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Missed payment won't harm Galore Creek mine: company

B.C.’s Galore Creek mine will not be put in jeopardy by the failure of major shareholder NovaGold to meet a $1.9 million payment today, according to an executive board member on the project.

“It’s not going to affect us one way or the other,” said Henri Letient, vice president of environmental and corporate affairs with the Galore Creek Mining Corporation. “The project will continue its normal day-to-day business.”

The proposed Galore Creek mine sits in north-western B.C. west of the Stikine River. According to NovaGold – which owns half the project along with Teck Cominco – massive reserves of gold, copper and silver could transform the area into one of the biggest excavation sites of its kind in the world.

Though the project was suspended in November 2007 due to escalating costs, NovaGold has recently been making plans to move forward with the mine.

But earlier today, the company announced it was “actively seeking additional financing” to cover the $1.9 million it owes on the project.

“NovaGold does not intend to make this payment on November 24th and will be approaching Teck Cominco to discuss alternatives relating to the settlement of the amount due,” reads the press release issued today.

If the two companies can’t come to an agreement, NovaGold’s share in the project could decline slightly from 50 per cent to about 49.8 per cent, the release adds.

Letient confirmed both shareholders were meeting but was quiet on the specifics.

“I can’t tell the details of what the outcome is going to be,” he said.

Asked whether the Galore Creek project's financial situation was secure despite the missed payment, Letient said he felt confident – for the time being.

“It’s not going to affect our day-to-day activities,” he said, adding that it's a difficult time for the commodities market. “I can’t tell what the answer will be a month from now.”

In addition to the missed payment, NovaGold signalled today it might have trouble meeting a $20 million bridge loan due in December, an announcement that helped sink its shares by almost 80 per cent.

Ramsey Hart, a coordinator with Mining Watch Canada, said mining companies across the country are facing difficult times amid the current economic crisis.

Though he wouldn’t comment directly on NovaGold’s financial situation, Hart said the payment issue could be a negative indicator for the Galore Creek mine.

“Certainly it raises doubts and concerns,” Hart said.

Calls to NovaGold were not returned by press time.

Geoff Dembicki is a staff reporter for the Tyee.

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