NOVAGOLD RESOURCES INC. (TSX, NYSE American: NG)
today released its first quarter 2019 financial results and update
on the Donlin Gold project in Alaska, which NOVAGOLD owns equally
with Barrick Gold Corporation (“Barrick”).
Details of the financial results for the first quarter ended
February 28, 2019 are presented in the consolidated financial
statements and quarterly report filed 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 mineral
resource and reserve estimates are shown on a 100% project
basis.
In the first quarter 2019, the following milestones were
achieved:
- Donlin Gold received two key state permits and advanced other
approvals:
- ADEC issued the final Waste Management Permit
- ADNR issued the final Reclamation and Closure Plan Approval and
advanced two other state authorizations
- Division of Mining, Land, and Water issued preliminary land use
decisions for public comment, proposing to authorize facilities
associated with the project’s transportation corridor
- Division of Oil and Gas, State Pipeline Coordinator’s Section
issued a preliminary decision to authorize the sections of the
pipeline on state lands
- Launched a series of six public meetings on the preliminary
decisions
- With permitting largely complete, there is an increased focus
on continuing to integrate scoping-level optimization work into a
study that will serve as the basis for an updated project
development plan
- Donlin Gold and NOVAGOLD continued active external affairs and
community engagement:
- Attended the State of Alaska legislative session in Juneau and
met with key Representatives, Senators, Governor Dunleavy, senior
agency executive appointees and mining program staff
- Connected with key stakeholders at the first two ADNR public
hearings held in McGrath and Tyonek
- Met with career counselors in the Lower Kuskokwim School
District to engage youth in a career fair
- Participated in the Alaska Forum on the Environment and
received the Green Star® Certification award that recognizes
businesses for their efforts toward sustainable environmental
stewardship
- Hosted the Donlin Gold Safety Expo ahead of the Iron Dog race
in Alaska
- Together with The Kuskokwim Corporation (TKC), organized and
participated in a Middle Kuskokwim gathering to discuss health
& safety, community healing, mining, workforce development and
other matters
President’s Message
During the first quarter of 2019, we focused our activities on
supporting government efforts in relation to various state permits.
In addition, together with our partner Barrick Gold, we continued
to advance optimization work on Donlin Gold and began preparing for
the upcoming field program. I’m pleased to report that in January,
we received two state permits: the final Waste Management Permit
and the final Reclamation and Closure Plan Approval that were
issued by ADEC and ADNR, respectively.
Progress was also made on other key state authorizations. ADNR
issued preliminary land use decisions for public comment proposing
to authorize facilities associated with the project’s
transportation corridor, including the access road and related
material sites, airstrip, and upriver Jungjuk Port. The
public comment period for these decisions closed on March 29, 2019.
Additionally, ADNR issued the State Pipeline Coordinator’s Section
preliminary decision to authorize the sections of the pipeline on
state lands. The comment period for this decision closed on March
22, 2019 after public meetings in Anchorage, Bethel, Aniak,
McGrath, Tyonek, and Skwentna Roadhouse. In the first quarter,
Donlin Gold representatives provided technical support and
responded to questions about the pipeline during the first two ADNR
public hearings in McGrath and Tyonek.
ADNR’s approval of the Alaska Dam Safety certificates for the
tailings storage facility and water retention and diversion
structures requires a thorough stepwise process to deliver a final
construction package to the State. The upcoming field program will
be focused on completing a site investigation and collection of
geotechnical information for the advancement of the engineering
from a feasibility level to the final construction package. The
site investigation information will support a preliminary design,
detailed design and ultimately the final construction package, each
of which will be submitted to ADNR for final approval and issuance
of the certificates. We are currently in the advanced planning
stage for the field program that will consist of geotechnical core
drilling, test pits, overburden drilling, packer tests,
hydrogeologic test well installation and pumping tests, and
geophysical surveys. The field program will carry into 2020.
In the first quarter, Earthjustice filed an administrative
appeal of the Reclamation and Closure Plan Approval with ADNR and
sent a request to ADEC for an informal review of the Waste
Management Permit. In 2018, Earthjustice requested an informal
review by ADEC of the State of Alaska’s 401 certification. ADNR and
ADEC are expected to issue their decisions in the second half of
2019. Given the level of detail and extensive work that has gone
into these permits, we expect these permits to remain in place.
With permitting largely complete, we are shifting more focus on
integrating scoping-level optimization work into a study that will
serve as the basis for an updated project development plan. Given
Donlin Gold’s stage of development, this is the right time to
advance work such as the Alaska Dam Safety certificates and
engineering studies, to have the flexibility needed to proceed with
the development of Donlin Gold.
With the completion of the recent Barrick-Randgold merger, the
Donlin Gold partnership is clearly benefitting from very
constructive input from Barrick’s new technical team. We have a
common goal of advancing the project in a financially-disciplined
manner with a focus on engineering excellence, environmental
stewardship, safety and social responsibility.
Deposits like Donlin Gold are extremely scarce and very
important, particularly given the industry’s rapid decline in gold
reserves and grade. A federally-permitted “category-killer”
gold project, primed for development in Alaska - the second largest
gold-producing state after Nevada, in a country that is one of the
safest jurisdictions in the world - is unique in terms of value
proposition for all stakeholders. With approximately
39,000,000 ounces of gold in measured and indicated mineral
resources grading 2.24 grams per tonne1, Donlin Gold is more than
five times the size of the peer group average2 and nearly double
the world average grade.3 With a mine life measured in decades and
the extensive exploration potential along the eight-kilometer
mineralized trend, the project could operate for a very long time.
It is our belief that the Company is truly well positioned to
create a lot of value for its shareholders when gold embarks upon
the next leg of what we strongly believe to be a long-term secular
bull market. For more information, please feel free to reference
the 2018 Annual Report we issued in March 2019, which goes into
Donlin Gold’s uniqueness and our strategy regarding its development
in greater detail:
NOVAGOLD’s 2018 Annual Report
External Affairs & Stakeholder Engagement
A big part of our activities in Alaska is working in partnership
with Calista and TKC, our Native Corporation partners, on different
health and safety, educational, environmental and cultural
initiatives that support a balanced and sustainable development
plan for the project and surrounding communities. To that end, with
a mining-industry delegation, we attended the State of Alaska
legislative session in Juneau and met with Alaska State House
Representatives and Senators, newly-elected Governor Michael
Dunleavy, senior agency executive appointees and mining program
staff. Donlin Gold also met with career counselors in the Lower
Kuskokwim School District with the goal of engaging youth in the
region in an upcoming career fair. We participated in the Alaska
Forum on the Environment where we also received the Green Star®
Certification award, that recognizes businesses for their efforts
in sustainable environmental stewardship. Donlin Gold hosted their
annual Safety Expo ahead of the Iron Dog race in Alaska. Together
with TKC, Donlin Gold organized and participated in a Middle
Kuskokwim gathering of TKC villages to discuss community areas of
interest and mining. NOVAGOLD strongly believes that transparent
and open communication with local communities is an essential part
of our day-to-day responsibilities in the region. Balance Sheet
NOVAGOLD is extremely well funded. With approximately $162
million in cash and term deposits as of February 28, 2019, plus the
additional $100 million we expect to receive from Newmont in
guaranteed payments within less than five years, and a further $75
million contingent payment4, we have enough funds to advance Donlin
Gold and meet all of our foreseeable financial obligations with no
need to go to capital markets until a construction decision is
made.
It is my continued belief that NOVAGOLD represents a unique
investment opportunity. Being a pure play on one of the world’s
largest and highest-grade known open-pit gold deposits - now
permitted for development in a geo-politically safe jurisdiction
with well-established support for responsible mining - is an
incredible value proposition. With time, we believe Donlin Gold’s
scarcity value can only get better as the industry depletes its
established endowment in the face of what we expect to be a “long
wave” in gold to rival the first leg that took it from $250 to
$1,900 per ounce. For these reasons and more, your management team
believes that shareholders will be rewarded for their patience.
We are very thankful to our Native Corporation partners, Calista
and TKC. Their strong support and commitment to Donlin Gold have
been the foundation of our success. Our sincere appreciation also
goes to the government agencies that have been working so
diligently on Donlin Gold and have shown great professionalism and
shared commitment to the well-being of the communities where we
operate. It’s an incredible amount of work to advance such an
important project. And finally, I would like to extend my
appreciation to NOVAGOLD’s Board and employees for their vision and
commitment, to the Donlin Gold team in Anchorage for all their hard
work, and to Barrick, our joint venture partner, for its continued
engagement with the project.
Gregory A. Lang President & CEO
Financial Results
in thousands of U.S. dollars, except for per share
amounts
|
Three
months endedFebruary 28,
2019$ |
Three
months endedFebruary 28,
2018$ |
General and administrative expense (1) |
4,340 |
4,685 |
Share of losses – Donlin Gold |
1,323 |
1,841 |
Total operating expenses |
5,663 |
6,526 |
|
|
|
Loss
from operations |
(5,663) |
(6,526) |
Other expense |
(303) |
(1,370) |
Income tax expense |
(357) |
(66) |
Loss
from continuing operations for the period |
(6,323) |
(7,962) |
Loss from discontinued operations for the period |
— |
(253) |
Net
loss |
(6,323) |
(8,215) |
|
|
|
Loss
per share, basic and diluted |
|
|
Continuing operations |
(0.02) |
(0.03) |
Discontinued operations |
— |
— |
|
(0.02) |
(0.03) |
|
|
|
At February 28,
2019$ |
At November 30, 2018
$ |
Cash
and term deposits |
|
|
161,777 |
167,004 |
Total assets |
|
|
255,461 |
260,929 |
Total liabilities |
|
|
100,243 |
100,241 |
(1) Includes share-based compensation expense of $1,531 and
$1,949 for the first quarter-ended February 28, 2019 and 2018,
respectively.
For the first quarter ended February 28, 2019, loss
from operations decreased from $6.5 million in 2018 to $5.7 million
in 2019 due to lower general and administrative expense and lower
costs at Donlin Gold. General and administrative expense decreased
by $0.3 million primarily due to lower share-based compensation
costs. At Donlin Gold expenses decreased by $0.5 million resulting
from a reduction in permitting and optimization activities.
Net loss from continuing operations decreased from
$8.0 million ($0.03 per share) in the first quarter of 2018 to $6.3
million ($0.02 per share) in the same period of 2019, primarily due
to lower operating losses, higher interest income and accretion of
notes receivable, offset by higher interest expense on the
promissory note payable to Barrick and foreign exchange losses.
Liquidity and Capital Resources
In the first quarter, total cash, cash equivalents
and term deposits decreased by $5.2 million of which $4.3 million
was used in operating activities for administrative costs and
working capital changes and $0.9 million was used to fund Donlin
Gold. Total spending for continuing operations in the first quarter
was $1.2 million lower than in the same period of 2018, primarily
due to lower permitting and optimization costs at Donlin Gold and
higher interest income, partially offset by withholding taxes paid
on vested performance share units. Spending in the first quarter of
2018 for discontinued operations included $0.6 million for Galore
Creek which was sold in July 2018.
We believe that our cash and term deposits continue
to be sufficient to advance Donlin Gold, as well as 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.
2019 Outlook
We continue to anticipate spending approximately $24 million in
2019, $13 million to fund our share of expenditures at the Donlin
Gold project and $11 million for general and administrative
costs.
NOVAGOLD remains focused on four primary goals
in 2019: Continue to advance the Donlin Gold project toward a
construction/production decision; maintain an effective corporate
social responsibility program; promote a strong safety culture by
maintaining a zero lost time accident record; and safeguard the
company’s treasury.
Conference Call & Webcast Details
NOVAGOLD’s conference call and webcast to
discuss these results will take place on April 3, 2019 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 |
The webcast will be archived on NOVAGOLD’s website for one year.
To request a transcript of the call, please email us at:
info@novagold.com.
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),1 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 continue advancing its Donlin Gold project up
the value chain.
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
Allison Pettit 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 2019 Outlook; the potential development
and construction of Donlin Gold; potential returns to investors and
benefits to stakeholders; perceived merit of properties; the
advancement of optimization studies at Donlin Gold; potential
opportunities to enhance or maximize the value of Donlin Gold; the
timing and likelihood of permits; opportunities to reduce capital
outlays and improve project economics; the potential completion of
an updated feasibility study on the project; mine life and
production estimates at Donlin Gold; mineral reserve and resource
estimates; work programs; payments from Newmont in connection with
the sale of Galore Creek; capital expenditures; timelines;
strategic plans; benefits of the Donlin Gold project and market
prices for precious metals. 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 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; 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 project estimates as per the Second Updated
Feasibility Study (as defined herein). Represents 100% of measured
and indicated mineral resources, of which NOVAGOLD’s share
represents 50%. Measured and indicated resources are inclusive of
proven and probable mineral reserves. Measured resources total 8M
tonnes grading 2.52 g/t Au and indicated resources total 534M
tonnes grading 2.24 g/t Au. Proven reserves total 8M tonnes grading
2.32 g/t Au, and probable reserves total 497M tonnes grading 2.08
g/t Au. See “Cautionary Note Concerning Reserve & Resource
Estimates” and “Reserve/Resource Table” at www.novagold.com
2 Comparison peer group of 17 projects based on
large (2Moz P&P cut off), North/South American gold-focused
development projects.
3 2017 average grade of open-pit and underground
deposits with gold as primary commodity and over 1 Moz in measured
and indicated resources, sourced from S&P Global Market
Intelligence.
4 Deferred compensation on sale of Galore Creek
totals $100M: including $75M on earlier of PFS or no later than
July 27, 2021 and $25M on earlier of FS or no later than July 27,
2023. An additional $75M is receivable upon approval of a Galore
Creek construction plan by the owner(s).
Novagold Resources (AMEX:NG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Novagold Resources (AMEX:NG)
Historical Stock Chart
From Apr 2023 to Apr 2024