Donlin Gold Site Tour 2014


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Donlin Gold Site Tour 2014

  1. 1. August 2014 Donlin Gold Project Overview
  2. 2. disclaimer This presentation is confidential and was prepared exclusively for the benefit and internal use of the recipient. 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 forward-looking 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 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 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 forward-looking 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 forward-looking statements of beliefs, opinions, projections, or other factors, should they change. 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. 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. 3. donlin gold management Stanley Foo President/General Manager 30+ years mining industry experience in exploration, mine geology, operations management, project management and permitting; 12 years mine operations experience in NV including superintendent roles at Cortez and Bald Mtn; 15 years in Alaska in project management and permitting; Previous Project Manager roles with Donlin 1997-99, 2005- 2007, served on Donlin Gold LLC board 2008-2010. James Fueg Study Manager Led Donlin Gold’s recent feasibility studies and coordinates all engineering and technical work for project; 20+ years experience in mining, exploration and environmental science; 16 years in Alaska; at Donlin since 2004. Robert Nick Enos Environmental and Permitting Manager Leads permitting and environmental management for project; primary contact for reg. agencies; 20 years experience in Alaska in geology, environmental science and permitting management; Previous experience includes Greens Creek, Calista Corp., as environmental/permitting consultant; Joined Donlin in 2005. Kurt Parkan External Affairs Manager Leads Donlin Gold’s community affairs, communications, government relations and corporate social responsibility functions; Nearly 30 years public affairs experience in Alaska; Previous roles: External Affairs Director of Nature Conservancy of Alaska, Deputy Commissioner for Alaska Department of Transportation and Public Facilities, Special Assistant to the Governor, Legislative Aide and as staff for Alaska House of Representatives Finance Committee. Meg Day Human Resources Manager 22 years human resources experience in the mining industry including 17 years in Alaska; Served in various senior management positions in Alaska, Utah and Washington and has been involved in the start up of several mines. Serves on Alaska Miners Association HR Committee, Society of HR Management and Advisory Board member of University of Alaska. Jan Halstead Administrative and Finance Manager 25+ years accounting and financial analysis experience in construction, investment, telecommunications; Responsible for growth and development of Accounting, Administration, Purchasing and Contract functions for Donlin Gold LLC.
  4. 4. table of contents  Part 1 An Introduction to Alaska  Part 2 History of the Project  Part 3 Community Engagement  Part 4 Environmental  Part 5 Permitting  Part 6 Mining  Part 7 Process  Part 8 Engineering/Infrastructure  Part 9 Resource Upside  Part 10 Capital & Operating Cost
  5. 5. Donlin Gold Project Overview Part 1: An Introduction to Alaska
  6. 6. 2 Alaska: the last frontier The project site is located in the hills approximately 20 kilometers north of the village of Crooked Creek on the Kuskokwim river, Anchorage lies 450 kilometers to the east 190 million acres of Federal, State, and Native lands open for mineral-related activities 2
  7. 7. motto: north to the future  Purchased from Russia in1867 for $7.2 million  Klondike Gold Rush brought thousands to Alaska  Became 49th state in 1959  Discovery of oil in Prudhoe Bay in 1968 created the modern Alaska we know today  65% of land in federal ownership 3
  8. 8. demographics  Population of 732,000 - ranked 47th in USA  61% Anchorage, 13% Fairbanks, 11% Panhandle, 15% Rural/Bush  Diversity  72% White, 13% Native, 6% Hispanic, 5% Asian and 4% Black  YK region ~90% Alaska Native  1/3rd of Alaskans have no access to public roads  Yukon-Kuskokwim Region one of the nation’s poorest regions  Red state politically with Republicans and Democrats generally supportive of resource development 4
  9. 9. key events in Alaska 5  1968 – Discovery of North Slope oil  1971 – Alaska Native Claims Settlement Act (ANCSA) enacted  1977 – Trans Alaska Pipeline System (TAPS) completed  1981 – Alaska National Interest Lands Conservation Act (ANILCA) enacted
  10. 10. ANCSA corporations  Alaska Natives relinquished title claims in exchange for right to select lands  13 Regional Corporations – granted rights to select lands valuable for their natural resources  70% of natural resource revenues shared among all Regional Corporations  Surface lands that were traditionally used for subsistence purposes were selected by and granted rights to village corporations  TKC was formed with the merger of 10 village corporations  Individuals residing in defined regions and villages when ANCSA enacted became shareholders in corporations based on residence  Shares can be transferred to descendants or gifted  Some corporations have adopted structures to provide shares to “descendants” 6
  11. 11. government  Executive Branch  Governor  Lt. Governor  Attorney General  Agencies  Fish & Game  Environmental Conservation  Natural Resources 7  Juneau / Anchorage  Juneau home to the legislature and governor residence  Federal and state agencies in Anchorage and Juneau  Legislature  Republican controlled, split by geography and ideology; Urban-Republican; Rural- Democrat but organize with Republicans
  12. 12. federal and state representatives 8 SUPPORTIVE OF DEVELOPING RESOURCES FOR ALASKA'S ECONOMIC PROSPERITY Governor Sean Parnell  Former Lt. Governor, State Senator  Former lawyer with Patton Boggs  Former Conoco executive  Champion of Alaska natural resources industry (oil and gas tax changes, and Roads to Resources) Senator Lisa Murkowski  Re-elected in write-In campaign  Ranking Republican on Energy & Natural Resources Committee  Supportive of natural resources sector Senator Mark Begich  Followed Senator Ted Stevens in 2008  Former mayor of Anchorage  Mostly supportive of natural resources  Running for re-election this year Congressman DonYoung  Elected in 1973  Former chair of the House Natural Resources Committee  Supportive of resource development in Alaska ALL VERY KNOWLEDGEABLE OF THE MINING INDUSTRY STRONGLY ADVOCATING ITS GROWTH IN ALASKA
  13. 13. Alaska economy  If the flow of federal and petroleum money disappeared overnight, 2/3rds of the jobs for Alaskans would no longer exist  Unemployment stayed below 8% during Great Recession  Unemployment in YK region is chronically high (22%+) 9
  14. 14. 10 Alaska budget and trust fund  Oil drives the budget  Tax credits to support exploration, development and vocational education  Competitive corporate taxes and no individual state income or sales tax; ranked 4th in U.S. for lowest tax burden  Alaska permanent fund (primarily contributions from the resource sector)  $42B savings account  Used to pay dividends to each Alaska resident - ranged from $845 to $3,200 in the last decade  Constitutional budget reserve - $10.6B to help fund state budget 10
  15. 15. an educated workforce  Four decades of oil & gas production has developed a skilled workforce in Alaska  Alaska offers a quality of life attractive to many looking for jobs  Large engineering, construction, transportation, and logistics companies able to service resource companies  Workforce development initiatives in regional and remote communities  Education and training programs  University of Alaska – earth sciences, geology, engineering, minerals and mining  Center for Mine Training – occupational fields workforce training  University of Alaska Fairbanks – Community and Technical College  State of Alaska – 22 job centers to connect employers to job seekers  Bethel – Yuut Elitnaurviat (YE) The People’s Learning Center, part of the State of Alaska’s Regional Training Centers, provides training and education in the Yukon-Kuskokwim Delta Region  TKC and Donlin Gold support creating/funding a training center in Aniak 11 ACTIVE MINERAL INDUSTRY CORE EDUCATION &TRAINING
  16. 16. top employers  4,000+ Providence Health Services  3,000+ Wal-Mart  2,000+ ASRC Energy Services, Trident Seafoods  1,000+ BP Exploration, NANA, CH2M Hill, Alaska Airlines, GCI, FedEx, ConocoPhillips  500+ Fort Knox Gold mine, Red Dog mine, UPS, Wells Fargo, Alyeska Pipeline, Costco  Less than 500 Kensington mine, Pogo Gold mine, Greens Creek mine 12
  17. 17. economic challenges and state issues  High costs, climate, distance to markets, lack of infrastructure, local workforce skills  Geographic cost differences  Anchorage 1.00 - Bethel 1.53  Food for a week: $123 vs $251  Gasoline ($/gal): 3.96 vs 7.06  Impacts of federal budget cuts - highest per capita federal dollars in the nation 13  Oil Taxes  Decline in output  Underutilization of pipeline capacity  Alaska National Wildlife Reserve  Infrastructure  Roads, oil & gas pipelines, power transmission lines  Shift of Bush population to Anchorage  The Pebble Project  Aging population – Health Care
  18. 18. the Alaska advantage  Well-defined permitting process  Four large precious metals mines, one coal mine & one base metal mine  Numerous small-scale mines  Natural resource projects integral to the State’s economy  Strong and time-tested community support  Resource-sector associations  Resource Development Council of Alaska  Alaska Miners Association  Council of Alaska Producers  Alaska Support Industry Alliance 14
  19. 19. a thriving and growing mining sector 15 2ND LARGEST GOLD PRODUCING STATE AFTER NEVADA  A high level of predictability, commitment and stability  Major mines create employment in Alaska  Fort Knox 630  Red Dog 639  Greens Creek 400  Kensington 306  Pogo 320  Usibelli 140 Source: Alaska Miners Association – The Economic Benefits of Alaska’s Mining Industry, January 2014
  20. 20. mining is a growing force in Alaska’s economy 16 2013 PROVIDED SIGNIFICANT BENEFITS FORTHE STATE Mining jobs in Alaska - includes 4,600 direct and 4,500 indirect jobs Total direct and indirect payroll - average annual wage $100,000 – twice that of any other sector in Alaska’s economy State Government-related revenue through rents, royalties, fees and taxes Payments to Alaska Native Corporations Local government revenue through property taxes 9,100 $630M $150M $144M $17M Source: Alaska Miners Association – The Economic Benefits of Alaska’s Mining Industry, January 2014
  21. 21. Alaska minerals commission  Funding infrastructure development  Comprehensive permitting reform to create timely and efficient permitting process  DNR oversees all state agency permitting and coordinates with federal agencies  Experienced key staff focused on large mining projects as a high priority  Over the past decade two new operations (Pogo and Kensington) and three expansions (Red Dog, Fort Knox, and Greens Creek) have been successfully permitted  Publishing geological data on Alaska’s mineral potential  Leadership role in state assumption of water discharge permitting from EPA  Accelerating state land entitlement conveyances in accordance with the Alaska Statehood Act  Reestablishing the Citizens’ Advisory Commission on Federal Areas  Asserting and defending public access to roads, trails, and navigable waterways  Funding University of Alaska mineral engineering and geology programs 17 OVERTHE PAST 27YEARS KEY RECOMMENDATIONS WERE ACTED UPON THESE INITIATIVES HAVE SENT A CLEAR MESSAGETOTHE MINERAL INDUSTRYTHAT ALASKAWANTS A SUSTAINABLE GLOBALLY COMPETITIVE MINING INDUSTRY
  22. 22. state supporting development of resource industry  New oil tax structure adopted in 2013 to encourage further investment  Alaska Exploration Incentive Credit Program – up to $20 million deduction over a 15- year period for new mines  Roads to Resources Program (R2R) – transportation initiatives to support the development of natural resources  Demonstrates the will of the State to work with companies in facilitating cost-effective access to various projects and operations in Alaska  Red Dog mine port & access road initially financed by Delong Mountain Transportation System and now owned by State Economic Development Agency  Ambler project - earlier-stage initiative in evaluating a 225 mile road to access the Ambler mining district  Legislative approval of financing for Bokan-Dotson Ridge ($145 million) and Niblack ($125 million) projects 18 2014 ENHANCED INVESTMENT INTHE STATE BYTHE OIL AND GAS INDUSTRY
  23. 23. investing in mining sector 19 INCREASED DEVELOPMENT FUNDING IN 2013 Mine construction and other capital investments Gross production value from Red Dog, Greens Creek, Fort Knox, Pogo, Nixon Fork, Kensington, Usibelli Coal mines, placer mines, and rock/sand/gravel operations Export value, or 36% of Alaska’s total export in 2012 $250M $3.4B $1.6B Exploration investment or $2.6B since 1981$180M Source: Alaska Miners Association – The Economic Benefits of Alaska’s Mining Industry, January 2014
  24. 24. community support state support business capacity workforce development skilled labor resource rich & exceptional geological potential ALASKA a safe jurisdiction 20 Alaska: the right location FUTURE ECONOMIC OPPORTUNITY AND PROSPERITY
  25. 25. Donlin Gold Project Overview Part 2: History of the Project
  26. 26. surrounding region Donlin Gold 22 75 COMMUNITIES WITH POPULATIONS OF 50-600
  27. 27. project area of influence 23 LARGERTHAN UTAH OR IDAHO - 88,0002 MILES
  28. 28. project history  Placer gold discovered at Snow Gulch in 1909  Small-scale placer gold production has continued to the present  Sub-surface rights held by Calista Corporation, surface rights held by TKC  First substantial drilling started in 1988, by WestGold  Placer Dome explored the property from 1995 through 2000  Donlin Creek Joint Venture (DCJV), between Placer Dome and NOVAGOLD, was formed in 2001  In 2007, after Barrick’s acquisition of Placer Dome, JV partners formed Donlin Creek LLC (now Donlin Gold LLC), a 50:50 joint operating company that has aggressively drilled and studied the project  Feasibility Study Update 2 (FSU2), completed at the end of 2011  Current Reserves & Resources based on this study  Donlin Gold Board approved FSU2 in July 2012, gave authorization to commence permitting 24
  29. 29. project structure  Donlin Gold LLC is the operating company  Operates under agreements with Alaska Native Claims Settlement Act (ANCSA) landowners  Calista Corporation (“Calista”)  Land selected by Calista for its resource development potential  Subsurface minerals and surface lease  The Kuskokwim Corporation (“TKC”)  Surface Use Agreement (“SUA”)  Project office in Anchorage  37 full-time employees in Anchorage and 9 contractors  Field offices in Bethel and Aniak  Camp at site maintained year-round 25
  30. 30. donlin gold llc agreement  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 Donlin Gold General Manager every two years  Chairman has limited casting vote authority  Certain matters require special (60%) or unanimous approval  Owners committed to fund permitting  Upon publication of Draft EIS either party can propose construction program and budget  Budget deadlock resolution provisions provided for permitting (expert referral) and construction (offer or buy/sell option) 26
  31. 31. "Since 1995, Donlin Gold has worked constructively in our region and I know our partnership will benefit our shareholders for many generations. Today's agreement sets the basis for a long and productive relationship that with construction of the mine will provide jobs and financial value to the shareholders in our 10 villages.” – Maver Carey, President & CEO of The Kuskokwim Corporation (surface owner) durable, long-term agreements with native corporations 27 STRONG ANDTIME-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 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, Vice President of Calista Corporation (mineral owner)
  32. 32. Calista Mining Lease  Term until April 30, 2031, continues thereafter year-to-year so long as mining or processing operations carried out continuously  NSR royalty from commercial production  Net Proceeds Royalty (NPR)  Shareholder hiring perference  Scholarships  Bidder’s preference 28 agreements with native corporations TKC Surface Use Agreement  Extended to coincide with Calista Mining Lease  Direct compensation through payments for milestones, annual surface use and mine operation  Consultative approach regarding annual project planning, and preparation of subsistence harvest plan  Preference for contracts, hiring and training  Scholarships  Exclusive contract for the construction and operations of an upriver port site
  33. 33. project highlights  Reserves: 33.9 Moz Au (~500M 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 truck & shovel  Milling: 53.5k tonnes/day, sulfide flotation, pressure oxidation (POX), carbon-in-leach recovery (CIL)  Strip ratio: 5.5 = 2.8B tonnes waste rock  Tailings: Fully lined storage facility  Power: 153MW average site-generated load, fueled by natural gas transported via a 315-mile pipeline  Logistics: All consumables supplied by Kuskokwim River transportation system with port near Jungjuk Creek 1) See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve and Resource Base” table with footnotes. 29
  34. 34. partnerships grade growthjurisdiction longevity size DONLIN GOLD 30 donlin gold - the right project ARGUABLYTHE WORLD’S MOST SIGNIFICANT GOLD PROJECT
  35. 35. Donlin Gold Project Overview Part 3: Community Engagement
  37. 37. community engagement  Active outreach effort to more than 60 remote communities in the region and along the pipeline route  Average population is less than 200  Frequent village meetings to update stakeholders  Donlin Gold community offices in Bethel and Aniak  FluentYup’ik speakers on staff to present information and participate in local discussions  Project summary video narrated in both English &Yup’ik  Mine and permitting planning take into account input from communities 33
  38. 38. health & safety  Over 1.8 million man-hours (6+ years) without a lost-time incident (LTI)  Training for safety awareness and emergency preparedness by all employees at site and in Anchorage annually  Strong safety culture for employees and for the region  Safety Culture:“Every person going home safe and healthy everyday” 34
  39. 39. workforce development  Promote and enrich youth education  School visits  Scholarships  Encourage local hire throughout the mine life  Training facilities and internships  Talent bank  On-site workforce has primarily been Calista shareholders or descendants  Shift schedule promotes a healthy lifestyle by maintaining a good job and practicing a subsistence way of life 35
  40. 40. academic & trades decathlon  Donlin Gold partnered with the Kuspuk School District, Alaska Construction Academies, and EXCEL Alaska to sponsor a youth Academic andTrades Decathlon in Aniak  145 students from 6Yukon Kuskokwim school districts  Learned various trades from experts  Held individual competitions in math, science, geography and keyboarding  Team competitions combined sports, design and academics, with events such as a banner design contest and volleyball and basketball games 36
  41. 41. community investment  Crooked Creek capacity building/sustainability  Bering Sea Elders Advisory Group  Kuskokwim River Watershed Council  Tundra Women’s Coalition  Drew’s Foundation (Suicide Prevention)  Best in theWest Small Business Incentive Grants  Iditarod & Iron Dog sled races CULTURAL PRESERVATION, ENVIRONMENTAL PROTECTION, COMMUNITY WELLNESS, EDUCATION  K-300 sled dog race  Aniak Interior Rivers State Fair  Donlin Gold Classic Basketball Tournament  Bethel Search and Rescue  Summer boat safety  Winter snow machine safety  Clean Up Green Up 37
  42. 42. current community activities 38 WORKINGTOGETHER AND FORMING LASTING RELATIONSHIPS
  43. 43. Donlin Gold Project Overview Part 4: Environmental
  44. 44. environmental management Water Management Waste Rock Management Design for Closure 40
  45. 45. water management  Objectives  All discharge meet Alaska water quality standards at point of discharge  Ensure an adequate supply of water to the process plant  Minimize build-up of water in the Tailings Storage Facility (TSF)  Meet pit slope depressurization requirements 41
  46. 46. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 January February March April May June July August September October November December Precipitation(inches) climate and hydrology Average annual precipitation: 19.6” (499 mm) 42
  47. 47. baseline water quality  Water Quality Monitoring:  Establish baseline data to provide defensible documentation in support of permitting  Support project design, including water management, process design, treatment design, and closure planning  Develop the baseline for evaluation of potential environmental impacts 43
  48. 48. Lewis Pit Waste Rock Facility Upper Contact Water PondLower Contact Water Pond Overburden Stockpile ACMA Pit with Backfill Tailings Storage Facility Fresh Water Pond Ore Stockpile Mill Tailings Dam 44 water management - layout LIFE OF MINETAILINGS STORAGE CAPACITY 27YEARS+
  49. 49. water balance 45  Developed comprehensive water balance taking into account full range of climatic conditions during life of mine and closure  Maximizes water reuse to the extent practicable while providing for discharge flexibility for excess water  Water management plan balances environmental concerns with operational needs  All data and analysis developed with input from Federal and State agencies; ensures will meet permitting requirements
  50. 50. waste rock management  Objectives  Geochemical characterization of waste rock  Segregation and isolation of Potentially Acid Generating (PAG) rock  Non-Acid Generating (NAG) rock managed to address predicted metal leaching  Maximize concurrent reclamation and backfill opportunities 46
  51. 51. waste rock management WRMC Mt % Disposal NAG 2,519 93 Waste Rock Facility (WRF) PAG 5 79 3 Blended in WRF PAG 6 123 4 Isolated cells in WRF / ACMA backfill PAG 7 2 0.1 Low-grade ore stockpile / ACMA backfill Total 2,723 47 CATEGORIZED AND PLACED BY ACID-GENERATING POTENTIAL
  52. 52. closure - design  Objectives  Minimize footprint  Maximize concurrent reclamation  Manage Waste Rock Facility for long-term stability  Minimize accumulation of water in facilities  Pit lake is key to closure water management 48
  53. 53. closure - pit lake 49 FORMATION WILLTAKE ~60YEARS
  54. 54. closure -tailing storage facility  TSF after dry closure and reclamation 50 Small pond with unaffected runoff from soil cover ELIMINATING LONG-TERM CLOSURE OBLIGATIONS
  55. 55. closure  Tailing Storage Facility reclamation: 5 years  Formation of pit lake: ~60 years  Seasonal water treatment from pit lake after filling  Trust-fund model for long-term financial assurance 51
  56. 56. Donlin Gold Project Overview Part 5: Permitting
  57. 57. permitting timeline Current Status 53 16 years ̴ 4 27+ years EXPLORATION& ENVIRONMENTAL STUDIES PERMITTING ENGINEERING& CONSTRUCTION OPERATION WE ARE HERE HALF WAY THROUGH PERMITTING 1.5Moz/year first five full years1 1.1Moz/year life of mine1 Federal and State agencies are working cooperatively, with day-to-day support from Donlin Gold, to efficiently move the project through the EIS and permitting processes. Notes: 1) Donlin Gold data as per the updated feasibility study. Projected annual production represents 100% of which NOVAGOLD’s share represents 50%. ~4 YEAR PROCESS ̴ 4
  58. 58. major federal permits  Clean Water Act - Section 404 (USCOE)  NEPA “Trigger”  Right of Way (BLM)  Pipeline corridor  Pipeline Special Permit (PHMSA)  Consultations  Essential Fish Habitat Consultation (NMFS)  Endangered Species Act/Section 7 Consultation (NMFS/USFWS)  Section 106 NHPA Consultation (SHPO) 54
  59. 59. major state permits  Reclamation Plan Approval (ADNR)  Integrated Waste Permit (ADEC)  Wastewater Discharge/APDES (ADEC)  Air Quality Permit (ADEC)  Fish Habitat Permits (ADF&G)  Water Rights (ADNR)  Rights of Way (ADNR/ADOT)  Dam Safety Certification (ADNR) 55
  60. 60. financial assurance  Financial Assurance/Bonding  “…require proof of financial responsibility to cover the cost of closing…and, if monitoring is required, the cost of post- closure monitoring…”  Cost estimate based on detailed engineering analysis and reviewed every 5 years  Trust funds for long term treatment obligations  Draft estimate is ~$285 million (funded at ~$10 million annually LOM) 56
  61. 61. NEPA/EIS  National Environmental Policy Act (NEPA)  Procedural  Supports agency decision-making  Informs public and provides opportunities for comment  Environmental Impact Statement (EIS) preparation well underway  PDEIS (agency review) – Around year-end 2014  DEIS (public review) – Mid-2015  Public Comment Period – Late 2015  Final EIS/Record of Decision – Around year-end 2016  All key Federal and State agencies cooperating in NEPA process to ensure EIS supports their permitting needs 57
  62. 62. permitting process EIS Process Federal Process State Process CSR Record of Decision Federal Permits, Certifications, Approvals State Permits, Certifications, Approvals Social License To Operate Notice of Intent Scoping Draft EIS Final EIS ACOE CWA 404 Tribal Consultation (ACOE/EPA) USFWS/NMFS Endangered Species Act Consultation NMFS EFH Consultation BLM ROW ADFG Fish Habitat ADNR Reclamation Plan/Bonding Pipeline Water Use SHPO National Historical Preservation Act Determination ADEC Waste Management Air Quality Water Discharge Stakeholder Engagement Community Engagement Workforce Development 58 OCCURS CONCURRENTLY
  63. 63. Notice of Intent to Prepare EIS Draft EIS Final EIS Record of Decision Initial permit applications Submitted: 08/12 Notice of intent Published: 12/14/12 Public scoping period Ended: 03/29/13 Scoping summary document Completed: 08/13 Development of alternatives Completed: Q2/14 Prepare preliminary draft EIS Agency review Prepare draft EIS Public comment period Prepare draft final EIS Agency review Publish final EIS Record of decision APPROACHING HALFWAY MARK IN PERMITTING donlin gold permitting milestones 2012-2013 2013-2015 2015-2016 59
  64. 64. work completed to date  Initial permit applications submitted - August 2012  Notice of Intent initiating EIS published - December 2012  EIS Public Scoping completed - March 2013  14 public scoping meetings  Donlin Gold/Calista submitted comments in key areas  Only one consolidated comment letter from NGOs  Approximately 150 public comment submittals  Public comments well informed and constructive, provided positive input to process 60 INITIAL DOCUMENTS SUBMITTED AND EIS SCOPING TOOK PLACE IN 2012/13
  65. 65. 2012 scoping meetings 61 WELL ATTENDED – POSITIVE & CONSTRUCTIVE REVIEW
  66. 66.  Environmental Evaluation Document (EED) issued - May 2013  Comprehensive environmental report for project prepared by Donlin Gold to support EIS  EIS data and analysis requirements finalized – Early 2014  All requisite info to be submitted by Donlin Gold – 3rd quarter 2014  Alternatives development completed – Mid-2014  Reasonable range of mine/transportation/pipeline alternatives adopted for detailed analysis in EIS  Initial drafts of EIS chapters released/reviews completed  Purpose and Need for EIS  Alternatives  Affected Environment (baseline conditions)  Donlin Gold afforded comment opportunities on drafts early in process 62 work completed to date
  67. 67. current activities  PDEIS Preparation – expected to be complete around year-end  Analysis of potential environmental impacts  Identification of mitigation measures  Major permit applications under development  CWA 404 (wetlands), pipeline ROW, water use, and dam safety applications submitted  Air quality, water discharge, and fish habitat applications being prepared  Coordinating with agencies to integrate permit issuance with EIS process 63
  68. 68. Project Name Location Metal Time Description Red Dog Alaska Lead/zinc ~2 years • Expansion • EIS completed in 2009 • Development started on schedule in 2010 Fort Knox Alaska Gold ~3 years • Expansion – new heap leach facility • Permitting completed in 2007 Pogo Alaska Gold ~3 years • New mine • Permitting completed in 2004 • Operations began in 2006 Arturo Nevada Gold ~4 years • Major pit expansion • New waste rock and heap leach facilities • EIS/ROD completed in May 2014 Rochester Nevada Silver ~1 year • Expansion – new heap leach & mine reopening • EA/permitting completed in 2011 Cortez Nevada Gold ~3 years • Major pit expansion • EIS/permitting completed in 2008/2009 Goldstrike Nevada Gold ~2 years • Major pit expansion • Waste rock and tailings facilities • ROD approving the project was in 2009 Hycroft Nevada Gold ~2 years • Reactivation • EIS/permitting completed in 2012 Long Canyon Nevada Gold ~3 years (anticipated) • New pit, heap leach, mill and tailings facility • Draft EIS issued in March 2014 Pan Nevada Gold ~2 years • New open pit and heap leach • EIS/permitting completed in 2013 Haile South Carolina Gold ~4 years (anticipated) • New mine on historic property • Open pits, processing and tailings facilities • Final EIS issued July 2014, ROD anticipated November 2014 permitted large projects 64
  69. 69. 65
  70. 70. Donlin Gold Project Overview Part 6: Mining
  72. 72. geology  Gold mineralization exists in intrusive dikes & sills (colored in figure), hosted by sandstones, siltstones, and shales of the Kuskokwim Group  Acma-Lewis mineralization generally associated with pyrite, arsenopyrite, and stibnite 68  Some graphitic carbon exists and is potentially preg-robbing  Existences of mercury, chlorine, & fluorine must be taken into account in process planning
  73. 73. resource modeling  1,396 holes (89% are core), 340 km of drilling used in the latest resource model  Acma & Lewis deposits divided into 9 geologic domains, each bound by structures, domains associated with distinct metallurgical recoveries and rock hardness  Raw assay gold grades capped prior to compositing based on cumulative frequency plots by rock type  Rock densities assigned by rock type  Drill hole database composited on 6-meter intervals  6m x 6m x 6m block model created, gold & sulfur grades estimated using inverse distance method, some estimates constrained by indicator shells (identify probability of mineralization), also constrained by rock type (intrusives, shales, & greywackes)  Other materials estimated are As, Hg, Sb, CO2, Ca, Mg, & neutralization potential  Due to small block sizes & high mining rates, post-processing required to simulate dilution & ore loss, also to decide which portions of deposit to mine selectively and which to mine in bulk 69
  74. 74. block model  Plan section of pit phases and block model at 5m elevation  Gold grades (g/t) identified using legend at bottom right 70
  75. 75. SMUman results  Plan section at 5m, Acma Pit  Legend below states planned material types  6m_ore = ore to be mined on 6m benches  6m_omaw = ore mined as waste, 6m benches (planned ore loss)  6m_wmao = waste mined as ore, 6m benches (planned dilution)  Same types also depicted for planned 12m bench mining  Planned ore loss is 1.3%  Planned dilution is 7.1% 71
  76. 76. reserves & resources  Last R&R statement generated upon completion of FSU2 in late 2011  Reserves & FSU2 mine plan based on a designed pit guided by a $975/oz Au, RF1.0 Whittle shell and M&I categorized material only  Resources guided by a $1,200/oz Au, RF1.0 Whittle shell, and M,I,&I categorized material  SMUman post-processing accounted for in R&R calculations  Reserve pit includes 2,765Mt of waste, strip ratio = 5.48 72 P&P Reserves Category Ore (kt) Au (g/t) S (%) Contained Au (koz) Proven 7,683 2.32 1.12 573 Probable 497,128 2.08 1.06 33,276 Total P&P 504,811 2.09 1.06 33,849 M,I,&I Resources, inclusive of Reserves Category Ore (kt) Au (g/t) Contained Au (koz) Measured 7,731 2.52 626 Indicated 533,607 2.24 38,380 Total M&I 541,337 2.24 39,007 Inferred 92,216 2.02 5,993
  77. 77. mine design  15-phase pit design (9 in Acma, 6 in Lewis) based on nested Whittle shells  Most benches double- stacked (24m total), some quadruple stacked where slope angles are very shallow (43º) due to adverse bedding  Pit ramps are 40m wide (including berm) and no steeper than 10%  Inter-ramp slope angles range from 28º to 50º, depending on slope sector  Most phases have dual access 73
  78. 78. pit & dump dimensions 564m vertical highwall 3.4km across 2.5km across 330m vertical dump face 4.2km across 74
  79. 79. mine schedule  Schedule logic based on maximizing NPV while meeting plant constraints on sulfur content and feed hardness  Large low-grade stockpile kept until end of mine life (reaches ~105Mt maximum)  Binned by sulfur content (high, medium, & low) for blending purposes  Ore stockpiled longer than one year assumed to have degraded plant recoveries and sulfur contents  Mining rate capped at 155Mtpa (425ktpd)  Vertical advance rate capped at 8 12m benches per year  Milling rate variable at 50-55ktpd, depending on feed hardness  Acma pit sequenced so that it is partially backfilled with Lewis waste at end of mine life  Most waste is NAG (91%), and PAG waste must be sequenced such that it is encapsulated inside the waste dump  Overburden to be removed from surface using smaller equipment and stockpiled for reclamation purposes 75
  80. 80. phase mining rates 76Source: Date 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 ( “FSU2”)
  81. 81. 77Source: FSU2
  82. 82. 78Source: FSU2
  83. 83. mine progress, year 26 79
  84. 84. mining equipment  Truck fleet consists of ultra-class (360-t) trucks for primary mining and smaller trucks (135-t) for overburden movement and project work  Loading fleet primarily 42m3 (55yd3) electric-hydraulic shovels, one diesel-hydraulic shovel for flexibility  Loading fleet also includes two large FELs (55yd3) for stock rehandle & backup loading, plus one smaller FEL for support & project work  Drill fleet consists of a mix of 3 different models for bulk material movement, split-bench movement, RC grade control, secondary D&B, and wall control D&B Source:FSU2 80
  85. 85. opportunities & risks  LNG-powered mine equipment, particularly trucks  Lowers operating costs  Reduces fuel-barging requirements on the river  Alternative waste haulage options (autonomous, trolley-assist, crush/convey)  Added grade from Inferred Resources  Currently assumed to have 0 grade, thus diluting M&I ore  Expanded pit due to higher gold prices  Exploration potential along NE-SW mineralization trend Opportunities Risks  Selective mining plan must be executed successfully to planned feed grades  Consumable price fluctuation (diesel, explosives, tires, etc.)  Equipment availability & capital fluctuation 81
  86. 86. Donlin Gold Project Overview Part 7: Process
  87. 87. process key parameters Parameter Value Units, Metric LOM 27 Years Mill Throughput 53,500 tpd avg Hourly Mill Throughput 2,397 te/h Plant Availability 93 % Au grade 2.09 g/te Mass pull to concentrate 15.2 wt% S grade in concentrate 7 wt% Au recovery, flotation 93.0 % Au recovery, POX/CIL 96.6 % Au recovery, overall 89.8 % Au production 1.1 Moz/yr avg LOM Power Consumption, (ave/peak) 153 / 185 MW 83
  88. 88. donlin gold flowsheet 84 CONVENTIONAL PROCESSING FACILITY
  89. 89. mineralogy  Au in Donlin Gold ore is exclusively sub-microscopic disseminated in crystal structure of arsenopyrite and pyrite, hence it is refractory  Native organic carbon, primarily concentrated in sediments, is preg-robbing  Arsenopyrite is primary host accounting for ~80% of Au in feed. Pyrite, although 3-10 times more abundant than aresenopyrite, carries ~20% of the gold 85
  90. 90. crushing/grinding  Flowsheet selection  Circuit selection:  Lowest capital cost  Ability to cope with clay fraction in the ore  Ability to cope with climatic conditions  General ease of operation and maintenance  Flexibility in throughput rates  Widely applied technology in the milling industry  Gyratory crusher – 60”x 89”  Sag mill – 38’x 24.8’ (20 MW)  Ball mills – 26’x 42.5’ (18 MW) 86
  91. 91. flotation - testwork  Extensive bench and pilot testing on Donlin Gold samples  Bulk concentrate flowsheet proved optimum to maximize Au recovery and produce a concentrate with autogenous sulphur grade for POX  An MCF2 style flowsheet provides additional 1.8% Au recovery to a 7% sulphur flotation concentrate and was economically favoured for Donlin Gold  Rapid kinetics for pyrite and coarser arsenopyrite, but much of Au is associated with fine arsenopyrite.  To achieve high float recovery, it is essential to recover free pyrite and binary particles of quartz carrying fine grained arsenopyrite.  To achieve maximum recovery from the arsenopyrite (some of which is tied up with larger gangue particles) a long float retention time (114 min) and high reagent consumption is necessary 87
  92. 92. POX flowsheet  Residence time and sulfur operating windows  Sulfur Range: 480 – 648 tepd  Design A/C throughput per train 4,356 tepd  40-50 minutes residence time, nominal 45 min.  3250 kPag  225°C  1,750 tepd oxygen plant  (2) autoclaves, each 5.2m diameter x 33.2m long, 630 tonnes 88
  93. 93. CIL flowsheet  Six CIL tanks to provide 24 hours leach retention time  15 g/L activated carbon concentration for each CIL tank  Carbon retention screens with 24 mesh openings  36 tonne of carbon would be advanced daily through the circuit  35% solids slurry in CIL circuit 89
  94. 94. refinery 90  Pressure Zadra  12t carbon batch  3 strips per day  Acid washing of carbon  Carbon regeneration  Electrowinning (4 cells)  Retort  Induction Furnace
  95. 95. Donlin Gold Project Overview Part 8: Engineering / Infrastructure
  96. 96. engineering  Feasibility Study  AMEC (lead, process and infrastructure)  Hatch (Pressure Oxidation, Oxygen Plant)  NCL/Barrick (Mining)  BGC (Tailings, Water, and Geotechnical)  CH2M Hill (Gas Pipeline)  SRK (Closure and Geochemistry)  Reviews  Barrick (All areas) 1  Turner & Townsend (Estimate)  Barrick Energy (Gas Pipeline)2 1 Divested by Barrick Gold Corporation in 2011. 2 Barrick Gold Corporation performed a third party audit. 92
  97. 97. access & infrastructure  27 mile road  5000-foot runway  Two port facilities  600-bed permanent camp  2500-bed construction camp  40 million gallon diesel storage 93
  98. 98. site overview 94 VERY COMPACTTO MINIMIZE FOOTPRINT
  99. 99. Lewis Pit Waste Rock Facility Upper Contact Water PondLower Contact Water Pond Overburden Stockpile ACMA Pit with Backfill Tailings Storage Facility Fresh Water Pond Ore Stockpile Mill Tailings Dam 95 LANDSCAPE AMENABLETO PROJECT DESIGN site layout in 3-D
  100. 100. site plan design 96 INCLUDES LATEST FEASIBILITY UPDATES
  101. 101. processing plant layout 97 CONVENTIONAL TECHNOLOGY
  102. 102. logistics & supply chain 98 WEST COAST BARGE CARGO INTO BETHEL UPTO JUNGJUK
  103. 103. energy demand  Average running load 153 MW  Peak load 182 MW  Total installed load 227 MW  Mobile Fleet Fuel 40 Mgal  28 Mgal for haul trucks 99
  104. 104. energy costs  Costs based on WTI crude price of $85/bbl  Diesel price  West Coast Seattle ULSD indexed price  Built up cost for barging, terminal fees, Bethel City charges, and trucking  Gas price assumes imported LNG  Based on 12% index to crude  Built up costs for shipping, regasification, pipeline transportation  Diesel delivered $3.03/gal ($22.50/mmbtu)  Gas delivered $13.18/mmbtu  Delivered power cost 11.9c/kwh 100
  105. 105. natural gas pipeline route 101 COOK INLETTO DONLIN GOLD - 315 MILES
  106. 106. natural gas pipeline project  Pipeline  315 mile, buried, 14” steel pipeline  Class 1 for entire alignment  70 mmscfd capacity (estimated 30 - 40 demand)  1,480 psig max allowable operating pressure  Construction  2 construction spreads, each with 3-4 sections  Construction period over 2 winters and 2-3 summers  Season for each section based on terrain and geotechnical conditions 102
  107. 107. power plant  Requirements  Proven technology  Load following ability  High efficiency  Redundancy (N+2)  16.6 MW Wartsila combined cycle units  Single steam turbine (16.4 MW)  Initial installation 10 units (182.4 MW)  Two additional units later (215.6 MW)  Similar to Pueblo Viejo power plant 103
  108. 108. oxygen plant  1,750 tpd GOX  (2) Main Air Compressors (MAC) at 10,813 kw each  (1) Booster Air Compressor (BAC) at 10,142 kw  LOX pump and vaporizer  Double column distillation process  LOX storage (24hrs)  50% turndown capability  Similar to Pueblo Viejo oxygen plant, but smaller 104
  109. 109. Donlin Gold Project Overview Part 9: Resource Upside
  110. 110. mineralization trend  Mineralization exists along a gold-in-soil geochemical anomaly trend, which coincides with a magnetic-low  Additional Resource opportunities exist:  In-pit Inferred and Blue Sky Resources  Higher gold price expansion potential  East/southeast expansions of Acma and Lewis Pits  North/northeast expansion of Lewis Pit  Deeper phase bottoms  Along the mineralization trend  Positive drilling at Snow  Positive drilling at Dome  No drilling yet at Ophir, but favorable outcrops exist 106 Ophir Dome Snow Duqum Quartz Queen Aurora Akivik Rochelieu 400 Acma S. Lewis LewisVortex Far East Far Side - Pit shown is $975/oz design
  111. 111. +1 g/t Au Blocks Ophir Dome Snow Lewis Acma mineralization trend - isometric Quartz DuqumFar Side Queen S. Lewis Far East 400 Aurora Akivik Vortex Rochelieu - Pit shown is $975/oz design 107
  112. 112. current drilling 4 ~1,400 holes (89% are core) utilized for latest Resource model update (340 km) 108
  113. 113. pit expansion potential P&P Reserve Design ($975/oz Au) M,I,&I Resource Shell ($1,200/oz Au) 109  Reserves based on M&I categorized material inside a $975/oz Au design  Resources based on M,I,&I categorized material inside a $1,200/oz Au Whittle shell  At higher Au prices, pit tends to expand towards the south/southeast, as well as north/northeast
  114. 114. exploration potential – along trend 5 km D D’ Snow Dome Snow DomeQuartz Ophir Acma Lewis 45.0Moz Resource Additional Resource Potential 110
  115. 115. upside potential summary Current  P&P Reserves = 33.8Moz (2.1 g/t)  M&I Resources = 5.2Moz (4.4 g/t)  Inferred Resources = 6.0Moz (2.0 g/t)  Total = 45.0Moz (2.2 g/t) Potential – including only areas of significant drilling  In-Pit Blue Sky - In-fill drilling needed or encounters of un-estimated grade during production  Below Resource Pit - Higher gold price needed to drive pit deeper  East Acma Extension - In-fill drilling of intercepts outside of pit and/or higher gold price (+$1,200) to expand pit  Snow, Queen, Quartz, Duqum, Dome and Far Side targets - Additional exploration & in- fill drilling opportunities, potential for low grade bulk oxide at Dome Additional Potential – areas with insufficient drilling  Ophir Exploration - Exploration drilling & in-fill follow-up  Deep UG Potential – Limited evaluation thus far, UG exploration drilling from near pit bottom required 111
  116. 116. Donlin Gold Project Overview Part 10: Capital & Operating Cost
  117. 117. execution plan  Schedule1  ~2 year engineering (partly and concurrently with construction)  ~ 4 year mine site construction  ~ 3 year pipeline construction (concurrently with mine site construction)  Labor  Peak construction labor force of 2500 (mine site)  Two crews working simultaneously on different segments of the pipeline construction 1131 Mine site and pipeline construction timelines will coincide.
  118. 118. capital cost estimate 114 Mining 345 Site prep and roads 236 Process facilities 1,326 Tailings 120 Utilities 1,302 Ancillary facilities 304 Off Site facilities 243 Owner's costs 414 Indirects 1,405 Contingency 984 Total 6,679 1 Level of accuracy for capital cost estimate is -15%/+30% as per AACE class 3 definition. Costs are unescalated and based on the 2011 Donlin Gold Second Updated Feasibility Study. Initial capital costs ($M)1 Tailings 631 Mine equipment 578 Other mobile equipment 71 Mine dewatering 66 Freight, EPCM & other 159 Total 1,505 Sustaining capital costs ($M)1
  119. 119. operating cost estimate 115 $M $/t mined $/t milled $/oz Mine operations 8,200 2.52 16.24 270 Processing operations 7,808 2.40 15.47 257 Administration 1,630 0.50 3.23 54 Royalties 1,580 0.48 3.13 52 Refining 31 0.01 0.06 1 Cost of sales1 19,249 5.91 38.13 634 Operating costs (life-of-mine) 1 U.S. GAAP cost of sales, excluding depreciation and reclamation costs. Costs are unescalated and based on the 2011 Donlin Gold Second Updated Feasibility Study.
  120. 120. mining operating cost 116 $M $/t mined $/t milled Labor 1,919 0.59 3.80 Diesel 2,066 0.63 4.09 Maintenance supplies 1,766 0.54 3.50 Consumables 1,286 0.40 2.55 Tires 685 0.21 1.36 Electricity 183 0.06 0.36 Services/overhead 295 0.09 0.58 Total 8,200 2.52 16.24 Mining costs (life-of-mine)1 1Costs are unescalated and based on the 2011 Donlin Gold Second Updated Feasibility Study.
  121. 121. process operating cost 117 $M $/t milled Labor 616 1.22 Reagents and consumables 2,587 5.12 Power 3,497 6.93 Maintenance supplies 860 1.70 G&A allocation 248 0.49 Total 7,808 15.47 Processing costs (life-of-mine)1 1Costs are unescalated and based on the 2011 Donlin Gold Second Updated Feasibility Study.
  122. 122. Next steps  Donlin Gold feasibility study to be updated to reflect recent economic metrics  Evaluate third party owner operators  Port facilities  Gas pipeline  Oxygen plant  Power plant  Leasing equipment 118 UPDATING FEASIBILITY STUDY