NOVAGOLD RESOURCES INC. (TSX, NYSE American: NG)
(“NOVAGOLD” or “the Company”) has received $75 million from Newmont
Corporation (TSX: NGT, NYSE: NEM) (“Newmont”) as per the 2018 Share
Purchase Agreement in which NOVAGOLD agreed to sell its 50%
interest in the Galore Creek project (“GCP”) in British Columbia,
Canada. All amounts are in U.S. dollars unless otherwise stated.
Under the terms of the July 2018 Agreement1, total consideration
payable by Newmont was up to $275 million. NOVAGOLD received $100
million upon closing and $75 million yesterday. The remaining
amounts related to the 2018 sale of the GCP are payable as
follows:
- $25 million upon the earlier of: (i) completion of a project
feasibility study prepared by or for GCP, or (ii) five (5) years
from the closing date on July 27, 2023; and,
- $75 million contingent upon GCP construction approval.
The latest payment from Newmont will increase NOVAGOLD’s cash
position by $75 million, which consisted of approximately $108
million of cash and term deposits as of May 31, 2021.
As a result of the successful sale of GCP, NOVAGOLD materially
increased its treasury, providing the Company with a strong
financial foundation to advance its 50%-owned Donlin Gold project
(“Donlin Gold”) in Alaska. The Company expects its existing
financial resources and future incoming payments to be sufficient
to execute on its business plan without resorting to raising more
capital until a construction decision on Donlin Gold is made.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on
the development of the Donlin Gold project, owned 50/50 with
Barrick Gold Corporation, in Alaska, one of the safest mining
jurisdictions in the world. With approximately 39 million
ounces of gold in the measured and indicated mineral resource
categories, inclusive of proven and probable mineral reserves (541
million tonnes at an average grade of approximately 2.24 grams per
tonne in the measured and indicated resource categories on a 100%
basis),2 Donlin Gold is regarded to be one of the largest,
highest-grade, and most prospective known open pit gold deposits in
the world.
According to the 2011 Technical Report, with content updated as
discussed under the heading “NI 43-101 Technical Report” contained
in NOVAGOLD’s press release issued June 29, 2021, once in
production, Donlin Gold is expected to produce an average of more
than one million ounces per year over a 27-year mine life on a 100%
basis. The Donlin Gold project has substantial exploration
potential beyond the designed footprint which currently covers
three kilometers of an approximately eight-kilometer-long
gold-bearing trend. Current activities at Donlin Gold are focused
on State permitting, optimization work, community outreach, and
workforce development in preparation for the eventual construction
and operation of this project. With a strong balance sheet,
NOVAGOLD is well-positioned to fund its share of permitting and
optimization advancement efforts at the Donlin Gold project.
Donlin Gold is a committed partner to the Alaska Native
communities both surrounding the project and within the State as a
whole. An important factor that distinguishes Donlin Gold from most
other mining assets in Alaska is that the project is located on
private land that was selected by Calista Corporation (“Calista”)
and The Kuskokwim Corporation (“TKC”) at the direction of the
Yukon-Kuskokwim region Elders and was designated for mining
activities five decades ago. Donlin Gold has entered into
life-of-mine agreements with Calista, which owns the subsurface
mineral rights, and TKC, a collection of 10 village corporations,
which owns the surface land rights and is committed to providing
employment opportunities, scholarships, and preferential contract
considerations to Calista and TKC shareholders. These agreements
include a revenue-sharing structure established by the Alaska
Native Claims Settlement Act of 1971 which resolved Alaska Native
land claims, allotting 44 million acres of land for use by Alaska
Native Corporations. Additionally, our long-term commitment to
economic development is exemplified by Donlin Gold’s support of
TKC’s initiative to launch energy and infrastructure projects in
Middle Kuskokwim villages. These partnerships, activities, and
programs are illustrative of the commitment to the sustainable and
responsible development of the Donlin Gold project for the benefit
of all stakeholders.
Scientific and Technical Information
Certain scientific and technical information contained herein
with respect to the Donlin Gold project is derived from the “Donlin
Creek Gold Project, Alaska, USA, NI 43-101 Technical Report on the
Second Updated Feasibility Study,” effective November 18, 2011, and
amended January 20, 2012 (“2011 Technical Report”) prepared by AMEC
with an effective date of November 18, 2011, as amended January 20,
2012. Kirk Hanson, P.E., Technical Director, Open Pit Mining, North
America, (AMEC, Reno) is the Qualified Person responsible for the
preparation of the independent technical report, and an independent
“qualified person” as defined by NI 43-101. As discussed under the
heading “NI-43-101” Technical Report” in NOVAGOLD’s press release
issued June 29, 2021, Wood Canada Limited (“Wood” formerly AMEC
Americas Limited) has updated the content in the 2011 Technical
Report with updated costs, economic assessment, permitting
information, and technical information related to permitting,
generated on the Donlin Gold project since 2011. The Company
anticipates voluntarily filing the technical report on SEDAR in
2021.
Clifford Krall, P.E., who is the Mine Engineering Manager for
NOVAGOLD and a “qualified person” under NI 43-101, has
approved and verified the scientific and technical information
related to the Donlin Gold project contained in this media
release.
NOVAGOLD Contacts:Mélanie HennesseyVice
President, Corporate Communications
Jason MercierInvestor Relations Manager
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding
Forward-Looking Statements
This media release 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
Securities Litigation Reform Act of 1995. Forward-looking
statements are frequently, but not always, identified by words such
as “expects”, “anticipates”, “believes”, “intends”, “estimates”,
“potential”, “possible”, and similar expressions, or statements
that events, conditions, or results “will”, “may”, “could”, “would”
or “should” occur or be achieved. Forward-looking statements are
necessarily based on several opinions, estimates and assumptions
that management of NOVAGOLD considered appropriate and reasonable
as of the date such statements are made, are subject to known and
unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, activity, performance or achievements
to be materially different from those expressed or implied by such
forward-looking statements. All statements, other than statements
of historical fact, included herein are forward-looking statements.
These forward-looking statements include statements regarding the
Company’s use of the $75 million received from Newmont; receipt of
the additional $100 million in payments from Newmont; the potential
development and construction of Donlin Gold; the perceived merit of
properties; and the sufficiency of funds to continue to advance
development of Donlin Gold. In addition, any statements that refer
to expectations, intentions, projections or other characterizations
of future events or circumstances are forward-looking statements.
Forward-looking statements are not historical facts but instead
represent NOVAGOLD’s management expectations, estimates and
projections regarding future events or circumstances on the date
the statements are made.
Important factors that could cause actual results to differ
materially from expectations include the need to obtain additional
permits and governmental approvals; the timing and likelihood of
permits including but not limited to the right-of-way lease offer
for Donlin Gold’s buried natural gas pipeline; the need for
additional financing to explore and develop properties and
availability of financing in the debt and capital markets; the
outbreak of the coronavirus global pandemic (COVID-19);
uncertainties involved in the interpretation of drill results and
geological tests and the estimation of reserves and resources;
changes in mineral production performance, exploitation and
exploration successes; changes in national and local government
legislation, taxation, controls or regulations and/or changes in
the administration of laws, policies and practices, expropriation
or nationalization of property and political or economic
developments in the United States or Canada; the need for continued
cooperation between Barrick and NOVAGOLD for the continued
exploration, and development and eventual construction of the
Donlin Gold property; the need for cooperation of government
agencies and native groups in the development and operation of
properties; risks of construction and mining projects such as
accidents, equipment breakdowns, bad weather, disease pandemics,
non-compliance with environmental and permit requirements,
unanticipated variation in geological structures, ore grades or
recovery rates; unexpected cost increases, which could include
significant increases in estimated capital and operating costs;
fluctuations in metal prices and currency exchange rates; whether a
positive construction decision will be made regarding Donlin Gold;
and other risks and uncertainties disclosed in NOVAGOLD’s most
recent reports on Forms 10-K and 10-Q, particularly the "Risk
Factors" sections of those reports and other documents filed by
NOVAGOLD with applicable securities regulatory authorities from
time to time. Copies of these filings may be obtained by visiting
NOVAGOLD’s website at www.novagold.com, or the SEC's website at
www.sec.gov, or at www.sedar.com. The forward-looking statements
contained herein reflect the beliefs, opinions and projections of
NOVAGOLD on the date the statements are made. NOVAGOLD assumes no
obligation to update the forward-looking statements of beliefs,
opinions, projections, or other factors, should they change, except
as required by law.
Cautionary Note to United States Investors
NOVAGOLD cautions that this media release has been prepared in
accordance with the requirements of the securities laws in effect
in Canada, which differ from the requirements of U.S. securities
laws. Unless otherwise indicated, all resource and reserve
estimates included in this media release have been prepared in
accordance with Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects (“NI 43-101”) and the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM)—CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended (“CIM Definition Standards”). NI 43-101 is
a rule developed by the Canadian Securities Administrators which
establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral projects.
Canadian standards, including NI 43-101, differ significantly from
the requirements of the United States Securities and Exchange
Commission (SEC) Industry Guide 7 (“SEC Industry Guide 7”), and
resource and reserve information contained herein may not be
comparable to similar information disclosed by U.S. companies.
NOVAGOLD’s disclosure concerning Reserve & Resources Estimates
remains consistent with NI 43-101. Under SEC Industry Guide 7,
mineralization may not be classified as a "reserve” unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made. SEC Industry Guide 7 normally does
not permit the inclusion of information concerning "measured
mineral resources”, "indicated mineral resources” or "inferred
mineral resources” or other descriptions of the amount of
mineralization in mineral deposits that do not constitute
"reserves” under SEC Industry Guide 7 in documents filed with the
SEC. Investors should also understand that "inferred mineral
resources” have a great amount of uncertainty as to their existence
and great uncertainty as to their economic and legal feasibility.
Under Canadian rules, estimated "inferred mineral resources” may
not form the basis of feasibility or pre-feasibility studies except
in rare cases. Disclosure of "contained ounces” in a resource is
permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves” under SEC Industry Guide 7 as in-place
tonnage and grade without reference to unit measures. The
requirements of NI 43-101 for identification of "reserves” are also
not the same as those of SEC Industry Guide 7, and reserves
reported by NOVAGOLD in compliance with NI 43-101 may not qualify
as "reserves” under SEC Industry Guide 7. Donlin Gold does not have
known reserves, as defined under SEC Industry Guide 7. Accordingly,
information concerning mineral deposits set forth herein may not be
comparable with information made public by companies that report in
accordance with SEC Industry Guide 7.
On October 31, 2018, the SEC adopted a final rule (“New Final
Rule”) that will replace SEC Industry Guide 7 with new disclosure
requirements that are more closely aligned with current industry
and global regulatory practices and standards, including NI 43-101.
Companies must comply with the New Final Rule for the Company’s
first fiscal year beginning on or after January 1, 2021, which for
NOVAGOLD would be the fiscal year beginning December 1, 2021. The
New Final Rule provides that SEC Industry Guide 7 will remain
effective until all registrants are required to comply with the New
Final Rule, at which time SEC Industry Guide 7 will be rescinded.
While early voluntary compliance with the New Final Rule is
permitted, NOVAGOLD has not elected to comply with the New Final
Rule at this time.
1 See July 26, 2018 media release titled
“NOVAGOLD Enters Agreement to Sell Its 50% Stake in Galore Creek to
Newmont for up to $275 Million” here. 2 Donlin Gold data as per the
2011 Technical Report (as defined below), with content updated as
discussed under the heading “NI 43-101” Technical Report” in
NOVAGOLD’s press release issued June 29, 2021. Donlin Gold measured
resources of approximately 8 Mt grading 2.52 g/t and indicated
resources of approximately 534 Mt grading 2.24 g/t, each on a 100%
basis and inclusive of mineral reserves. Mineral resources have
been estimated in accordance with NI 43-101.
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