NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the
Company”) (NYSE American, TSX: NG) today released its 2019 year-end
financial results and an update on its flagship Donlin Gold project
in Alaska, which NOVAGOLD owns equally with Barrick Gold Corp.
(“Barrick”).
Details of the financial results for the year ended November 30,
2019 are presented in the consolidated financial statements and
annual report filed January 22, 2020 on Form 10-K 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 2019, NOVAGOLD achieved the following
milestones:
- With key Federal and State permits in hand, Donlin Gold secured
additional State permits:
- The Alaska Department of Natural Resources (ADNR) approved the
Reclamation and Closure Plan (“Plan”).
- The Waste Management permit was issued by the Alaska Department
of Environmental Conservation.
- ADNR’s 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.
- NOVAGOLD and Barrick advanced technical work on Donlin Gold
with more drilling planned for 2020:
- In mid-2019, commenced a multi-year site investigation program
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 to a final
construction package, as required for the project’s dam safety
certification application to ADNR.
- A 22,000-meter, 80-hole drill program will be undertaken in
2020 to test the extension of high-grade gold zones, including some
encountered in the 2017 drilling, and validate geologic modeling
concepts.
- Donlin Gold, together with Calista Corporation (“Calista”)
and The Kuskokwim Corporation (“TKC”), its Native Corporation
partners who respectively own the subsurface and surface
rights for the Donlin Gold project, carried out a wide-ranging
program of community engagement, including training,
education, health, safety and environmental management initiatives
during 2019:
- Community Backhaul projects, funded by NOVAGOLD, brought
together over 20 regional organizations to remove nearly 100,000
pounds of hazardous and electronic waste from 14 remote villages in
the Yukon-Kuskokwim (Y-K) region and Bethel.
- Broad outreach activities and engagement with key local groups
during the Alaska Federation of Natives Convention last fall.
- Co-sponsored spill response training with TKC and 25
participants from the region.
- Hosted a career & college fair with the Lower Kuskokwim
School District that was attended by hundreds of students, parents
and teachers from the Y-K region.
President’s Message
Advancing permits, enhancing value and realizing a
visionLuck and a laser-like adherence to excellence
represent powerful forces. We definitely know how lucky we are.
Donlin Gold is a rare, high-grade open-pit gold development project
located in a mining friendly jurisdiction – Alaska – where the rule
of law is embraced and investors can feel secure. It is our
privilege to develop such a unique project at a time in the
sector’s history when promising assets in welcoming parts of the
world are desperately needed. Our steadfast commitment to
outperform for our shareholders, as evidenced by our moving the
project up the value chain, while never compromising on best
practices and keeping all of our promises, is a function of a
management strategy rooted in the ethos of “doing things
right”. Such a high level of quality-control throughout our
operations could not have been maintained were it not for the
dedication of Donlin Gold’s stakeholders. The achievements of the
past year – from securing major State permits and advancing project
engineering and optimization to maintaining broad and
all-encompassing community engagement – reflect our collective
commitment to a consistent vision that has arisen from a
long-lasting collaboration among NOVAGOLD, Barrick, and the Native
Corporation property owners, Calista and TKC.
Our track record of achievement was further enhanced earlier
this month when Donlin Gold received final easements for the access
road and fiber optic cable, as well as the receipt of the final
land leases, land use permits, and material site authorizations for
the proposed transportation facilities on State lands, including
the airstrip and upriver Jungjuk Port. In addition, ADNR’s Division
of Oil and Gas is finalizing the ROW authorizations for the buried
natural gas pipeline, following the issuance of the preliminary
decision in March 2019. Such exceptional results took tremendous
leadership and unwavering attention to detail and transparency from
Donlin Gold, NOVAGOLD and Barrick, with the support
and contributions of Calista and TKC, and the communities
closest to the future mine site. We greatly
appreciate the dedicated efforts of the ADNR in
advancing permits and approvals for the project, and
their commitment to environmental and governance best
practices, as well as genuine social responsibility.
In mid-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 they continue to provide the
requisite human and financial resources to ensure that the work is
done to the highest standard and according to the best design
practices.
A project so significant, so timely and so rare that a
comparable asset is near-impossible to findThe unique
nature of NOVAGOLD is starting to come into focus for investors.
Several specific advances help explain the prominent position
enjoyed by NOVAGOLD today: the major milestones of receiving key
Federal and State permits, selling Galore Creek to Newmont Corp.
and a re-invigorated partner in Barrick, and the release of some of
the best gold drill results in our industry in 2018.
Donlin Gold merits attention. With approximately 39,000,000
ounces of gold in measured and indicated mineral resources
grading 2.24 grams per tonne,1 the project already boasts a
size that is exceptional, a grade twice the industry average2,
excellent exploration upside potential, extraordinary leverage to a
higher gold price, a location in a friendly jurisdiction, and
strong local partnerships. These constitute a rare and unique
combination of attributes. Being a gold endowment presently
contained within only three kilometers of an
eight-kilometer mineralized belt, and with only a small portion of
the mining claims area having been explored, Donlin Gold ultimately
could well command district-sized potential. After working in or
visiting many of the world’s greatest mining districts, I know
firsthand what exciting geological upside looks like. Donlin Gold
embodies that promise. To such good fortune, one must add that
there are now few mining jurisdictions left that are peaceful and
democratic, and that will honor and enforce contracts and permits
with a strict adherence to the rule of law. Alaska, which is the
second-largest gold producer in the United States after Nevada, is
rightly ranked as a top jurisdiction for responsible mining
development. I can tell you this from my personal experience as a
miner: Alaska is simply a great place to do business. Having had
oversight of Barrick’s Nevada assets in the past, I believe there
is district-size opportunity at Donlin Gold. To put it another way,
as our Chairman Dr. Thomas Kaplan frequently observes from his own
vantage point as an investor, taking all of the above factors
together “Donlin Gold is a unique asset with exceptional leverage
to the gold price; and most importantly, it is located in a
jurisdiction that will allow one to keep the fruits of that
leverage”. As we both declared when I left Barrick as its President
of their North American business to come aboard NOVAGOLD as Chief
Executive Officer, and Tom joined as our Chairman of the Board, in
our view there is simply no comparable project in the world
today.
That was in late 2011. Since that time, NOVAGOLD has done
everything it set out to do – from restructuring the Company to the
permitting of Donlin Gold. Yet despite all of the great news from
the past, the brightest part of Donlin Gold’s already significant
history undoubtedly will stem from what happens next. Our
partnership with Barrick, for example, provides us with additional
depth of technical and environmental expertise, as well as
community engagement practices; skills that are particularly
critical in the context of 21st century requirements of earning and
maintaining a well-founded social license. Add to this sense of
optimism and momentum a management team with decades of successful
operational experience at some of the largest gold producers in the
world, and it becomes rather clear why we are all so excited to get
to the office every morning.
The sheer rarity of a project like Donlin Gold is of course well
understood by our major shareholders, who are united in their
belief that our equity provides perhaps one the best vehicle
available to take full advantage of the next big move in gold’s
secular bull market. In 2019, NOVAGOLD’s investors were given a
glimpse of what a move in the gold price could represent to
shareholders. But advancement of Donlin Gold is taking place at an
extraordinary time in the gold cycle, as the renewal of interest in
gold is happening against the backdrop of declining new
discoveries, challenging geo-politics of mine supplies, the
continuing erosion of grades of existing deposits, and increasing
global uncertainty and volatility. Such an environment is
particularly conducive to a substantial re-rating of value for an
asset with both the rare combination of virtues and the leverage
characteristics of Donlin Gold. The Company’s inclusion on the
Russell 2000 index in June 2019 also brought increased attention,
as core index fund holdings in NOVAGOLD increased along with other
funds who mirror these indices, thereby building more institutional
investor support for NOVAGOLD. We expect that support to
continue to grow. Having positioned ourselves as a “Go-To” stock of
the highest institutional quality, we believe that new gold
investors will quickly appreciate the scarcity value of such
attributes, and the value of that “pure play” on gold.
Dedicated to strong stakeholder engagementIn
addition to fidelity to our shareholders, NOVAGOLD and our project
partners are committed to growing strong and collaborative working
relationships to preserve traditional lifestyles and support
economic development for the benefit of Calista and TKC
shareholders and the Y-K region as a whole. In 2019, Donlin Gold
and our Native Corporation partners held more than 200 engagement
meetings with individual stakeholders and community organizations.
These meetings take many forms, from one-on-one to group meetings
as ongoing outreach activities, meeting with tribal councils
and key stakeholders in the Y-K region (including Donlin Gold
attending the Calista Annual Shareholders meeting in July),
providing project updates and gathering feedback from
shareholders in two coastal villages, Kotlik and Kongiganak, as
well as meeting with various Native groups
interested in establishing Friendship Agreements. In October
2019, Donlin Gold and TKC co-hosted a reception at the Alaska
Federation of Natives Convention in Anchorage, meeting with key
leadership representing various parts of the U.S. and seeking
partnerships with Donlin Gold for future opportunities.
The health and safety of our employees and our communities are
also paramount. In 2019, the Y-K Community Backhaul projects funded
by NOVAGOLD removed nearly 100,000 pounds of hazardous and
electronic waste from 14 villages and Bethel on the Kuskokwim
River. This program builds on significant work sponsored by Donlin
Gold in 2018, including Clean Up Green Up efforts in 43 villages,
collecting refuse for proper disposal in community landfills, and
the initial Green Star® Waste Backhaul Project that engaged six
Middle Kuskokwim villages in removing and safely disposing almost
20 tons of hazardous waste and materials. Donlin Gold is devoted to
the long-term support of the village of Crooked Creek in solid
waste management, including landfill operations near the project.
Additionally, Donlin Gold is working with TKC and the
Yukon-Kuskokwim Health Corporation to initiate an upgrade, as well
as improve health and safety standards, of water and sewer services
in Middle Kuskokwim area communities. Donlin Gold and TKC also
co‑sponsored a spill response training last fall, which was
attended by participants from 10 TKC villages. The trainees can now
take these practices home and into their communities.
Donlin Gold supports projects such as the Lower Kuskokwim
School District Career & College Fair in Bethel, a hub for
the region, and other career fairs throughout the Y-K region to
help develop the leaders of tomorrow. Alongside Calista and TKC,
Donlin Gold proudly engages with the EXCEL Alaska program that
flies high school students in from remote villages to provide
much-needed career and technical education, as well as fund
scholarships to help local students with post-secondary
education.
Balance sheetWe take dilution seriously.
Fortunately, NOVAGOLD’s strong balance sheet affords a
rare opportunity in our space to satisfy foreseeable project
expenses without seeking additional equity from the market. With
approximately $148.5 million in cash and term deposits as
of November 30, 2019, we can focus on moving Donlin Gold
forward while enhancing its value through permitting and
optimization work. Note that this amount does not include an
additional $100 million expected to come from Newmont in the
next three years, or a further $75 million
contingent payment on top of that which we could
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 a
construction decision is made.
Advancing the vision in 2020Looking ahead to
2020, Donlin Gold will embark on the project’s largest drill
program in twelve years, with 80-holes totaling 22,000‑meters
planned in the ACMA and Lewis deposit areas. The program’s
objective is to continue to gather additional data that should
increase our understanding of the geologic model and high-grade
mineralization controls that have the potential to benefit the
project when the owners decide 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.
In conclusion, I wish to thank the experienced team
of professionals at NOVAGOLD, Donlin Gold, and
Barrick for their passion and commitment to the project. Their
steadfast determination, coupled with the deep and
decades-long support and engagement of Calista and TKC, are
critical ingredients required for the successful achievement of our
collective vision. I also would like to express my sincere
appreciation to my dedicated colleagues on the NOVAGOLD
Board for their support, constant engagement, and
commitment to continual improvement and best governance practices.
It is a pleasure to serve alongside you all.
My gratitude also goes to the various State agencies for
their diligent and professional work and adherence
to well-established regulatory procedures.
Finally, to our shareholders, I thank each and every one of you
for your unwavering support, engagement, patience, and
encouragement. NOVAGOLD will not only do its utmost to deliver on
its strategy and promises but will continue to realize Donlin
Gold’s unparalleled investment opportunity in a manner that you can
truly be proud of.
Gregory A. Lang President & CEO
Financial Results
in thousands of U.S. dollars, except for per share
amounts
|
Year endedNovember 30,
2019$ |
Year endedNovember 30,
2018$ |
General and administrative expense (1) |
16,321 |
18,493 |
Share of losses – Donlin Gold |
10,491 |
8,798 |
Total operating expenses |
26,812 |
27,291 |
|
|
|
Loss from operations |
(26,812) |
(27,291) |
Accretion of notes receivable |
3,220 |
1,061 |
Interest expense on promissory notes |
(7,286) |
(6,461) |
Other income, net |
4,395 |
1,751 |
Income tax expense |
(1,278) |
(526) |
Loss from continuing operations for the period |
(27,761) |
(31,446) |
Loss from discontinued operations for the period |
– |
(81,299) |
Net loss |
(27,761) |
(112,765) |
Loss per share, basic and diluted |
|
|
Continuing operations |
(0.09) |
(0.10) |
Discontinued operations |
– |
(0.25) |
|
(0.09) |
(0.35) |
|
At November 30,
2019$ |
At November 30, 2018
$ |
Cash and term deposits |
148,549 |
167,004 |
Total assets |
245,835 |
260,929 |
Total liabilities |
107,881 |
100,241 |
(1) Includes share-based compensation expense of $6,176 and
$7,727 for the year-ended November 30, 2019 and 2018,
respectively.
For the year ended November 30, 2019, NOVAGOLD’s
share of Donlin Gold losses increased from $8.8 million in 2018 to
$10.5 million in 2019 due to the commencement of fieldwork to
support the design packages needed to advance the application for
Alaska Dam Safety certification applications, partially offset by a
reduction in permitting activities.
General and administrative costs decreased by $2.2
million, primarily due to lower share-based compensation costs for
stock options and Performance Share Units (PSUs) compared to the
prior year and lower salaries and benefits. The Company extended
the vesting period for new stock option and PSU grants issued
beginning in 2018 from two to three years and eliminated the
individual performance multiplier in the formula for long-term
equity compensation, which has the potential to increase long-term
equity incentive grants above the target amount.
Net loss from continuing operations decreased from
$31.5 million ($0.10 per share) in 2018 to $27.8 million ($0.09 per
share) in 2019, primarily due to lower general and administrative
costs, higher interest income and accretion of notes receivable,
partially offset by increased costs at Donlin Gold and interest
expense on the promissory note payable to Barrick.
Net loss from discontinued operations, net of tax
of $81.3 million ($0.25 per share) in 2018 resulted primarily from
the loss on the sale of Galore Creek, net of tax.
Liquidity and Capital Resources
Total Donlin Gold funding of $11.1 million was $1.9
million lower than our original outlook of $13 million primarily
due to the temporary suspension of geotechnical fieldwork as a
result of summer wildfires in the project area. General and
administrative spending of $10.1 million was lower than our
original outlook of $11 million due to lower salaries and benefits
than planned.
Net cash used in operating activities decreased by
$4.3 million from 2018, primarily due to higher interest income and
lower salaries and benefits. Funding of Donlin Gold increased by
$2.2 million due to the commencement of geotechnical fieldwork,
partially offset by lower permitting costs. Withholding taxes were
paid on vested PSUs in the first quarter of 2019. No PSUs vested in
2018.
Net cash provided from discontinued operations of
$102.4 million in 2018 included the receipt of $99.3 million in net
cash proceeds on the sale of Galore Creek and $4.6 million of
refunded cash deposits for Galore Creek reclamation bonding,
partially offset by $1.5 million of Galore Creek project funding
prior to the sale.
NOVAGOLD had $148.5 million in cash and term
deposits as of November 30, 2019. 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 drilling
program with the balance on 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 maintain an
effective corporate social responsibility program.
Conference Call & Webcast Details
NOVAGOLD’s conference call and webcast to discuss these results
will take place January 23, 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; 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; uncertainties involved in the interpretation of drilling
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, 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 reports and documents filed by
NOVAGOLD with applicable securities regulatory authorities from
time to time. 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 2018 average
gold grade of open-pit and underground deposits with gold as
primary commodity and over 1 Moz in measured and indicated
resources is 1.10 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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