Novagold Resources Inc. · AMEX:NG
Novagold Resources — Bank of America Merrill Lynch Canada Mining Conference 2014
47 slides from Novagold Resources's conference presentation, September 2014
Slide 1: Bank of America Merrill Lynch Canada Mining Conference
Bank of America Merrill Lynch Canada Mining Conference novagold.com NYSE-MKT, TSX: NG | September 2014
Slide 2: Cautionary statements
cautionary statements REGARDING FORWARD-LOOKING STATEMENTS This presentation includes certain “forward-looking statements” within the meaning of applicable securities laws, including the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historic
Slide 3: Why NOVAGOLD?
why NOVAGOLD? EXCEPTIONAL IN SCALE, QUALITY, AND JURISDICTIONAL SAFETY Donlin Gold ▶ poised to become one of the largest producers in the gold industry Galore Creek ▶ expected to be the largest and lowest cost copper mine in Canada 3
Slide 4: A large high-grade gold project
donlin gold a large high-grade gold project ATTRIBUTES POSITION IT AMONG THE WORLD’S MOST SIGNIFICANT GOLD DEPOSITS Contained Gold1 EXCEPTIONAL reserve size 34Moz 2.1g/t P&P reserves P&P grade OUTSTANDING production profile HIGH-QUALITY grade SIGNIFICANT exploration upside 39Moz 2.2g/t M&I resources
Slide 5: The right project – Donlin Gold
the right project – donlin gold ARGUABLY THE WORLD’S MOST SIGNIFICANT GOLD PROJECT size partnerships grade donlin gold jurisdiction growth longevity 5
Slide 6: Emerging top-tier producer in safe jurisdiction
donlin gold emerging top-tier producer in safe jurisdiction THE LARGEST PROJECTED GOLD PRODUCER AMONG DEVELOPMENT PROJECTS 1.60 1.40 1.501 Projected Annual Gold Production 1.20 (millions of ounces) 1.00 0.80 0.60 1.102 0.40 0.76 0.58 0.20 0.40 0.33 0.19 0.13 0.00 Donlin Gold Metates Livengood Merian
Slide 7: The right project – Donlin Gold: high grade open pit mine
the right project – donlin gold HIGH GRADE OPEN PIT MINE size partnerships grade donlin gold jurisdiction growth longevity 7
Slide 8: Expected to emerge as one of the highest-grade gold producers
donlin gold expected to emerge as one of the highest-grade gold producers DONLIN GOLD’S GRADE IS AMONG THE HIGHEST COMPARED TO WORLD’S BIGGEST PRODUCERS 3.00 M&I Au Grade (g/t) 2.66 2.50 2.24 2.14 2.00 1.88 1.81 1.50 1.44 1.32 1.04 0.98 1.00 0.81 0.78 0.50 0.00 Agnico Donlin DonlinGold Polyus Gold F
Slide 9: The right project – Donlin Gold: exploration potential
the right project – donlin gold SUBSTANTIAL EXPLORATION POTENTIAL size partnerships grade donlin gold jurisdiction growth longevity 9
Slide 10: Substantial exploration potential
donlin gold substantial exploration potential MULTIPLE DRILL PROSPECTS AND TARGETS EXIST ALONG 8KM TREND ▶ Potential to expand current open-pit resources along strike and at depth ▶ Good potential to discover meaningful deposits outside current mine footprint • Reserves and resources are contained w
Slide 11: Why gold? No new and substantial discoveries
why gold? no new and substantial discoveries DESPITE RECORD HIGH EXPLORATION SPENDING LEVELS THE GOLD INDUSTRY HAS EXPERIENCED A RECENT DROP IN DISCOVERIES 16 Gold Discovered 10,000 Exploration Budget (US$M) 9,000 14 8,000 12 Number of Gold Discoveries 7,000 2012 10 6,000 highest year on record for
Slide 12: The right project – Donlin Gold: longevity
the right project – donlin gold 27 YEAR MINE LIFE size partnerships grade donlin gold jurisdiction growth longevity 12
Slide 13: Strong cash flow at today's gold prices
donlin gold strong cash flow at today’s gold prices GOLD PRICE $1,300/oz 1.5M/oz annual production1 $532/oz1 $768/oz1 ALL-IN MARGIN SUSTAINING COST z + $1.0B annual cash flow1,2 Notes: Donlin Gold estimates as per the second updated feasibility study effective November 18, 2011, as amended January 2
Slide 14: Has exceptional leverage to gold
donlin gold has exceptional leverage to gold NPV INCREASES ~20X WITH ~2X INCREASE IN GOLD PRICE 30,000 ▶ Project has a positive return $27.0B that increases substantially 25,000 with higher gold prices NPV (US$ in millions) ▶ Good payback at a 20,000 $19.2B broad range of gold prices $14.6B ▶ Signif
Slide 15: The right project – Donlin Gold: jurisdiction
the right project – donlin gold LOCATED IN ALASKA, ONE OF THE FEW SAFE MINING JURISDICTIONS size partnerships grade donlin gold jurisdiction growth longevity 15
Slide 16: Located in a favorable jurisdiction
donlin gold located in a favorable jurisdiction A REMARKABLE RESOURCE AMONG EMERGING OPEN-PIT DEPOSITS Livengood: 15.7 M oz. Rainy River: 6.2 M oz. Donlin Gold: 39.0 M oz. Rosia Montana: 17.1 M oz. Hycroft Mine Expansion: 24.3 M oz. Haile: 4.0 M oz. Metates: 19.0 M oz. Aurora: 6.5 M oz. Merian: 4.2
Slide 17: Alaska a resource-rich state with an established rule of law
alaska a resource-rich state with an established rule of law ALASKA HAS A GROWING NATURAL RESOURCES SECTOR ▶ Alaska is the second largest U.S. gold- producing State ▶ Well-defined permitting process ▶ Four large precious metals mines, one coal mine & one base metal mine ▶ Numerous small-scale mines
Slide 18: The right project – Donlin Gold: partnerships
the right project – donlin gold STRONG PARTNERSHIPS WITH NATIVE CORPORATIONS size partnerships grade donlin gold jurisdiction growth longevity 18
Slide 19: Durable, long-term agreements with native corporations
donlin gold durable, long-term agreements with native corporations STRONG AND TIME-HONORED RELATIONSHIPS WITH STAKEHOLDERS “Calista would like to take this opportunity to assert and inform the U.S. Army Corps of Engineers and the public of its legislated mandate under ANCSA. Calista and TKC are not
Slide 20: NFWF partnership
NFWF partnership PROTECT, RESTORE AND CONSERVE ALASKA FISH AND WILDLIFE “We, the Board members of NOVAGOLD, are truly “The lands and waters of Alaska provide a home for proud of the fact that our company and NFWF an incredible number of fish and wildlife species. have come together to create an extr
Slide 21: Mining an integral part of communities
donlin gold mining an integral part of communities NATIVE CORPORATIONS WANT TO LEAD THE ECONOMIC DEVELOPMENT OF THEIR REGIONS ▶ ANCSA established 40 years ago; resolved legal issues related to Native title claims ▶ Lands valuable for resource potential selected by Regional Corporations under ANCSA ▶
Slide 22: Project permitting is on track
donlin gold project permitting is on track DEVELOPMENT TIMELINE - ADVANCING TOWARD A CONSTRUCTION DECISION 16 years ̴4 ̴4 27+ years 1.5Moz/year 1.5 Moz/year ENVIRONMENTAL firstfive fivefull years1 1 fullyears EXPLORATION & CONSTRUCTION first ENGINEERING & PERMITTING OPERATION 1.1Moz/year 1.1 Moz/yea
Slide 23: Permitting milestones
donlin gold permitting milestones HALFWAY THROUGH PERMITTING TIMELINE 2012-2013 2013-2015 2015-2016 Notice of Intent Final EIS to Prepare EIS Draft EIS Record of Decision Initial permit applications Scoping summary document Prepare draft final EIS Submitted: 08/12 Completed: 08/13 Agency review Noti
Slide 24: Galore Creek a significant copper-gold-silver asset in Canada
galore creek a significant copper-gold-silver asset in canada THE KIND OF ASSET YOU CAN BUILD A COMPANY AROUND M&I Resources1 9Blbs 0.5% STRONG copper grade copper copper SIGNIFICANT gold & silver content GROWING resources CONSIDERABLE exploration upside 8Moz 0.3g/t gold gold SAFE jurisdiction 136Mo
Slide 25: Galore Creek grade peer comparison
galore creek grade peer comparison AMONG HIGHEST COPPER GRADE COMPARED TO NORTH AMERICAN ASSETS P&P + M&I grade (Cu%) 0.60 0.50 0.50 0.45 0.42 0.40 0.40 0.32 0.30 0.30 0.27 0.24 0.21 0.20 0.18 0.18 0.10 0.00 Galore Pebble Rosemont Catface Red Chris Berg Schaft New KSM Mount Casino Creek Creek Prospe
Slide 26: Galore Creek
galore creek ENHANCING VALUE WHILE EVALUATING OPPORTUNITIES TO MONETIZE ASSET IN THE COMMUNITY ▶ Bursary award program for Tahltan members pursuing post-secondary education ▶ Sponsor of the 37th Annual Kilrich/Northern Yukon Native Hockey Tournament ▶ Sponsor of the Dease Lake Community sporting eve
Slide 27: Financial obligations have decreased substantially
financial obligations have decreased substantially CLEAR FOCUS BEGINS WITH STRONG FUNDING TO EXECUTE ON ALL FRONTS $129 actual M ~77% reduction in expenditures Total Annual Expenditure ($USD) $38 actual M $30 M budget 1 2012 2013 2014 $176M cash and term deposits2 27 Notes: (1) 2014 anticipated budg
Slide 28: Excellent and committed shareholder base
why NOVAGOLD? excellent and committed shareholder base BLUE CHIP INSTITUTIONAL QUALITY INVESTMENT 26.7% 80% Electrum Strategic Resources LP Institutional Ownership 51% Other 11.3% Paulson & Co. 49% Inc held by top 5 shareholders(1) 6.9% The Baupost Group, L.L.C. 1.4% Sun Valley Gold, LLC 2.7% Tocque
Slide 29: Why NOVAGOLD? Why now?
why NOVAGOLD? why now? In an environment where: ▶ Gold is in a secular bull market ▶ Macroeconomic environment supportive of continued trend toward higher price ▶ Grades are declining ▶ New discoveries are few ▶ Global exploration & development shrinking ▶ Geopolitical risks increasing NOVAGOLD offe
Slide 30: Appendix
appendix novagold.com
Slide 31: Donlin Gold project overview
donlin gold project overview ADVANCING DONLIN GOLD UP THE VALUE CHAIN ▶ Donlin Gold LLC is the operating company ▶ 50/50 ownership by NOVAGOLD and Barrick Gold ▶ Board of Directors has two representatives from each company • Chairman rotates every year • Each company has the right to appoint the Don
Slide 32: Donlin Gold project highlights
donlin gold project highlights DONLIN GOLD SLATED TO BE A STATE-OF-THE-ART SIGNIFICANT MINE Reserves: 33.9 Moz Au (505M tonnes ore)1 Resources: 5.1 Moz M&I (excluding P&P) and 6.0 Moz Inferred1 Mine Life: ~27 years Production: Year 1-5,1.5 Moz/year; LOM,1.1 Moz/year Operation: Open-pit, conventional
Slide 33: Reserve & resource growth
donlin gold reserve & resource growth RESOURCES MORE THAN DOUBLED FROM 2006 TO 2008 Focused on feasibility-level planning and more recently permitting 40.0 39.0 37.9 35.3 39Moz 35.0 M&I RESOURCES M&I Au Resources (Moz) 29.4 30.0 inclusive of 25.0 34Moz Updated Feasibility Study 20.0 P&P RESERVES @ $
Slide 34: More than three decades of low cost production
donlin gold expected to provide more than three decades of low cost production LOW OPERATING CASH COSTS AND ALL-IN SUSTAINING COSTS First Five Years Life of Mine Cash Costs1 Per Ounce Cash Costs1 Per Ounce Open-pit mining2 133 Open-pit mining2 270 Processing 208 Processing 257 G&A, royalties, land &
Slide 35: Donlin Gold: share upfront costs with third parties
donlin gold WELL POSITIONED TO SHARE UPFRONT COSTS WITH THIRD PARTIES Areas US$M1 Opportunities1 Mining 345 Leasing equipment ~$170M Site preparation/roads 236 Process facilities 1,326 Oxygen plant could be built by third party ~$130M Tailings 120 Utilities 1,302 Gas pipeline could be built by third
Slide 36: Donlin Gold key performance indicators
donlin gold key performance indicators ROBUST ECONOMICS HIGHLY LEVERAGED TO GOLD PRICES All amounts in US dollars Gold Price Unit $1,000/oz $1,200/oz $1,700/oz $2,000/oz $2,500/oz Base Case Average annual $M 670 950 1,500 1,785 2,185 after-tax cash flow (first full five years) Average annual $M 350
Slide 37: Current work
donlin gold current work PROCEEDING ON SCHEDULE AS PER EIS TIMELINE ▶ Maintaining strong working relationships with the agencies and providing input throughout the permitting and EIS processes ▶ EIS process and current activities • Alternatives development addressing mine, pipeline and transportatio
Slide 38: Permitting in the U.S.
permitting in the U.S. LARGE PROJECTS HAVE BEEN SUCCESSFULLY PERMITTED Project Name Location Metal Time Description • Expansion Red Dog Alaska Lead/zinc ~2 years • EIS completed in 2009 • Development started on schedule in 2010 • Expansion – new heap leach facility Fort Knox Alaska Gold ~3 years • P
Slide 39: Galore Creek project overview
galore creek project overview GALORE CREEK, AN EXCEPTIONAL ASSET ▶ Galore Creek Mining Corporation (GCMC) is the operating company ▸ 50/50 ownership by NOVAGOLD and Teck Resources Inc. ▸ Management Committee has two representatives from each company • Chairman rotates every year ▸ Project is located
Slide 40: Galore Creek project highlights
galore creek project highlights GALORE CREEK TO BE ONE OF CANADA’S LARGEST COPPER MINES Reserves: 6.8 Blb Cu; 5.5 Moz Au; 102 Moz Ag 1 Resources: 8.9 Blb Cu; 8.0 Moz Au; 136 Moz Ag (inclusive of reserves) 1 Mine Life: ~18 years Production: Year 1-5, 400 Mlb/year Cu; LOM, 340 Mlb/year Cu Operation: O
Slide 41: Galore Creek key performance indicators
galore creek key performance indicators ROBUST ECONOMICS HIGHLY LEVERAGED TO METAL PRICES All amounts in CAD dollars Unit Metal Prices Copper US$/lb 2.00 2.65 3.00 3.50 4.00 Gold US$/oz 900 1,100 1,100 1,200 1,300 Silver US$/oz 15.00 18.50 20.00 25.00 30.00 LOM after-tax cash flow $M 1,514 5,118 6,6
Slide 42: The NOVAGOLD team
the NOVAGOLD team INDUSTRY LEADERS TO BRING DONLIN GOLD THROUGH PERMITTING & BEYOND MANAGEMENT ▸ Former President of Barrick Gold North America Gregory Lang ▸ 35 years experience building & operating major mines President & CEO ▸ Intimate knowledge of Donlin Gold ▸ Former EVP and General Counsel of
Slide 43: NOVAGOLD board of directors
NOVAGOLD board of directors Dr. Thomas Kaplan Chairman and CIO of The Electrum Group LLC, a privately held natural resources Chairman investor that controls a diversified portfolio of precious and base metals assets Former Chief Legal Officer and Corporate Secretary with Franco-Nevada, transforming
Slide 44: NOVAGOLD reserve/resource table
NOVAGOLD reserve/resource table At April 30, 2012 Donlin Gold (NOVAGOLD 50%) Tonnage Grade* Metal content NOVAGOLD share** GOLD Mt g/t Moz Moz Reserves (100%)1 Proven 7.7 2.32 0.57 0.29 Probable 497.1 2.08 33.28 16.64 P&P 504.8 2.09 33.85 16.93 Resources (100%)3 inclusive of reserves Measured 7.7 2.
Slide 45: Reserve/resource table (con't)
reserve/resource table (con’t) Copper Canyon (NOVAGOLD 70%) Tonnage Grade* Metal content NOVAGOLD share** Resources (100%)5,6 COPPER Mt %Cu Mlbs Mlbs Inferred 53.7 0.50 592.0 414.4 GOLD Mt g/t Moz Moz Inferred 53.7 0.73 1.26 0.88 SILVER Mt g/t Moz Moz Inferred 53.7 10.60 18.36 12.85 t = metric tonne
Slide 46: Reserve/resource table (con't)
reserve/resource table (con’t) Notes: a. These resource estimates have been prepared in accordance with NI43-101 and the CIM Definition Standard, unless otherwise noted. b. See numbered footnotes below on resource information. c. Rounding as required by reporting guidelines may result in apparent su
Slide 47: Contact us
contact us NOVAGOLD RESOURCES INC. Suite 720 – 789 West Pender Street Vancouver, BC Canada V6C 1H2 T 604 669 6227 TF 1 866 669 6227 F 604 669 6272 www.novagold.com info@novagold.com Mélanie Hennessey Erin O’Toole VP, Corporate Communications Analyst, Investor Relations melanie.hennessey@novagold.com
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