2013 Year-End Financials & Project Update
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    2013 Year-End Financials & Project Update 2013 Year-End Financials & Project Update Presentation Transcript

    • 2013 year-end financials & project update novagold.com NYSE-MKT, TSX: NG | February 2014
    • conference call attendees ▶ Introduction Mélanie Hennessy (Vice President Corporate Communications) ▶ Corporate Update Greg Lang (President & Chief Executive Officer) ▶ Third Quarter Financials & 2013 Budget David Ottewell (Vice President & Chief Financial Officer) ▶ Closing Remarks Greg Lang (President & Chief Executive Officer) ▶ Question & Answer Session Greg Lang & David Ottewell 2
    • 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 historical fact, included herein including, without limitation, statements relating to Donlin Gold’s future operating or financial performance, are forwardlooking statements. Forward-looking statements are frequently, but not always, identified by words such as “plans”, “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible” and similar expressions, or statements that events, conditions or results “will”, “may”, “could”, or “should” occur or be achieved. These forward-looking statements are set forth in the slides pertaining to the implementation of the Donlin Gold second updated Feasibility Study and pertaining to the implementation of the Galore Creek Pre-Feasibility Study and may include statements regarding perceived merit of properties; exploration results and budgets; mineral reserves and resource estimates; work programs; capital expenditures; timelines; strategic plans; completion of transactions; market price of precious base metals; or other statements that are not statements of fact. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations include the uncertainties involving the need for additional financing to explore and develop properties and availability of financing in the debt and capital markets; uncertainties involved in the interpretation of drilling results and geological tests and the estimation of reserves and resources; the need for continued cooperation between NOVAGOLD and Barrick Gold in the exploration and development of the Donlin Gold property; the need for continued cooperation between NOVAGOLD and Teck Resources Ltd. in the exploration and development of the Galore Creek property; the need for cooperation of government agencies and native groups in the development and operation of properties; the need to obtain permits and governmental approvals; risks of construction and mining projects such as accidents, equipment breakdowns, bad weather, non-compliance with environmental and permit requirements, unanticipated variation in geological structures, ore grades or recovery rates; unexpected cost increases; fluctuations in metal prices and currency exchange rates; and other risk and uncertainties disclosed in reports and documents filed by NOVAGOLD with applicable securities regulatory authorities from time to time. The forwardlooking statements made herein reflect our beliefs, opinions and projections on the date the statements are made. Except as required by law, we assume no obligation to update the forwardlooking statements of beliefs, opinions, projections, or other factors, should they change. REGARDING SCIENTIFIC AND TECHNICAL INFORMATION Unless otherwise indicated, all reserve and resource estimates included in this presentation 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 Definition Standards for Mineral Resources and Mineral Reserves (“CIM Definition Standards”). Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and reserve and resource information in this presentation may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “‘reserves”. Under U.S. standards, 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. At this time, both of Donlin Gold and Galore Creek projects are without known reserves, as defined under SEC Industry Guide 7. The SEC’s disclosure standards normally do 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” by U.S. standards in documents filed with the SEC. U.S. 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. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. 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” by SEC standards 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 the SEC, and reserves reported in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable to information made public by companies that report in accordance with United States standards. 3
    • the NOVAGOLD opportunity EXCEPTIONAL IN SCALE, QUALITY, AND JURISDICTIONAL SAFETY ▶ Donlin Gold • In terms of combined size, grade, exploration potential, production profile and jurisdictional safety, Donlin Gold is arguably the most important undeveloped gold project in the world • Permitting commenced in Q3/12 ▶ Galore Creek • If placed into production, as per the latest prefeasibility study, would be the largest and lowest cash cost copper mine in Canada • Pursuing divestiture to fund development of Donlin Gold 4
    • recent achievements PROJECTS CONTINUE TO ADVANCE ON TIME AND ON BUDGET maintained a healthy balance sheet with receipt of $54M cash from warrants and reduced convertible debt by $79M1 continued to advance permitting of Donlin Gold with completion of public scoping and drafting of preliminary draft environmental impact statement Galore Creek 2013 exploration drill results identify extensions to mineralization at Legacy zone simplified company, significantly reduced expenditures built a management team with expertise in permitting, developing and operating large-scale projects 5 1) Outstanding Convertible Notes mature on May 1, 2015. The holders of the Notes had the right to require the Company to repurchase all or part of their Notes on May 1, 2013 (“put option”)
    • 2013 project activity ▶ Donlin Gold o Advanced permitting activities o Project funding (NG 50% share) • FY-2013: US$12.2 million • FY-2014: US$12 million ▶ Galore Creek o Completed 2013 drilling program ahead of schedule and under budget o Project funding (NG 50% share) • FY-2013: $6.6 million • FY-2014: $2.5 million 6
    • 2013 operating performance analysis Highlights (US$ million) Year ended November 30, 2013 Year ended November 30, 2012 $ 14.7 $ 19.2 Share-based payments 12.3 19.9 Share of losses – Donlin Gold 14.6 16.9 Share of losses – Galore Creek 13.4 23.4 0.8 0.5 55.8 79.9 3.1 (64.6) 3.9 $ 62.8 (7.7) $ 7.6 Expenses(1) Other operating expenses Operating loss Other expense (income) Income tax expense (recovery) Net loss from continuing operations (1) General and administrative, salaries and severance, professional fees, corporate and development expenses 7
    • 2013 cash flow highlights Highlights (US$ million) Year ended November 30, 2013 Year ended November 30, 2012 Cash used in operating activities $ (19.5) $ (28.6) Cash used in investing activities (128.8) (34.8) Cash used in financing activities (24.8) 323.6 -- (65.0) (0.3) 0.1 (173.4) 195.3 Beginning 254.7 59.4 Ending $ 81.3 $ 254.7 Discontinued operations Foreign exchange effect on cash Increase (decrease) in cash Cash and cash equivalents Term deposits Cash and term deposits 110.0 $ 191.3 8
    • 2014 budget ▶ Donlin Gold - $ 12M (NG 50% share) o Advance permitting through completion of PDEIS o Maintain engagement with communities in region ▶ Galore Creek - $ 2.5M (NG 50% share) o Undertake technical studies to build on 2012 & 2013 drill results o Evaluate opportunities to monetize the value of the asset ▶ General and Administrative Expenses - $ 13M ▶ Interest expense, working capital and other - $ 2M 9
    • financial obligations have decreased substantially CLEAR FOCUS BEGINS WITH STRONG FUNDING TO EXECUTE ON ALL FRONTS $140 in millions of U.S. dollars market cap2 reduced by ~$100M $120 $1,030 $100 - 70% cash and term deposits3 $80 $190 - 23% $60 convertible notes4 $40 $16 $20 1) 2) $0 2012 Act(1) 2013 Act 2014 Bud 1 3) 4) DiscOps G&A Donlin Galore 2014 anticipated budget expenditure disclosed on February 11, 2014 Market Capitalization as of February 11, 2014 based on 316.7 million shares issued and outstanding. Includes US$ 110 million in term deposits as of November 30, 2013. The Notes mature on May 1, 2015. Interest & other 10
    • 2014 activities & milestones PROJECTS CONTINUE TO ADVANCE ON TIME AND ON BUDGET advance permitting of the Donlin Gold project maintain a healthy balance sheet undertake Galore Creek technical studies evaluate opportunities to monetize the value of Galore Creek maintain an effective corporate social responsibility program 11
    • reserve & resource growth RESOURCES MORE THAN DOUBLED IN LESS THAN TWO YEARS Focused on feasibility-level planning and more recently permitting 40.0 37.9 39.0 39Moz 35.3 M&I resources 29.4 30.0 inclusive of Updated Feasibility Study 25.0 20.0 Feasibility Study 16.6 15.0 10.0 PEA M&I Au Resources (Moz) 35.0 5.0 0.0 2006 2007 2008 2009 2011 Notes: • Donlin Gold data as per NOVAGOLD Annual Integrated Reports published 2006-2013. Measured and Indicated resources are inclusive of Proven and Probable reserves. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 34Moz P&P reserves @ $975/oz grade of 2.24g/t And there is opportunity for continued growth once in production… 12
    • highest-quality development-stage gold deposit M&I Au Grade (g/t) WORLD’S BIGGEST UNDEVELOPED AND EARLY PRODUCTION GOLD PROJECTS 2.50 2.24 ▸ Donlin Gold is among the highest-grade deposits in the world, the top for an open-pit deposit 2.00 ▸ With capital constraints, only the best projects will find funding 1.50 1.05 1.04 1.02 1.00 0.61 0.55 0.50 0.50 0.31 -Donlin Gold Canadian Malarctic Rosia Montana Detour Lake Livengood KSM Notes: • Donlin Gold data as per Donlin Creek Gold Project Alaska, USA, NI 43-101 Technical Report on Second “Updated Feasibility Study”, effective November 18, 2011, as amended January 20, 2012 (the “updated feasibility study”). Measured and Indicated resources are inclusive of Proven and Probable reserves. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. • Peer group data as per latest company documents, public filings and websites. Comparison group based on large, open-pit, gold-focused development projects. Metates Hycroft 13
    • novagold is expected to emerge as a producer with the highest average grade DONLIN GOLD’S GRADE COMPARES WELL WITH WORLD’S BIGGEST PRODUCERS 3.00 M&I Au Grade (g/t) 2.50 2.00 1.50 1.00 0.50 0.00 Agnico Eagle Donlin Donlin Gold Gold Gold Fields Polyus AngloGold Ashanti Barrick Harmony Eldorado Newmont Yamana Notes: • Donlin Gold data as per Donlin Creek Gold Project Alaska, USA, NI 43-101 Technical Report on Second “Updated Feasibility Study”, effective November 18, 2011, as amended January 20, 2012 (the “updated feasibility study”). Measured and Indicated resources are inclusive of Proven and Probable reserves. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. • Peer group data - 2012 annual average grade per tonne (combined proven & probable reserves and measured & indicated resources) for open-pit and underground material as per public filings. Goldcorp Kinross Newcrest 14
    • the right stakeholders JURISDICTIONAL SAFETY IS MORE THAN GEOGRAPHIC LOCATION Committed Stakeholders ▶ Calista Corporation ▶ The Kuskokwim Corporation “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 only stakeholders, but are the legislatively mandated landowners charged with the responsibility of seeing the project to fruition in an environmentally responsible manner.” – June MacAtee, Calista Corporation VP 15
    • significant drop in discoveries since 2006 25 $1,800 Gold Discovered $1,600 Gold Price $1,400 $1,200 15 $1,000 $800 10 $600 First year in over two decades with no discoveries $400 5 $200 Source: SNL MEG’s MineSearch database, Company reports, SNL MEG estimates. Thomson Reuters. 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 $1991 0 1990 Number of Gold Discoveries 20 16
    • donlin gold development timeline PROCEED ON SCHEDULE… ̴4 ̴4 27+ years 1.5Moz/year 1.5five full years first Moz/year first five full years1 OPERATION ENGINEERING & CONSTRUCTION 1 PERMITTING EXPLORATION & ENVIRONMENTAL STUDIES 16 years 1.1Moz/year 1.1Moz/year life of mine 1 life of mine1 WE ARE HERE 17 Notes: 1. Donlin Gold data as per Donlin Creek Gold Project Alaska, USA, NI 43-101 Technical Report on Second “Updated Feasibility Study”, effective November 18, 2011, as amended January 20, 2012 (the “updated feasibility study”). Measured and Indicated resources are inclusive of Proven and Probable reserves. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix.
    • permitting milestones DONLIN GOLD ADVANCES ON PERMITTING PATH submit permit applications to federal and state regulatory agencies file Notice of Intent public scoping period (Dec. 14/12 - March 29/13) preliminary draft EIS (PDEIS) 2014 draft EIS ~1-2 years public comment period final EIS/record of decision permit issuance 30-day Appeal Period 18
    • 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 Alternatives Development – being finalized during Q1 2014 • Reasonable range of alternatives identified to address key issues • Alternatives address mine, pipeline, and transportation components ▶ PDEIS preparation – planned for issuance in late 2014 • Initial draft chapters in review by agencies and Donlin Gold • Final data needs being addressed ▶ Major permit application submittals and agency reviews – well underway • Air quality • Water discharge and usage • Pipeline plan of development • Wetlands • Dam safety 19
    • we are here DONLIN GOLD’S SCALE, QUALITY AND JURISDICTIONAL SAFETY WILL MAKE IT ONE OF THE MOST COVETED PRECIOUS METALS ASSETS IN THE WORLD …A compelling investment opportunity when one considers the impending production cliff. 20
    • galore creek ENHANCING VALUE WHILE EVALUATING OPPORTUNITIES TO MONETIZE ASSET Completed the 2013 drilling program under budget, exceeding objectives with 11,600 meters drilled ▶ • Confirmed significant mineralization at the recently discovered Legacy zone • Identified areas for potential resource growth 2012 and 2013 results will be incorporated into a capital efficient work plan for 2014 that will advance the project toward next-level mine planning and design ▶ • Includes technical studies in the areas of environmental & water management, and site layout M&I Resources1, 2 9Blbs 0.5% copper copper 8Moz 0.3g/t gold gold 136Moz silver 1) 2) See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. M&I: Measured and Indicated resources inclusive of Proven and Probable reserves 5.2g/t silver 21
    • galore creek grade peer comparisons AMONG HIGHEST COPPER GRADE COMPARED TO NORTH AMERICAN ASSETS P&P + M&I grade (Cu%) 0.80 0.72 0.70 0.60 0.50 0.50 0.45 0.40 0.32 0.30 0.27 0.24 0.21 0.18 0.20 0.10 0.00 Copper Creek Galore Creek Pebble Red Chris Schaft Creek New Prosperity KSM Mount Milligan 22 Source: SNL MEG’s MineSearch database, Company reports, SNL MEG estimates.
    • the NOVAGOLD opportunity INSTITUTIONAL QUALITY INVESTMENT Tocqueville Asset Management 2.2% Sun Valley Gold, LLC 1.7% The Baupost Group, L.L.C. % 80 Institutional Ownership 6.9% Electrum Strategic Resources, L.L.C. 26.7% Paulson & Co. Inc % 49 held by top 5 shareholders(1) 11.3% committed to Shareholder Value 1) Shareholder positions are based on the latest 13-F filings 23
    • why NOVAGOLD? why now? NOVAGOLD WELL POSITIONED TO DELIVER ON ALL CORPORATE OBJECTIVES top best supportive right strong tier, high-quality assets and safest leverage to gold , loyal, and engaged shareholders people to bring project up value chain balance sheet 24
    • appendix novagold.com
    • NOVAGOLD reserve/resource table At April 30, 2012 Donlin Gold (NOVAGOLD 50%) GOLD Reserves (100%)1 Proven Probable P&P Resources (100%)3 inclusive of reserves Measured Indicated M&I Inferred Tonnage Mt Grade* g/t Metal content Moz NOVAGOLD share** Moz 7.7 2.32 0.57 0.29 497.1 504.8 2.08 2.09 33.28 33.85 16.64 16.93 7.7 533.6 541.3 92.2 2.52 2.24 2.24 2.02 0.63 38.38 39.01 5.99 0.31 19.19 19.50 3.00 Tonnage Mt Grade* %Cu Metal content Mlbs NOVAGOLD share** Mlbs Galore Creek (NOVAGOLD 50%) COPPER Reserves (100%)2 Proven Probable P&P Resources (100%)4 inclusive of reserves Measured Indicated M&I Inferred GOLD Reserves (100%)2 Proven Probable P&P Resources (100%)4 inclusive of reserves Measured Indicated M&I Inferred SILVER Reserves (100%)2 Proven Probable P&P Resources (100%)4 inclusive of reserves Measured Indicated M&I Inferred 69.0 0.61 900.0 450.0 459.1 528.0 0.58 0.59 5,900.0 6,800.0 2,950.0 3,400.0 108.4 706.3 814.7 346.6 0.48 0.50 0.50 0.42 1,147.0 7,786.0 8,933.0 3,230.0 573.5 3,893.0 4,466.5 1,615.0 Mt g/t Moz Moz 69.0 0.52 1.15 0.58 459.1 528.0 0.29 0.32 4.30 5.45 2.15 2.73 108.4 706.3 814.7 346.6 0.48 0.28 0.31 0.24 1.70 6.40 8.00 2.70 0.85 3.20 4.00 1.35 Mt g/t Moz Moz 69.0 4.94 11.0 5.5 459.1 528.0 6.18 6.02 91.2 102.2 45.6 51.1 108.4 706.3 814.7 346.6 4.10 5.38 5.21 4.28 14.30 122.10 136.40 47.73 7.15 61.05 68.20 23.87
    • reserve/resource table (con’t) Copper Canyon (NOVAGOLD 70%) Resources (100%)5,6 COPPER Inferred GOLD Inferred SILVER Inferred t = metric tonne M = million g/t = grams/tonne * Reserve grade is diluted; resource grade is in situ. ** NOVAGOLD share net after earn-ins Tonnage Grade* Metal content NOVAGOLD share** Mt %Cu Mlbs Mlbs 53.7 0.50 592.0 414.4 Moz Mt g/t Moz 53.7 0.73 1.26 0.88 Mt g/t Moz Moz 53.7 10.60 18.36 12.85 Approximate cut-off grades (see Resource Footnotes below): Donlin Gold Reserves1: 0.57 g/t gold Resources3: 0.46 g/t gold Galore Creek Reserves2: C$10.08 NSR Resources4: C$10.08 NSR Copper Canyon Resources5,6: 0.6% copper equivalent
    • 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 summation differences between tonnes, grade and contained metal content d. Tonnage and grade measurements are in metric units. Contained gold and silver ounces are reported as troy ounces, contained copper pounds as imperial pounds Resource Footnotes: Mineral Reserves are contained within Measured and Indicated pit designs, and supported by a mine plan, featuring variable throughput rates, stockpiling and cut-off optimization. The pit designs and mine plan were optimized on diluted grades using the following economic and technical parameters: Metal price for gold of US$975/oz; reference mining cost of US$1.67/t incremented US$0.0031/t/m with depth from the 220 m elevation (equates to an average mining cost of US$2.14/t), variable processing cost based on the formula 2.1874 x (S%) + 10.65 for each US$/t processed; general and administrative cost of US$2.27/t processed; stockpile rehandle costs of US$0.19/t processed assuming that 45% of mill feed is rehandled; variable recoveries by rock type, ranging from 86.66% in shale to 94.17% in intrusive rocks in the Akivik domain; refining and freight charges of US$1.78/oz gold; royalty considerations of 4.5%; and variable pit slope angles, ranging from 23º to 43º. Mineral Reserves are reported using an optimized net sales return value based on the following equation: Net Sales Return = Au grade * Recovery * (US$975/oz – (1.78 + (US$975/oz – 1.78) * 0.045)) - (10.65 + 2.1874 * (S%) + 2.27 + 0.19) and reported in US$/tonne. Assuming an average recovery of 89.54% and an average S% grade of 1.07%, the marginal gold cutoff grade would be approximately 0.57 g/t, or the gold grade that would equate to a 0.001 NSR cutoff at these same values. The life of mine strip ratio is 5.48. The assumed life-of-mine throughput rate is 53.5 kt/d. Mineral Reserves are contained within Measured and Indicated pit designs using metal prices for copper, gold and silver of US$2.50/lb, US$1,050/oz, and US$16.85/oz, respectively. Appropriate mining costs, processing costs, metal recoveries and inter ramp pit slope angles varing from 42º to 55º were used to generate the pit phase designs. Mineral Reserves have been calculated using a 'cashflow grade' ($NSR/SAG mill hr) cut-off which was varied from year to year to optimize NPV. The net smelter return (NSR) was calculated as follows: NSR = Recoverable Revenue – TCRC (on a per tonne basis), where: NSR = Net Smelter Return; TCRC = Transportation and Refining Costs; Recoverable Revenue = Revenue in Canadian dollars for recoverable copper, recoverable gold, and recoverable silver using metal prices of US$2.50/lb, US$1,050/oz, and US$16.85/oz for copper, gold, and silver, respectively, at an exchange rate of CDN$1.1 to US$1.0; Cu Recovery = Recovery for copper based on mineral zone and total copper grade; for Mineral Reserves this NSR calculation includes mining dilution. SAG throughputs were modeled by correlation with alteration types. Cash flow grades were calculated as the product of NSR value in $/t and throughput in t/hr. The life of mine strip ratio is 2.16. Mineral Resources are contained within a conceptual Measured, Indicated and Inferred optimized pit shell using the following assumptions: gold price of US$1,200/oz; variable process cost based on 2.1874 * (sulphur grade) + 10.6485; administration cost of US$2.29/t; refining, freight & marketing (selling costs) of US$1.85/oz recovered; stockpile rehandle costs of US$0.20/t processed assuming that 45% of mill feed is rehandled; variable royalty rate, based on royalty of 4.5% * (Au price – selling cost). Mineral Resources have been estimated using a constant Net Sales Return cut-off of US$0.001/t milled. The Net Sales Return was calculated using the formula: Net Sales Return = Au grade * Recovery * (US$1200/oz – (1.85 + ((US$1200/oz – 1.85) * 0.045)) - (10.65 + 2.1874 * (S%) + 2.29 + 0.20)) and reported in US$/tonne. Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Inferred Resources are in addition to Measured and Indicated Resources. Inferred Resources have a great amount of uncertainty as to their existence and whether they can be mined legally or economically. It cannot be assumed that all or any part of the Inferred Resources will ever be upgraded to a higher category. See "Cautionary Note Concerning Reserve & Resource Estimates". Mineral resources are contained within a conceptual Measured, Indicated and Inferred optimized pit shell using the same economic and technical parameters as used for Mineral Reserves. Tonnages are assigned based on proportion of the block below topography. The overburden/bedrock boundary has been assigned on a whole block basis. Mineral resources have been estimated using a constant NSR cut-off of C$10.08/t milled. The Net Smelter Return (NSR) was calculated as follows: NSR = Recoverable Revenue – TCRC (on a per tonne basis), where: NSR = Diluted Net Smelter Return; TCRC = Transportation and Refining Costs; Recoverable Revenue = Revenue in Canadian dollars for recoverable copper, recoverable gold, and recoverable silver using silver using the economic and technical parameters mentioned above. The mineral resource includes material within the conceptual M,I&I pit that is not scheduled for processing in the mine plan but is above cutoff. Mineral Resources are inclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Inferred Resources are in addition to Measured and Indicated Resources. Inferred Resources have a great amount of uncertainty as to their existence and whether they can be mined legally or economically. It cannot be assumed that all or any part of the Inferred Resources will ever be upgraded to a higher category. See "Cautionary Note Concerning Reserve & Resource Estimates". The copper-equivalent grade was calculated as follows: CuEq = Recoverable Revenue ÷ 2204.62 * 100 ÷ 1.55. Where: CuEq = Copper equivalent grade; Recoverable Revenue = Revenue in US dollars for recoverable copper, recoverable gold and recoverable silver using metal prices of US$1.55/lb, US$650/oz, and US$11/oz for copper, gold, and silver, respectively; for the purposes of the equivalency formula, Cu Recovery is assumed to be 100%. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Inferred Resources are in addition to Measured and Indicated Resources. Inferred Resources have a great amount of uncertainty as to their existence and whether they can be mined legally or economically. It cannot be assumed that all or any part of the Inferred Resources will ever be upgraded to a higher category. See "Cautionary Note Concerning Reserve & Resource Estimates". NOVAGOLD Canada Inc. has agreed to transfer its 60% joint venture interest in the Copper Canyon property to the Galore Creek Partnership, which is equally owned by NOVAGOLD Canada Inc. and a subsidiary of Teck Resources Limited. The remaining 40% joint venture interest in the Copper Canyon property is owned by another wholly owned subsidiary of NOVAGOLD. Cautionary Note Concerning Reserve & Resource Estimates This summary table uses the term “resources”, “measured resources”, “indicated resources” and “inferred resources”. United States investors are advised that, while such terms are recognized and required by Canadian securities laws, the United States Securities and Exchange Commission (the “SEC”) does not recognize them. Under United States standards, 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. Mineral resources that are not mineral reserves do not have demonstrated economic viability. United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, inferred resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the inferred resources will ever be upgraded to a higher category. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of “contained ounces” is permitted disclosure under Canadian regulations, however, the SEC normally only permits issuers to report “resources” as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in this release may not be comparable to information made public by United States companies subject to the reporting and disclosure requirements of the SEC. NI 43-101 is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all resource estimates contained in this circular have been prepared in accordance with NI 43-101 and the CIM Definition Standards. Technical Reports and Qualified Persons The documents referenced below provide supporting technical information for each of NOVAGOLD's projects. Project Donlin Gold Qualified Person(s) Most Recent Disclosure & Filing Date Tony Lipiec, P. Eng., AMEC Donlin Creek Gold Project Gordon Seibel R.M. SME, AMEC Alaska, USA Kirk Hanson P.E., AMEC Galore Creek NI 43-101 Technical Report on Second Updated Feasibility Study amended filing on January 23, 2012 Robert Gill, P.Eng., AMEC Galore Creek Copper–Gold Project, Jay Melnyk, P.Eng., AMEC British Columbia, NI 43-101 Technical Report on Pre-Feasibility Study, Greg Kulla, P.Geo., AMEC filed on September 12, 2011 Greg Wortman, P.Eng., AMEC Dana Rogers, P.Eng., Lemley International Heather White, B.Sc., P.Eng., who is a consultant to NOVAGOLD and a “qualified person” under NI 43-101, has approved the scientific and technical information included in this section related to: (i) Donlin Gold since the issuance of the technical report filed on January 23, 2012, and (ii) Galore Creek since the issuance of the technical report filed on September 12, 2011.
    • 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 VP, Corporate Communications melanie.hennessey@novagold.com Erin O’Toole Analyst, Investor Relations erin.otoole@novagold.com