•Donlin Gold received key state permits: ?Alaska Department of Environmental Conservation (ADEC) granted final Waste Management Permit
?Alaska Department of Natural Resources (ADNR) granted final Reclamation and Closure Plan Approval
•Cash and term deposits were $162 million as of February 28, 2019
VANCOUVER, British Columbia, April 02, 2019 (GLOBE NEWSWIRE) -- NOVAGOLD RESOURCES INC. (TSX, NYSE American: NG) today released its first quarter 2019 financial results and update on the Donlin Gold project in Alaska, which NOVAGOLD owns equally with Barrick Gold Corporation (“Barrick”).
Details of the financial results for the first quarter ended February 28, 2019 are presented in the consolidated financial statements and quarterly report filed on Form 10-Q with the SEC that is available on the Company's website at www.novagold.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov. All amounts are in U.S. dollars unless otherwise stated and all mineral resource and reserve estimates are shown on a 100% project basis.
In the first quarter 2019, the following milestones were achieved:
•Donlin Gold received two key state permits and advanced other approvals: ?ADEC issued the final Waste Management Permit
?ADNR issued the final Reclamation and Closure Plan Approval and advanced two other state authorizations ?Division of Mining, Land, and Water issued preliminary land use decisions for public comment, proposing to authorize facilities associated with the project’s transportation corridor
?Division of Oil and Gas, State Pipeline Coordinator’s Section issued a preliminary decision to authorize the sections of the pipeline on state lands
?Launched a series of six public meetings on the preliminary decisions
•With permitting largely complete, there is an increased focus on continuing to integrate scoping-level optimization work into a study that will serve as the basis for an updated project development plan
•Donlin Gold and NOVAGOLD continued active external affairs and community engagement: ?Attended the State of Alaska legislative session in Juneau and met with key Representatives, Senators, Governor Dunleavy, senior agency executive appointees and mining program staff
?Connected with key stakeholders at the first two ADNR public hearings held in McGrath and Tyonek
?Met with career counselors in the Lower Kuskokwim School District to engage youth in a career fair
?Participated in the Alaska Forum on the Environment and received the Green Star® Certification award that recognizes businesses for their efforts toward sustainable environmental stewardship
?Hosted the Donlin Gold Safety Expo ahead of the Iron Dog race in Alaska
?Together with The Kuskokwim Corporation (TKC), organized and participated in a Middle Kuskokwim gathering to discuss health & safety, community healing, mining, workforce development and other matters
President’s Message
During the first quarter of 2019, we focused our activities on supporting government efforts in relation to various state permits. In addition, together with our partner Barrick Gold, we continued to advance optimization work on Donlin Gold and began preparing for the upcoming field program. I’m pleased to report that in January, we received two state permits: the final Waste Management Permit and the final Reclamation and Closure Plan Approval that were issued by ADEC and ADNR, respectively.
Progress was also made on other key state authorizations. ADNR issued preliminary land use decisions for public comment proposing to authorize facilities associated with the project’s transportation corridor, including the access road and related material sites, airstrip, and upriver Jungjuk Port. The public comment period for these decisions closed on March 29, 2019. Additionally, ADNR issued the State Pipeline Coordinator’s Section preliminary decision to authorize the sections of the pipeline on state lands. The comment period for this decision closed on March 22, 2019 after public meetings in Anchorage, Bethel, Aniak, McGrath, Tyonek, and Skwentna Roadhouse. In the first quarter, Donlin Gold representatives provided technical support and responded to questions about the pipeline during the first two ADNR public hearings in McGrath and Tyonek.
ADNR’s approval of the Alaska Dam Safety certificates for the tailings storage facility and water retention and diversion structures requires a thorough stepwise process to deliver a final construction package to the State. The upcoming field program will be focused on completing a site investigation and collection of geotechnical information for the advancement of the engineering from a feasibility level to the final construction package. The site investigation information will support a preliminary design, detailed design and ultimately the final construction package, each of which will be submitted to ADNR for final approval and issuance of the certificates. We are currently in the advanced planning stage for the field program that will consist of geotechnical core drilling, test pits, overburden drilling, packer tests, hydrogeologic test well installation and pumping tests, and geophysical surveys. The field program will carry into 2020.
In the first quarter, Earthjustice filed an administrative appeal of the Reclamation and Closure Plan Approval with ADNR and sent a request to ADEC for an informal review of the Waste Management Permit. In 2018, Earthjustice requested an informal review by ADEC of the State of Alaska’s 401 certification. ADNR and ADEC are expected to issue their decisions in the second half of 2019. Given the level of detail and extensive work that has gone into these permits, we expect these permits to remain in place.
With permitting largely complete, we are shifting more focus on integrating scoping-level optimization work into a study that will serve as the basis for an updated project development plan. Given Donlin Gold’s stage of development, this is the right time to advance work such as the Alaska Dam Safety certificates and engineering studies, to have the flexibility needed to proceed with the development of Donlin Gold.
With the completion of the recent Barrick-Randgold merger, the Donlin Gold partnership is clearly benefitting from very constructive input from Barrick’s new technical team. We have a common goal of advancing the project in a financially-disciplined manner with a focus on engineering excellence, environmental stewardship, safety and social responsibility.
Deposits like Donlin Gold are extremely scarce and very important, particularly given the industry’s rapid decline in gold reserves and grade. A federally-permitted “category-killer” gold project, primed for development in Alaska - the second largest gold-producing state after Nevada, in a country that is one of the safest jurisdictions in the world - is unique in terms of value proposition for all stakeholders. With approximately 39,000,000 ounces of gold in measured and indicated mineral resources grading 2.24 grams per tonne1, Donlin Gold is more than five times the size of the peer group average2 and nearly double the world average grade.3 With a mine life measured in decades and the extensive exploration potential along the eight-kilometer mineralized trend, the project could operate for a very long time. It is our belief that the Company is truly well positioned to create a lot of value for its shareholders when gold embarks upon the next leg of what we strongly believe to be a long-term secular bull market. For more information, please feel free to reference the 2018 Annual Report we issued in March 2019, which goes into Donlin Gold’s uniqueness and our strategy regarding its development in greater detail:
NOVAGOLD’s 2018 Annual Report
External Affairs & Stakeholder Engagement
A big part of our activities in Alaska is working in partnership with Calista and TKC, our Native Corporation partners, on different health and safety, educational, environmental and cultural initiatives that support a balanced and sustainable development plan for the project and surrounding communities. To that end, with a mining-industry delegation, we attended the State of Alaska legislative session in Juneau and met with Alaska State House Representatives and Senators, newly-elected Governor Michael Dunleavy, senior agency executive appointees and mining program staff. Donlin Gold also met with career counselors in the Lower Kuskokwim School District with the goal of engaging youth in the region in an upcoming career fair. We participated in the Alaska Forum on the Environment where we also received the Green Star® Certification award, that recognizes businesses for their efforts in sustainable environmental stewardship. Donlin Gold hosted their annual Safety Expo ahead of the Iron Dog race in Alaska. Together with TKC, Donlin Gold organized and participated in a Middle Kuskokwim gathering of TKC villages to discuss community areas of interest and mining. NOVAGOLD strongly believes that transparent and open communication with local communities is an essential part of our day-to-day responsibilities in the region.
Balance Sheet
NOVAGOLD is extremely well funded. With approximately $162 million in cash and term deposits as of February 28, 2019, plus the additional $100 million we expect to receive from Newmont in guaranteed payments within less than five years, and a further $75 million contingent payment4, we have enough funds to advance Donlin Gold and meet all of our foreseeable financial obligations with no need to go to capital markets until a construction decision is made.
It is my continued belief that NOVAGOLD represents a unique investment opportunity. Being a pure play on one of the world’s largest and highest-grade known open-pit gold deposits - now permitted for development in a geo-politically safe jurisdiction with well-established support for responsible mining - is an incredible value proposition. With time, we believe Donlin Gold’s scarcity value can only get better as the industry depletes its established endowment in the face of what we expect to be a “long wave” in gold to rival the first leg that took it from $250 to $1,900 per ounce. For these reasons and more, your management team believes that shareholders will be rewarded for their patience.
We are very thankful to our Native Corporation partners, Calista and TKC. Their strong support and commitment to Donlin Gold have been the foundation of our success. Our sincere appreciation also goes to the government agencies that have been working so diligently on Donlin Gold and have shown great professionalism and shared commitment to the well-being of the communities where we operate. It’s an incredible amount of work to advance such an important project. And finally, I would like to extend my appreciation to NOVAGOLD’s Board and employees for their vision and commitment, to the Donlin Gold team in Anchorage for all their hard work, and to Barrick, our joint venture partner, for its continued engagement with the project.
Gregory A. Lang
President & CEO
Financial Results
in thousands of U.S. dollars, except for per share amounts
Three months ended February 28, 2019 $ Three months ended February 28, 2018 $
General and administrative expense (1) 4,340 4,685
Share of losses – Donlin Gold 1,323 1,841
Total operating expenses 5,663 6,526
Loss from operations (5,663) (6,526)
Other expense (303) (1,370)
Income tax expense (357) (66)
Loss from continuing operations for the period (6,323) (7,962)
Loss from discontinued operations for the period — (253)
Net loss (6,323) (8,215)
Loss per share, basic and diluted
Continuing operations (0.02) (0.03)
Discontinued operations — —
(0.02) (0.03)
At February 28, 2019 $ At November 30, 2018 $
Cash and term deposits 161,777 167,004
Total assets 255,461 260,929
Total liabilities 100,243 100,241
(1) Includes share-based compensation expense of $1,531 and $1,949 for the first quarter-ended February 28, 2019 and 2018, respectively.
For the first quarter ended February 28, 2019, loss from operations decreased from $6.5 million in 2018 to $5.7 million in 2019 due to lower general and administrative expense and lower costs at Donlin Gold. General and administrative expense decreased by $0.3 million primarily due to lower share-based compensation costs. At Donlin Gold expenses decreased by $0.5 million resulting from a reduction in permitting and optimization activities.
Net loss from continuing operations decreased from $8.0 million ($0.03 per share) in the first quarter of 2018 to $6.3 million ($0.02 per share) in the same period of 2019, primarily due to lower operating losses, higher interest income and accretion of notes receivable, offset by higher interest expense on the promissory note payable to Barrick and foreign exchange losses.
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