NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the
Company”) (NYSE American, TSX: NG) today released its 2020 first
quarter financial results and an update on its flagship Donlin Gold
project in Alaska, which NOVAGOLD owns equally with Barrick.
Details of the financial results for the quarter ended February
29, 2020 are presented in the consolidated financial statements and
quarterly report filed April 1, 2020 on Form 10-Q with the SEC that
is 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
U.S. dollars unless otherwise stated and all resource and reserve
estimates are shown on a 100% project basis.
In the first quarter 2020 and more recent global events,
NOVAGOLD wanted to highlight the following achievements and
updates:
- COVID-19
- NOVAGOLD’s most important objective is to secure the health and
safety of its employees, partners and contractors. In that regard,
to reduce risk, our office employees have been asked to work from
home, avoid all non-essential travel, adhere to good hygiene
practices, and, if they must visit the office, engage in social
distancing. NOVAGOLD and its partner Barrick Gold, through Donlin
Gold LLC, have implemented a wide-ranging set of policies
consistent with the State of Alaska’s requirements,
recommendations, and precautions for State activities and aimed at
achieving the same objectives at the project site including:
screening all employees and contractors visiting the project site
prior to their departure and periodically during their stay; should
any individual exhibit symptoms of illness, they will be evaluated
to determine if they need to be isolated and evacuated from site;
implementation of more frequent sanitization practices; regularly
conducting safety meetings designed to address sound hygiene and
sanitization practices; and requesting all employees to monitor
their health and consult the health professionals if feeling any
symptoms of illness.
- In addition, Donlin Gold LLC has reached out to Calista
Corporation (Calista) and The Kuskokwim Corporation (TKC), Donlin
Gold’s Native Corporation partners and owners of the project’s
subsurface and surface rights, respectively, to offer help and
assistance with COVID-19 related issues at this great time of
need.
- While the 2020 Donlin Gold drill program preparations and work
commenced in February, as a precautionary measure and to align with
the State of Alaska Department of Health and Social Services
recommendations, travels restrictions and other COVID-19 measures
in the region, the drill program will temporarily pause and the
project site will go into care and maintenance until it is safe for
our employees and contractors to return to site.
- NOVAGOLD and Barrick advanced technical work on Donlin Gold:
- The partners commenced the project’s drill program,
encompassing 80-holes planned totaling 22,000‑meters in the ACMA
and Lewis resource areas, with the objective of validating recent
geologic and resource modeling concepts and testing potential
extensions of high-grade zones focused on early-life mining that
have the potential to add value.
- We continued to advance the multi-year site investigation
program that commenced in mid-2019 as part of the project’s dam
safety certification application.
- With key Federal and State permits in hand, Donlin Gold
secured additional State permits:
- In early January, the Alaska Department of Natural Resources
(ADNR) Division of Mining, Land, and Water (DMLW) issued the final
land leases, land use permits, and material site authorizations for
the proposed transportation facilities on State lands and
the final easements for the access road and fiber optic
cable.
- On January 17, 2020, the ADNR issued the final State ROW lease
for the buried natural gas pipeline to provide fuel to power
the remote project site.
- Donlin Gold, together with Calista and TKC, continued
their long-standing community engagement during the quarter:
- Donlin Gold worked with TKC, the State of Alaska and
Alaska Native Tribal Health Consortium in an initiative to upgrade,
as well as improve health and safety standards, of water and sewer
services in Middle Kuskokwim area communities.
- In a partnership with TKC, the Village of Crooked Creek, and
the Napaimute Tribe, Donlin Gold funded and provided technical data
to extend and maintain the ice road on the Kuskokwim River -
greatly improving safety and access to nearby remote
communities.
- Donlin Gold delivered a project update with TKC CEO and
President, Andrea Gusty, at the TKC Middle Kuskokwim Gathering in
Aniak, where 10 villages were represented.
- Donlin Gold hosted and sponsored a regional basketball
tournament in January at Bethel High School where nine communities
participated. Bethel is approximately 140 miles from Donlin Gold
and is the closest major town to the project.
President’s Message
Continuing to advance Donlin Gold in the climate of
COVID-19
While many important milestones were achieved during the first
quarter 2020, a great deal of that fine work is overshadowed by the
stark backdrop of the spread of COVID-19. That was particularly the
case in the latter part of the quarter when it became clear that
the world, as we knew it, was changing.
NOVAGOLD treats all matters related to the health and safety of
its employees with the utmost urgency and thus addressed the
challenges and the dangers posed by COVID-19 by immediately
instituting specific operating and social guidelines at both of its
offices and, together with Barrick, at Donlin Gold. The key
elements of the office policies relate to strongly encouraging
everyone to work from home and maintain rigid rules for social
distancing, hygiene and travel restrictions.
At Donlin Gold, Barrick and NOVAGOLD instituted a comprehensive
set of testing for symptoms of COVID-19 prior to traveling to the
project site, as well as new health, hygiene and behavior
guidelines implemented for those working at the project site
designed to protect individuals from contracting or spreading the
virus. As an additional precautionary measure and to align with the
State of Alaska Department of Health and Social Services, travel
restrictions and other COVID-19 measures in the region, we will
temporarily pause the drill program and reduce activities to care
and maintenance until it is safe for our employees and contractors
to return to site. We are committed to maintaining vigilance during
this pandemic and continue to enforce all the appropriate
guidelines to ensure everyone’s safety and wellbeing.
Building Value for a Unique Asset
NOVAGOLD strongly believes that Donlin Gold is a one-of-a-kind
asset, unique in our industry. There are several reasons for that
description. First, with approximately 39,000,000 ounces of gold in
measured and indicated mineral resources1, we believe it is
nearly impossible for this endowment to be replicated given the
scarcity of such projects and the lack of new discoveries in the
world. Second, its grade, averaging 2.24 grams per tonne1 is
more than twice the industry average grade2. Third, considering
that its stated resources are contained in only three
kilometers of an eight-kilometer mineralized belt, and
with only a small portion of the land package having been explored,
Donlin Gold could well command district-sized exploration
potential. Fourth, its location in Alaska, with the State’s history
of support for responsible mining and mine development, provides
the kind of jurisdictional safety that is a key differentiator,
especially during this era of political and economic fragility.
And, of course, we are truly blessed to have time-tested Native
Corporation partners who share our vision of building value for
their future generations of stakeholders in this game-changing
project.
All of these attributes clearly render Donlin Gold unique.
Consequently, any value-enhancing work that we undertake on the
property should be value-accretive to the owners. In 2017, Donlin
Gold carried out a drill program that encountered distinct
significant high-grade intercepts within the reserve pit and high
grades identified outside the planned pit boundaries. With a
history of growth through drilling, these results are indeed
indicative of the exceptionally strong resource potential that
exists. In 2019, Donlin Gold commenced a multi-year site
investigation program required to collect additional geotechnical
information to advance the engineering work on the tailings
facility and other water retention and diversion structures from a
feasibility level study to a final construction package, as
required for the project’s dam safety certificate application to
ADNR. The safety of the tailings facility constitutes one of Donlin
Gold’s most important priorities as the partners continue to ensure
that the work is done to the highest standards and according to
best design practices.
The partners have mobilized three drill rigs at the Donlin Gold
site for the project’s largest drill program in 12 years, with
80-holes totaling 22,000‑meters planned in the ACMA and Lewis
deposit areas to validate recent geologic and resource modeling
concepts, and test potential extensions of high-grade zones focused
on early life mining that have potential to add value. The program
will provide the necessary data needed for the owners to decide on
the next steps to update the Donlin Gold feasibility study and
initiate the engineering work necessary to advance the project
design from feasibility level to basic, then detailed, engineering
before reaching a construction decision. As a precautionary measure
and as a result of travel restrictions and other COVID-19 measures,
the owners have decided to temporarily pause the drill program. The
project site will go into care and maintenance and the drill
program will resume once it is safe for our employees and
contractors to return to site.
Early in 2020, NOVAGOLD reached a number of milestones with the
issuance of key transportation and energy infrastructure approvals
for the Donlin Gold project including the final state land
authorizations and the final state ROW lease for the buried
natural gas pipeline to provide fuel to power the remote project
site. The receipt of the ROW lease and other land leases and
permits for the transportation facilities are the most recent among
the last few key permits needed to proceed with activities at
Donlin Gold. With federal permitting complete and state permitting
progressing, the focus is on the drill program to advance and
integrate scoping-level optimization work into a study that will
serve as the basis for an updated project development plan.
Given the significant advancement of all permitting activities
and substantial amount of project de-risking that the owners have
undertaken over the years, the timeline for the development of
Donlin Gold resides in the hands of the partnership. NOVAGOLD is
working with Barrick’s management and technical team to advance the
project in a financially disciplined manner with a strong focus on
engineering excellence, environmental stewardship, a strong safety
culture and continued community engagement.
Strong upside and well-protected downside
It is well known that the value of Donlin Gold is highly
leveraged to the price of gold. What few people realize, however,
is the fact that NOVAGOLD’s value in a downside scenario is also
exceptionally well protected. In the Chairman’s Q&A section of
our 2019 Annual Report, which was written around the New Year, we
address NOVAGOLD’s positioning in terms of its downside
protections. The following excerpt discusses the potential concerns
our employees, shareholders, contractors, partners and communities
may have regarding the economic security of the Company as we
continue to focus on responding to the COVID-19 global health
crisis:
14. Do you still see NOVAGOLD
as well-positioned in terms of its downside protections, or is the
gold market past the need for that?
One should never be past thinking in
terms of downside protection. Indeed, as a seasoned player in the
natural resources space who strongly believes in the notion that if
an investor has covered the downside the upside will take care of
itself, let me actually highlight the downside protections we’ve
put in place for NOVAGOLD’s owners in order to ensure that your
company, effectively an unexpiring warrant without time decay, is
positioned to prosper.
As a pure play on a federally
permitted mining project – on Native Corporation land already
designated for mining – we believe Donlin Gold will constitute the
largest single pure gold mine in the world, in one of the few parts
of the world where mining is welcomed and the rule of law isn’t a
novelty. The project has tremendous support at the local, state,
and federal levels.
And we have a well-managed, tier-one
partner in Barrick Gold. Moreover, as of February 29, 2020,
NOVAGOLD had a balance sheet that, between cash on hand and
receivables, was approximately $241 million, with maybe more to
come. With federal permitting behind us, and Galore Creek
monetized, NOVAGOLD’s current obligated burn rate is nominal at a
time when we are flush with cash.
What this means is that, were the
gold price to go down before they revive in full, and should we
face challenging times, we simply could not go out of business
under any reasonable scenario. While I don’t believe that the
fundamentals of gold, or the industry, require a washout to set the
stage for gold’s next big move higher, these head fakes do happen.
Shakeouts before a blistering move upward are classic chart
patterns. Think of a V-bottom and you may recall a few. This is
assuredly not a scenario our shareholders should fear – the
Electrum team having been in that movie several times over the
years and knowing well from firsthand experience how to position
our portfolio companies in order to identify opportunity in market
displacements.
We have thus deliberately positioned
NOVAGOLD in such a manner that we likely would not need to raise
capital, even if the resumption of the gold bull market is delayed
by a temporary downturn in gold price – including a sharp one.
If anything, under certain circumstances, the company might
determine that its shares are worth more than the metal itself and
buy some back. Put differently, an investor can expect that, when
gold is acknowledged to have put in its bottom, we will not have
diluted our fully intact optionality on our reserve base. For an
investor, these robust downside protections provide a true
differentiator.
Dedication to strong partnerships with
stakeholders
NOVAGOLD and our project partners are committed to enhancing and
engaging in community relationships to preserve traditional ways of
life and support economic development for the benefit of Calista
and TKC shareholders and the Y-K region. One partnership that
speaks directly to the health and safety of our employees and our
communities is recent assistance with construction of an ice road
on the Kuskokwim River, which acts as a highway connecting these
remote villages to one another. In partnership with TKC, the
Village of Crooked Creek, and Napaimute Tribe, Donlin Gold was the
lead sponsor of a project to construct and maintain the upper
portions of an ice road on the Kuskokwim River from Crooked Creek
to Sleetmute and provided technical data to assist the roadbuilder,
including aerial photographs and ice measurements along the river.
For the first time, the road extended as far north as Sleetmute,
greatly improving safety and access to nearby communities for
residents in remote locations, creating economic opportunity for
local trade, and increased community contact for sport, social
activities and academics. In many of these communities, difficulty
with air travel in winter can lead to life-threatening scenarios
and isolation from other communities, family and friends. Through
Donlin Gold, NOVAGOLD is proud to have played a part in bringing
this safety lifeline to communities in the Middle Kuskokwim. Upon
its completion in February, the Kuskokwim ice road was a record
length of 355 miles long running from just south of Bethel to
Sleetmute.
Also having a positive impact on communities farther from the
project, Donlin Gold was invited to host and sponsor a regional
basketball tournament in January at Bethel High School where nine
villages participated. Bethel is approximately 140 miles from
Donlin Gold, is the closest major town to the project, and is a
significant port and regional hub in southwestern Alaska.
Additionally, Donlin Gold is working with TKC, the State of
Alaska and Alaska Native Tribal Health Consortium on a health
initiative to upgrade, as well as improve health and safety
standards of water and sewer services in Middle Kuskokwim area
communities. As part of its ongoing community engagement, Donlin
Gold attended and gave a presentation with TKC’s CEO and President,
Andrea Gusty, at the TKC Middle Kuskokwim Gathering in Aniak where
10 villages were represented.
In January, Pete Kaiser, 2019 Iditarod Champion and Donlin
Gold-sponsored musher, won the Kuskokwim 300 regional dog mushing
race. In addition, Donlin Gold sponsored four Iron Dog teams for
the annual snowmobile race in February. These popular events are an
important part of the culture and way of life in remote
southwestern Alaska.
A balance sheet with integrity
A unique feature and benefit of being a NOVAGOLD shareholder is
not only owning a piece of one of the rarest assets in the world
but also a Company with a strong balance sheet and projected
expenses that are comfortably within means and which has not needed
to go back to the market in more than eight years. In 2020, we are
projecting expenses of $31 million. With approximately
$140.7 million in cash and term deposits as of February
29, 2020, the management team can focus entirely on moving
Donlin Gold forward without the distraction of needing to raise
additional capital. In addition to a strong balance sheet, we
expect to receive an additional $75 million from Newmont in 2021
and another $25 million in 2023, or a further $75
million contingent payment on top of that which we would
receive if and when the Galore Creek project owners
approve a construction plan. Based on these commitments
and projected needs, the Company believes it has sufficient funds
to advance Donlin Gold without the need to raise capital until
markets, and indeed the rest of the world, are considerably
healthier and a construction decision is made.
In periods of turmoil, we believe companies like NOVAGOLD
present an investment opportunity that stand above most others. As
a pure play on one of the world’s largest and highest-grade known
open-pit gold deposits - now federally permitted for development in
a geo-politically safe jurisdiction with well-established support
for responsible mining – we believe NOVAGOLD is an incredible value
proposition, now more than it has been in years, particularly in
light of its exceptional leverage to the price of gold and great
downside protection. As global gold production reaches “peak gold”,
we believe Donlin Gold’s scarcity value can only get better as the
industry depletes its established reserves and begins to seek out
replacement in a world where major discoveries have become nearly
extinct.
I wish to thank the experienced team
of professionals at NOVAGOLD, Donlin Gold, and
Barrick for their steadfast dedication to advancing the project. We
are also thankful to our Native Corporation partners, Calista and
TKC. Their strong support and commitment to Donlin Gold have been
the foundation of our success. The permitting achievements this
quarter would not have been possible
without the dedication of the professionals at the Alaska
Department of Natural Resources to advance permits
and approvals for the project in a transparent as well as
environmentally and socially responsible manner with strong
adherence to best practices. To our Board of Directors, I wish to
thank all of you for your continued counsel and adherence to best
governance practices which have truly set the Company apart in the
junior development space.
To our shareholders, having come to know many of you, I thank
you all for your unwavering support, engagement, patience, and
dedication. It is not during times of good fortune when you learn
who your friends are but in times of difficulty. Our shareholders
have understood and supported NOVAGOLD’s investment thesis and have
shown remarkable steadfastness as we continued to deliver on our
strategy. For that and much more, we are truly grateful to you.
We at NOVAGOLD pledge to remain true to our promise to build on
Donlin Gold’s unparalleled value and growth propositions, and to
remain true to our principles to do it right and continue to make
our shareholders proud. As we begin a new quarter during a
challenging era, please know that we wish all of our stakeholders,
who we sincerely consider to be our friends and family, a safe and
healthy future.
Sincerely,
Gregory A. Lang President & CEO
Financial Results
in thousands of U.S. dollars, except for per share
amounts
|
Three months endedFebruary 29,
2020$ |
Three months endedFebruary 28,
2019$ |
General and administrative expense (1) |
4,714 |
4,340 |
Share of losses – Donlin Gold |
1,568 |
1,323 |
Total operating expenses |
6,282 |
5,663 |
|
|
|
Loss from operations |
(6,282) |
(5,663) |
Interest expense on promissory note |
(1,760) |
(1,798) |
Accretion of notes receivables |
824 |
795 |
Other income |
887 |
700 |
Income tax expense |
(264) |
(357) |
Net loss |
(6,595) |
(6,323) |
|
|
|
Loss per share, basic and diluted |
(0.02) |
(0.02) |
|
At February 29,
2020$ |
At November 30, 2019
$ |
Cash and term deposits |
140,699 |
148,549 |
Total assets |
239,816 |
245,835 |
Total liabilities |
108,803 |
107,881 |
(1) Includes share-based compensation expense of $1,761 and
$1,531 for the first quarter-ended February 29, 2020 and
quarter-ended February 28, 2019, respectively.
For the first quarter ended February 29, 2020,
NOVAGOLD’s share of Donlin Gold losses increased from $1.3 million
in 2019 to $1.6 million in 2020 due to preparations for the drill
program.
General and administrative costs in 2020 increased
by $0.4 million from 2019, primarily due to higher share-based
compensation and regulatory costs.
Liquidity and Capital Resources
In the first three months of 2020, total cash, cash
equivalents and term deposits decreased by $7.9 million of which
$3.5 million was used in operating activities for administrative
costs and working capital changes, $2.6 million was used to fund
Donlin Gold and $1.7 million related to withholding taxes paid on
vested performance share units. Effects of exchange rate changes
also decreased cash by $0.1 million.
Net cash used in operating activities in 2020
increased by $0.3 million from 2019, primarily due to lower
interest income and higher regulatory fees partially offset by
changes in working capital. Funding of Donlin Gold increased by
$1.7 million due to the preparations for the commencement of
fieldwork in March 2020.
NOVAGOLD had $140.7 million in cash and term
deposits as of February 29, 2020. The Company’s cash and term
deposits are believed to be sufficient to advance Donlin Gold and
meet our other financial obligations. Additional capital will be
necessary if a decision to commence engineering and construction is
reached for the Donlin Gold project. The term deposits are
denominated in U.S. dollars and are held at Canadian chartered
banks.
2020 Outlook
We anticipate spending approximately $31 million in 2020, which
includes $20 million to fund our share of expenditures at the
Donlin Gold project, the majority earmarked for the drill program
with the balance for permitting and community engagement, and $11
million for general and administrative costs.
NOVAGOLD’s primary goals in 2020 are to continue to
advance the Donlin Gold project toward a construction/production
decision; maintain a healthy balance sheet; and continue an
effective corporate social responsibility program.
Minimizing risk of COVID-19
Exposure
NOVAGOLD’s most important objective is to secure the health and
safety of its employees, partners, and contractors. As so many
other companies have done, in recognition of the major threat posed
by COVID-19, the Company has implemented a wide-ranging set of
policies at its offices in Salt Lake City and Vancouver, as well
with its partner Barrick at the Donlin Gold office in Anchorage and
Donlin Gold site, designed to ensure the safety and well-being of
all employees, contractors, partners, and the people associated
with them. In that regard, to reduce risk, our office
employees have been asked to work from home, avoid all
non-essential travel, adhere to good hygiene practices, and, if
they must visit the office, engage in social distancing.
NOVAGOLD and its partner Barrick through Donlin Gold have
implemented a wide-ranging set of policies consistent with the
State of Alaska’s requirements, recommendations, and precautions
for State activities and aimed at achieving the same objectives at
the Donlin Gold project site:
- Screening all employees and contractors visiting the Donlin
Gold project site prior to their departure for site and
periodically during their stay. Should any individual exhibit any
symptoms of illness, they will be evaluated to determine if they
need to be isolated and evacuated from site;
- Implementing more frequent sanitization practices;
- Regularly conducting safety meetings designed to address sound
hygiene and sanitization practices; and
- Requesting all employees to monitor their health and consult
health professionals if feeling any symptoms of illness.
In addition, Donlin Gold has reached out to Calista and TKC,
Donlin Gold’s Native Corporation partners and owners of the
project’s subsurface and surface rights, respectively, to offer
help and assistance with COVID-19 related issues at this great time
of need.
NOVAGOLD 2019 Annual Report
Investors are reminded that NOVAGOLD’s 2019 annual report has
been mailed in hard copy to those shareholders who have requested
it and is also available online without charge in interactive form
https://bit.ly/38QsvHI as well as downloadable PDF
https://bit.ly/32Sr1vz. Investors interested in Dr. Thomas Kaplan’s
thoughts on gold (https://bit.ly/2PPQG2i) or in NOVAGOLD’s
achievements in 2019 and goals for 2020 from our President and CEO,
Greg Lang (https://bit.ly/2wCiNv9), can find them in the Company’s
full annual report on NOVAGOLD’s website.
If you wish to receive a hard copy, please send the request
to info@novagold.com or call Investor Relations at
+1-866-669-6227.
Conference Call & Webcast Details
NOVAGOLD’s conference call and webcast to discuss these results
will take place April 2, 2020 at 8:00 am PT (11:00 am ET). The
webcast and conference call-in details are provided below.
Webcast: |
www.novagold.com/investors/events/ |
North American callers: |
1-800-319-4610 |
International callers: |
1-604-638-5340 |
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on
the development of its 50%-owned Donlin Gold project in Alaska, one
of the safest mining jurisdictions in the world. With approximately
39 million ounces of gold in the measured and indicated mineral
resource categories, inclusive of proven and probable mineral
reserves (541 million tonnes at an average grade of approximately
2.24 grams per tonne in the measured and indicated resource
categories on a 100% basis),3 Donlin Gold is regarded to be one of
the largest, highest-grade, and most prospective known open pit
gold deposits in the world. According to the Second Updated
Feasibility Study (as defined below), once in production, Donlin
Gold is expected to produce an average of more than one million
ounces per year over a 27-year mine life on a 100% basis. The
Donlin Gold project has substantial exploration potential beyond
the designed footprint which currently covers three kilometers of
an approximately eight-kilometer long gold-bearing trend. Current
activities at Donlin Gold are focused on state permitting,
optimization work, community outreach and workforce development in
preparation for the construction and operation of this project.
With a strong balance sheet, NOVAGOLD is well-positioned to fund
its share of permitting and optimization advancement efforts at the
Donlin Gold project.
Scientific and Technical Information
Some scientific and technical information contained herein with
respect to the Donlin Gold project is derived from the “Donlin
Creek Gold Project Alaska, USA NI 43-101 Technical Report on Second
Updated Feasibility Study” prepared by AMEC with an effective date
of November 18, 2011, as amended January 20, 2012 (the “Second
Updated Feasibility Study”). Kirk Hanson, P.E., Technical Director,
Open Pit Mining, North America, (AMEC, Reno), and Gordon Seibel,
R.M. SME, Principal Geologist, (AMEC, Reno) 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.
Clifford Krall, P.E., who is the Mine Engineering Manager for
NOVAGOLD and a “qualified person” under NI 43-101, has approved and
verified the scientific and technical information related to the
Donlin Gold project contained in this press release.
NOVAGOLD Contacts:Mélanie Hennessey Vice
President, Corporate Communications
Jason Mercier Manager, Investor Relations
604-669-6227 or 1-866-669-6227
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. 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”, “would”
or “should” occur or be achieved. Forward-looking statements are
necessarily based on several opinions, estimates and assumptions
that management of NOVAGOLD considered appropriate and reasonable
as of the date such statements are made, are subject to known and
unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, activity, performance or achievements
to be materially different from those expressed or implied by such
forward-looking statements. All statements, other than statements
of historical fact, included herein are forward-looking statements.
These forward-looking statements include statements regarding the
2020 Outlook; the potential development and construction of Donlin
Gold; the Company’s protection against downside scenarios; the
impact of precautionary measures, including temporarily pausing the
drill program and reducing activities to care and maintenance, that
we have adopted on the safety and well-being of our and Donlin
Gold’s employees; the sufficiency of funds to continue to advance
development of Donlin Gold; perceived merit of properties; the
advancement of optimization studies at Donlin Gold; potential
opportunities to enhance or maximize the value of Donlin Gold;
sufficiency of funds for the Company to advance Donlin Gold without
additional financing; the timing and likelihood of permits;
opportunities to reduce capital outlays and improve project
economics; mine life and production estimates at Donlin Gold; the
exploration potential of Donlin Gold; mineral reserve and resource
estimates; work programs; capital expenditures; timelines;
strategic plans; benefits of the Donlin Gold project and market
prices for precious metals; whether the final $75 million
promissory note from the sale of Galore Creek will mature and be
payable, and future share price performance of NOVAGOLD. In
addition, any statements that refer to expectations, intentions,
projections or other characterizations of future events or
circumstances are forward-looking statements. Forward-looking
statements are not historical facts but instead represent
NOVAGOLD’s management expectations, estimates and projections
regarding future events or circumstances on the date the statements
are made.
Important factors that could cause actual results to differ
materially from expectations include the need to obtain additional
permits and governmental approvals; the timing and likelihood of
permits; the need for additional financing to explore and develop
properties and availability of financing in the debt and capital
markets; the outbreak of the coronavirus global pandemic
(COVID-19); uncertainties involved in the interpretation of drill
results and geological tests and the estimation of reserves and
resources; the need for continued cooperation between NOVAGOLD
and Barrick Gold Corp. for the continued exploration, and
development and eventual construction of the Donlin Gold property;
the need for cooperation of government agencies and native groups
in the development and operation of properties; risks of
construction and mining projects such as accidents, equipment
breakdowns, bad weather, disease pandemics, 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; whether a positive construction
decision will be made regarding Donlin Gold or Galore Creek; and
other risks and uncertainties disclosed in NOVAGOLD’s most recent
reports on Forms 10-K and 10-Q, particularly the "Risk Factors"
sections of those reports and other documents filed by NOVAGOLD
with applicable securities regulatory authorities from time to
time. Copies of these filings may be obtained by visiting our
Investor Relations website at www.novagold.com or the SEC's website
at www.sec.gov or at www.sedar.com. The forward-looking statements
contained herein reflect the beliefs, opinions and projections of
NOVAGOLD 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 Canadian
National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”) and the Canadian Institute of Mining,
Metallurgy and Petroleum (CIM)—CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as
amended (“CIM Definition Standards”). 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) Industry Guide 7 (“SEC Industry Guide 7”), and
resource and reserve information contained herein may not be
comparable to similar information disclosed by U.S. companies.
NOVAGOLD’s disclosure concerning Reserve & Resources Estimates
remains consistent with NI 43-101. Under SEC Industry Guide 7,
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. SEC Industry Guide 7 normally does
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” under SEC Industry Guide 7 in documents filed with the
SEC. 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.
Under Canadian rules, estimated "inferred mineral resources” may
not form the basis of feasibility or pre-feasibility studies except
in rare cases. 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” under SEC Industry Guide 7 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 SEC Industry Guide 7, and reserves
reported by NOVAGOLD in compliance with NI 43-101 may not qualify
as "reserves” under SEC Industry Guide 7. Donlin Gold does not have
known reserves, as defined under SEC Industry Guide 7. Accordingly,
information concerning mineral deposits set forth herein may not be
comparable with information made public by companies that report in
accordance with SEC Industry Guide 7.
On October 31, 2018, the SEC adopted a final rule (“New Final
Rule”) that will replace SEC Industry Guide 7 with new disclosure
requirements that are more closely aligned with current industry
and global regulatory practices and standards, including NI 43-101.
Companies must comply with the New Final Rule for the Company’s
first fiscal year beginning on or after January 1, 2021, which for
NOVAGOLD would be the fiscal year beginning December 1, 2021. The
New Final Rule provides that SEC Industry Guide 7 will remain
effective until all registrants are required to comply with the New
Final Rule, at which time SEC Industry Guide 7 will be rescinded.
While early voluntary compliance with the New Final Rule is
permitted, NOVAGOLD has not elected to comply with the New Final
Rule at this time.
1 Donlin Gold data as per the Second Updated
Feasibility Study (as defined herein). Donlin Gold measured
resources of approximately 8 Mt grading 2.52 g/t and indicated
resources of approximately 534 Mt grading 2.24 g/t, each on a 100%
basis and inclusive of mineral reserves. Mineral resources have
been estimated in accordance with National Instrument 43-101 –
Standards of Disclosure for Mineral Projects (“NI 43-101”).2 2019
average gold grade of open-pit and underground deposits with gold
as primary commodity and over 1 Moz in measured and indicated
resources is 1.05 g/t, sourced from S&P Global Market
Intelligence.3 Donlin Gold data as per the Second Updated
Feasibility Study (as defined herein). Donlin Gold measured
resources of approximately 8 Mt grading 2.52 g/t and indicated
resources of approximately 534 Mt grading 2.24 g/t, each on a 100%
basis and inclusive of mineral reserves. Mineral resources have
been estimated in accordance with NI 43-101.
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