NOVAGOLD RESOURCES INC. (TSX:NG)(NYSE MKT:NG)(NYSE Amex:NG) today
released its fourth quarter and year-end financial results and
project update for its flagship 50%-owned Donlin Gold project
("Donlin Gold") in Alaska and its 50%-owned Galore Creek project
("Galore Creek") in British Columbia. Details of the Company's
financial results for the year ended November 30, 2012 are
presented in the consolidated financial statements and Management's
Discussion and Analysis ("MDA") which, together with further
details on each of the Company's projects, including resource and
reserve estimates, will be available on the Company's website at
www.novagold.com, on SEDAR at www.sedar.com, and on EDGAR at
www.sec.gov. All amounts are in Canadian dollars unless otherwise
stated and all resource and reserve estimates are shown on a 100%
project basis.
In 2012, NOVAGOLD reached multiple milestones:
-- Donlin Gold's updated Feasibility Study was approved by partners
NOVAGOLD and Barrick, and permitting commenced under the National
Environmental Policy Act (NEPA)
-- The Company successfully spun out to its shareholders its interest in
the Upper Kobuk Mineral Project (UKMP) in the highly prospective Ambler
district in Alaska; shares of the newly formed NovaCopper Inc. are
trading on the TSX and NYSE-MKT under the symbol NCQ
-- NOVAGOLD assembled a strong core team which includes individuals with an
exceptional track record of developing, financing, building and
operating major gold mines on time and on budget
-- Donlin Gold Notice of Intent to prepare an Environmental Impact
Statement (EIS) was published in the U.S. Federal Register
-- The Company completed the sale of Alaska Gold Corporation (AGC),
including the Rock Creek project to Bering Straits Native Corporation
(BSNC)
-- NOVAGOLD strengthened its balance sheet as it:
-- Completed one of the year's largest offerings which allowed the
company to build a cash position of $253 million at November 30,
2012
-- Received cash proceeds of $54 million from the exercise of warrants
subsequent to year-end
-- Secured sufficient cash resources to take Donlin Gold through
permitting and satisfy all current financial obligations
President's Message
2012 was a transformative year for NOVAGOLD. One year ago, we
launched a process of maximizing the value of our high-quality
gold, gold-copper and copper assets. The objective was to provide
our shareholders with the best leverage to gold by becoming a pure
gold company focused on the advancement of Donlin Gold, the largest
and one of the highest-grade open-pit development projects in the
gold sector, located in Alaska, one of the safest mining
jurisdictions in the world. NOVAGOLD published three key studies in
2011, the Donlin Gold Feasibility Study (FS), the Galore Creek
Preliminary Feasibility Study (PFS), which confirmed that it would
be Canada's largest copper mine, as well as its lowest cash cost
large-scale producer, and the UKMP's Preliminary Economic
Assessment (PEA) which demonstrated that this project contains one
of the highest-grade copper deposits in the world and has the
potential to become one of the sector's most exciting copper
districts. The studies clearly confirmed the significant value,
growth potential and distinctive nature of these assets. Despite
these attributes, we determined that these assets were not
receiving sufficient value recognition. To address this issue, the
Board decided to reorganize the Company to unlock the value of
these assets for our shareholders. This objective was achieved by
transferring the UKMP into its subsidiary NovaCopper Inc. and
distributing its shares to NOVAGOLD shareholders resulting in a
separate publicly traded company. Furthermore, our plan was put in
motion to monetize NOVAGOLD's interest in Galore Creek on terms
reflective of the quality of this valuable asset, and use the
proceeds from such a disposition to advance our Donlin Gold
flagship project.
In 2012, beyond achieving the reorganization of the Company,
NOVAGOLD and Donlin Gold co-owner Barrick Gold approved the Donlin
Gold updated FS and, shortly thereafter, submitted a draft Plan of
Operations and Section 404 permit application to Federal and State
regulators which launched the permitting process. Permitting in
Alaska is a clearly defined environmental review process, which is
coordinated under the requirements of the National Environmental
Policy Act (NEPA). The process involves the preparation of an EIS.
In the fourth quarter, the public scoping process commenced with
the publication of the Notice of Intent to prepare an EIS in the
U.S. Federal Register. Preparation of the EIS is generally the most
time-consuming portion of this process. Based on past experience on
similar projects, NOVAGOLD expects that it will take approximately
3-4 years to permit Donlin Gold. We welcome the scrutiny that the
permitting process brings, given the importance of a project of
this size to the State and the region. We have sufficient funds to
finance the entire permitting effort. As the process nears
completion, the owners will consider a construction decision. As an
operator who has permitted and built a number of mines in the
United States and abroad, I'm very pleased with the progress to
date. I'm also proud of the excellent relationships NOVAGOLD has
developed with local communities, native corporations, and Alaska's
government agencies where we have been operating for over 16 years.
Once our permits to construct and operate the mine are in place, we
expect to move forward to a construction decision without
delay.
We believe it speaks volumes to the quality of Donlin Gold that
NOVAGOLD has been able to attract senior industry leaders to
steward this exceptional asset. Drawn from top tier majors
including Goldcorp, Newmont and Barrick, these seasoned veterans
see in Donlin Gold what our Chairman Thomas Kaplan and top
shareholders see, a rare opportunity to be part of the development
of a truly unique and company-making gold asset in an era defined
by asset scarcity. Donlin Gold has all the leverage to a rising
gold market that a bull on the metal could ask for, and,
critically, it's one of only a handful of large projects located in
a safe jurisdiction where you can sleep soundly knowing you will
keep the fruits of that leverage. Donlin Gold is vital to the gold
industry where reserves are rapidly depleting, grades declining,
costs escalating and significant discoveries are rare.
These are the reasons we believe that NOVAGOLD will emerge as
one of only a handful of premier, institutional-quality, "must own"
gold equities. With approximately 39 million ounces(1) of gold in
the Measured and Indicated Resource category, Donlin Gold is the
world's largest gold development project. Furthermore, at a time
when quality assets are rapidly being redefined by where in the
world they are located, Donlin Gold is situated in Alaska, one of
the safest jurisdictions and the second largest gold producing
state in the U.S. after Nevada. With resource nationalism becoming
a prominent concern for mining companies and their investors, we
are fortunate to be in the United States.
We project that when Donlin Gold goes into production, assuming
no expansion, the annual production rate will be approximately
1,500,000 ounces for the first five years, which, by way of
comparison, exceeds Grasberg's or Goldstrike's production rates.
Over its mine life, annual production should average over 1,100,000
ounces of gold. There are only six gold assets in the world that do
or are projected to produce a million ounces of gold per year. Ours
is one of them, and the only one undeveloped in North America.
Quality is just as important as quantity. With a Measured and
Indicated Resource grade of 2.2 grams per tonne, Donlin Gold is
blessed with exceptionally high grade for a large open-pit deposit.
While we applaud, and root for, all good gold projects, the truth
is that the operations and economics of a mine can be much more
forgiving at 2.2 grams per tonne than at the industry average of
one gram or less per tonne.
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(1) Measured and indicated resources of 0.63 million ounces and 38.38
million ounces respectively (541 million tonnes at an average grade of
approximately 2.2 grams per tonne) are inclusive of 0.57 million
ounces proven and 33.28 million ounces probable reserves (504.8
million tonnes at an average grade of approximately 2.09 grams per
tonne).
Staying power is just as important as size. As currently
envisioned, Donlin Gold has a 27-year mine life. That estimate is
based merely on current reserves and does not take into account
Inferred Resources or the deposit's excellent potential to grow.
Moreover, of even greater significance, the existing reserves and
resources are situated in a three-kilometer section of an area of
known mineralization that extends for at least eight kilometers.
Donlin Gold would be a core asset in any gold mining company,
generating returns for decades to come.
Today, big capital-intensive projects are being carefully
scrutinized. Some of the reasons are perfectly legitimate and there
have been too many capital cost blow-outs to ignore the issue.
However, we believe that capital cost cannot be considered in
isolation. There is a supply and demand disequilibrium in gold and
today's operating mines cannot fill the gap. Therefore, gold prices
are likely to continue to rise. Indeed, we believe that this is one
of a number of anecdotal indicators that the bear market for such
assets is in the final capitulation (or winter) phase, and that
those who are currently advocating that the industry hunker down
will be swinging back to a mantra of "More production, now!" The
stocks with the highest multiples will be those with high quality
growth in safe jurisdictions. Viewed through that prism, Donlin
Gold is an obvious "go to" asset.
The plan to sell our 50% interest in the Galore Creek
copper-gold-silver project is part of NOVAGOLD's strategy of
positioning the Company as a pure play on Donlin Gold. In a perfect
world, we would keep Galore Creek and take it all the way through
the value chain. It's a superb asset: it's huge; the copper grades
are strong, with a significant gold kicker; and the resource is
growing, with considerable exploration upside. Galore Creek is
expected to be the largest low-cost producer in Canada, one of the
few safe jurisdictions left for copper miners, a significant
consideration when one sees the challenges miners are facing in the
Congo, Indonesia, Argentina, Mongolia, Peru, Chile and other
significant copper producing countries. Even so, there is only so
much a company like ours can do and, much as we would be happy to
keep our share of Galore Creek, we concluded that we should seek to
monetize the asset value for our future equity component in Donlin
Gold. We believe it will pay to be patient. It's important to
remember that when we embarked on the sales process, NOVAGOLD's
balance sheet was thin. Now with approximately $300 million in the
treasury, our ability to be patient in maximizing Galore Creek's
value has been dramatically enhanced. Nonetheless, given our
commitment to Donlin Gold, we continue to work to sell our share of
Galore Creek, but will do so only if the right offer is made. On
the other hand, if all offers are, in our view, inadequate, we will
continue to enhance its value through exploration and engineering
studies on a reduced budget and evaluate further opportunities when
market conditions improve.
As a result of much hard work and cooperative effort between the
State of Alaska and the Company, NOVAGOLD completed the transfer of
AGC to BSNC. The transfer included the Rock Creek mine and other
properties in and around Nome, Alaska, and marked another step in
NOVAGOLD's transition into a pure gold play focused on the Donlin
Gold project. NOVAGOLD has been indemnified by BSNC with respect to
Rock Creek and all other AGC properties that were transferred.
With the reorganization complete, NOVAGOLD has become a much
simpler company focused on the development of Donlin Gold, a
pure-gold, high-quality asset located in a stable and safe
jurisdiction with a much smaller but experienced team in place to
achieve these objectives. As such, our 2013 budget of $41 million
represents a 68% reduction in expenditures compared to 2012.
Further details on the budget are provided in the 2013 Outlook
section below.
Although the last year was exceptionally productive and NOVAGOLD
met all of its corporate objectives, our accomplishments were not
reflected in our share price. While it is true that the market has
been difficult for the majority of the mining sector, we were hit
by an additional factor: the comments made by Barrick in its second
quarter report.
Some investors interpreted Barrick's second quarter 2012
release, which stated that Donlin Gold did not currently meet their
investment criteria and that they would not make a decision to
construct the project at this time, to mean that the project was
cancelled, shelved or delayed. None of these things are true. Far
from it. Permitting commenced on schedule, and Donlin Gold LLC is
doing its job, advancing the project up the value chain at exactly
the same pace as was envisioned when the updated FS was completed.
Permitting is a 3-4 year process and is one of the lowest-cost
phases in the development cycle. A rising gold price during the
permitting period, as well as a premium valuation for scarce assets
in safe places, will only accentuate the value of Donlin Gold and
NOVAGOLD's market value. With Donlin Gold's undiscounted net
present value (NPV) of US$19 billion at US$2,000 gold, we feel very
confident that NOVAGOLD's share price will benefit as confidence
increases in the likelihood of this extraordinary project being
built and that, as we saw in 2010, NOVAGOLD will outperform its
peers.
In conclusion, I cannot stress enough how excited we are with
the progress we have made over the last year in setting the stage
for a smooth permitting process and ultimately the development of
Donlin Gold. We are very grateful to our shareholders and
stakeholders for their tremendous support and trust. We thank our
Board of Directors for their shareholder-friendly and value-focused
vision. The progress we have made would not have been possible
without the project teams' hard work, dedication and expertise in
the excellent management of our quality assets; the Governments and
Native Corporations of the jurisdictions where we operate, who give
us the foundation of support without which we could not develop our
projects; and finally, our transitioning and new employees who have
helped us deliver on our objectives of completing the
reorganization, enter into permitting at Donlin Gold, and lay the
foundation for maximizing the value of our assets for the benefit
of our stakeholders.
Results of Operations
in thousands of Canadian dollars, except for per share amounts
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Year ended Year ended
November 30, 2012 November 30, 2011
$ $
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Expenses (1) 24,126 21,112
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Share-based payments 19,045 8,878
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Finance costs, net 14,061 13,520
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Foreign exchange gain 11,376 9,322
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Gain on embedded derivative 39,955 29,761
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Gain on derivative 36,901 30,322
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Income (loss) for the period 67,641 (57,452)
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Income (loss) per share
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- Basic 0.25 (0.24)
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- Diluted 0.09 (0.24)
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Cash and cash equivalents 253,037 60,572
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Total assets 655,626 519,730
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Total liabilities 179,583 299,585
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(1) General and administrative, salaries and severance, professional fees,
and corporate and development.
Financial Results
For the year ended November 30, 2012, the Company reported net
income of $67.6 million (or $0.25 per share, basic, and $0.09 per
share, diluted) compared to a net loss of $57.5 million (or $0.24
per share, basic and diluted) for the corresponding year ended in
2011. The increase in income was primarily due to: non-cash gains
recognized on (1) the spin-out of NovaCopper Inc. to our
shareholders during the second quarter; (2) the reduction in the
embedded derivative liability related to our convertible notes; and
(3) the reduction in the derivative liability related to the
Company's U.S. dollar denominated warrants; and a decrease in
operating losses. The reduction in the embedded derivative
liability and derivative liability resulted from the decrease in
the Company's share price.
The Operating loss for 2012 decreased by $99.7 million,
primarily due to lower charges related to Rock Creek (sold in the
fourth quarter of 2012), lower project costs at Donlin Gold and
Galore Creek, partially offset by higher administrative costs due
to the corporate reorganization.
In 2012, Donlin Gold incurred US$33.6 million in costs compared
to a budget of US$37.2 million. The Company's 50% share was US$16.8
million in preparation for and the commencement of the permitting
application process and community development.
In 2012, Galore Creek incurred $33.2 million in costs compared
to a budget of $35.4 million. The Company's 50% share was $16.6
million primarily related to approximately 27,000 meters of
resource infill, exploration and geotechnical drilling, as well as
engineering studies and site care and maintenance costs.
At Rock Creek, a total of $21.3 million was spent in 2012
compared to a budget of $30.0 million to complete the Phase 1
closure plan. On November 1 2012, NOVAGOLD sold AGC, which owns the
Rock Creek property in and around Nome to BSNC for US$1.0 million
in cash and US$5.0 million in notes receivable over five years.
BSNC has assumed full responsibility and liability for the
remainder of the Rock Creek reclamation activities as requested by
Federal and State regulatory authorities.
Liquidity and Capital Resources
As at November 30, 2012, the Company had $253.0 million in cash
and cash equivalents compared to $60.6 million at November 30,
2011. The increase in cash is primarily related to the receipt of
$316.4 million in net proceeds from an equity financing in February
2012 and $5.8 million from the exercise of warrants, partially
offset by $88.4 million used in operating activities during the
year and $40.4 million used to fund the spin-out of NovaCopper.
Cash used in operating activities increased by $12.2 million to
$88.4 million in 2012 compared to $76.2 million in 2011. The
increase resulted from $21.3 million used for the Phase 1 closure
plan at Rock Creek, partially offset by lower expenses at the UKMP
property and Ambler district due to the spin-out of NovaCopper in
April 2012. The Company used $18.5 million and $16.3 million to
fund its share of expenditures at the Donlin Gold and Galore Creek
projects in 2012, compared to $22.0 million and $14.1 million cash
funding in 2011.
2013 Outlook
Last year was an extremely productive year for NOVAGOLD. Moving
into 2013, the expected expenditures have reduced significantly;
our total budget is $41 million, which includes $15 million in
G&A and $3 million in interest on the convertible notes
(assuming full repayment of the notes totaling $95 million on May
1, 2013).
The Donlin Gold LLC approved budget for 2013 is US$30 million of
which the Company's 50% share is approximately US$15 million for
permitting, engineering, environmental, community development and
G&A. During 2013, Donlin Gold intends to advance the permitting
process through public scoping, completion of the Preliminary Draft
Environmental Impact Statement (PDEIS), and receipt of comments
from the Federal and State agencies on the PDEIS in preparation for
issuance of the draft EIS in 2014. In addition, Donlin Gold LLC
will continue to optimize the project and evaluate third party
owner-operator agreements to reduce the up-front project capital
costs. Sharing upfront costs with third party operators and further
optimizing project design and layout are avenues that can
significantly reduce initial costs. As the anticipated operating
margins of the project are already robust, the emphasis on reducing
up-front capital costs could potentially have a significant impact
on project returns.
Galore Creek's approved project budget for 2013 is $16 million
of which the Company's 50% share is approximately $8 million. Our
program in 2013 includes, updating the resource model with the
latest 2012 drill results; follow-up on positive drill results and
test additional targets with approximately 10,000 meters of planned
drilling; and potentially increase resources. In addition, NOVAGOLD
will continue to evaluate opportunities to monetize the value of
Galore Creek.
Conference Call & Webcast Details
NOVAGOLD will host a conference call and webcast today, February
12, 2013 at 8:00 am PST (11:00 am EST). The webcast and conference
call-in details are provided below.
Webcast: www.NOVAGOLD.com
North American callers: 1-866-202-1971
International callers: 1-617-213-8842
Participant Passcode: 67506795
The webcast will be archived on NOVAGOLD's website for one year
and the conference call replay will be available for 14 days. To
access the conference call replay please dial 1-888-286-8010 (North
America), or 1-617-801-6888 (International), followed by your
Access PIN: 14713098. For a transcript of the call please email
info@NOVAGOLD.com.
Filing of Annual Information Form
NOVAGOLD today filed its Annual Information Form (AIF) and its
Form 40-F for the year ended November 30, 2012. The AIF is
available on the Company's website at www.NOVAGOLD.com and on SEDAR
at www.SEDAR.com. The Form 40-F is available on EDGAR at
www.sec.gov. Shareholders may also receive a hard copy of the
Company's complete consolidated financial statements free of charge
by sending a request to info@NOVAGOLD.com or calling
1-866-669-6227.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company engaged in
the exploration and development of mineral properties in North
America. Its flagship asset is the 50%-owned Donlin Gold project in
Alaska, one of the safest jurisdictions in the world. With
approximately 39 million ounces(2) of gold in the Measured and
Indicated resource categories (541 million tonnes at an average
grade of approximately 2.2 grams per tonne), Donlin Gold is
regarded to be one of the largest, and most prospective known gold
deposits in the world. According to the updated Feasibility Study,
once in production, Donlin Gold should average approximately 1.5
million ounces of gold per year for the first five years, followed
by decades of more than one million ounces per year. The Donlin
Gold project has substantial exploration potential beyond the
designed footprint which currently covers only three kilometers of
an approximately eight-kilometer strike length of the property.
Permitting is underway for the Donlin Gold project, a clearly
defined process expected to take 3-4 years. NOVAGOLD also owns 50%
of the Galore Creek copper-gold-silver project located in northern
British Columbia. According to the 2011 Pre-Feasibility Study,
Galore Creek is expected to be the largest copper mine in Canada, a
tier-one jurisdiction, when it is put into production. NOVAGOLD is
currently evaluating opportunities to sell all or a portion of its
interest in Galore Creek and would apply the proceeds toward the
development of Donlin Gold. NOVAGOLD has a strong track record of
forging collaborative partnerships, both with local communities and
with major mining companies.
Please note: As part of the rebranding, NOVAGOLD has converted
its primary domain to .com from .net, therefore, our website can
now be accessed at www.NOVAGOLD.com and all email formats within
NOVAGOLD are now firstname.lastname@NOVAGOLD.com. Please update
your contacts accordingly.
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(2) Measured and indicated resources of 0.63 million ounces and 38.38
million ounces respectively (541 million tonnes at an average grade of
approximately 2.2 grams per tonne) are inclusive of 0.57 million
ounces proven and 33.28 million ounces probable reserves (504.8
million tonnes at an average grade of approximately 2.09 grams per
tonne).
Scientific and Technical Information
Scientific and technical information contained herein with
respect to Donlin Gold is derived from the "Donlin Creek Gold
Project Alaska, USA NI 43-101 Technical Report on Second Updated
Feasibility Study" compiled by AMEC. Kirk Hanson, P.E., Technical
Director, Open Pit Mining, North America, (AMEC, Reno), Gordon
Seibel, R.M. SME, Principal Geologist, (AMEC, Reno), Tony Lipiec,
P.Eng. Manager Process Engineering (AMEC, Vancouver) are the
Qualified Persons responsible for the preparation of the
independent technical report, each of whom are independent
"qualified persons" as defined by NI 43-101.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking
information" and "forward-looking statements" (collectively
"forward-looking statements") within the meaning of applicable
securities legislation, including the United States Private
Securities Litigation Reform Act of 1995. All statements, other
than statements of historical fact, included herein including,
without limitation, the timing of permitting and potential
development of Donlin Gold, statements relating to NOVAGOLD's
future operating and financial performance, outlook, and the
potential sale of all or part of NOVAGOLD's interest in Galore
Creek are forward-looking statements. Forward-looking statements
are frequently, but not always, identified by words such as
"expects", "anticipates", "believes", "intends", "estimates",
"potential", "possible", and similar expressions, or statements
that events, conditions, or results "will", "may", "could", or
"should" occur or be achieved. These forward-looking statements may
include statements regarding perceived merit of properties;
exploration results and budgets; mineral reserves and resource
estimates; work programs; capital expenditures; timelines;
strategic plans; completion of transactions; market prices for
precious and base metals; intended use of proceeds; or other
statements that are not statements of fact.
Forward-looking statements involve various risks and
uncertainties. There can be no assurance that such statements will
prove to be accurate, and actual results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from NOVAGOLD's expectations include the uncertainties
involving the need for additional financing to explore and develop
properties and availability of financing in the debt and capital
markets; uncertainties involved in the interpretation of drilling
results and geological tests and the estimation of reserves and
resources; the need for continued cooperation with Barrick Gold
Corporation and Teck Resources Limited for the continued
exploration and development of the Donlin Gold and Galore Creek
properties; the need for cooperation of government agencies and
native groups in the development and operation of properties; the
need to obtain permits and governmental approvals; risks of
construction and mining projects such as accidents, equipment
breakdowns, bad weather, non-compliance with environmental and
permit requirements, unanticipated variation in geological
structures, ore grades or recovery rates; unexpected cost
increases, which could include significant increases in estimated
capital and operating costs; fluctuations in metal prices and
currency exchange rates; and other risk and uncertainties disclosed
in NOVAGOLD's Annual Information Form for the year-ended November
30, 2012, filed with the Canadian securities regulatory
authorities, and NOVAGOLD's annual report on Form 40-F filed with
the United States Securities and Exchange Commission and in other
NOVAGOLD reports and documents filed with applicable securities
regulatory authorities from time to time. NOVAGOLD's
forward-looking statements reflect the beliefs, opinions and
projections on the date the statements are made. NOVAGOLD assumes
no obligation to update the forward-looking statements of beliefs,
opinions, projections, or other factors, should they change, except
as required by law.
Cautionary Note to United States Investors
This press release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which
differ from the requirements of U.S. securities laws. Unless
otherwise indicated, all resource and reserve estimates included in
this press release have been prepared in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101") and the Canadian Institute of Mining, Metallurgy, and
Petroleum Definition Standards on Mineral Resources and Mineral
Reserves. NI 43-101 is a rule developed by the Canadian Securities
Administrators which establishes standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. Canadian standards, including NI
43-101, differ significantly from the requirements of the United
States Securities and Exchange Commission ("SEC"), and resource and
reserve information contained herein may not be comparable to
similar information disclosed by U.S. companies. In particular, and
without limiting the generality of the foregoing, the term
"resource" does not equate to the term "reserves". Under U.S.
standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made.
The SEC's disclosure standards normally do not permit the
inclusion of information concerning "measured mineral resources",
"indicated mineral resources" or "inferred mineral resources" or
other descriptions of the amount of mineralization in mineral
deposits that do not constitute "reserves" by U.S. standards in
documents filed with the SEC. Investors are cautioned not to assume
that any part or all of mineral deposits in these categories will
ever be converted into reserves. U.S. investors should also
understand that "inferred mineral resources" have a great amount of
uncertainty as to their existence and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an "inferred mineral resource" will ever be upgraded to
a higher category. Under Canadian rules, estimated "inferred
mineral resources" may not form the basis of feasibility or
pre-feasibility studies except in rare cases. Investors are
cautioned not to assume that all or any part of an "inferred
mineral resource" exists or is economically or legally mineable.
Disclosure of "contained ounces" in a resource is permitted
disclosure under Canadian regulations; however, the SEC normally
only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in-place tonnage and
grade without reference to unit measures. The requirements of NI
43-101 for identification of "reserves" are also not the same as
those of the SEC, and reserves reported by NOVAGOLD in compliance
with NI 43-101 may not qualify as "reserves" under SEC standards.
Accordingly, information concerning mineral deposits set forth
herein may not be comparable with information made public by
companies that report in accordance with U.S. standards.
Contacts: NOVAGOLD RESOURCES INC. Melanie Hennessey Vice
President, Corporate Communications 604-669-6227 or 1-866-669-6227
NOVAGOLD RESOURCES INC. Erin O'Toole Analyst, Investor Relations
604-669-6227 or 1-866-669-6227 www.NOVAGOLD.com
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