 100 m of down-hole advance.

      12.1.2

    Geology and Geological Interpretation Review, NovaGold/SpectrumGold Programs 2003–2006

    AMEC checked approximately 7%, or 502 of a total geological 6,747 entries in the drill hole database using scanned versions of the original geology logs as source files. The entire lithology table was checked for contiguous intervals; the error rate, at 0.06% interval data entry errors, is acceptable.

    AMEC audited approximately 7% of the entries using 20 drill hole logs from within the resource area. Minor differences between the scanned logs and the database records were noted for one hole. The total error for this review was 1%, which is considered borderline acceptable for advanced studies.

    The lithology table was examined for interval errors, overlapping intervals and missing intervals. A total of 12 holes were identified with this error type.

    Recommendations arising from the geological review of the database are that NovaGold correct all identified errors, and resolve differences between scanned logs and the database for the identified drill hole.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      12.1.3 Drill Collar Review, NovaGold/SpectrumGold Programs 2003–2006

    A total of 42 drill holes (10% of the drill holes used in resource estimation) from the 2003–2007 NovaGold/SpectrumGold drilling programs were reviewed. No data errors were found in the transcription of data from original drill logs to the database collar table that would materially affect Mineral Resource estimates.

    A comparison of the database with Ashtech survey data noted a 15 m difference in elevation for the 2003 and 2004 drill holes. The difference was attributed to a correction applied by NovaGold to the 2003 and 2004 and pre 1991 collar elevations (Reid, 2007).

      12.1.4

    Downhole Survey Review, NovaGold/SpectrumGold Programs 2003–2006

    Downhole survey records were assessed for 40 drill holes. There were no zero depth survey record errors noted by AMEC.

    The entire survey table was checked for interval errors and 34 cases identified where the survey depth exceeds the total length of hole. Survey depths for these holes were recommended to be adjusted to match the hole length.

    Review of transcription or manipulation errors between the downhole survey records and the database survey table indicated an error rate of 0.48% for depth entries, 0.16% for azimuth and 0.95% for dip. The error rate, at under 1%, is acceptable.

    AMEC audited the downhole survey table for consistent application of the correction factor to account for magnetic declination. No significant issues were noted.

      12.1.5

    Density Review

    Of the 13,638 SG determinations in the database that pertained to the resource areas, 95 are based on laboratory measurements, 1,307 are based on water displacement methods (the sample weight divided by the volume of displaced water), 84 are based on core weight divided by the core volume which was derived from the core length and core diameter and 12,147 values are based on water immersion methods (the sample weight in air divided by the difference between the weight in air and the weight in water). Eight measurements were discarded because of missing weights.

    AMEC recalculated 13,538 SG values, representing 99% of the density table records, from source record data and compared the values to the database. Minor differences in calculated SG were noted in 532 records (3.9%) . Some unusual density values, ranging from -367.68 to 774.55 were noted, and may be due to transcription errors

         
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    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    when recording the weight in air or weight in water values on the original field logs or when entering the data into the database.

    A total of 711 values from 2005–2006 drill program source records, or 5.2% of the density table, were checked for typographical errors. AMEC noted 10 (1.4% error rate) depth data entry errors, 13 (1.8%) weight-in-air data entry errors and 15 (2.1%) weight-in-water entry errors. A total of 13 (1.8%) of these errors were regarded as significant errors in the determination of the SG value.

    AMEC concluded that the SG error rate was above that considered acceptable for a prefeasibility- or feasibility-level study.

      12.1.6

    Assay Audit, NovaGold/SpectrumGold Programs 2003–2006

    Original electronic CSV (comma separated value) files from ALS Chemex were converted to Excel spreadsheets and then imported into an Access database. About 99% of the samples in the assay table for holes drilled within the defined resource areas were audited. The copper, gold, and silver values from ALS Chemex were matched against database entries, and the following numbers of errors noted: Cu: seven errors (0.01% error rate); Au: five errors (0.01% error rate) and Ag: four errors (0.01% error rate). The results were considered acceptable.

      12.1.7

    Sample Intervals Audit, NovaGold/SpectrumGold Programs 2003–2006

    AMEC checked approximately 40,606 of a total 52,391 records in the sample database against data entry files received from NovaGold. Fields in the data entry files were compared to the values found in the database. A total of 22 records were noted with errors. This resulted in an error rate of 0.05%, and was considered acceptable.

    The sample interval table was checked for negative intervals, overlapping intervals and the occurrence of duplicate sample identification numbers. One error was noted.

      12.1.8

    Standard Reference Materials (SRMs), NovaGold/SpectrumGold Programs 2003–2006

    NovaGold used several SRMs during 2004–2006 to monitor analytical results from ALS Chemex. There are a total of 2,709 results from standards found in the database, which corresponded to the one in 20 insertion rate. There were no significant biases noted in any of the copper SRM results; that is, all biases for copper are less than 5%. A potential bias was noted for SRM Std-Pm152 during 2004 and 2005 where the biases for gold are 6.6% and 7.5% respectively. All other gold SRM biases are less than 5%.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      12.1.9

    Blanks, NovaGold/SpectrumGold Programs 2003–2006

    NovaGold inserted a blank sample that tests for contamination of samples, on a rate of approximately one blank for every 20 samples.

    NovaGold submitted a total of 2,777 blanks from 2003 through 2006. The blank material performance with respect to copper was considered acceptable. In all years, an average of 31.6% of the copper results were below or equal to 3 ppm, and 95.5% of the results that were above this level were below 100 ppm or 0.01% copper. The average grade at Galore Creek is around 0.52% copper. Blank sample copper values of 2,470 ppm and 7,640 ppm respectively are reported for 2004 and 2005.

    The performance of gold contamination in blanks was also considered acceptable. Overall, 98% of the samples returned results below 0.015 ppm, but most years showed some values above this limit. Generally these values were all below 0.09 ppm Au, except during 2005 when three values reported above 0.09 ppm Au, including one sample which reported a value of 0.304 ppm Au.

    The silver blank results were more erratic than either the copper or the gold results, except for 2003 where all the results fell below 0.6 ppm Ag. A total of 87% of the silver results fell below the 0.6 ppm limit; 2004, 2005 and 2006 showed a significant number of results above this limit. The maximum values returned for 2004, 2005 and 2006 were 2.3 ppm Ag, 7.9 ppm Ag and 4.8 ppm respectively. In 2006, 5% of the results were above 1 ppm Ag, in 2005, 12% of the results were above 1 ppm Ag and in 2004, 8% of the results were above 1 ppm Ag. The average silver grade reported for Galore Creek is 4.9 g/t (4.9 ppm).

      12.1.10

    Duplicate Performance, NovaGold/SpectrumGold Programs 2003–2006

    Duplicates at Galore were “preparation duplicates”; splits were taken from crushed reject material at a rate of about one in 20 samples.

    The precision noted for copper analysis was acceptable. Copper is analysed by two methods, depending on concentration; ME-ICP41 for values less than 10,000 ppm (or <1% Cu) and Cu-AA46 for values greater than 1% Cu.

    The precision for gold analysis is low, but is considered acceptable. The precision for silver is low, but is also considered acceptable.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

      12.1.11

    Check Assays NovaGold/SpectrumGold Programs 2003–2006

    NovaGold conducted two check assay programs during 2003–2006; results of the programs were reviewed.

    The 2006 program consisted of a random selection of approximately 5% of all Galore Creek pulp samples as check assay samples. A total of 699 pulps (4.2% of assays for 2006) were sent for re-assay at Assayers Canada as umpire laboratory, for direct comparison with the results from ALS Chemex, the primary laboratory.

    No significant bias was noted for the copper and gold check assays. ALS Chemex silver results were biased 5.4% low relative to Assayers Canada check assays. As silver is of minor economic importance, this bias is not considered to be of material significance.

    No background information regarding the sample selection for the 2004 check assay program was provided to AMEC. Check assays were submitted to both Assayers Canada and to ACME Laboratories in Vancouver. ACME provided check assays for copper and gold, while Assayers Canada only provided check assays for copper.

    ALS Chemex results were biased low (7.6%) compared to the ACME check assays for gold (595 samples). The ICP copper results (copper results below 1%) indicated that ALS Chemex was biased low (11%) compared to the ACME results for the 473 samples submitted. The copper values greater than 1% copper showed no significant bias for 111 samples submitted. No bias was noted for the 472 copper values below 1% copper, but ALS Chemex was biased 7.7% lower than Assayers Canada for the 123 copper check assays greater than 1% copper.

    As these biases were marginal, and as ALS Chemex was biased low with respect to the check laboratory, AMEC considered the biases to be not material to the resource. The results obtained from ALS Chemex were considered conservative, as the bias was consistently low.

      12.1.12

    Conclusions of 2008 Audit

    The QA/QC programs adequately addressed issues of precision, accuracy and contamination. The QA/QC work completed was sufficient to support resource estimation. Although there was a consistent low assay bias in the ALS Chemex data for gold and for copper values under 1% Cu, the biases were considered to be conservative, and would not affect resource estimates.

    AMEC noted a number of minor database errors which required rectification, including:

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study
    • Resolve differences between scanned logs and the database for drill holes identified in the audit that had discrepancies

    • NovaGold have the drill hole collars professionally surveyed by a registered land surveyor, and fix the minor identified errors in the drill collar tables

    • Correct the noted transcription or manipulation errors in the downhole survey tables

    • Apply the proper magnetic declination correction to the four identified holes

    • Adjust the 34 identified drill holes which have survey depths extending past the length of hole

    • Review the 35 drill holes that are lacking surveys, and determine if any can be re- entered and surveyed

    • Identified assay table errors be rectified

    • Identified errors in the sample interval table, although minor, be fixed

    • NovaGold should review the supporting data for SRM Std-Pm152 and determine whether the calculated “best value” for this standard is correct, or if any of the laboratories originally used to analyze this standard also reported values similar to the bias noted

    • AMEC concurred with the recommendation made in Lechner, (2006) that “NovaGold more closely track QA/QC results and re-assay all sample batches that are associated with any control samples that are out of tolerance.”

    AMEC concluded that the SG error rate was above that considered acceptable for a prefeasibility or feasibility level study. Recommendations were that NovaGold review the SG table in greater detail and make modifications as required, and additionally, develop a more rigorous error checking protocol during data entry. NovaGold was requested to recalculate the SG values in the density table, as this exercise would remove minor errors noted in 532 of the SG values.

    12.2

    2011 AMEC Audit


      12.2.1

    Database Review

    AMEC was provided with a database for review by GCMC. The database is divided into 14 areas; however, AMEC restricted its audit to those deposits and zones which support the Mineral Resource estimate in the GCMC 2011 pre-feasibility study. These are the Central Zone, South West, West Fork, Junction, North Junction, and Middle Creek areas, and are collectively termed the mineral resource estimate area.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
    NI 43-101 Technical Report on Pre-Feasibility Study

    Database verification comprised checking of the drilling prior to 2006, by comparing the data available to the database audited by AMEC in 2008. Drilling completed after 2006 was compared against supporting documents provided by GCMC.

    AMEC notes that there were a few unexpected discrepancies identified in the database, which is an indication that the database is changing and that changes to the database are not fully documented.

    Clear documentation of the Datashed database should be completed prior to initiation of a feasibility study on the Galore Creek Project. Documentation should include details of a 5% double data entry check all data in the database.

    Collar Review

    A comparison by AMEC of the 2010 and 2008 collar record tables showed, apart from drill holes added since the previous AMEC audit, all drill holes in the 2010 table had a matching drill hole in the 2008 drill hole table. Of these, only seven holes have different collar positions. Only one of the seven drill holes was within the area of the mineral resource estimate. One drill hole was noted to have a significant collar shift; this change in position is likely a result of modifications made by Teck during their internal audit.

    Drill holes completed since the 2008 resource update were compared against the original drill logs. Although not all recent collar positions could be verified with the drill logs, those that could be compared did match. The collar positions reported in the 2010 drill hole database are considered reasonably free of errors and based on field inspection by AMEC in September 2010, are considered reasonably accurate.

    Down Hole Survey Review

    The 2010 survey table was filtered to show only the holes drilled in the area of the mineral resource estimate prior to 2006 and was then compared to the 2008 survey table. There are 50 records present in the 2008 which are no longer reported in the 2010 table. These intervals may have been removed as part of an ongoing audit process but no documentation is available to verify this. The absence of these surveys is not considered to have a material impact on the estimate.

    No down-hole survey records for drill holes added to the database since the previous AMEC audit were available for review.

    In the absence of original records for verification the entire down hole survey database was checked for unusual kinks and bends using AMEC-proprietary software. No

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    anomalous deviations were noted that could materially affect Mineral Resource estimation.

    Assays

    A total of 25 intervals from the pre-2006 drilling in the 2010 assay table do not have matching intervals in the 2008 assay table. There are 83 intervals that have different copper values. There are 441 intervals that have different gold values than previously reported. Of these, only 30 have differences in the gold value that are more than 0.02 ppm. Apart from 90 legacy silver values which have been reset to zero, there is only one silver interval that does not match.

    Assay certificates for 725 samples from the drill holes in the 2010 database were compared to the 2010 assay table. There were no differences. Assays for the 2007 and 2008 drilling were not checked by AMEC during the 2011 review, as they were reviewed in detail during the earlier AMEC audit.

    The discrepancies in the assay data noted by AMEC would not cause a material impact on the mineral resource estimate.

    Specific Gravity

    Verification of the 2010 SG database was based on comparing a 2010 Gems SG table with the 2008 SG table. The 2008 and 2010 legacy databases were compared taking into account repeat intervals and after removal from the 2008 SG database of one legacy sample where the SG value was repeated.

    The comparison of the 2008 and 2010 tables identified 196 records in 73 holes in the 2008 SG table that had no match in the 2010 table. Several of the 2008 records with no 2010 match have negative or unlikely large or small SG measurements. There are also 136 records matched on Hole ID and Depth that have different SG values. These differences are likely due to changes made during a 100% data entry check of non-legacy SG completed by NovaGold in 2008. No documentation is available to validate this.

    The comparison of the 2008 and 2010 tables identified 1,372 records in the 2010 table with no matching depth record in the 2008 table. These differences are likely a result of additional SG measurements from holes completed since the 2008 audit.

    In order to assess the quality of the 2010 SG database AMEC repeated the 5% data entry check of the 2010 non-legacy data using the same records used in the 2008 data entry check. The combined data entry error rate for the SG database is 1% which is

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    considered to indicate the database is sufficiently free of errors that there would be no material impact on the resources using the 2010 SG data.

    Bulk Density Determinations and Block Model Assignment

    AMEC reviewed the application of the adjustment that was used to account for disaggregation and moisture content to arrive at the final bulk density values used in mineral resource estimation.

    The SG correction factor applied to account for disaggregation and moisture content is considered by AMEC to be reasonable.

      12.2.2

    Legacy Data Review

    A comprehensive QA/QC program is not evident for much of the pre-2003 data, referred to as “legacy data”. A twin hole drill program or re-sampling program of existing pulps, coarse rejects or drill core, has not been completed.

    In order to assess for grade biases in the legacy data, a “near-twin” composite comparison was performed.

    Scatter plots, Q-Q plots, and relative difference plots were used to examine for biases in copper, gold, and silver grades between non-legacy and legacy composites. Non-legacy and legacy composite pairs were prepared at separation distances of 100 m, 25 m and 10 m for all composites within the Central Zone and South West, West Fork, Junction, North Junction, and Middle Creek. Non-legacy-legacy composite pairs were also examined in groups based on drill campaign time frames of 1990s, 1970s, and 1960s.

    As a result of this review AMEC concluded that:

    • Legacy copper and gold assays appear biased low at grades above 0.15% Cu and 0.1 ppm Au

    • Legacy copper and gold assays appear biased high at grades below 0.15% Cu and 0.1 ppm Au

    • Legacy silver assays show a positive bias at grades above 1 ppm Ag

    • The biases interpreted from the AMEC review may, in part, be due to spatial variability (distances > 10 m) and lithological variability (composite pairs across lithological boundaries)

    • The copper and gold biases are generally low and are expected to cause an overall underestimation of grade in the Mineral Resource estimate

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    • The legacy silver assay bias could be quantified and corrections could be developed using regression analysis

    • There are some unusually long-length silver assays in the database that should be removed during future studies

    • The apparent high bias for legacy silver is a concern but is mitigated by the low overall economic value that silver is likely to contribute to the Project relative to the contributions from copper and gold values.

      12.2.3

    Site Visit

    No issues were identified during the September 2010 site visit that were considered to negatively impact AMEC’s ability to support the Mineral Resource estimate.

    12.3

    Comments on Section 12

    AMEC considers that a reasonable level of verification has been completed during the 2008 and 2011 audits, and that no material issues would have been left unidentified from the programs undertaken.

    The AMEC QPs, who rely upon this work, have reviewed the appropriate reports, and are of the opinion that the data verification programs undertaken on the data collected from the Project adequately support the geological interpretations, the analytical and database quality, and therefore support the use of the data in Mineral Resource and Mineral Reserve estimation:

    • Sample data collected adequately reflect deposit dimensions, true widths of mineralization, and the style of the deposits

    • AMEC completed a database audit in 2008. The audit identified some minor errors in the Project database that AMEC recommended correcting, but they were not considered material to the Mineral Resource estimation. However, the SG error rate at the time was above that considered acceptable

    • A second audit was completed by AMEC in 2011; results were:

    • The database is sufficiently error free to cause no restrictions on the confidence categories of the resource estimate and are therefore suitable to support resource estimates used in prefeasibility or more advanced studies

    • No correction should currently be applied for legacy copper, gold, and silver results, but a cautionary note explaining the potential low bias for copper and gold and high bias for legacy silver assays and the potential impact on the Mineral Resources will be presented as a footnote to disclosure of Mineral Resources

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    • Limitations on the use of legacy assays to support classification of Measured blocks are still warranted due to the lack of supporting quality control samples; estimated blocks supported primarily by legacy assays should be limited to Indicated classification

    • There is more than one source for data and original supporting documentation. In some cases the supporting documentation provided to AMEC was not the finalized documentation. The drill hole database has changed since the 2008 AMEC audit. Documentation of changes made to the database since then was not adequately documented at the time of the AMEC review. These should be rectified so that the documentation can support a clear audit trail.

    • The data for the Galore Creek Project are in the process of being migrated to a Datashed database. Documentation of this migration is limited, and should be developed.

    AMEC recommends:

    • Clear documentation of the verification of the Datashed database is needed to support the efficient execution of any future audit. Documentation should include all details of a 5% data entry check for all components of the Datashed database

    • Clear documentation identifying the location of, and the type of original supporting documentation should be prepared prior to initiation of more advanced studies

    • Estimated blocks supported primarily by legacy assays should be limited to Indicated classification

    • No correction should be applied for legacy copper, gold, and silver results

    • A cautionary note explaining the potential low bias for copper and gold and high bias for legacy silver assays and the potential impact on the resources should be presented with any disclosure of resources

    • Long-length silver assays be excluded from the database that supports Mineral Resource estimation and excluded from use in future model updates

    • A legacy pulp or archived core check re-assay program be undertaken that is supported by appropriate quality control measures

    • Re-assessment of grade bias be undertaken after completion of the re-assay program

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    • If no significant bias is evident after the reassay check program is completed GCMC should consider removing limitations on the use of legacy data to support Measured blocks

    • A twin-hole drill program could be considered for areas where re-assaying may not be possible due to absence of archived pulps or core.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
    Galore Creek Copper–Gold Project British Columbia
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    13.0

    MINERAL PROCESSING AND METALLURGICAL TESTING

    Over the Project history, a number of metallurgical testwork campaigns have been undertaken. These are summarized in Table 13-1.

    Since 2003, the majority of metallurgical testwork was completed at G&T Metallurgical Services laboratories in Kamloops, British Columbia. GCMC representatives were involved in all aspects of the testwork, including sample selection, test design, and data review and interpretation. Periodic laboratory visits were completed in 2010 to verify that tests were being carried out at an acceptable standard, and no issues were identified.

    All tests have been documented according to G&T Metallurgical standard practices. Standard tests completed included open circuit rougher-cleaner flotation tests, locked-cycle tests, Bond ball mill work index determinations, SMC hardness determinations, and JK drop-weight test index determinations. All tests were completed using industry-standard methods.

    Due to the history of the Galore Creek Project, large amounts of test data were available and were reviewed to determine potential gaps in the metallurgical understanding of the Galore Creek orebody.

    The following subsections present additional details of the various test programs conducted.

      Table 13-1: Metallurgical Testwork Summary Table

    Year Laboratory Testwork Performed
    1960–1967 Hazen Research, Golden, CO Pilot plant on bulk sample
    1960s Britton Research Laboratories, Vancouver, BC Grinding and flotation on low grade samples
    1992 Dawson Metallurgical, Salt Lake City, UT Bench flotation tests
    2003 G&T Metallurgical Services, Kamloops, BC Grinding, flotation, gold gravity recovery
    2005 G&T Metallurgical Services, Kamloops, BC Grinding Bond Work Indices
    2006 G&T Metallurgical Services, Kamloops, BC Flotation and pilot plant
    2006 SGS Lakefield and SGS MinnovEX CEET modelling (grinding)
    2008 G&T Metallurgical Services, Kamloops, BC Aging tests on slurry
    2009 G&T Metallurgical Services, Kamloops, BC Locked-cycle flotation
    2010 G&T Metallurgical Services, Kamloops, BC Grinding and locked-cycle flotation

    13.1 Hazen Research and Britton Research Ltd, 1960s

    The initial Galore Creek metallurgical work was at the request of Kennecott Corporation in the 1960s and focused on the Central Zone. The testwork was carried out by Hazen Research and commenced with initial bench tests on drill core samples.

         
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    NovaGold Resources Inc.
    Teck Resources Limited
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    The testing started in 1962, and culminated in 1967 with a 50 ton pilot plant milling test using a bulk sample taken from an adit in the Central Zone. The bulk head sample assayed 1.28% Cu. The optimum grind for rougher flotation was established at 25% +100 mesh (50% -200 mesh). The optimum grind for concentrates was established at 95% -325 mesh.

    Britton Research Ltd. conducted testing of lower-grade material and estimated recoveries of 83% and 81% for grades of 0.54% Cu and 0.31% Cu respectively. Kennecott developed a flowsheet, equipment recommendations, and operating cost estimates for a 20,000 t/d concentrator. The flowsheet anticipated a relatively coarse primary grind (25% plus 100 mesh) followed by regrinding the rougher concentrate to 97% passing -200 mesh to obtain suitable concentrate grades.

    13.2

    Dawson Metallurgical Laboratories, 1992

    In 1992, bench flotation tests were carried out on drill core from five 1991 holes by Dawson Metallurgical Laboratories in Salt Lake City. The object of this study was to determine the amenability of the composites to a standard flowsheet developed for Kennecott and to determine if gold recovery could be significantly improved. The study used four composites from the Southwest Zone and two from the Central Zone. It was found that both gold recoveries and copper concentrate grades for the Southwest Zone were lower than those indicated for the Central Zone. This was attributed to the higher pyrite content in the Southwest Zone and the association of at least part of the gold with pyrite.

    Overall copper and gold recoveries in a copper concentrate grading 25% Cu were estimated to average approximately 90.3% and 58%, respectively based on constant tail grades of 0.065% Cu. Concentrator tail grades for Au also tended to remain fairly constant at 0.137 g/t Au for the Central Zone and 0.274 g/t Au for the Southwest Zone. Gold recovery was projected based on head assay and rougher tail residue. A nugget effect was observed in tests from many of the higher-grade composites. Gold recoveries were not optimized as part of these studies. It was also reported that several composites were not upgraded to 25% Cu in concentrate after two stages of cleaning with regrinding.

    Copper recovery was slightly lower than the 1965–1967 test results; however, recovery at a modestly finer grind was in line with the earlier work. Several composites were not upgraded to the 25% copper grade obtained in the pilot plant; this was attributed to the presence of “talc” which was not observed in the earlier samples.

         
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    13.3

    G&T Metallurgical Services, 2003

    The 2003 testwork was undertaken to assess the metallurgy of one Southwest zone and three Central Zone samples in a standard rougher and cleaner circuit. The program included a preliminary evaluation of the effect of grind on metallurgical performance and the potential for gold recovery by gravity concentration.

    Grinding tests indicated that approximately 60% of the copper sulphide was liberated at a P80 of 150 µm. The majority of the non-liberated copper sulphides were locked with non-sulphide gangue. The data suggested that good rougher copper recovery should be achieved at a relatively coarse grind and regrinding would be required to maximize the concentrate grade during cleaner flotation. Gold occurred as liberated fine-grained particles and its co-recovery in copper concentrate was typical of porphyry copper deposits.

    The preliminary batch flotation results were consistent with the 1966 pilot plant studies undertaken by Kennecott 96% copper recovery and a concentrate grade of 25% copper were achieved.

    Conclusions from the 2003 testwork included:

    • A primary grind at a P80 of 150 µm nominal is sufficient for copper mineral and gold liberation. Pyrite liberation is high at this grind

    • Rougher flotation of copper and gold was fast and with high recovery from all four samples. Copper recovery ranged from 95% to 99% and gold recovery ranged from 81% to 88% within 5 minutes using simple flotation schemes and standard reagents

    • A fraction of the floatable gold is fine-grained and free, despite the relatively coarse grind, and floats with the copper sulphides

    • The cleaner concentrates are relatively clean. Selenium appeared to be the only impurity of concern.

    The potential for gravity concentration of gold was assessed on each sample in a laboratory-scale Knelson concentrator. Some of the gold appeared to be recoverable by gravity. More work was recommended to determine the merits of this operation compared with direct flotation after primary grinding since gold is readily recovered by flotation with the copper sulphides.

         
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    13.4

    G&T Metallurgical Services, 2005

    Four Bond Work Index determinations were conducted by G&T on Minnovex reject samples completed earlier in 2005. The resulting BWis ranged from 14.3 to 17.3 kWh/t.

    13.5

    G&T Metallurgical Services, SGS Lakefield, SGS MinnovEX, 2006

    The 2005–2006 metallurgical test program was managed by Hatch and carried out by G&T Metallurgical Services Ltd (Kamloops, BC). G&T Metallurgical Services determined the Bond Ball Mill Work Index and conducted the flotation testwork on the composites used in the flotation program, while SGS Lakefield and SGS Minnovex (Toronto, ON) ran additional grindability and flotation simulation tests.

    A comprehensive metallurgical program was completed on fresh drill core samples from 2005 drilling to further validate the flowsheet developed in the earlier work and to determine the metallurgy associated with the variable mineralization and head grades in the various zones of the Galore Creek deposit. The test program investigated grindability using CEET and JKSimMet methodologies, mineralogy, and minerals recovery by batch and locked-cycle flotation. Models were developed to project copper, gold and silver recoveries in mining blocks for each pit. Pilot plant campaigns were also completed, primarily to generate concentrate samples for dewatering tests and marketing purposes, and tailings samples for dewatering tests and environmental purposes.

    At a grind of 80% passing 150 µm, 50% to 60% of copper sulphides and the majority of gold particles were liberated and recoverable by flotation. The gold particles were fine at nominally 8 to 12 µm and would be unlikely to be recovered by gravity concentration. A primary grind of 80% passing 200 µm was suggested to achieve the same metals recovery. The metallurgical response deteriorated as the grind approached 300 µm.

    Mineralization hardness, in terms of Bond Ball Mill Work Index, varied between 13 kWh/t and 21 kWh/t over the various proposed pits. The average hardness in the dominant Central Pit was 16.5 kWh/t, similar to that determined from the 2003 metallurgical testwork.

    The hardness, measured as SAG power index (SPI), ranged from 20 minutes to 141 minutes across the deposit. The MinnovEX CEET model indicated that any proposed mill circuit would be SAG mill-limiting when treating mineralization with SPI greater than 115 minutes. The “stick” rock was found to be generally harder and more

         
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    abrasive than the “broken” rock (refer to Section 10.4 for a description of these rock types).

    The proposed flowsheet design consisted of rougher flotation, regrind of rougher concentrate, and three stages of cleaner flotation using a simple reagent scheme that utilized PAX as the primary collector and MIBC as the frother. The use of 3418A, a more selective dithiophosphinate collector, instead of PAX, was suggested to produce slightly higher concentrate grade at similar recovery. A guar gum carboxymethyl cellulose reagent was noted to be required to disperse talc-like materials and minimize their adverse impact on flotation responses. Variable amounts and occurrences of these talc-like materials were observed in the drill cores from across the deposit. The talc-like materials were not identified. The program also verified that chalcopyrite and bornite materials from various mineralization zones have similar metallurgical responses.

    Models were developed for each deposit to project copper recovery from head grades at constant concentrate grade and to project gold and silver recoveries from copper recovery for use in mining blocks. Using a head grade of 0.7% copper for each deposit, the projected recoveries were as follows:

    • Central deposit: 92% Cu, 76% Au, 71% Ag at 28% Cu concentrate grade

    • Southwest deposit: 88% Cu, 68% Au, 57% Ag at 26% Cu concentrate grade

    • North Junction deposit: 88% Cu, 70% Au, 62% Ag at 28% Cu concentrate grade

    • West Fork deposit: 91% Cu, 70% Au, 68% Ag at 28% Cu concentrate grade.

    A model was also developed for projecting copper recovery from mineralization containing non-sulphide copper. Copper recovery was expected to be lower and to vary with the proportion of non-sulphide copper content, whereas the gold and silver recoveries were expected to correlate with copper recovery. Using a 0.7% total copper head and assuming 20% of the total copper occurring as a non-sulphide, the model projected recoveries of 71% copper, 55% gold and 51% silver at a 28% Cu concentrate grade. Since gold and silver recoveries largely followed copper recovery, the gold and silver in mineralization with very low copper grades, and largely occurring within pyrite grains, may not be recovered.

    A preliminary flotation model indicated that the concentrate grade might improve at the same recovery if flotation columns were used for final cleaning in place of mechanical cells. Further work was recommended on this option.

    The final concentrates had relatively low penalty elements. Fluorine, selenium, lead and zinc concentrations were variable and might have the potential to be of concern. It

         
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    was recommended that further work be conducted to address a number of key issues and increase confidence in the projected metallurgical performance of the mineralization from each pit given the variable mineralization, head grades and observed metallurgy. The work should be conducted on fresh drill core samples, in particular, to better define and quantify the occurrences and spatial distributions of talc-like minerals and pyrite, non-sulphide copper, the penalty elements and the extent of their impact on metallurgy, and to determine how the recovery of lead and zinc into the concentrate may be minimized.

    13.6

    G&T Metallurgical Services, 2008

    In 2008, G&T conducted testwork to investigate the effect of aging on metallurgical performance. The principal objective of this study was to simulate the effect of transporting ground slurry in a pipeline for seven hours prior to flotation processing in the rougher bank. The test procedure was to be conducted on two composites identified as CRZ Zone Stick and CRZ Zone Broken from the Galore Creek deposits. These composites were prepared from samples stored at the laboratory since mid-2006. The testing process involved grinding the samples to 140 µm K80 for the CRZ Stick and 185 µm K80 for the CRZ Broken composites. The mill discharge slurry was allowed to age with occasional stirring for a period of 7 hours. Following this aging period, flotation proceeded to produce four timed rougher concentrates.

    The results of these tests were then compared to baseline tests conducted on each sample under near identical conditions. The results indicated under the condition tested no perceived metallurgical disadvantage in copper flotation kinetics or gold recovery.

    13.7

    G&T Metallurgical Services, 2009

    Locked-cycle testing carried out on six samples from the CRZ and NGL zones validated that metallurgical performance was achieved on all the samples tested. Copper recoveries ranged from 84% to 94% at grades ranging between 27% and 33% copper in the concentrates. Associated gold recoveries to the concentrate ranged from 46% to 78% with gold content in the copper concentrate ranging between 4.2 and 58 g/t.

    In order to achieve these results, non-standard conditions were required for 3 met samples from the CRZ zone. The concentrates produced using the standard flowsheet and test conditions contained less than 20% copper.

         
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    Modal analyses carried out on these low grade concentrates revealed that they were contaminated with either liberated non-sulphide gangue or pyrite. To reject these diluents the test conditions were modified. These modifications resulted in production of acceptable copper grades and recoveries.

    A three-day pilot plant campaign was carried out on two pilot plant feed samples: Chalcopyrite and chalcopyrite-bornite material. The main purpose of this work was to generate flotation products (mainly tailings) for environmental testing. Metallurgical performance was also measured during each pilot plant run.

    The average metallurgical performance for the chalcopyrite only feed sample was about 90% copper recovery into a copper concentrate grading 30% by weight copper. On average, about 77% of the gold in the feed was recovered into the copper concentrate. The average gold content in the copper concentrate was about 24 g/t.

    For the chalcopyrite-bornite feed sample, the average copper recovery was 95 percent into a copper concentrate assaying about 41% copper. About 85% of the feed gold was recovered to the copper concentrate. The average gold content in the copper concentrate was also about 24 g/t gold.

    The samples tested in this program did not explore the effect on metallurgical performance resulting from processing material containing less than 0.4% copper.

    13.8

    G&T Metallurgical Services, 2010

    Grinding and flotation testwork was conducted by G&T Metallurgical Services in 2010. Full core from six diamond drill holes were used as feed stock to this test program.

    Fifty-five discrete samples were generated for material hardness testing and 59 samples for flotation testing. The samples that were generated for flotation testing ranged in copper feed grade form about 0.15% up to greater than 2.0% . The gold feed grades in the flotation composites ranged from near zero to about 1.25 g/t.

    Material hardness testing included JKTech Drop Weight and SMC tests, along with Bond ball mill work index testing. The Axb parameter value, a measure of resistance to impact breakage in the SAG mill ranged from about 28 to 236. The lower the Axb value the more resistance to impact breakage in the SAG mill. The samples tested in this program ranged from very hard to very soft but, on average, were moderately soft.

    The Bond ball mill work index, a measure of resistance to breakage in the ball mill, ranged from about 13 to 20 kWh/t and averaged 15 kWh/t. This range of values of the

         
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    Bond ball mill work index indicates that these material samples range from moderate hardness to hard with respect to breakage in a ball mill.

    A single open circuit batch cleaner test was carried out on each of the 59 flotation samples. Feed copper recovery, to the final concentrate, ranged from about 25% to 98%. The copper grade in the copper concentrate ranged from about 10% up to 40%.

    Locked-cycle tests were carried out on 4 composite samples. The copper feed grades in these samples ranged from 0.13% to 0.80% copper. Metallurgical performance was variable across the four composites with copper recoveries ranging from about 77% to 92%. The copper grades in the final concentrate ranged from 17% to 37% copper.

    Additional open circuit flotation tests, using modified conditions were carried out on 2 composites. In these tests the rougher circuit pH was increased and PE26, a non-sulphide gangue depressant, were utilized. Under the modified conditions, these samples had acceptable metallurgical performance and were comparable to typical response for Galore Creek materials.

    Minor element determinations were carried out on the final copper concentrate produced from one test. The zinc and cadmium levels were elevated in the concentrate produced from this sample. There was not enough concentrate to carry out minor element determinations on the other three locked-cycle test concentrates.

    Almost all the samples from drill hole 799 produced lower copper grades in the final concentrate, averaging 16% copper in batch open circuit cleaning tests. The reason for lower concentrate grade, for Composites F799-50, was identified as contamination with liberated pyrite and non-sulphide gangue. It is not known if this is the common cause of lower final copper concentrate grades for the remaining samples in that drill hole.

    Samples of the solid and liquid phase from the exit streams from four locked-cycle tests were submitted for environmental testing.

    13.9

    G&T Metallurgical Services, 2011

    A set of 11 locked-cycle tests was performed using intervals from the remaining stock of Galore Creek samples. GCMC requested that AMEC include the results of the tests in the recovery estimation for the Project.

    Upon examination, AMEC concluded that the samples used to generate the new results are unrepresentative of any category of ore type, and are very likely to be

         
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    biased toward higher recoveries. The new results were not used to estimate metal recoveries.

    13.10

    Throughput Calculations

    Hardness values generated from samples obtained from a metallurgical test program completed in 2010 were combined with historical hardness values to define hardness variability. Throughput estimations were generated using an Excel-based engineering throughput model developed from multiple JKSimMet grinding circuit simulations. This model can be used to calculate the mill throughput of the grinding circuit at various ore hardnesses and feed sizes.

    Two ore fracture models were used to estimate SAG mill feed size. For broken ore (near surface sheet fractured ore), an 80% passing feed size of 57 mm was assumed. Although finer than normal SAG feed sizes, this value was deemed conservative based on on-site estimates of the broken ore. Due to the extremely fractured and friable nature of this ore, it was expected that the ROM ore size will be similar to SAG feed size. For the more competent stick ore, a typical 60” crusher discharge size distribution was chosen to represent the SAG mill feed size. The 80% passing size for stick ore SAG feed was 150 mm.

    Multiple mineral alteration shells were generated in order to delineate the most appropriate geometallurgical category for the resource blocks within the geological block model. These shells, coupled with a defined boundary between competent and sheet fractured ore, resulted in each model block being assigned one of eight throughput values (Table 13-2).

    The values in Table 13-2 were utilized as part of the mine production optimization analysis. In this analysis, physical mill capacity was limited to 110,000 t/d to represent expected non-power-related limitations within the processing circuit, such as pumping capacity and conveyor capacity.

    Each block was assigned a defined number of mill operating hours to process: these hours were inversely proportional to the throughput capacity of the ore. As the mine plan was developed, cumulative mill hours were tallied until a full year of mill operational time was reached. The sum mass of these blocks equalled the calculated mill throughput for the year.

         
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      Table 13-2:         Throughput Rates Assumed Based on Geometallurgical Types

    Structure Geometallurgical Ore Type, dmt/h dmt/h at 92% dmt/day at 92%
      Mineral Alteration-Based   availability availability
    Competent (stick) Low garnet, low orthoclase 3321 3055 73328
    F80 = 150 mm        
      High garnet, low orthoclase 3536 3253 78075
      High garnet, high orthoclase 3438 3163 75911
      Low garnet, low orthoclase 3162 2909 69817
    Sheet-fractured Low garnet, low orthoclase 5517 5076 121815
    (broken)        
    F80 = 57 mm        
      High garnet, low orthoclase 5871 5401 129632
      High garnet, high orthoclase 5709 5252 126055
      Low garnet, low orthoclase 5101 4693 112630

    13.11

    Deleterious Elements

    During the various metallurgical testwork programs, the presence of potential deleterious elements to the process route was noted. These are summarized in Table 13-3. The only element that is considered to be above penalty levels in the final concentrates is fluorine.

      Table 13-3:         Deleterious Elements

    Year of Laboratory Comments
    Testwork    
    1992 Dawson Metallurgical Laboratories Several composites were not upgraded to the 25% copper grade obtained in the pilot plant; this was attributed to the presence of “talc” which was not observed in the earlier samples
    2003 G&T Metallurgical Services The cleaner concentrates are relatively clean. Selenium appeared to be the only impurity of concern
    2006 G&T Metallurgical Services, SGS Lakefield, SGS MinnovEX A guar gum carboxymethyl cellulose reagent was noted to be required to disperse talc-like materials and minimize their adverse impact on flotation responses. Variable amounts and occurrences of these talc-like materials were observed in the drill cores from across the deposit. The talc-like materials were not identified.
    The final concentrates had relatively low penalty elements. Fluorine, selenium, lead and zinc concentrations were variable and might have the potential to be of concern.
    Further work should be conducted on fresh drill core samples, in particular, to better define and quantify the occurrences and spatial distributions of talc-like minerals and pyrite, non-sulphide copper, the penalty elements and the extent of their impact on metallurgy
    2007 AMEC review of testwork conducted to 2007 In 2006, four concentrate batches were subject to multi-element analysis. Within three batches, fluorine returned low-level values, and one sample had a high fluorine analysis, which may be an analytical error. The fluorine level in the three batches noted was only just at a typical penalty level, and well below the reject level.
    2010 G&T Metallurgical Services, Minor element determinations were carried out on the final copper concentrate produced from one test. The zinc and cadmium levels were elevated in the concentrate produced from this sample. There was not enough concentrate to carry out minor element determinations on the other   three locked-cycle test concentrates

         
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    13.12

    Recovery

    Using results of flotation tests conducted during three campaigns in 2005–2006, 2008–2009 and 2010, empirical relationships to estimate recoveries for copper, silver, and gold were derived as a function of head grade. Separate models were prepared for material types defined as Standard or Oxidized/Near Surface material consistent with the geological block model.

    The final models for the recovery relationships are shown in Table 13-4.

    The subsections which follow discuss how the models were generated.

      Table 13-4: Process Recovery Relationship Models

    Recovery    
    (%) Standard Material Oxidized/Near Surface Material
    Copper 7.66*Ln([Head Cu(%)])+94.34 (cap at 95%) ([OxRConc]*([Head Cu(%)]-0.18)/([Head Cu(%)]*([OxRConc]-0.18))*94.8 where: ([OxRConc] =7.2*[Head Cu(%)]+1.6 (cap at 95%)
    Gold 8.1*Ln([HeadAu(g/t)])+78 (cap at 90%) 8.1*Ln [HeadAu(g/t)]+78 (cap at 90%)
    Silver 19.7* Ln([HeadAg(g/t)])+26 (cap at 90%) 14.5* Ln([HeadAg(g/t)])+28 (cap at 75%)

      13.12.1

    Copper Recovery Estimate

    Standard and Oxidized Material

    Results of flotation testwork indicated a significant difference between the metallurgical response of standard and oxidized material. As such, separate recovery estimates were developed for each type.

    Standard Material Estimate

    The recovery was estimated by regression analysis of locked-cycle test results. The resulting relationship was:

    Recovery = 7.66*Ln([Head Cu(%)])+94.34

    The recovery estimate was reduced by 1% to accommodate for scale-up from laboratory work to plant scale.

    The recovery was capped at 95%, equivalent to a flotation test recovery of 96%, since the uncapped relationship rapidly exceeds 100% at higher head grades and the maximum test recovery achieved was in the order of 96%.

         
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    Oxidized/Near-Surface Material Estimate

    The copper recovery relationship for oxidized material is based on a combination of utilization of a median tailings grade value of all available tests, average of available cleaner recovery tests and rougher flotation recovery relationship to head grade. Correlation using open-circuit and two locked-cycle flotation results was poor.

    The algorithm for copper recovery from oxide material is:

    Recovery = ([OxRConc]*([Head Cu(%)]-0.18)/([Head Cu(%)]*([OxRConc]-0.18))*94.8

    where: ([OxRConc] =7.2*[Head Cu(%)]+1.6

      13.12.2

    Gold Recovery Estimate

    Standard and Oxidized Material

    A single recovery estimate was developed as the difference between the metallurgical flotation response of standard and oxidized material appeared to be insignificant in light of the general variability of the results.

    Estimate

    Gold recovery shows general trends with copper head grade, silver head grade, copper recovery and gold head grade. Since gold head grade also has trends with the other parameters, gold head grade was taken to be the performance indicator; the other relationships were assumed to be spurious. Regression analysis generated the following model:

    Gold Recovery = 8.1*Ln([HeadAu(g/t)])+78

    A cap of 90% is applied since no test result exceeded that value.

      13.12.3

    Silver Recovery Estimate

    Standard and Oxidized Material

    Analysis of the flotation results indicated a significant difference between the metallurgical response of standard and oxidized material. Separate recovery estimates were developed for each type.

         
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    Standard Material Estimate

    As with gold recovery, there were presumably spurious relationships with other parameters, but the silver head grade was taken as the performance indicator. The model was derived from regression analysis of the locked-cycle test results, and is:

    Silver Recovery = 19.7*Ln([Head Ag (g/t)])+26

    A cap of 90% is applied.

    Oxidized Material Estimate

    There were only two locked-cycle tests for oxidized material. However, there was a reasonable trend for the open-circuit tests and the silver recovery was estimated by regression analysis of the entire oxidized material suite. It was:

    Silver Recovery = 14.5*Ln ([HeadAg(g/t)])+28

    A cap of 75% is applied.

    13.13

    Comment on Section 13

    In the opinion of the AMEC QPs, the following conclusions are appropriate:

    • Metallurgical testwork and associated analytical procedures were performed by recognized testing facilities, and the tests performed were appropriate to the mineralization type

    • Samples selected for testing were representative of the various types and styles of mineralization at Galore Creek. Samples were selected from a range of depths within the deposit. Sufficient samples were taken so that tests were performed on sufficient sample mass