TORONTO (miningweekly.com) – Vancouver-based Teck Cominco has agreed to fund all the capital required for the Galore Creek copper/gold project, in British Columbia, until it has spent a total of C$60-million, partner NovaGold Resources said on Friday.

Both companies will retain their 50% stake in the large project, and, once Teck has spent the C$60-million, NovaGold and Teck will jointly fund the costs going forward.

The agreement replaces a November 2007 plan, under which Teck was to have spent C$72-million on optimisation studies for the project over five years and required NovaGold and Teck to jointly fund other costs.

The companies suspended construction on the mine in November 2007, citing ballooning costs, and said they would work on a new development plan and complete a revised feasibility study, before making a production decision.

Teck has already spent C$15,8-million on the optimisation work, and covered all the project costs of C$8,5-million in November and December 2008, when NovaGold was struggling to raise cash to repay a loan and meet its obligations, so the balance to be spent is C$35,7-million which is to be contributed by December 31, 2012, NovaGold said.

However, Teck, which has its own balance sheet problems as it needs to refinance and pay down debt taken on last year to buy coal firm Fording Canadian Coal Trust, will have more flexibility over how and when the money is spent.

While it is sole funding the project, Teck will have a casting vote on the partnership’s management committee "with respect to the timing and nature of expenses to be funded", NovaGold said in a statement.

Last month, NovaGold raised $75-million by selling shares and warrants. The company was in dire need of cash, after suspending operations at its only operating mine, Rock Creek in Alaska, just months after the operation started up.

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