NOVAGOLD Continues to Advance Donlin Gold as Planned and Maintains a Strong Financial Position
VANCOUVER, BRITISH COLUMBIA–(April 7, 2014) – NOVAGOLD RESOURCES INC. (TSX:NG)(NYSE MKT:NG) today released its first quarter financial results and updates for its flagship 50%-owned Donlin Gold project in Alaska and its 50%-owned Galore Creek copper-gold-silver project in British Columbia.
Details of the Company’s financial results for the three-months ended February 28, 2014 are presented in the consolidated financial statements and quarterly report filed on Form 10-Q with the SEC that will be 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 resource and reserve estimates are shown on a 100% project basis.
In the first quarter 2014, NOVAGOLD:
- As a routine part of the Donlin Gold Environmental Impact Statement (EIS) process, supported the alternatives analysis being conducted for all major components of the project including the mine, pipeline and transportation infrastructure
- Made progress in key Donlin Gold permitting areas, including pipeline, water management, air quality, dam safety and wetlands
- Commenced work on technical studies related to water and waste management as well as site layout for future mining activities at Galore Creek
President’s Message
In the first quarter, we made significant progress in taking Donlin Gold up the value chain by advancing our flagship project through permitting. We also commenced the integration of results from the last few years of drilling activity at Galore Creek into an updated mine plan which we believe will add value to that asset. Our reduced cash expenditures allowed us to maintain a healthy treasury, sufficient to fund permitting activities at Donlin Gold and meet other ongoing financial obligations. The Company is well positioned to provide all of its stakeholders with an opportunity to benefit from the orderly advancement of one of the world’s most significant development-stage gold projects. As ever before, we remain committed to building shareholder value notwithstanding all the challenges our industry has had to face over the last three years. Our strategy and largest shareholders’ investment thesis is simple and remains the same: provide all of our stakeholders with the greatest, and safest, asset with long-term leverage to gold…in a jurisdiction where one can keep the fruits of that leverage.
NOVAGOLD’s activities are based on our strong conviction that Donlin Gold is one of the gold industry’s best projects. Its large size, high grade, excellent exploration potential and a highly favorable geo-political location, characterized by the rule of law, put it in a unique category of institutional investor-quality assets. Donlin Gold has all the key attributes required to build one of the industry’s most important mines: a 39-million-ounce deposit (contained in Measured and Indicated resource categories); an average grade of 2.2 grams per tonne, one of the highest in the world among large projects under development; and a favorable location in Alaska, the second largest gold producing state in the United States, with its well-established track record of permitting, building and operating major mines. As envisioned by the updated feasibility study, Donlin Gold would be among the industry’s top gold producers with more than 1.1 million ounces of projected average annual production over a mine-life that would span nearly three decades and likely longer considering the project’s tremendous exploration potential.
In the first quarter of 2014, permitting activities at Donlin Gold were mainly centered on the preliminary draft EIS expected to be completed around year-end. This document is comprised of four main sections. First, an outline of the purpose and the need for the proposed mine. The management of Donlin Gold and its Native Corporation partners, Calista and The Kuskokwim Corporation, jointly contributed to the preparation of this section which highlighted the need for the development of this important mine and the benefit it would bring to its stakeholders. Second, the preparation of the alternatives analysis to the proposed mine in terms of local access to transportation and power. Third, the preparation of an environmental analysis, which primarily consists of the environmental baseline studies. This portion normally constitutes the most extensive part of the EIS. The last section will deal with potential mitigation measures that will be developed later in the permitting process. In addition, Donlin Gold and the appropriate permitting agencies are concurrently working on other major permits, such as air quality, water discharge and usage, gas pipeline, wetlands and dam safety. The EIS is the most time-consuming part of permitting under the National Environmental Policy Act (NEPA), the act that governs the process by which all major projects in the United States are permitted. The EIS is also, in large part, a determining factor in the overall permitting timeline which, for Donlin Gold, commenced in 2012 and is anticipated to take approximately four years to complete.
Beyond permitting, Donlin Gold is actively engaged in sponsorship activities at the community level, supporting local youth in leadership endeavors, visiting communities in the Yukon-Kuskokwim area and executing on the workforce development strategy in the region. More recently, Donlin Gold was one of the main sponsors of the Iditarod Trail Sled Dog Race in Alaska, the last great race, which in its 42nd year, keeps alive a tradition of transporting goods to remote regions of Alaska and honors mushing’s greatest achievement, the 1925 serum run to Nome, also known as the “Great Race of Mercy.” The Iditarod is a true test of determination and endurance. I would like to congratulate Yukon-Kuskokwim’s Richie Diehl, Pete Kaiser and Mike Williams, Jr. who competed in and finished the race. They are great role-models for youth in the region. For a number of years now, the Donlin Gold camp staff also volunteered to support incoming mushers at a check-point in close proximity to the Donlin Gold site. Overall, it was a great experience to welcome some of the incoming mushers at the finish line in Nome, Alaska.
In the first quarter of this year, we announced drill results of Galore Creek’s 2013 campaign which identified extensions to the copper-gold mineralization into, as well as adjacent to, the newly-discovered Legacy zone. This campaign also confirmed that Galore Creek has significant exploration upside beyond its current 18-year mine life. These results should provide sufficient information to arrive at an initial resource at the Legacy zone. We have also commenced technical work to advance Galore Creek toward the next level of mine planning and design and are encouraged by the results completed to date. We expect that this effort will further enhance the value and marketability of this important project which we plan to monetize, in whole or in part, to strengthen our treasury and focus principally on permitting our flagship Donlin Gold project.
NOVAGOLD is strong financially. With more than $180 million in the bank, we are able to concentrate on our business activities without having to raise additional funds over the ensuing few years. Following the 2012 reorganization of NOVAGOLD, we reviewed our processes and streamlined our operations to improve efficiencies. As a result, we have been able to continually reduce our operating expenditures. In 2014, our budget has been set at $30 million, a 23% reduction from last year. Today NOVAGOLD is a much simpler company and I’m encouraged by the results from the cost reduction initiatives which allowed us to build and maintain a sizable treasury.
In conclusion, I’m very thankful for the Board of Directors, my colleagues and our stakeholders’ commitment and shared enthusiasm in advancing both projects up the value chain. Based on three decades of experience in the mining sector and ever-increasing political and jurisdictional challenges facing our industry, NOVAGOLD has all the key attributes to be a successful mining company. We are very grateful for the continued interest and support of our shareholders, project teams, as well as governments, Native Corporations and First Nations of the jurisdictions in which we operate.
NT3
