Novagold Resources Inc. · AMEX:NG
Novagold Resources — FY2021 Earnings Presentation
47 slides from Novagold Resources's earnings presentation, Jan 27, 2022
Slide 1: 2021 Year-End Financial Results & Project Update
2021 Year-End Financial Results & Project Update January 27, 2022 TSX, NYSE American: NG | novagold.com
Slide 2: Introduction
Introduction Mélanie Hennessey Vice President, Corporate Communications 2 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 3: Year-End 2021 webcast & conference call agenda
Year-End Introduction Mélanie Hennessey 2021 webcast & Vice President, Corporate Communications conference call agenda Year-End update Greg Lang President & Chief Executive Officer Year-End financials David Ottewell Vice President & Chief Financial Officer Gold commentary & closing remarks Dr. Thoma
Slide 4: Cautionary statements
Cautionary statements REGARDING FORWARD-LOOKING STATEMENTS mineability, marketability and operating and capital costs, together with other assumptions underlying our resource and reserve This presentation includes certain “forward-looking information” and “forward-looking statements” (collectively “
Slide 5: 2021 Year-End update
2021 Year-End update Greg Lang President & Chief Executive Officer 5 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 6: COVID-19 protocol incorporates increased vigilance
DONLIN GOLD COVID-19 protocol incorporates increased vigilance Focusing on health and safety at site and at home Donlin Gold enhanced its Community and Workforce Protection Plan to ensure the safety and well-being of its workforce, their families, and local communities. The Plan adheres to CDC guide
Slide 7: Sustainability performance
NOVAGOLD Sustainability performance NOVAGOLD and Donlin Gold are committed to responsible mining — positively impacting people and the planet through collaborative ESG efforts in three major areas: 1 2 3 ENVIRONMENT SOCIAL GOVERNANCE ▪ Partnered with the Association of ▪ Donlin Gold has a total of e
Slide 8: 2021 community engagement
NOVAGOLD 2021 community engagement Supporting organizations in the areas in which we operate NOVAGOLD sponsorships/partnerships ▪ Sponsored and participated in the Mining for Miracles Pie Throw, an annual fundraising event in support of the BC Children’s Hospital ▪ Recognized for its outstanding con
Slide 9: 2021 drill program delivers outstanding gold intercepts
DONLIN GOLD 2021 drill program delivers outstanding gold intercepts Bringing Donlin Gold up the value chain Five of the top intervals received YTD • 2021 drill program completed: 79 holes (24,200 meters1) drilled Map depicts holes with complete assay results in orange and holes with pending assay re
Slide 10: 2021 drill program
DONLIN GOLD 2021 drill program ACMA and Lewis deposits open at depth and along strike Longitudinal section view of the ACMA and Lewis deposits • High-grade intercepts point to potential feeder zones of this system • Significant exploration potential remains near the ACMA and Lewis deposits and the b
Slide 11: 2022 drill program: largest budget in more than a decade
DONLIN GOLD 2022 drill program: largest budget in more than a decade 2022 drill program (approx. 34,000 meters of core drilling) $34M • Grid drilling (mineralization continuity and geologic structural controls in three areas of the deposit) • In-pit and below pit exploration • Waste Rock Facility co
Slide 12: Barrick and NOVAGOLD optimizing mine design at Donlin Gold
Barrick and NOVAGOLD optimizing mine design at Donlin Gold1 “ The successfully concluded site visit and the meetings that followed with our Alaskan constituencies provided an excellent lead-in to Barrick’s and NOVAGOLD’s onward progression for the Donlin Gold project. The identification of key work
Slide 13: Permitting update
DONLIN GOLD Permitting update Key federal permits for the project received and state permitting is well-advanced Federal Permitting State Permitting ✓ Final Environmental Impact Statement (EIS) ✓ Air quality ✓ Joint Record of Decision (ROD) by the Army Corps of Engineers and ✓ Alaska Discharge Pollu
Slide 14: Decades of government affairs and bipartisan engagement
DONLIN GOLD Decades of government affairs and bipartisan engagement Calista Corporation, Barrick, and NOVAGOLD conduct outreach to senior Biden administration officials regarding the Donlin Gold project ▪ The Donlin Gold project is under private ownership of our Alaska Native Corporation partners, C
Slide 15: Donlin Gold: a tier-one asset in a tier-one jurisdiction
NOVAGOLD Donlin Gold: a tier-one asset1 in a tier-one jurisdiction2 Generational asset with strong, investor-friendly attributes SIZE GRADE EXPLORATION POTENTIAL 39 million gold ounces 2.24 g/t4 Au more than double contained in measured and the world average grade5 Only 5% of 489 sq km land indicate
Slide 16: Largest gold development project in its category
DONLIN GOLD Largest gold development project in its category 1 A resource more than five times the size of the peer group average 50.0 40.0 39.0Moz Donlin Gold2 M&I gold resource (millions of ounces) 30.0 20.0 10.9 11.3 11.5 11.7 10.0 8.0 8.1 8.2 10.0 6.3 7.7Moz Peer group average1 3.9 4.2 4.6 5.0 3
Slide 17: Positioned to be one of the world's largest gold mines
DONLIN GOLD Positioned to be one of the world’s largest gold mines Positioned to become a million-ounce gold producer1 Donlin Gold’s 1.20 27-year mine life 1.101 Projected annual gold production (millions of ounces) 1.00 1.1 Moz/yr1 0.80 0.60 0.5 0.39 0.40 0.36 0.37 0.3 0.32 0.28 0.29 0.29 0.29 0.20
Slide 18: Double the global average gold grade
DONLIN GOLD Double the global average gold grade1 Among the world’s highest-grade known open-pit gold deposits 2.24 g/t While global average gold grades are declining, Donlin 1.12 Gold’s grade g/t provides resilience through commodity price cycles Global average grade1 Donlin Gold average grade2 See
Slide 19: The next big gold discovery could be at Donlin Gold
DONLIN GOLD The next big gold discovery could be at Donlin Gold Significant potential to expand current resource along strike and at depth ▪ From 2006 to 2011, M&I resources increased 135% Far Side (16.6Moz1 to 39.0Moz2) ▪ Gold resource defined with approximately 1,400 drillholes Queen totaling more
Slide 20: Alaska's jurisdictional appeal
Alaska’s jurisdictional appeal • Mineral potential • Political and social stability • Excellent local partnerships • Established mining industry 20 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 21: One of the largest gold projects in a safe jurisdiction
DONLIN GOLD One of the largest gold projects in a safe jurisdiction1 Comparing the top three gold producing operations2 and the five largest development-stage gold projects3 50.0 46 Donlin Gold Muruntau Livengood Olimpiada 39.04 40.0 Sukhoi Log M&I gold resource (millions of ounces) 30.0 20.0 11.3 1
Slide 22: Alaska Native Corporation partnerships elevate the project
DONLIN GOLD Alaska Native Corporation partnerships elevate the project Donlin Gold has life-of-mine agreements with Alaska Native Corporations Calista and TKC Land valuable for resource potential was selected by regional Alaska Native Corporations, and resource development companies were invited by
Slide 23: A true 50:50 partnership with Barrick Gold
DONLIN GOLD A true 50:50 partnership with Barrick Gold Working together since 2001 to take the Donlin Gold project up the value chain How does the Donlin Gold LLC partnership work? ▪ ▪ Donlin Gold LLC is owned 50:50 by Barrick Gold and NOVAGOLD subsidiaries The Donlin Gold project management team is
Slide 24: 2021 financial results
2021 financial results David Ottewell Vice President & Chief Financial Officer 24 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 25: 2021 operating performance
NOVAGOLD 2021 operating performance Three months ended November 30 Year ended November 30 (US$ millions) 2021 2020 2021 2020 General and administrative1 $5.0 $4.8 $20.2 $18.7 Donlin Gold 3.7 3.1 16.6 14.5 Operating loss 8.7 7.9 36.8 33.2 Other (income) expense, net2 0.9 0.6 3.0 1.2 Income tax expens
Slide 26: 2021 cash flow
NOVAGOLD 2021 cash flow Three months ended November 30 Year ended November 30 (US$ millions) 2021 2020 2021 2020 General and administrative1 $(3.0) $(2.9) $(12.0) $(11.5) Donlin Gold (2.6) (1.7) (17.6) (15.3) Working capital, interest and other 1.4 0.2 2.5 1.9 Withholding tax on share-based compensa
Slide 27: Maintaining a strong treasury
NOVAGOLD Maintaining a strong treasury Largest planned spending for Donlin Gold in over a decade $30M Donlin Gold project expenditures $46M $13M Corporate G&A Forecast 2022 spending1 $3M Withholding taxes on PSUs and other working capital $169.1M cash and term deposit balance on November 30, 2021 Du
Slide 28: Gold commentary & closing remarks
Gold commentary & closing remarks Dr. Thomas Kaplan Chairman 28 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 29: Promises kept, excellent partnerships
NOVAGOLD Promises kept, excellent partnerships Track record of converting company goals into shareholder value Successful strategic repositioning as a Aligned on project strategy and timeline with Steady advancement of Donlin Gold up the value chain pure gold play Barrick Gold ▪ 2012: Spin-out of 10
Slide 30: Supply decreases as demand pressure increases
GOLD Supply decreases as demand pressure increases Demand drivers $2,500 Gold established a solid base following its 2011 Asset Central bank diversification purchasing to 2015 bear market $2,000 Historic Inflation/deflation safe-haven appeal protection Gold price (US$ per ounce) Currency Emerging ma
Slide 31: Central banks are building up their gold reserves
GOLD Central banks are building up their gold reserves Global Central Bank gold reserves, in tonnes, Q4/2000-Q2/2021 36,000 34,000 Gold reserves (tonnes) 32,000 30,000 28,000 26,000 24,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Developed Markets Rest of the World Source: World Gold C
Slide 32: Global decline in reserves, discoveries, grade, and underinvestment in exploration
GOLD Global decline in reserves, discoveries, grade, and sharp underinvestment in exploration Few large gold projects are poised for development Gold in reserves, resources and past production Projected new gold in discoveries Gold exploration budgets Decline in reserves, discoveries, and grade 240.
Slide 33: High-quality assets like Donlin Gold are scarce
High-quality assets like Donlin Gold are scarce; of 154 assets globally not yet in production, only 34 have greater than 10 Moz of gold in reserves and resources. Only 8 assets have a grade of 1 g/t Au or greater.1 See endnotes for this slide in Appendix 33 NOVAGOLD | 2021 Year-End Financial Results
Slide 34: Not all ounces are the same
DONLIN GOLD Not all ounces are the same Global gold reserves1 ranked by favorability of mining jurisdiction2 Increasing jurisdictional risk2 Grades above scale3 50 5.0 45 4.5 Million ounces of gold reserves (P&P) P&P reserve grade (g/t Au) 40 4.0 35 3.5 30 3.0 25 2.5 20 2.0 15 1.5 10 1.0 5 0.5 0 0.0
Slide 35: Proprietary model indicates a price target of $4,800 in 2030
GOLD Proprietary model indicates a price target of $4,800 in 2030 Approximate gold price in USD in 2030 by distribution probability 20% 19.55% 18.75% Probability-weighted peak: 14.40% $4,821 (USD) 14.70% 15% Distribution probability (%) 10.40% 10% 6.55% 5.55% 5% 3.85% 2.85% 2.40% 1.00% 0% <1,000 1,0
Slide 36: Significant value upside with higher gold prices
DONLIN GOLD Significant value upside with higher gold prices $35.0 31.6B $30.0 Net Present Value (NPV) (US$ in Billions) ▪ Project return increases substantially with higher $25.0 gold prices1 22.5B ▪ Good payback at a $20.0 broad range of gold 17.5B prices ▪ Long mine life offers high $15.0 13.1B l
Slide 37: Strong institutional shareholder and management support
NOVAGOLD Strong institutional shareholder and management support The 10 largest shareholders represent 64.8% of shares issued and outstanding1 Executive Officers’ ownership has increased to ~2.8 shares2 since joining the company 35.2% 64.8% all other top 10 shareholders shareholders 2.2 25.4% Electr
Slide 38: Donlin Gold: a tier-one asset in a tier-one jurisdiction
NOVAGOLD Donlin Gold: a tier-one asset1 in a tier-one jurisdiction2 Generational asset with strong, investor-friendly attributes SIZE GRADE EXPLORATION POTENTIAL 39 million gold ounces 2.24 g/t4 Au more than double contained in measured and the world average grade5 Only 5% of 489 sq km land indicate
Slide 39: Questions & answers
Questions & answers 39 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 40: Appendix
Appendix 40 NOVAGOLD | 2021 Year-End Financial Results & Project Update
Slide 41: Mineral reserves
Mineral reserves Attributable to Donlin Gold Tonnage Grade Metal Content NOVGAOLD *Mineral reserves and GOLD kt g/t Au koz Au koz Au mineral resources are reported on a 100% basis Reserves1 and on a 50% basis. Proven 7,683 2.32 573 287 NOVAGOLD and Barrick each own 50% of the Probable 497,128 2.08 3
Slide 42: Mineral resources
Mineral resources Attributable to Donlin Gold Tonnage Grade Metal content NOVGAOLD *Mineral reserves and GOLD kt g/t Au koz Au koz Au mineral resources are reported on a 100% basis Resources2, exclusive of Reserves and on a 50% basis. NOVAGOLD and Barrick Measured 869 2.23 62 31 each own 50% of the
Slide 43: Endnotes
Endnotes SLIDE 9 accrued interest at U.S. prime plus 2% as of August 31, 2021. The promissory note and accrued 1. See media release from December 1, 2021 titled “Barrick and NOVAGOLD Agree on Next Steps interest are payable from 85% of the Company’s share of revenue from future mine production or To
Slide 44: Endnotes
Endnotes SLIDE 19 SLIDE 22 1. Represents measured and indicated mineral resources previously reported by NOVAGOLD and 1. Kitco News Interview with Michael McCrae on May 6, 2021 “Barrick Gold's Mark Bristow on how to supported by a past technical report, “Preliminary Assessment, Donlin Creek Gold Pro
Slide 45: Endnotes
Endnotes SLIDE 30 $1,700 gold; $7,229M @ $2,000 gold; and $11,199M @ $2,500 gold. The project requires a gold price of 1. S&P Global Market Intelligence, “Gold price increase drives surge of smaller discoveries”, June 29, approximately $930 per ounce to break even on an undiscounted cash flow basis
Slide 46: Endnotes
Endnotes SLIDES 41 & 42 administration cost of $2.29/t; refining, freight & marketing (selling costs) of $1.85/oz recovered; stockpile rehandle costs of $0.20/t processed assuming that 45% of mill feed is rehandled; variable 1. Mineral Reserves are reported within the pre-feasibility pit designs, an
Slide 47: TSX, NYSE American: NG | novagold.com
TSX, NYSE American: NG | novagold.com NOVAGOLD | 2021 Year-End Financial Results & Project Update