Shares of NovaGold Resources Inc. tumbled Monday after the company and Teck Cominco Ltd. said they will halt development of the Galore Creek gold-silver-copper development project in northwestern British Columbia due to rising costs and a longer construction plan.

Those factors, combined with reduced margins due to the rise in the Canadian dollar, "would make the project, as now conceived and permitted, uneconomic at current consensus long-term metal prices," the companies said in a release issued prior to the opening of stock markets.

NovaGold 30-day TSX chart

On the TSX, NovaGold plunged $10.65 to close at $9.31. Teck Cominco fell $1.89 to a new 52-week low of $35.60.

Teck Cominco and NovaGold said they were still upbeat about the property and would look at alternative development plans. Both companies expect to take as-yet-undetermined writeoffs on the project.

The two firms said the cost of the project could now be as much as $5 billion US. The earlier estimate was $2 billion US. They said the costs have gone up due to steps necessary to build a tailings dam and water-management structures. The construction schedule was also forecast to take an extra 18 to 24 months.

Teck Cominco said it would invest an extra $72 million in the mine partnership to reassess the project.  

Of the next $100 million in project costs, Teck Cominco will pay 67 per cent, while NovaGold will cover the remaining 33 per cent.

The project, which is owned 50/50 by the two companies, currently employs more than 500 contractors and staff. The site is about 150 kilometres northeast of the community of Stewart.

Michael McPhie of the Mining Association of British Columbia said he was surprised that the project was being suspended.

"It's very significant," McPhie said. "This was not only the largest project in B.C., but one of the largest mine development projects in North America."