NOVAGOLD RESOURCES INC. (TSX:NG) (NYSE
American:NG) (“NOVAGOLD” or “the Company”) today announced that it
has entered into a binding agreement (the “Agreement”) with Newmont
Mining Corporation (NYSE:NEM) (“Newmont”), pursuant to which
NOVAGOLD has agreed to sell its 50% interest in the Galore Creek
project (“Project”), owned by the Galore Creek Partnership (GCP).
The Project is located in northern British Columbia, Canada. All
dollar amounts referred to in this release are stated in U.S.
Dollars.
Under the terms of the Agreement, NOVAGOLD will receive total
consideration of up to $275 million, payable as follows:
- $100 million payable upon closing;
- $75 million payable upon the earlier of: (i) the completion of
a new Project pre-feasibility study prepared by or for GCP or (ii)
three (3) years from the closing date;
- $25 million, payable upon the earlier of: (i) completion of a
Project feasibility study prepared by or for GCP or (ii) five (5)
years from the closing date; and
- $75 million payable upon approval of Project construction.
Teck has waived its right of first refusal to acquire NOVAGOLD’s
interest in GCP. The transaction is expected to close on or about
July 27, 2018.
“NOVAGOLD has remained steadfast on its stated strategy of
monetizing its interest in Galore Creek at a value that recognizes
the scarcity of this important asset and to a purchaser that will
continue to advance the Project in a technically sound as well as
environmentally and socially responsible manner,” said Greg Lang,
NOVAGOLD’s President & CEO. “Our patience has been rewarded.
I’m very pleased that NOVAGOLD is receiving fair value for its
interest in Galore Creek and believe that Newmont is the right
organization to carry forward the track record of excellence that
we have achieved with our partners over the years. Upon completion
of this transaction, NOVAGOLD will further strengthen its balance
sheet to fund activities at its flagship Donlin Gold project in
Alaska. With approximately 39 million ounces of measured and
indicated gold resources grading 2.24 grams per tonne1, Donlin Gold
is one of the most valuable projects in our industry today. As we
approach receipt of the Record of Decision, marking successful
completion of a multi-year National Environmental Policy Act
assessment and federal and state permitting processes, as well as
advancing the project optimization study with our partner Barrick
Gold, our team is looking forward to continuing to build value for
Donlin Gold with our customary discipline and professionalism.”
“This transaction is a win win for all parties,” said Dr. Thomas
Kaplan, NOVAGOLD’s Chairman. “For NOVAGOLD’s shareholders, it is
the continuation of a laser-focused strategy of unlocking the value
of its assets and transforming the Company into a pure play on
Donlin Gold, which we believe is the most important gold
development story in the industry. Beginning in 2012 with the
successful spin-off of NovaCopper (now Trilogy Metals) so that our
shareholders could benefit from a rare high-grade copper asset in a
premier jurisdiction, to the disciplined and unhurried sale of our
interest in Galore Creek to a first-rate acquirer, the Board and
management are proud of the fact that their commitments to
investors have been scrupulously kept. NOVAGOLD is expected to end
this year with over $150 million in cash, with a further $100
million of guaranteed payments to follow over the next five years.
Should Galore Creek proceed to a construction decision, NOVAGOLD
will receive an additional $75 million. The owners of our shares
should be delighted by the fact that to implement its business
strategy, our Company does not expect to raise more money until a
construction decision is made on Donlin Gold. Reminding ourselves
of our consistent refrain that such a decision, in turn, is
expected to be taken at a point when gold has resumed its long-term
bull market trajectory which should imply much, much higher share
prices, the implications of this transaction for the value of
NOVAGOLD’s shares cannot be overstated. For those who believe as we
do, that there comes a time when the shares are more precious than
the metal itself, this latest news should be seen for what it is: a
very rare case of a mining company continuing every day, month, and
year to honor its promises to do the right thing for its
shareholders. In that quest, we have of course been blessed with
great partners such as Teck and the Tahltan Nation, with whom we
have kept faith by delivering an excellent partner for Galore
Creek. On a personal note, I would like to thank the management
team and Board of NOVAGOLD for making the role of Chairman a joy
rather than a burden as we together take Donlin Gold, the premier
asset in the gold space, up the value chain.”
As part of the transaction, Newmont will also acquire the
Company’s 40% interest in the adjacent Copper Canyon mineral
property (the “Copper Canyon property”). The remaining 60% of
the Copper Canyon property is owned by GCP. The sale will be
accomplished by the transfer of 100% of the shares of a new company
to be formed by the amalgamation of NovaGold Canada Inc. and Copper
Canyon Resources Limited, two wholly-owned subsidiaries of the
Company, to a subsidiary of Newmont. The Company expects to record
an after-tax loss of approximately $92 million on completion of the
sale of its interests in the Project, assuming no value is assigned
to the final contingent payment.
RBC Capital Markets served as financial advisor to the Company’s
Board of Directors and B. Riley FBR, Inc. provided a fairness
opinion to the Special Committee.
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.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on
the permitting and 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 resource categories, inclusive of proven and probable
reserves (541 million tonnes at an average grade of approximately
2.2 grams per tonne), Donlin Gold is regarded to be one of the
largest, highest grade, and most prospective known 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 only three kilometers of an approximately
eight-kilometer long gold-bearing trend. Current activities at
Donlin Gold are focused on permitting, optimization work, community
outreach and workforce development in preparation for the
construction and operation of this top tier asset. NOVAGOLD
anticipates applying the proceeds from the sale of its interest in
the Galore Creek project and Copper Canyon property toward the
development of Donlin Gold. With a strong balance sheet, NOVAGOLD
is well positioned to stay the course by completing permitting and
advancing optimization efforts at the Donlin Gold project.
NOVAGOLD Contacts:Mélanie Hennessey Vice
President, Corporate Communications
Allison PettitInvestor Relations Manager
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. All statements, other
than statements of historical fact, included herein, without
limitation, with respect to timing and completion of NOVAGOLD’s
sale of its interest in Galore Creek and the Copper Canyon mineral
property, including the application of any proceeds from such sale,
as well as statements relating to the recordation of an after-tax
book loss. Statements regarding the permitting, potential
development, exploration, construction and operation of Donlin
Gold, statements relating to NOVAGOLD’s future operating and
financial performance, production estimates and outlook 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”, “would” or “should”
occur or be achieved. These forward-looking statements may include
statements regarding; exploration potential of Donlin Gold; mine
life and production estimates at Donlin Gold; perceived merit of
properties; anticipated permitting timeframes; exploration results
and budgets; mineral reserve and resource estimates; work programs;
capital expenditures; timelines; strategic plans; benefits of the
project; completion of transactions; market prices for
precious and base metals; 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 timely
satisfaction of closing conditions with respect to the sale of
Galore Creek and the Copper Canyon mineral property, the
uncertainties involving the interpretation of the drill results,
the need to obtain permits and governmental approvals; 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
for the continued exploration and development 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, 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 Report filed on Form 10-K for the year-ended
November 30, 2017 with the United States Securities and Exchange
Commission, Canadian securities regulators, 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 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), 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 all
or any part of “measured” or “indicated resources” will ever be
converted into “reserves”. 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” 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. 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 U.S. standards.
1 Donlin Gold data as per the Updated
Feasibility Study (as defined below). Donlin Gold measured
resources of 8 Mt grading 2.52 g/t and indicated resources of 534
Mt grading 2.24 g/t, inclusive of proven reserves of 8 Mt grading
2.32 g/t and probable reserves of 497 Mt grading 2.08 g/t.
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