Question

How does Novagold finance investments/projects within the United States specifically of the Donlin Gold project?

Answer 1

The 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, the project already boasts a size that is exceptional, a grade twice the industry average, 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.