Novagold Resources Inc. · AMEX:NG
Novagold Resources — Q3 2020 Earnings Presentation
39 slides from Novagold Resources's earnings presentation, Oct 1, 2020
Slide 1: 2020 Third Quarter Results & Project Update
2020 Third Quarter Results & Project Update TSX, NYSE American: NG | novagold.com | October 1, 2020
Slide 2: Third Quarter 2020 Webcast and Conference Call Attendees
Third Quarter 2020 Webcast and Conference Call Attendees Introduction Mélanie Hennessey (Vice President, Corporate Communications) Third-Quarter Update Greg Lang (President & Chief Executive Officer) Third-Quarter Financials Update David Ottewell (Vice President & Chief Financial Officer) Corporate
Slide 3: Cautionary Statements
Cautionary Statements REGARDING FORWARD-LOOKING STATEMENTS This presentation 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 Securi
Slide 4: Donlin Gold is a Tier-One Asset in a Tier-One Jurisdiction
NOVAGOLD: Donlin Gold is a Tier-One Asset in a Tier-One Jurisdiction Unique asset with strong, investor-friendly attributes SIZE: 39,007,000 gold ounces contained in measured and indicated mineral resources1 GRADE: 2.24 g/t2, more than double the world average grade3 EXPLORATION POTENTIAL: Endowment
Slide 5: DONLIN GOLD: 2020 Strategic Focus
DONLIN GOLD: 2020 Strategic Focus Progressing the project amid COVID-19 in a safe, efficient, responsible, and cost-effective manner Health & Safety • Enhanced COVID-19 health protocols remain in place at Donlin Gold Drill Program • Drilling was completed at the Donlin Gold project as of September 2
Slide 6: COVID-19 Response Update and Safety Plan
NOVAGOLD: COVID-19 Response Update and Safety Plan Coordinating a response to COVID-19 in a safe, efficient, and responsible manner Highlights of NOVAGOLD’s Response at Offices and Donlin Gold Project Site Requesting all employees to monitor their health and consult health professionals if feeling a
Slide 7: 2020 COVID-19 Response Activity
DONLIN GOLD: 2020 COVID-19 Response Activity Continued active external affairs and community engagement during pandemic Providing a helping hand during COVID-19 and deepening partnerships: • Partnering with TKC and tribal councils: • Delivered food to every home in eight middle Kuskokwim villages •
Slide 8: 2020 Drill Program
DONLIN GOLD: 2020 Drill Program Largest drill program in 12 years ACMA Lewis • The 2020 drill program had planned 80 core holes encompassing 22,000 meters in the ACMA and Lewis deposit areas • Validating recent geologic and resource modeling concepts and testing for extensions of high-grade zones in
Slide 9: Third Quarter 2020 Drill Program Update
DONLIN GOLD: Third Quarter 2020 Drill Program Update Encouraging initial results 1 – further advancing the unique value proposition • Mineralized intercepts continue to encounter grades higher than predicted by previous modeling • Drilling was completed as of September with 85 core holes encompassin
Slide 10: Third Quarter 2020 Drill Program Update Continued
DONLIN GOLD: Third Quarter 2020 Drill Program Update Continued Initial drill assays exceed modeled expectations with significant distinct high-grade intervals intercepted in multiple areas, including intervals near surface Five of the Top Assay Intervals1 Hole From (Meters) To (Meters) Length (Meter
Slide 11: Third Quarter 2020 Permitting Update
DONLIN GOLD: Third Quarter 2020 Permitting Update Key federal permits for the project received and state permitting is well advanced Federal Permitting Final Environmental Impact Statement (EIS) Joint Record of Decision (ROD) by the Corps and Bureau of Land Management Section 10/404 (wetlands) permi
Slide 12: Better Together
DONLIN GOLD: Building Value for the Future Generations of Stakeholders HEALTH & SAFETY EDUCATION & ENVIRONMENTAL TRAINING STEWARDSHIP STAKEHOLDER CORPORATE ENGAGEMENT GOVERNANCE Better Together 12
Slide 13: Third Quarter 2020 Community Investment Update
DONLIN GOLD: Third Quarter 2020 Community Investment Update Focused on our long-term strategy of delivering value for all stakeholders Continued extensive external affairs and community engagement • Donlin Gold is working with TKC, the State of Alaska and Alaska Native Tribal Health Consortium in an
Slide 14: Third Quarter 2020 Community Investment Update Continued
DONLIN GOLD: Third Quarter 2020 Community Investment Update Continued Strong and collaborative regional partners • Donlin Gold, in partnership with the AVCP and ONC, sponsored the Backhaul Project to remove hazardous waste from 10 villages in September • In addition, large appliances were removed fr
Slide 15: Project Catalysts
DONLIN GOLD: Project Catalysts Multi-generational sustainable economic opportunity • Complete drill program • Report drill assay results • Incorporate drill data into the latest model • The partners will determine the next steps to update the Donlin Gold feasibility study and initiate the engineerin
Slide 16: Decline in Discoveries and Grade as Global Production Peaks
GOLD: Decline in Discoveries and Grade as Global Production Peaks Mine supply is set to decline after years of increases • Existing mines are being depleted and grades are declining, while few new discoveries have been identified to replace them • Existing mine production at 26 of the world’s larges
Slide 17: Sharp Underinvestment Impedes Output Growth
GOLD: Sharp Underinvestment Impedes Output Growth In 2012, mining companies began implementing aggressive cost-cutting measures and curtailing expansion plans in an effort to protect margins, as shareholders abandoned growth stories in favor of maximizing returns from existing operations • Explorati
Slide 18: Largest Gold Development Project in its Category
DONLIN GOLD: Largest Gold Development Project in its Category1 A resource more than five times the size of the peer group average 50.0 2 39.0 7.7 40.0 Donlin Gold2 Moz M&I Gold Resource (millions of ounces) 30.0 39.0 Moz peer group average1 20.0 18.8 11.7 11.5 10.0 10.0 8.0 6.5 5.7 5.6 5.3 5.0 4.3 4
Slide 19: Double the Industry Average Grade
DONLIN GOLD: Double the Industry Average Grade1 Among the world’s highest-grade known open-pit gold deposits 2.24 g/t 1.05 g/t Donlin Gold average grade2 World average grade1 While industry average grades are declining, Donlin Gold’s grade provides resilience through commodity price cycles 1) 2019 a
Slide 20: Positioned to be One of the World's Largest Gold Mines
DONLIN GOLD: Positioned to be One of the World’s Largest Gold Mines Positioned to become a million-ounce gold producer1 1.60 1.40 1.1 Moz/yr1 0.3 1.502 Projected Annual Gold Production (millions of ounces) 1.20 Moz/yr3 1.00 0.80 Donlin Gold’s 27-year mine life North and South American gold- focused
Slide 21: Long-Term Native Corporation Partners
DONLIN GOLD: Long-Term Native Corporation Partners The Donlin Gold project location was specifically selected for its resource development potential • The Alaska Native Claims Settlement Act1 (ANSCA) of 1971 resolved Alaska Native land claims, allotting 44 million acres for land use to Native Corpor
Slide 22: Third Quarter 2020 Operating Performance Analysis
NOVAGOLD: Third Quarter 2020 Operating Performance Analysis Three months ended Nine months ended August 31, August 31, (US$ millions) 2020 2019 2020 2019 General and administrative(1) $4.7 $4.1 $13.9 $12.6 Donlin Gold 6.2 3.1 11.4 6.7 Operating loss 10.9 7.2 25.3 19.3 Other (income) expense(2) 1.5 0
Slide 23: Third Quarter 2020 Cash Flow Highlights
NOVAGOLD: Third Quarter 2020 Cash Flow Highlights Three months ended Nine months ended August 31, August 31, (US$ millions) 2020 2019 2020 2019 General and administrative(1) $(3.0) $(2.5) $(8.6) $(8.0) Donlin Gold (6.7) (3.8) (13.6) (7.6) Working capital, interest and other 1.7 2.2 1.7 2.7 Withholdi
Slide 24: Maintaining a Strong Treasury
NOVAGOLD: Maintaining a Strong Treasury A healthy treasury to advance Donlin Gold to the next stage of development T R E A S U R Y P L A N N E D S P E N D I N G $126 cash and term deposit M $31 anticipated 2020 expenditures M balance on August 31, 2020 disclosed on January 22, 20202 G A L O R E C R
Slide 25: When I speak about Donlin Gold, I often ask this question
WHEN I SPEAK ABOUT DONLIN GOLD, I OFTEN ASK THIS QUESTION What other gold development-stage asset in the industry compares in its combination of… • Enormous size; • High grade for an open pit gold mine (and hence low all- in sustaining cash costs); • Truly superb exploration upside; • A production p
Slide 26: One of the Few Large Gold Projects in a Safe Jurisdiction
DONLIN GOLD: One of the Few Large Gold Projects in a Safe Jurisdiction Top 10 gold producing operations comparison1 just three operations produced >1Moz in 2019 globally 39.0Moz 2 Donlin Gold 29.8Moz Olimpiada 29.3Moz 14.4Moz Kazzinc Carlin 48.2Moz 44.2Moz Lihir Island 21.1Moz Muruntau Cortez 25.0Mo
Slide 27: The New Carlin? The Next Big Gold Discovery Could be at Donlin Gold
DONLIN GOLD: The New Carlin? The Next Big Gold Discovery Could be at Donlin Gold Substantial exploration potential along the 8 km-long mineralized trend, located on less than 5% of Donlin Gold’s land position • From 2006 to 2011, M&I resources increased 135% (16.6Moz1 to 39.0Moz2) through a well-exe
Slide 28: Thomas Kaplan quote on Buffett and Barrick
The fact that Buffett has chosen Barrick means more eyes will be focused on Donlin… and actually more financially rewarding — than when Buffett anointed silver as investible again and removed forever the stigma associated with silver investment that remained since the Bunker Hunt era. Lightning has
Slide 29: Ray Dalio quote on store of wealth
There’s not yet a good alternative in the form of a currency … Because the three major reserve currencies all have the same basic problem … That’s why [investors] move into a new store-hold of wealth. And the store- hold of wealth … is equities, is gold, is other asset classes that go up. Ray Dalio
Slide 30: GOLD COMMENTARY: Bullish Conviction is no Longer a Rarity
GOLD COMMENTARY: Bullish Conviction is no Longer a Rarity “Gold is evolving into a “must-have” asset.” Mohamed A. El-Erian, Chief Economic Advisor, Allianz, August 11, 2020 “Gold is a currency. We have dollars, we have euros, we have yen and we have gold. If you don’t have [10% of your assets in] go
Slide 31: GOLD: Supply Decreases as Demand Pressure Increases
GOLD: Supply Decreases as Demand Pressure Increases DEMAND DRIVERS S U P P LY P R E S S U R E S asset diversification dwindling discovery rates historic safe-haven inadequate exploration appeal budgets currency debasement decreasing ore grades protection central bank purchasing rising production cos
Slide 32: Leverage Where it Counts…and That You Can Keep
DONLIN GOLD: Leverage Where it Counts…and That You Can Keep Net Present Value (NPV) (US$ in Billions) NPV at 0% NPV at 5% 27.0B $2,500 19.2B $2,000 14.6B Gold Price (US$ per oz) $1,700 Donlin Gold NPV1 increases ~20x with ~2x $1,500 11.6B increase in gold price 8.2B $1,300 $0.0 $5.0 $10.0 $15.0 $20.
Slide 33: Strong Institutional Shareholder and Management Support
NOVAGOLD: Strong Institutional Shareholder and Management Support o The five largest shareholders represent 49% of shares issued and outstanding1 o Named Executive Officers’ share ownership has increased to 2,466,4332 since joining the Company 25.7% Electrum Strategic Resources LP & affiliates 7.5%
Slide 34: Year-To-Date Share Price
NOVAGOLD: Year-To-Date Share Price1 Substantial share price recovery since August – Up approximately 40% 60.0% NOVAGOLD GDX GDXJ 40.0% 20.0% $11.65 Sept 28 - (20.0%) $8.18 Aug 11 (40.0%) (60.0%) 1. YTD share price performance against major gold indices as of Sept 22 2020 34
Slide 35: Donlin Gold is a Tier-One Asset in a Tier-One Jurisdiction
NOVAGOLD: Donlin Gold is a Tier-One Asset in a Tier-One Jurisdiction Unique asset with strong, investor-friendly attributes SIZE: 39,007,000 gold ounces contained in measured and indicated mineral resources1 GRADE: 2.24 g/t2, more than double the world average grade3 EXPLORATION POTENTIAL: Endowment
Slide 36: Appendix
Appendix
Slide 37: Top Recent Investor Questions & Answers
NOVAGOLD: Top Recent Investor Questions & Answers Topic Answer Donlin Gold Feasibility Donlin Gold was considered technically and economically feasible in the 2012 Second Updated Feasibility Study (FSU2). With 39 million ounces of contained gold in measured and indicated mineral resources inclusive
Slide 38: Mineral Reserves & Mineral Resources
NOVAGOLD: Mineral Reserves & Mineral Resources Donlin Gold (100% basis)* Tonnage Grade Metal content * Mineral reserves and resources are reported on a GOLD kt g/t Au koz Au 100% basis. NOVAGOLD and Barrick each own 50% of the Reserves(1) Donlin Gold project. Proven 7,683 2.32 573 Donlin Gold approx
Slide 39: NOVAGOLD Resources Inc. contact details
NOVAGOLD RESOURCES INC. Suite 1860 – 400 Burrard Street Mélanie Hennessey Vancouver, BC, Canada V6C 3A6 VP, Corporate Communications T: 604 669 6227 melanie.hennessey@novagold.com TF: 1 866 669 6227 F: 604 669 6272 Jason Mercier www.novagold.com Manager, Investor Relations info@novagold.com jason.me