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Vancouver Resource Investment Conference 2013


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NOVAGOLD exhibited at Cambridge House's Vancouver Resource Investment Conference. Check out our latest presentation, it was a great show! Visit for more information.

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Vancouver Resource Investment Conference 2013

  2. 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 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. 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. 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. 2 NYSE-MKT, TSX: NG
  3. 3. THE NOVAGOLD OPPORTUNITYTier 1 Projects – 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 Pre-Feasibility Study, would be the largest and lowest cash cost copper mine in Canada ▸ Pursuing divestiture to fund development of Donlin Gold 3 NYSE-MKT, TSX: NG
  4. 4. THE NOVAGOLD OPPORTUNITYInstitutional Quality InvestmentSolid. 80% Institutional Ownership▸ Significant High Grade Reserves Electrum Group Lifted Stake to 27%1▸ Excellent Exploration Potential▸ Experienced Management Team Top Shareholders 2 Electrum Strategic Holdings, L.L.CSecure. Paulson & Co. Inc.▸ Healthy Balance Sheet The Baupost Group, L.L.C.▸ Jurisdictional Safety Fidelity Management & Research CompanyGolden. Vinik Asset Management, L.P.▸ Committed to Shareholder Value▸ Superior Leverage to Gold 1) Based on the 12.31.12 13-D filings 2) For the exception of Electrum Strategic Holdings, LLC, shareholder positions are based on the 10.31.12 13-F filings 4 NYSE-MKT, TSX: NG
  5. 5. NOVAGOLD: MEETING THE MILESTONES FOR 2012A Year Of Accomplishments Advancing NOVAGOLD Up the Value Chain Q4 - 12 Q4 - 12 Q4 - 12 Received $46.6M Q4 - 12 Strengthened exercised management warrants Q3 - 12 Notice of team Dec. 31/12 Intent to Q2 - 12 Rock Creek prepare an divestiture EIS for Q1 - 12 Donlin Gold Completed Donlin Gold Updated published in NovaCopper Feasibility Federal spinoff Study Register Bought- accepted & deal permitting financing initiated US$318M (net) 5 NYSE-MKT, TSX: NG
  6. 6. THE RIGHT PROJECT – DONLIN GOLDArguably the World’s Most Significant Gold Project Largest gold project in development SIZE Among the highest grade large- GRADE scale open-pit deposits Excellent expansion potential EXPLORATION along strike and at depth POTENTIAL Poised to be world’s largest gold producer, PRODUCTION one of only six >1Moz/year PROFILE Safe: located in JURISDICTIONAL Alaska, 2nd largest SAFETY gold producing state in U.S. 6 NYSE-MKT, TSX: NG
  7. 7. DONLIN GOLD: THE LARGEST DEVELOPMENT-STAGE GOLD DEPOSIT Feasibility Study in Place and Permitting Underway 45 40 39.0 35 30M&I Au Resources (Moz) 25.8 25 20 19.0 16.5 14.6 15 14.0 10 7.6 6.5 5.7 5.2 5 4.0 -- Donlin Gold Detour Lake Metates Livengood Rosia Montana Kibali Akyem Aurora Rainy River Tropicana East Haile D.R.LOCATION: USA CANADA MEXICO USA ROMANIA GHANA GUYANA CANADA AUSTRALIA USA CONGO Source: 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. RBC peer group data based on large, open pit, gold focused development projects. 7 NYSE-MKT, TSX: NG
  8. 8. DONLIN GOLD: AMONG HIGHEST-GRADE DEPOSITS IN THE WORLD Large-Scale Open-Pit Gold Development 4.00 3.50 3.38 3.24 3.00 2.50M&I Au Grade (g/t) 2.24 2.08 2.00 1.77 1.65 1.50 1.30 1.17 1.04 1.00 0.55 0.50 0.50 -- Kibali Aurora Donlin Gold Tropicana East Haile Akyem Rosia Montana Rainy River Detour Lake Livengood Metates D.R.LOCATION: CONGO GUYANA USA AUSTRALIA USA GHANA ROMANIA CANADA CANADA USA MEXICO Source: Donlin Gold data as per 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. RBC peer group data based on large, open pit, gold focused development projects. 8 NYSE-MKT, TSX: NG
  9. 9. DONLIN GOLD: SUBSTANTIAL EXPLORATION POTENTIALMultiple Drill Prospects and Targets Exist Along 8km Trend ▸ Future mine will only be part of 3km portion of 8km identified trend ▸ Over the last six years, the mineral endowment has more than doubled ▸ Exploration upside: > In-pit resource conversion > In-pit/deep-pit exploration > Near-pit targets (East ACMA, Akivik Zone and Snow) > Area resource potential ▸ Located largely on private land, designated for mining ▸ Gold-bearing drill holes along the 8km trend 3km = 39 Moz M&I (including 34 Moz P&P), 6 Moz Inferred11) See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 9 NYSE-MKT, TSX: NG
  10. 10. DONLIN GOLD: ANTICIPATED TO BE TOP-TIER PRODUCER By Far the Largest Evolving Gold Producer from Existing Projects 1.60 1 1.50 1.40 1.20LOM Average Annual Au Production (Moz) 2 1.10 1.00 0.80 0.76 0.66 0.60 0.60 0.56 0.51 3 0.40 0.40 0.34 0.33 0.19 0.20 0.13 0.00 Donlin Gold Metates Detour Lake Kibali Livengood Rosia Montana Akyem Tropicana East Rainy River Aurora Haile LOCATION: CANADA D.R. USA ROMANIA GHANA AUSTRALIA CANADA GUYANA USA USA MEXICO CONGO Source: Donlin Gold data: 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. RBC peer group data based on large, open pit, gold focused development projects. 1) Projected annual gold production during first five full years of mine life. 2) Projected annual gold production during full life of mine. 3) Midpoint of range for first 5 years. 10 NYSE-MKT, TSX: NG
  11. 11. JURISDICTIONAL SAFETY BECOMING THE “EXISTENTIAL” INVESTMENTCRITERION“Large-Scale Quality Assets” Raising the Question “Where in the World Are You?” ▸ Accelerated industry focus on jurisdictional safety and resource nationalism in many of the largest gold and copper-producing countries ▸ Heightened investor focus on “Safety Premium” ▸ Very limited number of quality assets in low geo-political risk jurisdictions ▸ NOVAGOLD holds assets that are well positioned to achieve the premium valuation they deserve Recently highlighted regions/countries with heightened geopolitical risk and uncertainty of ownership affecting explorers, developers, and miners alike 11 NYSE-MKT, TSX: NG
  12. 12. MINES THE SIZE OF DONLIN GOLD ARE SCARCEOnly Six Projects in the World are Slated for Ore Producing >1Moz/year CORTEZ USA 1 156 MINES >100 Koz MURUNTAU Uzbekistan 1 3 MINES/PROJECTS 21 MINES Located in North America GOLDSTRIKE >500 Koz USA SAFE JURISDICTION: 8 MINES YANACOCHA Donlin Gold only 1 of 3 in North America >800 Koz Peru PUEBLO VIEJO 6 MINES/ Dominican Republic Projects >1 Moz DONLIN GOLD USA ▸ 1.5 Moz/year in first five full years2 ▸ 1.1 Moz/year LOM2Source: RBC1) Based on 2011 actual production where available, excludes Newmont’s Nevada operations that consist of multiple mines, and excludes Tasiast asKinross has elected to undertake a pre-feasibility study (PFS) for construction of a mid-sized CIL mill in the 30,000 tonne per day range, for purposes of comparison with the 60,000 tonne per day millexpansion option. Analysis includes life of mine data for Donlin Gold.2) If put into production as contemplated by the Updated Feasibility Study. 12 NYSE-MKT, TSX: NG
  13. 13. THE CLIMATE OF DECLINING GRADE AND ESCALATING COSTSDonlin Gold Has Among the Highest Grade for an Open-Pit Deposit Grade, g/t Cost US$/oz 2.5 1,200Donlin Gold 12.24 g/t average Mined gradeM&I grade 2.0 1,000“Reserve grade are 800down 60% over 10 Reserve grade 1.5yrs negativelyimpacting 600production costand capex which 1.0have tripled in the 400same time period” 0.5Pierre Lassonde, 200DGF 2012 0.0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total cash cost Depreciation Exploration & sustaining capex Other and administrative 2 Source: GFMS Mine Economics, LBMA, World Gold Council 1) 2002-2004 data set includes primary Gold mines only, 2005 onwards, includes porphyry copper gold mines 2) Includes exceptional items 13 NYSE-MKT, TSX: NG
  14. 14. MAJOR DISCOVERIES ARE INCREASINGLY RAREVery Few and No Easy Quality Development Assets LeftSignificantdecline in golddiscoveriessince 2006Gold reservesare being minedout at a high rate Source: Metals Economics Group – Strategies for Gold Reserves Replacement 2012 Note: Major gold discoveries based on a cut off of 2 M/oz of gold in total reserves, resources and past production (or at least 1 M/oz in defined reserves) 14 NYSE-MKT, TSX: NG
  15. 15. RESERVE BURN RATELarge Development Projects are Needed to Maintain Current Production Levels 30 26 25 Large deposits 21 rapidly depleting 20 20 reserves 18 16 The industry 15 Years 15 15 needs large mines to sustain production levels 10 5 0 NOVAGOLD Goldfields Kinross Goldcorp Anglogold Ashanti Newmont Barrick 2011 Attributable Recoverable 17.2 70.0 47.7 45.4 67.9 79.3 114.6 P&P Reserves (Moz.) 2011 Attributable Annual 0.7 3.3 2.4 2.5 4.3 5.2 7.7 Production (Moz.) Note: Based on public filings and websites. Annual production figures represent 2011 annual production for public peers and steady-state production estimate for Donlin Gold as per the most recent updated feasibility study. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 15 NYSE-MKT, TSX: NG
  16. 16. DONLIN GOLD: POISED TO BE WORLD’S BIGGEST GOLD MINEExpected Production Rivals 10 Largest Existing Gold Mines 1.60 1 1.50 1.44 1.42 1.40 1.29 1.20 1.09 Gold (M/oz) 1.10 2 1.00 0.96 0.83 0.79 0.79 0.80 0.76 0.74 0.60 0.40 0.20 0.00 Donlin Gold Grasberg Mine Cortez Yanacocha Goldstrike Veladero Vaal River The Super Pit West Wits Lagunas Norte Boddington SOUTH SOUTH LOCATION: USA INDONESIA USA PERU USA ARGENTINA AUSTRALIA PERU AUSTRALIA AFRICA AFRICA Source: Cole Latimer, “World’s ten biggest gold mines – three mining majors dominate list,” Australian Mining, Mineweb, August 13, 2012. A listing of the worlds ten largest gold mines by gold output according to 2011 production figures. 1) Projected annual gold production during first five full years of mine life as per the Updated Feasibility Study. 2) Projected annual gold production during full life of mine as per the Updated Feasibility Study. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 16 NYSE-MKT, TSX: NG
  17. 17. DONLIN GOLDProjected to be Among the Low Cost Producers First Five Years Cash Costs Life of Mine Cash Costs Area US$/oz Area US$/oz Open-pit mining1 133 Open-pit mining1 228 Processing 208 Processing 257 G&A, Royalties, land & 68 G&A, Royalties, land & 100 other2 other2 Total $409 Total $585 ▸ First 5 full years of production at cash cost of US$409/oz, accelerating payback ▸ Processing costs include power generation and natural gas delivery ▸ Industry average 2012E cash cost is US$673/oz3 Source: Updated Feasibility Study 1) Net of deferred costs 2) Based on US$1,200/oz gold price and an exchange rate of $1.10 CAD/USD Source: Metals Economics Group, Company Reports, RBC Research Estimates 3) Based on 168 primary gold mines with aggregate 2011 production of ~29Moz Au 17 NYSE-MKT, TSX: NG
  18. 18. CONVENTIONAL MINING AND MILLING PROCESSWell Tested and Available Technology 18 NYSE-MKT, TSX: NG
  19. 19. DONLIN GOLD: STANDARD TECHNOLOGYWell Established Mining and Mineral Processing Methodology Donlin Gold Pueblo Viejo Capital Expenditures $6.7B1 ~$4.1B2 Location Alaska, US Sanchez Ramirez, Dominican Republic Mining Method Open Pit Open Pit Project Status Permitting Start up Total M&I Resources 39.0 Moz 36.3 Moz (inclusive of reserves) Nameplate 53,500 24,000 Design Throughput (tpd) M&I Grade (g/t) 2.24 2.41 Expected Average Annual Production 1,500,000 3 1,042,000 – 1,125,000 3 (oz) Processing Method Flotation/Autoclaving/Leaching Autoclave/Leaching/Ag/Cu Number of Autoclaves 2 medium 4 large Key Infrastructure Natural gas pipeline/Power plant Power plant/Oxygen plant Oxygen plant Lime Kilm Mine Life 27 years 25 yearsSource: Updated Feasibility Study, company documents, public filings and websites. Measured and indicated resources are inclusive of proven and probable reserves. See “Cautionary Note ConcerningReserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix.1) Capital expenditure shown on a 100% project basis2) Based on a range of $3.6-3.8B (100% basis) disclosed in Barrick Gold’s Q3-2012 Report, plus an net incremental cost of approximately $300M for the power plant3) Production expected for first full five years of operation 19 NYSE-MKT, TSX: NG
  20. 20. DONLIN GOLD IS EXPECTED TO GENERATE SUBSTANTIAL CASH FLOWSSignificant Leverage to Gold & Fast Payback at a Broad Range of Gold Prices All Amounts in US Dollars $30,000 $26,803 $25,000 Cumulative Net Cash Flow (US$ millions) Net Cash Flow (millions) $20,000 Rich Ore Body With a 27-Year Mine Life and Extensive Exploration Upside $19,075 ~4.5x $15,000 $14,444 leverage $11,459 $10,000 $6,025 $5,000 $0 ($5,000) ($10,000) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 $1,200/oz Au $1,500/oz Au $1,700/oz Au $2,000/oz Au $2,500/oz Au Source: Updated Feasibility Study 20 NYSE-MKT, TSX: NG
  21. 21. DONLIN GOLD HAS EXCEPTIONAL LEVERAGE TO GOLDNPV Increases ~20x with ~2x Increase in Gold Price All amounts in US dollars 30,000 $27.0B 25,000 NPV (US$ millions) 20,000 $19.2B $14.6B 15,000 10,000 $6.2B 5,000 0 $1,200 $1,700 $2,000 $2,500 Gold Price NPV at 5% NPV at 0% Source: Updated Feasibility Study. All dollar figures are in USD and reflect after-tax net present value (at a 0% and 5% discount rates) of the Donlin Gold Project as of 1/1/2014. At a 5% discount rate, the net present value is: $547 m @ $1,200 gold; $4,581 m @ $1,700 gold; $6,722 m @ $2,000 gold; and $10,243 m @ $2,500 gold. Project development costs prior to 1/1/2014 are treated as sunk costs. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 21 NYSE-MKT, TSX: NG
  22. 22. THE RIGHT LOCATION – ALASKARight Project, Location & Stakeholders Should Lead to Orderly Permitting ▸ Alaska is the second largest U.S. gold-producing State ▸ Five major gold producing mines and counting ▸ Natural resource projects integral to the State’s economy ▸ Strong commitment to responsible mining ▸ Donlin Gold has no proximity to major population areas; located on private land designated for mining ▸ Strong and time-tested community support ▸ Strong partnerships with Native Corporations; Calista Corporation and The Kuskokwim Corporation 22 NYSE-MKT, TSX: NG
  23. 23. THE RIGHT STAKEHOLDERSJurisdictional Safety is More Than Geographic LocationGreat Partners “Calista supports responsible resource development…The Donlin Gold project▸Calista Corporation presents us with an opportunity for▸The Kuskokwim Corporation tremendous economic potential right in▸50/50 joint-ownership with Barrick Gold our Region.” – June MacAtee, Calista Corporation VP 23 NYSE-MKT, TSX: NG
  24. 24. NOVAGOLD & BARRICK GOLD MOVING FORWARD WITH DONLIN GOLDAdvancing Donlin Gold Up the Value Chain ▸ Approved Donlin Gold Updated Feasibility Study on July 11, 2012 and gave authorization to file permit applications NOVAGOLD ▸ Commenced Donlin Gold permitting on July 26, 2012 ▸ While in permitting, will identify areas to reduce CAPEX by sharing up-front costs with third party operators BARRICK GOLD ▸ Further optimize project design and layout ▸ Production decision in 3-4 years 24 NYSE-MKT, TSX: NG
  25. 25. DONLIN GOLD PERMITTING PROCESSRegulatory Process Currently Focused on Environmental Impact Statement (“EIS”) What is an EIS? A disclosure document that is part of the regulatory process and led by the U.S. Army Corps of Engineers that provides the What is the Permitting Process? agencies and the public with Concurrent with and supported by the EIS process, the Federal and State regulatory information needed to make agencies will consider all of the required permits and authorizations for the project. permitting decisions on the project Record of Preliminary Decision Notice of Public Public Final Draft EIS Draft EIS subject to Intent Scoping Comment EIS/Permit 30-Day Period Issuance Appeal Period 2012 2016 Permitting Process ~3-4 Impacts Discussed in the EIS years • Hydrology • Fish & Aquatic Habitat • Air & Water Quality • Wildlife • Cultural Resources • Noise • Socioeconomics • Visual Resources • Wetlands • Threatened & Endangered Species • Recreation, Safety & Feasibility • Cumulative Impacts • Land Use and Subsistence 25 NYSE-MKT, TSX: NG
  26. 26. ENSURING A SMOOTH PERMITTING PROCESSA Team with Strength, Knowledge, Experience and Understanding Strength • Alaska has a rigorous and clearly defined permitting process • Good reputation and local support Knowledge • Early project briefings and open communication with regulatory agencies • Consistent communication with and input from local communities throughout the region • Strive for “responsible development,” bringing benefits and positive impacts to the region Experience • One of the most robust environmental baseline databases • Strong support and NEPA experience from Barrick Gold and NOVAGOLD • Team in place that has “been there, done that” in Alaska and throughout the U.S. Understanding • Based in Alaska, with comprehensive understanding of State’s issues and concerns • Integration of permitting requirements in formulating project design concepts • Deep roots in the State and community with more than 16 years on the ground at Donlin Gold 26 NYSE-MKT, TSX: NG
  27. 27. DONLIN GOLDWell Positioned to Reduce Capex by Sharing Upfront Costs with Third PartiesAreas US$M Capital Reduction OpportunitiesMining 345 Leasing equipment ~$170MSite preparation/roads 236Process facilities 1,326 Oxygen plant could be built by third party ~$130MTailings 120Utilities 1,302 Gas pipeline could be built by third party ~$700MAncillary buildings 304Off-site facilities 243Total Direct Costs 3,876Owners’ cost 414Indirects 1,405 Contingency increases confidence to 85% and is aContingency 984 reflection of the conservative nature of the feasibility studyTotal Indirect & 2,803ContingencyTotal Project Cost 6,679 >$1B potential capital reductions 27 NYSE-MKT, TSX: NG
  28. 28. DONLIN GOLDRobust Contingency Represents 25% of Hard Assets Potential Capex Reduction from $6.7B1 to $5.7B (amounts in US dollars) ~$1B in Contingency is a Reflection of the Conservative Nature of the Updated Feasibility Study Surface/Mill3 $1.2B Capital Expenditures $4.7B Utilities2 $2.6B Owners Cost $414M Contingency $984M Indirect $1.4B Capital Expenditures Reduction Opportunities Include: Opportunities - Third-party built gas pipeline ~$1.0B Contingency - Third-party built oxygen plant $984M - Leasing mining equipment1) Represents 100% of capital expenditures to be shared equally with co-owners Barrick Gold Corporation2) Utilities include process facilities (ie: oxygen plant) and utilities (ie: gas pipeline)3) Surface/Mill: Mining, site preparation, roads, tailings, ancillary buildings and off-site facilities 28 NYSE-MKT, TSX: NG
  29. 29. GALORE CREEKProjected to be Largest Copper Mine in a Mining-Friendly Jurisdiction, Canada ▸ Once in production, as envisioned by the Pre-Feasibility Study, Galore Creek is expected to be the largest and lowest cash cost copper mine in Canada ▸ Co-owned by NOVAGOLD and Teck Resources ▸ Strong Federal, Provincial, and First Nation support ▸ NOVAGOLD evaluating potential sale of its share of Galore Creek to facilitate financing of Donlin Gold development 29 NYSE-MKT, TSX: NG
  30. 30. GALORE CREEKValuable Asset with Large Copper–Gold–Silver Resources Location BC, Canada Mining Method Open Pit Owners 50/50 (NG/TCK) P&P Copper 6.8 Blb 0.6% Reserves 1, 2 Gold 5.45 Moz 0.32 g/t Silver 102 Moz 6.0 g/t M&I Resources1, 3 Copper 8.9 Blb 0.5% Gold 8.0 Moz 0.3 g/t Silver 136 Moz 5.2 g/t ▸ Primarily a copper project but also in top 5% of known gold deposits in the world ▸ NPV increases from $137M (Base Case) to $2.75B (Upside Case), excluding inferred resources ▸ Completed the 2012 Galore Creek drilling program and look forward to releasing the results in the coming months 1) See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix. 2) P&P: Proven and Probable Reserves 3) M&I: Measured and Indicated Resources inclusive of Proven and Probable Reserves. 30 NYSE-MKT, TSX: NG
  31. 31. STRENGTHENED FINANCIAL POSITIONSufficient Cash On-Hand to Address All Corporate Needs for 5+ Years Balance Sheet Items USD$ Millions1 Cash and Cash Equivalents2 $255 Proceeds From Exercised Warrants3 $46 Potential Proceeds From Remaining Warrants4 $8 Pro-forma Cash Balance $309 Cash Available for Convertible Note Put Option5 ($95) Pro-forma Net Cash Available $214 1) Please note that all amounts included are approximate figures and may vary from actual results. 2) Cash and cash equivalents as of November 30, 2012. 3) Electrum Strategic Resources L.P exercised 31,337,278 share purchase warrants which were due to expire January 21, 2013 and were exercisable at CAD$1.479 per share. 4) 5.1M warrants set to expire on January 21, 2013 with a strike price of US$1.50. 5) The holders of the Convertible Notes have the right to require the Company to repurchase all or part of their Notes on May 1, 2013. 31 NYSE-MKT, TSX: NG
  32. 32. NOVAGOLD’S FUTURE FINANCIAL OBLIGATIONS HAVE DECREASED SUBSTANTIALLY Clear Focus Begins with Strong Funding to Execute on All Fronts 180.0 Lower Expenses ▸ Donlin Gold permitting costs over the next 3-4 years are expected to be 160.0 lower than in prior years $18 140.0 ▸ Galore Creek expenditures are expected to be significantly lower in 120.0 70% US$ (Millions) $40 the event where NG does not sell its Reduction 100.0 interest 80.0 ▸ Rock Creek was sold to BSNC in $50 Q4/12 – it’s a non-recurring expense 60.0 ▸ NovaCopper was a one-time expense 40.0 linked to the spinoff in Q2/12 $25 $25 20.0 ▸ G&A is expected to reduce $20 $20 significantly due to downsizing/ - 1 2 reorganization 2012 Budget1 Ongoing1 Donlin Gold G&A and Miscellaneous Rock Creek NovaCopper Galore Creek1) 2012 anticipated budget expenditure disclosed on May 31, 2012. 32 NYSE-MKT, TSX: NG
  33. 33. INTRODUCING THE NOVAGOLD TEAMPutting the Right Resources in the Right Places MANAGEMENT ▸ Former President of Barrick Gold North America Gregory A. Lang ▸ 35 years experience building & operating major mines President & CEO ▸ Intimate knowledge of Donlin Gold ▸ Former EVP and General Counsel of Goldcorp and prior to that was regional David Deisley General Counsel for Barrick Gold North America Executive Vice President and ▸ Held senior positions for Goldcorp Inc. and Barrick Gold Corp. General Counsel ▸ Extensive track record in project permitting, corporate social responsibility, mergers and acquisitions and corporate development David Ottewell ▸ Former VP and Corporate Controller of Newmont Mining Corporation ▸ 25 years of mining industry experience Vice President and Chief ▸ Diverse experience in all facets of financial management, from mine operations Financial Officer to executive corporate financial management of premier gold producers Mélanie Hennessey ▸ Held variety of senior IR & corporate communication positions with Goldcorp Vice President, Corporate Inc., New Gold Inc., and Hecla Mining Company Communications ▸ Leading NOVAGOLD’s internal and external communications functions Ron Rimelman ▸ 25 years of environmental experience , managing environmental impact assessments and permitting activities world-wide Vice President, Environment, ▸ Leadership role on mine permitting and NEPA evaluations for mine projects in Health, Safety & Sustainability Alaska since 1993 33 NYSE-MKT, TSX: NG
  34. 34. WHY IS NOVAGOLD A BUY TODAY?NG is a Very Well Managed, Strongly Sponsored Way to Gain Extraordinary Leverage to aRising Gold Price in a Safe Country Where you Can Keep the Fruits of that Leverage KEY FORESEEABLE CATALYSTS THE MICRO VIEW THE MACRO VIEW Pending De-Risking of Donlin Gold Right Place at The Right TimeOrderly Permitting Process Jurisdictional Safety• Uniform Transparent Step-by-Step Process • Alaska is 2nd Largest Gold Producer in the US• Strong Support from Native Corporations • Support for Environmentally & Socially Responsible MiningOpportunity for Financial Optimization Strong Leverage to Gold• Third-party Participation should Reduce Capex • Major Increase in NAV with Higher Au Price• $1 Billion Contingency is Robust • Long-life Asset in a Stable Jurisdiction should Yield Sustainable Investor Returns in a Secular Bull MarketStable Share Dynamics Long-Term Option on Gold• Strong Shareholder Support • Projected to be the World’s Largest Gold Mine• No Need to Raise Capital for Years • Significant Exploration Potential should Add Decades to the Mine-Life 34 NYSE-MKT, TSX: NG
  36. 36. SHARE CAPITALIZATION Issued and Options Warrants Fully outstanding outstanding diluted1 311.1M 13.4M 5.1M 329.6M As of January 2, 2013. 1) Fully diluted number excludes convertible notes. The Convertible notes (“Notes”) - The holders of the Notes have the right to require the Company to repurchase all or part of their Notes on May 1, 2013 and upon certain fundamental corporate changes at a price equal to 100% of the principal amount of such Notes plus any accrued and unpaid interest. 36 NYSE-MKT, TSX: NG
  37. 37. RISING GOLD DEMAND ACROSS ALL SECTORSA Once Concentrated Global Demand is Now Diversified Source: Bloomberg, CPM Group, LBMA, World Gold Council 37 NYSE-MKT, TSX: NG
  38. 38. GOLD SIGNIFICANTLY UNDERINVESTEDInvestor Gold Holdings Among World Financial Assets Are Negligible US$ Trillion $250 200 150 100 50 0 80 90 95 00 01 02 03 04 05 06 07 08 09 10 11e Bank Deposits Government Debt Securities Private Debt Securities Equity Securities Investor Gold Holdings World Financial Assets Including Gold, May 2012 Source: McKinsey & Co., IMF, CPM Group 38 NYSE-MKT, TSX: NG
  39. 39. DOW JONES INDUSTRIAL AVERAGE TO GOLD PRICE RATIO SINCE 1900A New Super Cycle in Gold is Imminent 45.0 40.0 2000; 38.42 35.0 30.0 1965; 25.93 25.0Arithmetic ScaleDow/Gold Ratio 20.0 1929; 15.15 15.0 10.0 5.0 2012; 7.69 1934; 2.83 1980; 1.45 - Year Source: Dow Jones Industrial Average (DJIA): Federal Reserve Bank of St. Louis, Historical Gold Prices: The National Mining Association (NMA), Gold prices are based on annual prices on first trading day of each year 2012 as of 09/21/2012 (last data point) 39 NYSE-MKT, TSX: NG
  40. 40. UNCONVENTIONAL MONETARY POLICY DRIVE INVESTMENT INTO GOLDFour Key Factors Why One Should Invest in Gold ▸ Inflation risk: Increase in money printing could be a catalyst for higher inflation in the future, a likely positive for gold investment ▸ Weakened currency: Gold is typically transacted using its US-dollar price as a reference, gold provides a hedge against domestic currency debasement ▸ Crisis and sharp market pull backs: During these times, gold has proven to be an effective diversifier acting as a hedge against falls in equity and credit markets ▸ Low interest rate environment: Households must save greater sums of money to pay obligations, causing a shift into investments in real assets that will provide long-term security Source: World Gold Council 40 NYSE-MKT, TSX: NG
  41. 41. PROJECT OVERVIEWAdvancing Donlin Gold Up the Value Chain ▸Donlin Gold LLC is the operating company ▸50/50 ownership by NOVAGOLD and Barrick Gold ▸Board of Directors has two representatives from each company ▸Chairman rotates every year ▸Each company has the right to appoint the Donlin Gold General Manager every two years ▸Operates under agreements with Alaska Native Claims Settlement Act (ANCSA) landowners ▸Calista Corporation (Subsurface minerals and surface lease) ▸The Kuskokwim Corporation (Surface use agreement) ▸Project office in Anchorage ▸40 full-time employees and 32 contractors ▸Strong track record for local hiring 41 NYSE-MKT, TSX: NG
  42. 42. PROJECT HIGHLIGHTSDonlin Gold Slated to be a State-of-the-Art Significant Mine Reserves: 33.9 Moz Au (~500M tons ore)1 Resources: 5.1 M&I Moz (excluding P&P) and 6.0 Inferred Moz1 Mine Life: ~27 years Production: Year 1-5 – 1.5 Moz/year, LOM – 1.1 Moz/year Operation: Open-pit, conventional truck & shovel Milling: 59k short tons/day, sulfide flotation, pressure oxidation (POX), Carbon-in-Leach recovery (CIL) Strip ratio: ~5.5:1 = ~3B tons waste rock Tailings: Fully lined storage facility Power: ~150MW, supplied by 313-mile, natural-gas 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. 42 NYSE-MKT, TSX: NG
  43. 43. SITE LAYOUTThe Property Lends Itself Well to Compact Project Layout 43 NYSE-MKT, TSX: NG
  44. 44. DONLIN GOLD TIMELINESmall Percentage Of Time Invested Considering Mine Life Measured In Decades Exploration, Key Permitting Construction Production Responsibilities Environmental Highlights: State: Air, Water, ▸ ~1.5 million Studies, ▸ Two open pits Dam Safety, ounces/year Engineering, ▸ Pressure oxidation plant for first 5 years, Waste Management, Feasibility Reclamation Plan ▸ Milling circuit followed by Studies Approval, Rights of Way, ▸ 27-mile road ▸ ~1 million Cultural Resources ▸ 5,000-foot runway ounces/year Federal: Wetlands, ▸ Two port facilities Rights of Way, ▸ 600-bed permanent camp 27 year Wildlife Consultations, ▸ 2,500-bed construction camp mine life Environmental Impact ▸ ~40-million gallon diesel storage Statement 44 NYSE-MKT, TSX: NG
  45. 45. DONLIN GOLD PERMITTING PROCESSClear Steps Outlined and Good Working Relationship at State & Federal Levels Permitting Process is Approximately 3-4 years State Federal AK Department of AK Department of US Army Corps Bureau of Land Agencies Environmental Natural Resources of Engineers Management AK Department of Fish & Game US Fish and US Environmental Wildlife Service Protection Agency Reclamation Air Quality National Marine Fisheries ServicePermits/Approvals Waste Pipeline Management Right of Way Wetlands Fish Habitat Water Discharge Essential Fish Habitat Marine Mammal Protection 45 NYSE-MKT, TSX: NG
  46. 46. DONLIN GOLD KEY PERFORMANCE INDICATORSRobust Economics Highly Leveraged to Gold Prices All amounts in US dollars Gold Price Unit $1,000/oz $1,200/oz $1,700/oz $2,000/oz $2,500/oz Base CaseAverage annual $M 670 950 1,500 1,785 2,185after-tax cash flow(first full five years)Average annual $M 350 500 815 990 1,275after-tax cash flow (LOM)NPV (5%) after-tax1 $M (1,340) 550 4,580 6,720 10,240NPV (0%) after-tax1 $M 2,100 6,200 14,620 19,250 26,975IRR after-tax1 % 2.3 6.0 12.3 15.1 19.1Payback period Years 19.1 9.2 5.3 4.4 3.5Source: Updated Feasibility Study. All dollar figures are in USD and reflect after-tax net present value (at a 0% and 5% discount rates) of the Donlin Gold Project as of 1/1/2014. At a 5%discount rate, the net present value is: $547 m @ $1,200 gold; $4,581 m @ $1,700 gold; $6,722 m @ $2,000 gold; and $10,243 m @ $2,500 gold. Project development costs prior to that dateare treated as sunk costs. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Reserve & Resource Base” with footnotes in the appendix.1) NPVs and IRRs as at January 1, 2014. Project development costs prior to that date are treated as sunk costs. 46 NYSE-MKT, TSX: NG
  47. 47. NOVAGOLD BOARD OF DIRECTORS Dr. Thomas S. Kaplan Chairman and CEO of The Electrum Group LLC, a privately held natural resources Chairman investor that controls a diversified portfolio of precious and base metals assets Former Chief Legal Officer and Corporate Secretary with Franco-Nevada, transforming an Sharon Dowdall industry pioneer into one of the most successful precious metals enterprises in the world Publishes a monthly investment newsletter entitled The Gloom, Boom & Doom Dr. Marc Faber Report and is the author of several book Executive VP and CFO of Kinross Gold Corporation, former CFO of Capstone Mining Tony Giardini Corp. Gil Leathley Former Senior Vice President and Chief Operating Officer of the Company President of The Electrum Group LLC, former VP of Homestake Mining and International Igor Levental Corona Corp. Kalidas Madhavpeddi Former Executive with Phelps Dodge Gerald McConnell Former Chairman and CEO of NovaGold, CEO of Namibia Rare Earths Inc. Clynton Nauman CEO of Alexco Resources, formerly with Viceroy Gold and Kennecott Minerals Rick Van Nieuwenhuyse CEO of NovaCopper, founder and former CEO of NovaGold Former President and Chief Executive Officer of Miramar Mining Corporation, which in Anthony P. Walsh 2007 was sold to Newmont Mining Company. 47 NYSE-MKT, TSX: NG
  48. 48. DONLIN GOLD MANAGEMENT TEAM 30+ years mining industry experience in exploration, mine geology, operations management, project managementStanley Foo and permitting; 12 years mine operations experience in NV including superintendent roles at Cortez and Bald;President/General 15 years in Alaska in project management and permitting; Previous Project Manager roles with Donlin 1997-99,Manager 2005-2007, served on DGLLC board 2008-2010.James Fueg Led Donlin Gold’s recent feasibility studies and coordinates all engineering and technical work for project;Study Manager 20+ years experience in mining, exploration and environmental science; 16 years in Alaska; on Donlin since 2004. 30 years experience in mining industry; 16 years in Alaska, with Donlin and TeckCominco (Pogo and Red Dog);Bill Bieber Recipient of Barrick’s long-term CSR achievement award for his work at Donlin in workforce development andOperations Manager community relations.Robert Nick Enos Leads permitting and environmental management for project; primary contact for reg. agencies; 20 yearsEnvironmental and experience in Alaska in geology, environmental science and permitting management; Previous experiencePermitting Manager includes Greens Creek, Calista Corp., as environmental/permitting consultant; Joined Donlin in 2005. Leads Donlin Gold’s community affairs, communications, government relations and corporate social responsibilityKurt Parkan functions; Nearly 30 years public affairs experience in Alaska; Previous roles: External Affairs Director of NatureExternal Affairs Conservancy of Alaska, Deputy Commissioner for Alaska Department of Transportation and Public Facilities,Manager Special Assistant to the Governor, Legislative Aide and as staff for Alaska House of Representatives Finance Committee. 22 years human resources experience in the mining industry including 17 years in Alaska; Served in variousMeg Day senior management positions in Alaska, Utah and Washington and has been involved in the start up of severalHuman Resources mines. Serves on Alaska Miners Association HR Committee, Society of HR Management and Advisory BoardManager member of University of Alaska.Jan Halstead 25+ years accounting and financial analysis experience in construction, investment, telecommunications;Administrative and Responsible for growth and development of Accounting, Administration, Purchasing and Contract functions forFinance Manager Donlin Gold LLC. 48 NYSE-MKT, TSX: NG