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Q&A

Most Common questions

All figures referenced in the Q&A below are in USD unless otherwise specified.

What are the key milestones and goals for 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
  • Safeguard the company’s treasury
Why should I be interested in NOVAGOLD today?

NOVAGOLD owns 50 percent of Donlin Gold, one of the largest and among the highest-grade open-pit gold development projects in the world. With approximately 39 million ounces of gold in the measured and indicated resource categories grading 2.24 grams per tonne* – and exceptional exploration potential along an eight-kilometer gold mineralized belt in Alaska, Donlin Gold has all the key attributes that one would seek in a major gold deposit and it’s located in an excellent jurisdiction with a track record of strong support for responsible resource development. The recently completed federal permitting process, which resulted in the issuance of a joint Record of Decision (ROD) by the U.S. Army Corps of Engineers (the “Corps”) and the Bureau of Land Management (BLM), has substantially de-risked the project. 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.

While these attributes in themselves make NOVAGOLD a compelling target for investors looking for size, grade, scale, resource growth, and jurisdictional safety, there’s more to consider. Mine development and operation is a complex business, and we’re fortunate to have a great partner in Barrick. Among the largest companies in the gold mining industry, Barrick has a depth of expertise in project development and operation. And we’re blessed to have the Calista Corporation and The Kuskokwim Corporation, owners of mineral and surface rights, as Native Corporation partners.

Investors should also be encouraged that the drill program completed in 2017 at Donlin Gold delivered better-than-expected results, providing valuable input to project optimization, which evaluated opportunities to reduce upfront costs.

We’re also strong financially. With a treasury of $162 million as of February 28, 2019, plus the additional $100 million we expect to receive from Newmont in guaranteed payments within less than five years, (from the recent sale of our 50 percent share of the Galore Creek project), and a further $75 million contingent payment, we’re in a strong financial position to carry out all requisite activities at Donlin Gold and meet all of our financial obligations – without going back to shareholders for more funding.

Finally, NOVAGOLD has an experienced management team with an unparalleled track record in building and operating major mines, as well as a highly regarded board with strong ownership representation, a commitment to sound governance principals, and a firm belief in doing things right from the standpoint of technical excellence, safety, and environmental stewardship. NOVAGOLD is a compelling opportunity for a discerning investor interested in becoming a shareholder in a company committed to value creation in the gold space.

We have a long-term view and believe that NOVAGOLD offers investors all the leverage they could wish for when gold prices move higher and at a point when the equity may be even more precious than the metal itself. The collapse in oil prices is a reminder to investors that, unlike oil, gold is not a commodity. It is, first and foremost, a kind of currency that people have accepted as a store of value long before paper currencies. If anything, the understanding and appreciation for gold is only going to improve since it is the only currency that cannot be printed at a time when major reserve currencies are being debased. After a 40-year secular trend of attempted demonetization, gold is re-asserting itself as the only financial asset that doesn’t represent someone else’s liability. Time is clearly on our side to have an extraordinary return on the Company’s investment in Donlin Gold.

 

What makes the Donlin Gold project so unique among other large undeveloped projects?

It all comes down to geology, potential, economics, location, partnerships and management.

Geology – With approximately 39 million ounces of gold in the measured and indicated resource categories (541 million tonnes of gold at an average grade of 2.2 grams per tonne)* , and an additional approximately six million ounces (92 million tonnes at an average grade of 2.0 grams per tonne) in inferred resources, Donlin Gold is one of the world's largest known undeveloped gold deposits. These are excellent numbers, placing Donlin Gold well within the top 1 percent of known global gold deposits in terms of size. It's also blessed with high grades when compared with other open pit mines and projects. As we've seen in the recent downdraft in the mining industry, this kind of quality counts. With Donlin Gold having a measured and indicated resource grade of 2.2 grams per tonne, it is one of the highest-grade known large open-pit gold deposits. Its grade is where the average grade of the industry was ten years ago and is believed to be more than double the average grade of gold mines and projects globally.

Potential – The second updated feasibility study filed in 2012 demonstrated that, as envisioned, Donlin Gold could become one of the largest single gold-producing mines in the world, averaging approximately 1,500,000 ounces of gold production in the first five years of operation and approximately 1,100,000 ounces per year over its 27-year life. And that's assuming no more higher-grade ore is found – or any additional ore at all, for that matter. In addition to its already large mineral endowment, Donlin Gold has excellent exploration potential, with the opportunity to expand the current open-pit resource both along strike and at depth. Considering that the current pit occupies only part of a three-kilometer area that is itself only a portion of an eight-kilometer mineralized belt, in NOVAGOLD's view it is likely that Donlin Gold's mine life, already measured in decades, or ultimate production profile – or both – is likely to be greater than anticipated.

Economics – During the first five years of operations, Donlin Gold's costs applicable to sales are slated to be $411 per ounce of gold (based on costs applicable to sales of $3,003 million); over the life of mine, the average is expected to be $635. All-in sustaining costs during the first five years and over the LOM are expected to be $532 and $735 per ounce, respectively1 . This is very favorable in today's world and a function of the project’s high grade. Donlin Gold's leverage to higher gold prices is exceptional. Its after-tax Net Present Value (NPV), using $1,200 per ounce and a 5 percent discount rate, was estimated at $547 million, as per the second updated feasibility study. This number rises to $6.2 billion if undiscounted. Importantly, the resultant NPV sensitivity analysis showed a more than eight-fold increase in value to $4.6 billion at $1,700 per ounce of gold ($14.6 billion if undiscounted), and then a nearly 50 percent further increase in NPV to $6.7 billion at $2,000 per ounce of gold. At a zero discount rate with which North American assets may once again be rated, that number rises to more than $19 billion.

Location – Unstable and changing geopolitics, including but not limited to economic and political instability, have altered how the market views investment opportunities on the frontier. According to PricewaterhouseCoopers, "ongoing geopolitical issues…threaten the development and advancement of projects…around the globe” (Mine 2014: Realigning expectations). In fact, in our view, it's not an overstatement to say that jurisdictional risk represents the single greatest threat to the mining industry. Many companies and assets in the developing world have been victims of sovereign risk with unanticipated tax increases, royalties, civil unrest, permitting delays, corruption and resource nationalism. Market analysts, commentators, and investors are taking note of the actions by a number of governments to impose higher taxes and royalties on gold and other metal mines in their assessment of project value. We believe that the fact that Donlin Gold is located in Alaska, America's second largest gold producing state, on private lands already designated for mining and owned by Native Alaska corporations, distinguishes the project from other undeveloped open pit gold projects. In summary, as a corollary to this heightened awareness, we believe that when sentiment returns to the space, Donlin Gold's location in the United States will give NOVAGOLD a tremendous competitive advantage during a time when heightened resource nationalism and jurisdictional uncertainty is second only to investor sentiment as the most significant factor negatively affecting shareholder value among natural resource companies.

Partnerships – Donlin Gold enjoys broad support, including from our Alaska Native Corporation stakeholders, the Calista Corporation (Calista) and The Kuskokwim Corporation (TKC), who own the mineral and surface rights to Donlin Gold. Our well-established track record of social engagement and environmental stewardship in the community is a huge plus. The government of Alaska cites Donlin Gold as a model project for responsible development, a reputation that was reinforced in 2014 by a unique strategic alliance with the National Fish and Wildlife Foundation. That's not something you see every day, and we're proud of it.

Management – NOVAGOLD's operating management team is among the most solid in their credentials and pedigree as any you'll find in the industry. Greg Lang, president and CEO, has been fortunate to work with some of the most experienced individuals in the gold industry and on some of its greatest assets. He ran Barrick's top assets – their North American operations – as president for eight years before joining NOVAGOLD. During the majority of his 30-year career, Greg rose through the ranks with Barrick and the companies it had acquired, Homestake Mining and International Corona. Greg leads a team of experienced industry veterans. Dave Ottewell joined NOVAGOLD from Newmont; Mélanie Hennessey joined from Hecla; Ron Rimelman joined from Tetra Tech; and Richard Williams joined NOVAGOLD from Barrick right after bringing into production the mammoth Pueblo Viejo project. Each of these individuals left senior positions at these senior companies because they too see in Donlin Gold a truly unique and attractive gold asset in an era defined by quality asset scarcity.

In summary, Donlin Gold has size and extraordinary grade, industry-leading projected output, a low-cost structure, a company-making mine life, excellent exploration upside, strong local partnerships, and jurisdictional safety. Donlin Gold is a truly unique and attractive gold asset in an era defined by asset scarcity with leverage to rising gold prices in a strong gold environment. Finally, Donlin Gold is well-advanced in the permitting process; positioned to be ready to construct when market sentiment will support construction of a major new gold mine.

(1)See non GAAP financial measures here

What is the latest status of the Donlin Gold project and what permits remain outstanding?

During the first quarter on January 18th, 2019, Donlin Gold received two major state authorizations. The Donlin Gold Reclamation and Closure Plan was approved by the Alaska Department of Natural Resources (ADNR) and the Waste Management permit was issued by the Alaska Department of Environmental Conservation (ADEC). 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.  Earthjustice also recently requested a second informal review by ADEC of the State of Alaska’s Clean Water Act Section 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 and approvals to remain in place.

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.

NOVAGOLD and Barrick Gold Corporation issued a joint release on August 13, 2018, announcing the receipt of the joint single Federal Record of Decision for the Donlin Gold project, completing the multi-year federal environmental review and permitting process. Between 2012 and 2018, Donlin Gold worked with the Corps and cooperating agencies to obtain the necessary permits for the Donlin Gold project. In 2018, we successfully concluded the federal permitting with the receipt of the following permits:

  • The combined Corps Clean Water Act Section 404, Rivers and Harbors Act Section 10 permit
  • The BLM Offer to Lease for the pipeline right of way at Donlin Gold
  • The Pipeline and Hazardous Material Safety Administration (PHMSA) special pipeline design permit
  • The ADEC Prevention of Significant Deterioration (PSD) air permit
  • The ADEC Alaska Pollutant Discharge Elimination System (APDES) water discharge permit
  • The ADF&G Title 16 Fish Habitat permits for the mine and transportation facilities
Apart from the ongoing permitting process, what other pre-development work at the Donlin Gold project is outstanding?

The permitting process was initiated based on the project described in the Second Updated Feasibility Study dated November 18, 2011 and amended and filed on January 20, 2012. Additional engineering work is required to advance the project design from feasibility-level to construction-ready level. Some field work, for example drilling to further define geotechnical conditions in the area of the proposed tailings dam embankment, will be undertaken in support of the engineering. Field work also will be undertaken along the natural gas pipeline right-of-way to finalize the pipeline alignment and location of borrow sites and river crossings. As engineering specifications are finalized, orders will be placed for mine equipment, plant components (e.g., mills, crushers, motors, and pumps), pipe, and other materials. All of these actions will be identified in a well-thought-out project execution plan that the project team will use to manage the project scope and to reduce the risks inherent in project execution. The first development works would be the execution of site capture, which includes early works consisting of port facilities, airport, roads and camp.

What was the specific aim of the 2017 drilling campaign?

In February 2018, NOVAGOLD released results of the Donlin Gold’s drill program which included drilling and assaying of 16 core holes (7,040 m). We were pleased to report that mineralized intercepts encountered higher grades than predicted by previous modeling and drilling intercepted distinct and significant high-grade zones in multiple areas, including high-grade mineralization at depth in the ACMA deposit in an area of previously sparse drilling. These results will be incorporated in the upcoming optimization work designed to evaluate the prospect of reducing upfront capital costs and enhancing the overall execution plan. All of this work should form a solid foundation for updating the 2011 feasibility study.

Refer to press release for full details.

What is your anticipated spending for 2019?

By carefully managing our treasury, we have remained financially strong with $162 million in cash and term deposits as of February 28, 2019. These funds are expected to be sufficient to execute on our stated goals of advancing the Donlin Gold project to a construction decision.

For the full year, we anticipate a total budget of approximately $24 million in 2019, comprising of $13 million to fund our share of the Donlin Gold project expenditures, and $11 million for general and administrative costs.

How much risk do you see of environmental litigation delaying the project?

NOVAGOLD believes that the risk of environmental litigation successfully delaying the project is small, however, should there be any delays, we are prepared to work through them and keep the process moving forward. With an asset that has a life of mine of almost 30 years, we maintain a view that is long-term while taking a methodical approach to ensure that each step is completed properly – even if that means taking a bit more time.  We believe that the strong relationships established over 20 years by Donlin Gold with the Calista Corporation, owner of the mineral estate, The Kuskokwim Corporation (TKC), owner of the surface estate, local communities in the Yukon-Kuskokwim Region, and the State of Alaska mitigates the litigation risk. With a large mining project like Donlin Gold, we would expect to gain some attention from non-governmental organizations.

In the first quarter of 2019, 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.

In Alaska, the Alaska Native Claims Settlement Act (ANCSA), came into effect in 1971 and was intended to resolve long-standing issues surrounding aboriginal land claims in Alaska, as well as to stimulate economic development throughout Alaska. The settlement established Alaska Native claims to the land by transferring titles to twelve Alaska Native regional corporations and over 200 local village corporations. A thirteenth regional corporation was later created for Alaska Natives who no longer resided in Alaska. The Native Corporations must share 70% of their profits with the other Native Corporations. In essence you have more than 50% of the voting population that stands to benefit from this project.

Part of the reason Donlin Gold’s relationship with local communities is so strong is that these local communities already have enjoyed tangible benefits as a result of activities at the project. For instance, since exploration began in 1996, local residents have been employed in a variety of roles, forming up to 90 percent of the workforce at the Donlin Gold camp. The proposed project would employ up to 3,000 workers during construction, and up to 1,000 during operations. Through Donlin Gold’s support of scholarships for Calista and TKC youth, sponsorship of academic and trades fairs, and leadership in development of the Alaska Miners Association’s Mining Workforce Development Plan, we are building a foundation that will provide Calista and TKC shareholders and their descendants with the opportunity to thrive as Donlin Gold prospers.

How do you apportion value to NOVAGOLD?

NOVAGOLD should be seen through two prisms. One is as a growth story. The other is as a value play. NOVAGOLD and Barrick are developing what is expected to be among the largest gold mines in the world. Donlin Gold is a spectacular asset by any measurement. And then of course with the sale of the Company’s interest in the Galore Creek project, we strengthened our balance sheet, which means we should not need to access capital until we wish to do so. Our strong balance sheet gives us extraordinary leverage, as well as financial flexibility. In fact, it renders NOVAGOLD unique.

In Donlin Gold, NOVAGOLD offers an unrivaled opportunity for investors seeking leverage to gold through a uniquely attractive asset that – in terms of size, grade, exploration potential, production profile, and jurisdictional safety – is an important gold project in the world today. How does one value that? We believe that we are returning to the environment that existed two decades ago, before the frontier investing that began with Yanacocha, when assets in the United States were valued using zero percent discount rates and were arbitraged against what were perceived as the then "risky” jurisdictions…Australia, South Africa, and Canada. For so many reasons, we see that era is well and truly over, and the arc as returning to premium valuations for North American assets. Yes, it may take longer to permit a mine in the USA. But when you have permitted and built the mine here…you own it! Using that kind of analysis, Donlin Gold's undiscounted Net Present Value (NPV) approaches $20 billion with gold at $2,000 per ounce*. That's not to say that even that sum is the true value in our minds. It assumes no further exploration upside and no additional mine life, outcomes which we do not expect. Indeed, we would argue that traditional NPV analysis is skewed when it comes to valuing a mine with a 27 year life … as it diminishes the value of the production beyond a decade. Lastly, NOVAGOLD believes gold will go much higher to reach a logical equilibrium level for supply and demand.

Sentiment is like the seasons, and it is surely fickle. In 2010, when gold equities last had a nice run, NOVAGOLD's share price surged from $5 to $16 in a matter of weeks. That was before there was a Feasibility Study on Donlin Gold. That was before new management was brought in with the credentials to build major mines. That was before we sold our 50% interest in Galore Creek for up to $275 million. Today, as a result of constant fiscal diligence and the receipt of $100 million on the closing of the Galore Creek sale, our balance sheet is among the strongest in the space, ensuring that even if gold falls before it resumes its upward trajectory we do not need to come to our shareholders for money…for many years. So what we believe is this: many who are presently espousing a hunker-down mentality in the gold industry will be clamoring, when the next leg in the bull market unfolds, for a project with leverage and growth in a safe place. In an era defined by asset scarcity, NOVAGOLD provides one of the few institutional-quality ways to gain exposure to both.

Donlin Gold

Do you have all the surface rights and exploration licenses in place to mine at the Donlin Gold project for as long as there is potential?

Yes. Donlin Gold has a mining lease with Calista Corporation and a surface use agreement with The Kuskokwim Corporation with co-terminus terms that grant Donlin Gold the rights to mine so long as the company believes there is valuable mineral potential at the property.

How many ounces of gold do you anticipate Donlin Gold will produce a year?

Once in production, Donlin Gold is expected to be one of very few mines in the world producing more than one million ounces of gold. In the first five years, the project is expected to produce 1,500,000 million ounces of gold per year and greater than 1,000,000 million ounces of gold per year over its 27-year mine life. Furthermore, the project has significant exploration potential as its current mineral endowment covers only three kilometers of an eight-kilometer-long mineralized corridor. This provides support for our belief that Donlin Gold, once built, should provide investors with many years of wealth-generating opportunities.

How would you describe the Donlin Gold ore body?

Gold-bearing rock within the Donlin Gold deposit is present in two adjacent areas known as the ACMA and Lewis pits. By completion of mining, the two pits would merge at the surface into one roughly oval, open-pit mine with dimensions roughly 2.2 miles long by 1 mile wide. The ACMA pit would have an ultimate depth of approximately 1,850 feet and Lewis would be 1,653 feet deep. Mining of the ACMA pit is proposed in nine phases and the Lewis pit in six phases. The initial mining of the two pits would be independent, but they would partially merge later in the life of the mine. Overburden from the final stages of the Lewis pit would be placed into the ACMA pit, partially backfilling it.

Within the orebodies, southeast-dipping north-northeast-oriented fracture zones are the primary control on gold bearing vein distribution within the north-northeast mineralized corridors. Composite vein zones or mineralized corridors range up to 30 meters in width and extend for hundreds of meters along strike. Intrusive rocks and to a lesser extent competent massive greywacke are the most favored host rocks, and act as a secondary control on the mineralization. Gold distribution in the deposit closely mimics the intrusive rocks, which contain about 74% of the mineral resource identified in the second updated Donlin Gold Feasibility Study (Donlin Gold FS). Structural zones in competent sedimentary units account for the remaining 26%.

Is there potential for a smaller scale project requiring lower initial capital and providing better economics in this gold price environment? Or does the large infrastructure requirement make a smaller scale project difficult economically?

Prior to making a construction decision, the owners will revisit and update the Donlin Gold FS. NOVAGOLD and Barrick already have initiated their review of the Donlin Gold FS, apart from the work being advanced by Donlin Gold, to identify the project components that offer the greatest opportunities for enhancing project efficiencies, execution, operation and hence economics. At this point, Donlin Gold's scale is affected by the need to develop access, fuel, and power infrastructure for the project. While the owners will consider all potentially viable options for design, construction, and operation of a successful project, the best project design available today is the one that Donlin Gold has advanced through permitting.

How would you describe the exploration potential of the Donlin Gold property beyond the 39 million-ounce resource already identified?

Donlin Gold has excellent exploration potential, with the opportunity to expand the current open-pit resource both along strike and at depth. Considering that the current pit occupies only part of a three-kilometer area that is itself only a portion of an eight-kilometer mineralized belt, in NOVAGOLD's view it is likely that Donlin Gold's mine life, already measured in decades, or ultimate production profile – or both – is likely to be greater than anticipated.

Can you briefly describe the social stakeholders in the Donlin Gold project and how are you managing your community relations and obligations?

Local communities are our neighbors – and at Donlin Gold, they're the owners of the minerals and land on which the project will be built and operated. Over nearly 20 years of activities at Donlin Gold, we have consistently sought to build strong community partnerships, reach equitable participation agreements with Calista Corporation (the owner of mineral rights) and TKC (the owner of surface rights), and establish good communication with local communities as well as state and federal regulators. At the same time, we collected extensive environmental baseline data to facilitate permitting of the project and developed training and employment programs to engage the local population and businesses in the advancement of Donlin Gold. We're very proud of the relationships that we have with our community partners. We have taken the time to listen to their concerns and carefully designed our project to mitigate those concerns. We welcome the scrutiny that the permitting process entails, given the importance of a project of this size to the state and to the region.

A big part of our activities in Alaska is working in partnership with Calista and TKC on different health and safety, educational, environmental and cultural initiatives that support a balanced and sustainable development plan for the project and surrounding communities. In the first quarter of 2019 the following took place - 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.

Funding options

What gold price do you need to see before the economics are attractive enough for a large gold miner (potential partner) to take interest in developing Donlin Gold?

Multiple elements, such as an updated feasibility study, engineering and site preparations, come into play ahead of any decision on the construction of the Donlin Gold project. Our timing could be spot on given that in this market, large capital projects are out of favor and gold is deemed to be in a correction within a bull market. It would not be responsible for us to proceed until such time where the price of gold is higher, markets are healthier and more receptive to large capital undertakings. In the meantime, we will continue to advance the Donlin Gold project to be positioned nicely when markets become more favorable.

What do you think is a reasonable estimate for capital costs in the current environment? Can you provide specific opportunity levers?

Capital intensive projects like Donlin Gold are out of favor in the current market environment with little to no attention on mining equities. NOVAGOLD believes it will have the ability to fund its share of capital in the right environment given the scarcity of assets like Donlin Gold. Total Capital cost estimate for Donlin Gold, which came in at $6.7 billion and included $1 billion in contingencies, was meant to be sufficiently robust to withstand the deserved scrutiny that many projects have faced since the industry experienced a series of capital expenditure blowouts. Our aim is for Donlin Gold not only to meet expectations, but to exceed them. To that end, many opportunities have been identified for potential reduction of owners initial capital cost, including turning over construction and operation of significant infrastructure and ancillary projects – such as the gas pipeline, oxygen plant, and port operations – to other third-party owner/operators. Such exercises are routine for projects blessed with long mine lives.

The Alaska State government is facing a decline in oil revenues. Have you had conversations with them for a potential partnership to fund a portion of the project? How supportive are they in general and in what ways?

Donlin Gold has not discussed any specific proposals with the State of Alaska, but has had general conversations with the state regarding potential opportunities for state financing for infrastructure components of the project. While Alaska derives more than 90% of its revenues from oil production, the state’s ability to support economic development does not depend on annual funding. The Alaska Industrial Development and Export Authority (AIDEA) was created by the Alaska Legislature in 1967 "in the interests of promoting the health, security, and general welfare of all the people of the state, and a public purpose, to increase job opportunities and otherwise to encourage the economic growth of the state, including the development of its natural resources, through the establishment and expansion of manufacturing, industrial, energy, export, small business, and business enterprises…" AIDEA financed the Delong Mountain Transportation System, one of AIDEA’s original projects, to support the development of the Red Dog mine in northwest Alaska, one of the world’s largest producing zinc mines. The Delong Mountain Transportation System comprises the infrastructure for the transport of concentrate from the Red Dog mine site to a port where lightering barges are used to load ships that carry the concentrate to off-shore smelters, including: a 52-mile all-weather gravel industrial haul road, a port facility, an offshore conveyor system, a fuel storage and distribution facility, concentrate storage facilities, on-site power, and residential quarters for up to 96 workers. The Delong Mountain Transportation System is illustrative of the types of investment that AIDEA can make to support resource development in Alaska.

Valuation drivers

What gold price do you believe NOVAGOLD’s stock is implying currently? What is your long-term view on the price of gold?

We believe that the gold price is disconnected from gold equity valuations in general. Such divergences and overshooting happens sometimes when investors feel disappointed…in all markets by the way, not just precious metals. Fortunately, NOVAGOLD has the luxury of not needing to be concerned about the current price of gold. We have a long-term view and believe that NOVAGOLD offers investors all the leverage they could wish for when higher gold prices return. The recent collapse in oil prices is a reminder to investors that, unlike oil, gold is not a commodity. It is, first and foremost, a kind of currency that people have accepted as a store of value long before paper currencies. From the Americas to the deepest recesses of Europe, Africa, and Asia, humanity has regarded gold as a form of currency since the beginning of recorded history. That's not going to change. Gold is a better global brand than Coca-Cola. If anything, the understanding and appreciation for gold is only going to improve since it is the only currency that cannot be printed at a time when major reserve currencies are being cheerfully debased – among them the US Dollar, the Euro, the Pound Sterling, the Yen, and even the Swiss Franc. After a 40-year secular trend of attempted demonetization, gold is re-asserting itself as the only financial asset that doesn't represent someone else's liability. Time is clearly on our side to have an extraordinary return on the Company's investment in Donlin Gold.

Donlin Gold has a significant capital cost requirement, is it economical?

The capital requirements for the Donlin Gold project were released as part of the Second Updated Feasibility Study filed in November 2011. As we get closer to a decision on construction, the Donlin Gold partners will look to update the feasibility study and take a fresh look at the overall capital requirements, underlying costs and potential cost saving opportunities.

Over the last number of years, big capital-intensive projects have been under scrutiny – some for perfectly legitimate reasons; however, we believe that capital costs should never be considered in isolation. Once permits are obtained, NOVAGOLD will be able to evaluate a construction decision based on market conditions at that time.

Does NOVAGOLD participate in the Direct Registration of Shares (DRS)?

Yes, NOVAGOLD participates in the Direct Registration of Shares with the Company's transfer agent, Computershare. For more information on DRS, share transfers, lost certificates, or a change of address, please contact Computershare www.computershare.com.

Still Have a Question?

Please email info@novagold.com. While we may not be able to post all questions on the website, we will respond promptly to everyone.

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