NOVAGOLD Reports Second Quarter 2022 Financial Results
Donlin Gold’s Largest Drill Program in Over 10 Years
Advancing in Preparation for Feasibility Work
Strong Treasury of $142 Million in Cash and Term Deposits;
$25 Million of Receivables in 2023
- Building on the success of the 2021 drill program, drilling commenced in February 2022 with four drill rigs operating for 34,000 meters of planned drilling. As of mid-June, more than 70% of planned drilling is complete. The first set of assay results for this year’s program are expected to be published this summer.
- The 2022 drill program continues to yield encouraging results. In 2022, under the largest budget in over a decade, geologic modelling and interpretation work to update the resource model is underway, including engineering activities for use in an updated feasibility study that, subject to Donlin Gold LLC Board approval, is expected to commence in the second half of 2022.
- NOVAGOLD’s robust balance sheet of $142 million in cash and term deposits as of May 31, 2022, with additional funds of $25 million due in July 2023 from Newmont Corporation, should be sufficient to advance Donlin Gold to a construction decision.
VANCOUVER, British Columbia, June 29, 2022 (GLOBE NEWSWIRE) — NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the Company”) (NYSE American, TSX: NG) today released its 2022 second quarter financial results and an update on its Tier One 1 gold development project, Donlin Gold, which NOVAGOLD owns equally with Barrick Gold Corporation (“Barrick”).
Details of the financial results for the quarter ended May 31, 2022 are presented in the consolidated financial statements and quarterly report filed on Form 10-Q on June 29, 2022 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.
In the second quarter 2022, the following milestones were achieved at Donlin Gold:
- The drill program is progressing ahead of schedule with 24,000 meters completed to date of the planned 34,000-meter drill program.
- The site crew (150 employees, contractors and student interns), a majority of which are local hires from 24 Yukon-Kuskokwim (Y-K) communities in Alaska, are working on a two-week rotation schedule and continue to advance project activities at a good pace.
- In May, the Alaska Department of Environmental Conservation (ADEC)’s Division of Water upheld the 401 Certification of the Clean Water Act (CWA) which had been remanded to the ADEC on December 29, 2021, for consideration of additional information provided by Donlin Gold.
- Donlin Gold participated in and sponsored statewide events and, together with its Native Corporation partners, Calista Corporation and The Kuskokwim Corporation (TKC), carried out a wide range of critical support and engagement activities throughout the Y-K region. These included:
- Finalizing a Shared Value Statement with Stony River, a village from the Y-K region for a total of nine Shared Value Statements to date (Akiak, Sleetmute, Kalskag, Napaimute, Crooked Creek, Napaskiak, Nikolai, Tuluksak, and Stony River). These agreements include educational, environmental, and social initiatives to help support villages;
- Serving as a principal partner in the 50 th Iditarod Race in March with mushers and their teams from around the world participating in the 1,000-mile-long sled-dog race in Alaska, also called “The Last Great Race”;
- Holding the Lower Kuskokwim School District’s annual College and Career fair with 30 vendors and 89 students attending the virtual event;
- Working with TKC to charter flights with drinking water to Red Devil, one of the local communities on the Kuskokwim River, following a flood due to ice break-up in May that temporarily contaminated the local water wells; and
- Sponsoring multiple Y-K community events and gatherings as well as statewide events, including the Skwentna 200 snowmobile race, the Native Youth Olympics and the Arctic Encounter Symposium – the largest annual Arctic policy event held in the United States.
1 NOVAGOLD defines a Tier One gold development project as one with a projected production life of at least 10 years, annual projected production of at least 500,000 ounces of gold, and average projected cash costs over the production life that are in the lower half of the industry cost curve.
Donlin Gold’s Largest Drill Program in More Than 10 Years Progressing Ahead of Schedule
The prime focus of our activities this year is to undertake a 34,000-meter drill program with tight-spaced grid drilling as well as in-pit and ex-pit exploration; and to input the results from this drilling into the geologic modelling and interpretation work that is being used for updated resource models. In addition to the engineering studies being undertaken, this program will as a whole enable commencement of an updated feasibility study. The Donlin Gold total 2022 expenditures are anticipated to be $60 million (of which NOVAGOLD’s portion is 50%). The budget also supports the advancement of environmental activities, and finances community and external affairs efforts.
Following the excellent results of 2021, we are encouraged by the significant drill program for 2022, with drilling also focused on upside prospects in the ACMA and Lewis pits where drilling so far has been limited. In the second quarter 2022, the team of 150 people at Donlin Gold are advancing drilling activities at a good pace, with more than 70% of the planned drilling completed to date. We expect the first set of assay results from the 2022 drill program to be issued this summer.
The health and safety of our workforce, both at NOVAGOLD and at Donlin Gold, is a priority. Both NOVAGOLD and Donlin Gold have implemented strict safety protocols, and COVID-19 mitigation measures are still in place at Donlin Gold to ensure the staff rotations in and out of the camp are conducted in both an efficient and safe manner.
The 2021 drill program results are being incorporated into updated geologic and resource models as well as mining schedules and life of mine business plans ahead of the update to the feasibility study, which is expected to commence in 2022, subject to a formal decision by the Donlin Gold LLC Board.
Onwards and Upwards
Donlin Gold is fortunate to enjoy time-tested partnerships with Calista and TKC, owners of the mineral and surface rights, respectively. The project’s location on private land specially designated for mining activities through the 1971 Alaska Native Claims Settlement Act (ANCSA) constitutes a key attribute that distinguishes it from most other mining assets in Alaska. Our longstanding commitment to meaningful tribal consultation throughout project development and permitting has been demonstrated over decades of reliable and dependable engagement with the community.
And it shows. Donlin Gold received its federal permits in 2018 and most of the key State permits are also in place. This represents a tremendous achievement and the product of a substantial undertaking, over many years, to ensure a diligent, thorough, transparent, and inclusive process for all involved – including stakeholders from the Y-K region.
On May 16, 2022, ADEC’s Division of Water upheld the 401 Certification of the CWA which had been remanded to the ADEC on December 29, 2021. On June 13 th , 2022, Earthjustice and Orutsararmiut Native Council (ONC) requested that the ADEC Commissioner conduct an additional adjudicatory hearing on the part of the Division of Water’s decision related to potential water temperature effects in Crooked Creek.
In 2021, the State of Alaska’s issuance of water rights for the mine and transportation facilities was appealed to the Commissioner of the Alaska Department of Natural Resources (ADNR). On April 25, 2022, the ADNR Commissioner denied the appeal; however, Earthjustice, ONC and five villages appealed the Commissioner’s decision in Alaska Superior Court on May 25, 2022. A briefing schedule has not yet been set by the Court. Donlin Gold and the owners will continue to support the State in its defense of their thorough and diligent permitting process.
On September 20, 2021, ADNR’s issuance of the Right-of-Way (ROW) lease for the portions of the natural gas pipeline on State lands was separately appealed in Alaska Superior Court by two parties: (1) Earthjustice representing ONC, the native villages of Eek, Chevak, and Kwigillingok, and Cook Inletkeeper; and (2) Robert Fithian, an adventure business owner who operates near the ROW. On April 5, 2022, Earthjustice filed its opening brief, ADNR and Donlin Gold then filed their response briefs on June 16, 2022. Mr. Fithian filed his opening brief on June 8, 2022, ADNR and Donlin Gold are working on their response briefs.
Donlin Gold has applied for a new air quality permit from ADEC to be in place when the extension of the current permit expires in mid-2023. We anticipate that ADEC will issue a draft of the new permit for public comment in the second half of 2022. We are also working with the ADNR, the U.S. Bureau of Land Management, and our Alaska Native Corporation partners on re-locating certain public easements and ROWs in the mine and transportation facility areas for public safety purposes. Alternate routes will be constructed and available before any existing planned routes are closed (some of which are not passable during much of the year). We anticipate that the proposed re-locations will be issued for public comment sometime in 2022.
Donlin Gold, working with its Native Corporation partners, continues to support the State of Alaska to advance other permits and certificates for the project. The field work related to the issuance of the Alaska Dam Safety certificates is expected to recommence during the second half of 2022 or the first half of 2023.
Native Corporation Participation and Consistent Community Engagement
NOVAGOLD prides itself on having been a longstanding leader in ESG. We are committed to delivering long-term value to all our stakeholders through responsible mining, the protection of human life, good stewardship of the environment, and adding value to the local communities in which we operate. Donlin Gold’s Native Corporation partners, Calista and TKC, provide valuable insight about their region, way of life, culture, and ANCSA mandate, under which the Donlin Gold lands were selected and set aside for mining activities to promote the economic prosperity of their shareholders. As private landowners, Calista and TKC are committed to developing a mining operation that is consistent with the Elders’ vision of responsible development – one that creates jobs and economic benefits for the communities while mitigating impacts to the environment and protecting local culture.
In the second quarter, Donlin Gold participated in and sponsored multiple local events with Calista and TKC, providing a wide range of critical support and engagement activities throughout the Y-K region. This encompassed a broad array of projects including the signing of a new Shared Value Statement with Stony River, a village in the Y-K region, for a total of nine Shared Value Statements to date (Akiak, Sleetmute, Kalskag, Napaimute, Crooked Creek, Napaskiak, Nikolai, Tuluksak, and Stony River). In addition, we undertook numerous educational, environmental, and social initiatives to help support villages, such as working with TKC to charter flights with drinking water to Red Devil, one of the local communities on the Kuskokwim River, following a flood in May as a result of the ice breakup that temporarily contaminated local water wells, supporting the Skwentna 200 snowmobile race, and sponsoring the Lower Kuskokwim School District’s annual College and Career fair with 30 vendors and 89 students attending the virtual event.
Additionally, Donlin Gold sponsored statewide events including the Native Youth Olympics and the Arctic Encounter Symposium – the largest annual Arctic policy event in the United States. Donlin Gold was also the principal sponsor of the 50 th anniversary of the Iditarod, the 1,000-mile sled-dog race, often referred to as “The Last Great Race”. This event holds a special connection with the gold rush days in Alaska and is a reconstruction of the freight route to Nome through which much needed supplies as well as news from afar were once delivered. In March 2022, 49 mushers and their dogs participated in the race, with numerous volunteers and veterinarians to support and care for the mushers and dogs along the various checkpoints.
A Rare High-Quality Gold Asset in a Jurisdiction that Welcomes Responsible Development
In our view, Donlin Gold is a rare gold development asset. The reason for such a unique status, beyond providing investors with pure leverage to gold, lies in the project’s key attributes – namely: Size (no gold mine ever began production with 39 million ounces in Measured and Indicated Resources, inclusive of Proven and Probable Mineral Reserves); Scale (expected to be a million-ounce-per-year producer with a projected mine life of at least 27 years); Low Cost (anticipated to be one of the lowest cost producers due to the high-grade large-scale open-pit, grading 2.24 grams per tonne 2 or twice the industry average for an open-pit project 3 ); Growth (excellent exploration potential beyond the planned 27 years of production with defined resources located on only three kilometers of an eight-kilometer mineralized belt, which itself represents less than 5% of the total land package); and Jurisdiction (having the good fortune of being located in Alaska, one of the safest jurisdictions in the world, on private land specifically designated for mining by our partners Calista and TKC).
It is our belief that Donlin Gold is poised to become the greatest gold story in the development space. We have protected these resources, substantially de-risked Donlin Gold over many years, committed to responsible mining, dedicated to building trust and transparency, and continuing to work to find ways to improve and enhance the project as well as building a legacy.
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