Q1 2020 Earnings Call
Thank you for standing by interest the conference operator.
Welcome to the notebook older Twentytwenty first quarter results and project update conference call.
As a reminder, all participants and in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
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I would now like to turn the conference over to Melanie Hennessey, Vice President Corporate Communications. Please go ahead.
Thank you Claudio and good morning, everyone. We're pleased that you have joined us and all the gold 2021st quarter financial results for an update on the Donlin Gold project.
Today's call, we add Dr., Tom shopping knows the gold Sherman, Greg Lang, Novagolds, President and CEO, and David Ottewell, Novagold, Vice President and CFO.
At the end of the webcast, we will take questions both by phone and biotech.
Before we get started I would like to remind our listeners that as stated on slide three any statements made today may contain forward looking information.
Such as projections, then goals, which are likely to involve risks detailed in our various Edgar and SEDAR filings and forward looking disclaimers inclusion in his presentation.
With that I had the pleasure of introducing Greg Lang, Novagolds, President and CEO Greg.
Thank you Melanie and good morning, everyone.
Yeah. These are unprecedented times and our most important objective right now used to secure health and safety ever employees.
Partners and contractors in that regard our employees are working from home.
Avoiding all non essential treble in.
And if they must visit be off there's of course are engaged in social justice.
No the Golden our partner through Donlin Gold LLC has implemented a wide ranging set of policies consistent with the state of Alaska is health and social service requirements and recommendations.
These precautions impede screening all employees and contractors basically trying to decide.
Evaluating and each individual who might be exhibiting symptoms to determine if they need to be isolated.
Implementing more frequent sanitation practices.
In conducting safety meetings to address.
The current situation.
The Donlin gold real program commenced as planned in February and continued through March However, Donlin gold will pepperoni parts of the program.
Going to care and maintenance and joke travel restrictions and other covert 19 measures in the region or used in good shape for employees and contractors.
Sure would turn to be site.
Moving to slide five Donlin gold in Alaska is a 50 50 joint venture with.
[laughter].
Alaskan mining is an important part of the Alaskan economy, and becoming even more important.
As.
Oil industry and tourism collapsing.
There are six producing mines and numerous exploration and development projects that are dancing across the street as shown on the map.
The future of smaller communities here, just curious concern for many restaurants like western Oscar and Donlin Gold offers a brighter future training and opportunities for young people to move closer to home and continued fierce abstinence way of life.
With other Resourcing streeteasy experience, the low or no gross.
The opportunities in mining present, good paying jobs.
Closer to home for Alaskans living in the rural parts of the state.
[noise] slide six highlights first quarter operational activities with the receipt of several state permits, but really in the year and preparations for the drill program. We had three words on site in early March.
Also continued to your they actually end up the multi year site investigation needed for the Alaska Damn safety surgery patients and we continued our community investment initiatives with our native partners Shortlisted in P. Casey.
Our record of successful told me to continue with the receipt of Donlin Gold final easements for the access raid and fiber optic cables.
Greetings and receipt of land use and land use permit and optimizations to the proposed transportation maturities on state where.
Additionally, the division of oil and gas finalize the right away lease Super natural gas pipeline.
All of this trap ingestion January.
Permitting takes tremendous leadership and attention to detail and transparency from Donlin gold with the support and contributions of Jewish there and Teekay C.
And the communities closest to the mines.
We greatly appreciate that dedicated efforts the entire team in advancing permits and approvals for the project I'm your commitment to environmental.
And governance best practices.
Donlin gold progressed, it's ongoing optimization efforts to establish a plan for 2022 would allow the owners or greater understanding of the recently prepare geologic model and high grade mineralization controls.
All of which have to potentially to benefit. The project you will serve as a basis for an updated study.
The drill rigs I'm, sorry are completing their holes and then we will pause to program and go into care and maintenance.
No, but gold's most important objective is to secure the health and safety habits employees and they will not return to the site, killing it is safe to do so.
Well the global Health crisis has a short term impact.
It is not yet no.
How long the program you timeline will need to be adjust.
And we will keep you posted.
And any changes.
During these times, where dedicated keeping our community partnerships strong and engage in environmental safety educational and cultural initiatives.
In the first quarter Donlin gold participated in numerous community activities in projects as highlighted on slide eight.
Donlin worked with P. tasty and the state of Alaska to upgrade.
And improve health and safety standards water and sewer services in the middle cost with whom area.
In partnership with Teekay see the village of cooking Creech and then upon you tried gone them funded and providing technical data to extend and maintain the ice flow through yet they the winter months. This improved the safety in access to remote communities.
We routinely meet with our partners boards and we've been able to project up gate to Teekay C and B middle class couldn't villages.
We also is quoted regional basketball tournament in that that go high school that was approximately 140 miles from downtown and the closest major town to the project.
With the support of its owners Donlin gold continued its outreach activities with our major Corporation partners the meetings and travel Council and stakeholder meetings more recently, we have of course shipping to phone calls and conference calls.
Given the ongoing situation.
[laughter].
Well the team recognizing the success of the state permits issued in the first quarter re will we remind our shareholders. The donlin gold project is already there.
Said really permitted.
And numerous state permits are in hand.
As listed on the table on slide nine.
One of the remaining state Court makes the dam safety certifications and this is a multiyear effort, which we will continue.
And with that I'll turn the call over to our Chief Financial Officer, Dave without him well.
Okay.
Thank you Greg.
[noise] first quarter 2020 cash flows are highlighted on slide 10.
Cash used in operations was 2.6 million higher and then 2090.
The majority of the increase resulted from higher Donlin gold funding [laughter] advances in real program.
And withholding taxes paid Unvested P.S. use in addition to lower interest income.
The increase in our stock price and its performance in relation to the S&P TSX Global Gold index led to a higher best value P.S. use and resulted in more taxes would help.
[noise], we ended the quarter with cash and term deposits of 140.7 million.
[laughter].
On slide [laughter] Slide 10, I always have operating performance or first quarter 2020, our net loss increased is there a point 3 million to 6.6 million, primarily due to higher GM.
Okay, and donlin cost as well as lower interest income [laughter], DNA increase resulting from higher share based compensation and regulatory costs.
Donlin gold expenses increased due to preparations for the drill program.
On slide 12, we note our healthy Treasury, we continued to anticipate spending of approximately 31 million 2020.
Which includes 20 million to fund our share of expenditures at Donlin Gold project, and 11 million for general and administrative costs.
[noise] at Donlin Gold 11 million is planned for the drilling program and with the remaining 9 million for permitting and community engagement.
Back to our CEO Greg line.
Thank you Dave.
Past couple of months [laughter] memorable to the Gulf markets. It's time, so I see that we are particularly reassured to be invested in a unique project like Donlin gold.
That really permitted project in a jurisdiction where the rule of law is not a novelty with strong long term partnerships with sure Mr. and P. Casey.
Which are all where attributes in today's world of declining grades in smaller deposits.
On slide 13, we compare donlin golds 40 million ounces.
<unk> 13, another development stage projects in the industry.
If you look at the peer group.
Commons resource is better than twice the size of the nearest competitors and five times two sides to be air.
While the scale of the resource is rare.
Another is the grade as shown on slide 14.
The average grade of Donlin sets it apart from other large scale open pit deposits.
At two in a quarter grams for time it is more than twice the industry average.
Also noteworthy that the global average grade continued to decrease year over year from 2018 2019.
We're scaling grade if it was built today donlin gold would be the largest producing gold mining industry.
For the long term investor there's additional value. It comes with a mine has a multi decade life span.
Almost 30 years of production just from the current resource.
As in Beijing, Donlin gold wouldn't average I mean, how losses over the first five years and over a million ounces per year life of mine.
There are few mines in the world existing or proposed with that level of gold production.
Yeah, Hi, Louis deposits can be seen on slide 16, you can see the topography at Donlin is favorable for development.
It is rare and mining projects today that both the mineral and surface rights to the project land are privately owned.
In our case by our long term partners chip Mr.
And the T.K. C.
As shown on slide 17, the ackman Louis deposits contain the resources, but occupy namely three kilometers of eight kilometer gold bearing true.
We've done extensive drilling over 1400 holes totaling 340000 meters.
Our focus is continuing to optimize the project.
Hi, there clearly future opportunities for expansion.
Of the resource along the known mineralized trend.
When their time is right.
We will resume exploration Pedro.
There's tremendous value, having a project like donlin gold on private land cialis debt owns the mineral rights and locally Teekay see owns the surface rights. We have life of mine agreements with both partners have been deeply involved and support.
From the start has highlighted on slide 18.
We've been partner since 1995, we're thankful for CIT, Lister and T.K. skis long term support.
And commitment to the project success.
We support their mandate.
To access to help them develop their land for the economic benefit of the regions and all stakeholders involved.
Got a genuine owners actress and seeing the project go for them.
Times like this we are all experiencing or responding to the covert 19 crisis and its impacts on the health of our communities and our economies.
We gain comfort from a long standing relationships that unitas in a common goal of bringing the dominant project up the value chain.
We continue our engagement with all of our stakeholders.
We also continue our interaction with our investors as it improves our governance practices.
Gauge rent.
Promote the health and safety of our people throughout the region and on the river during your various seasons.
He brings our support of the well being and well being of the communities.
And assistance to youth ticket for upfront.
We're partnering to improve the environment.
We're always recognizing the importance of preserving traditional lifestyles.
Well I bring tangible long term benefits to our community partners.
We are better together.
With that I will now turn the call over to our chairman Dr. Thomas Chaplin.
We will give macy's insights into gold.
Uh huh.
Thank you very much Greg and I, certainly hope that all of you were on the coal.
And those of our friends and shareholders, who arent that to our words full upon you I'm in a state of safety and good health. These are.
Unfortunately, the very interesting times that the Chinese would referred to and all of us have to be in even greater cognizance of the challenge is that it would be facing in the years ahead.
With that let's remind ourselves.
What we have in Donlin and what makes it not just some things that is a tier one assets I'm, an expression to which I'm indebted to mark Bristow at Barrick, but also something which Greg himself referred to as unique as many of you know Greg.
Came from Barrick, where he was the president of Eric North America for many many years I'm running an operation that was actually producing more gold then goldcorps at the time.
[noise] when he came in to Nova Gold I came into Novagold I'd already been an investor from the end of 2008, but when Greg became CEO I became chairman Weve celebrated eight years together and during that time I'm.
Very confident that every statement that we've made every promise that we have.
Expressed has been met with success.
The primary reason for that is because of not just the management team, but the fact that donlin is not just a quote unquote world class assets. It really is unique because there is no other development stage assets into.
World, which combines the reserve grade production capability the exploration potential the mine life, the leverage to gold and the super imposed on to all of that in a jurisdiction that will allow you to keep the.
Fruits of the leverage when the time comes for you to ring the cash Register.
But in fact, it really is even better than that Donlin is the right asset for this moment in the gold market.
If we could move to the next slide.
[noise] gold is in a secular bull market.
We went through a sick a cyclical downturn from 2011 ish until last year [noise].
I was not immune to the nuclear winter psychology in a certain sense of the gold industry and when David Rubenstein.
Wanted to interview me about gold for his Bloomberg peer to peer series I said do we really have to talk about it I want to wait until gold Pops and by a stroke of luck. When we did the interview gold head to head its last real pull back and the price was 12 80.
And from then on it started to move up and never went down below that.
So we got at Lucky and yet Lucky is really only a part of it the reasons to own gold or multifaceted I'll get to those in a moment, but suffice to say that when David asked me what my target was for gold.
I told him that based on the industry fundamentals themselves and the challenges faced by the gold industry I believe that enormity of supply demand Equolibrium would come somewhere between three and $5000 an ounce.
That is still my initial target, but I also alluded and this is a year ago to some other dimly perceived variables that could make that just a first target.
And I'll just say this I do believe that when we look back upon where gold is today and we see where it will be years, Hence Z. A chart pattern will not be dissimilar to that which really has characterize the Dow Jones.
From the early 19 eighties to where it has been recently.
Implication is that we're going to see gold it much much higher levels. If you look back and obviously history doesn't repeat itself put on occasion. It rhymes you can see that gold is actually playing out the bull market in a way that is not dissimilar.
But to what we saw in the 19 seventies I do believe that the chart patterns and chart patterns to meet our just brain waves. Some historian by background I'm I don't believe that fit technicals rule, but on the other hand I've learned that if the fundamentals are right in the technicals corruption.
Great them, you really knows that you're going to get the wind in your sales that's what's happening in gold and the saucer bottom as it were that we're seeing is a very very powerful chart pattern and I do believe that what we're seeing is the bigger.
Turning to of the next leg in the secular bull market like number one having taken us from 250 to 1900 like number two a pull back to almost a thousand.
The third leg will take us into the new highs and far beyond that all of my predictions. In this instance, we're not predicated I hasten to add by what I called the fear Factor's things.
Such as Pandemics, and crises and wars and pestilence and all of that I've always believed that if you can't persuade the senscient.
Being on the case for something based on economics, one or one supply and demand and you have to resorts to what I call. The fear Factor's. The last refuge of the Scoundrel, then you shouldn't be in that business either for yourself or for anyone else suffice to say that.
I do believe that extrinsic of the incredibly trying circumstances that we see now gold will multiply.
Unfortunately, as a consequence of some of the macroeconomic measures, which are going to be taken in order to get the world through this it's very possible that we will see price is much higher than I had been forecasting over the longer term and the reason for that.
That is not so much a consequence of independent make itself I've always believed that the business cycle will not repeat itself and that we could one day get an economic downturn that economic downturn.
Would lead to measures.
Which would be from a macro standpoint, very gold bullish that's happening it what's going to happen anyway, those who are bullish on gold are not in any way profiteers, they're just people who believe in a currency that Ken.
Be printed regardless of circumstances.
We can move to the next slide.
Again economics, one no one what we've seen in the gold industry is that gold production has effectively peaked we have seen peak gold for those of you can remember what peak oil looked like.
Mike.
The reality is that unlike hydrocarbons when gold peaks you just can't turn it on unlike hydrocarbons, we do not have large reservoirs of trapped reserves that a new technology, such as fracking or harvests until drilling can unlock it just.
Simply doesn't exist, we don't even have the technologies like three D seismic to allow us to explore and more efficient ways as a consequence the majors are.
Depleting their reserves faster than they can replenish them in most instances that is unfortunately going to be accentuated dramatically by what I predict will be a falloff in production from the developing world for reasons that we will get to in a moment.
Exploration success never easy in the best of circumstances, when I got into the business. It was calculated that the odds of being able to make a discovery that would take a prospect to production was somewhere between 1000 to 10000 to one against you.
Those are still pertain and this is the longest period in which we've seen really no new great discoveries in the gold market. What's worse is that even if you do make the discovery is at times.
Line from discovery to production is now calculated on average to be in excess of 20 years, which means that as we embark upon the next leg of the bull market.
Because the trapped reservoirs, the resources or not there to be unlocked because the exploration is not there because it takes so long to be able to take those rare exploration stories to market. It's already a case, where the horse is already out of the barn and.
It's been locked if you're not going to gain exposure to high quality gold assets in excellent jurisdictions, you will end up buying them I do believe that those who have great assets and safe places will experience for their equities a bubble I.
I do believe that you will see north American assets valued using the zero percent discount rates that pertained before the early 19 nineties, when newmont went to Yanacocha and set off the a animal spirits the gold where the gold is philosophy that took people.
So all through Africa, South America, and Asia, as somebody who as an American was probably one of the two or three most adventurous who made their fortune in Bolivia, Zimbabwe, South Africa, Congo, I sold Kibali to Randgold I'm not speaking as a pollyanna I'm not talk.
During my own book I wrote the book until the time that I realize that these regions would become more difficult I was in fact, the largest holder of mineral rights in the Islamic World.
At a certain point I realize that not because it was the Islamic world, but the developing world in general that they areas that had been so good to me that that game was over I think that what we're seeing by the combination of mine supply falling at the same time.
As grade has fallen over the last decade, which means that operating costs have risen.
When you Super impose the other jurisdictional factors on to that you really do see that peak gold is exactly that.
Ian Telfer I think made that comment several years ago and he was spot on and the truth is we're seeing it in the market.
If you can move on.
[noise] question about central banks central banks or.
What I called the ultimate insider buyers and if there was some people who say central banks are not smart money.
And my point would be this it doesn't matter, whether they're smart or whether they're incompetent.
One thing that they do no is that what do they considered to be reserves or ephemeral and unfortunately, the last month has proven that there is almost nothing that they own that cannot be duplicated and multiplied by.
The press a button the only asset that they have in their portfolios that does not represent either their liabilities, because they're putting a lot of their own stuff on their balance sheet or someone else is liabilities is the gold not surprisingly.
Central banks have been buyers of gold what does that mean for gold investor. So long as central banks are not net sellers, which I don't see happening at all it means that one of those areas that pushed the price of gold down three.
Through the Ninetys is now gone.
Just buy them being absent from being sellers is good enough. The fact that they have now become buyers is a reflection of the fact that they understand that everything else that they own is a challenge. This is going to continue.
It will be times, when they will pause when the price of gold goes higher or because they need to sell some gold for other liquidity because there are other things they can sell it doesn't matter, they're going to keep their gold any thought that central banks will be large sellers of gold is over.
They get it they understand they shouldn't sell it and if anything what you've seen in the market.
Is that these countries are repatriating their goal they don't even want to leave it with traditional custodians in London, and New York, They want to be able to have it back where they can look at it.
That's a statement.
You can move on.
Meanwhile, we have a number of demand pressures, which are going to be squeezing the already dire supply issues that I've cited.
One of the great.
Factors for gold investors, especially those who are used to being cold gold bugs or caved dwellers or troglodytes or whatever it is we are is that over the course of the last year being bullish on gold has gone from something that is you're right. It.
For a mock to something that is now a legitimate question for the broader investment market and we've seen that in the diversity of the names who have been advocating gold ownership as well as the multiplicity of reasons for why.
They advocate these names have often very different reasons for why they're gold Bulls, whether it's ray Dally owe a mark Mobiuss, Sam Zell, Jeff Gundlach can grow golf I could go on and on the point is that if somebody comes on to CNBC now and.
Talks about gold.
Yeah, and eyebrow may be arched, but you will not have the traditional knee jerk reaction of both you gotta be kidding. That's extremely important gold is not a crowded trade. So the contrarians amongst you should not make the mistakes that oh, because gold is now something you can talk about it means.
It's a crowded trade not remotely it's the most under owned trade in the financial World.
That will change I don't know, where they're going to get the gold because even a 1% location by the really big money out there wouldn't multiplies the price of gold, but it's going to happen I do believe that every fiduciary ultimately is going to have an allocation to precious metals.
One way or the other if theyre going to do it for diversification, they're going to do it because their clients are going to see that gold is going up and that's going to drive them to take a little bit of a position because they're not going to want to answer questions on why they don't own gold. So some of the reasons that they will advocated.
Asset diversification safe Haven, a currency that can't be debased that central banks are purchasing it inflation protection deflation protection emerging markets demand. So when you see all the different reasons, you'll be shocked at how many there are for us.
That means that when the bold bull market really resumes and we see new highs.
Instead of people a mocking gold they're going to scratch their heads they're going to do it investors, usually do which is really only to look at something after the price has risen and they start asking should we have an allocation to it and then they're going to see all the different boldface names live advocated gold buying for very different reasons.
They will choose to hook on which they wish to hang their hat and they will buy gold it will be easier for them psychologically to buy gold at 2600, then it's 1600.
Mark My words.
Next.
I don't even if the mentioned the fact that I think it was Bloomberg came out with an article a couple of days ago that gold is one of the only a three four assets, which is actually up during vis recessionary.
He period.
When you think that gold is with a 16 handle which is basically where it was before the Soc market crash. That's quite a statement. That's shown that gold is a good place to be able to have some cash part.
For a rainy day the implications for gold stocks I'll talk about in a moment, but the truth is gold belongs in everyone's portfolio I think ray Deleo had it right. When he said that those who don't own gold either don't understand a history, where the economics of gold.
And he gave reasons for owning gold as a currency Sam Zell, because there are no new mines coming online marked mobiuss because of a diversification can wrote off because of the emerging markets. Jeff Sunblock gold is coiling like a snake eat a little looking at the chart.
Pattern a poll tutor Jones same thing gold will be the trade of the year. So.
When you when you have a little bit of gold it should give you some peace of mind.
And gold is doing what it supposed to be doing right now, it's providing liquidity two people from an asset that's appreciated in order to be able to help those people who own it who have other assets that have fared worse.
Next.
Okay.
Last year I give another interview in which I got to talk about a lot of my other passions, but during that enter view on real vision, which you can certainly get access to on the Internet and there are a lot of other people who've been interviewed.
Real vision I would certainly advocate those who are interested in gold watch John Hathaway's interview as well and we spoke considerably about gold during that interviewed and TEP Euro whose brilliant gold investor in its own right. I told me that for a number of years, he's been referring to a certain mantra that.
I have as the Capline doctrine.
I liked it definitely appeal to my Vanity and the truth is is that from the time that I enunciated. It's doctrine in 2012 at a conference that John Paulson convened a on the gold.
This is really worked for me and so I used to be 50% North America, 50% other places around the World I'm now 90, 95% North America and Australia. It is my considered opinion that after having visited 109 countries after having.
Made a lot of money in the developing world that that era of gold go with the gold is I believe personally is over.
And whereas my mantra used to be acquire category killer assets that give the greatest leverage to the underlying investment thesis that you're investing in and it worked for me in silver platinum hydrocarbons I came to add a corollary to that which is due so in jurisdictions that will allow one to keep the fruits.
The leverage I truly believe that institutional investors when their brokers come to them and say that they have a management team coming in with a world class assets are more and more going to respond to that by saying it sounds great I'd love to meet them. Just tell me one thing where in the world or they because if it's in a place where the rule of law is a novelty.
If it's in a place where they wouldn't take their family if it's in a place where one day, they're going to have to defend their I see why they went into a place where there was de facto where do your a confiscation.
Its just not going to work people are going to first and foremost pay the highest multiples and use the lowest discount rate on those assets that are in places where when they go to sleep at night, they know that whatever they owned in the morning they still.
Next.
There's no doubt in my mind that Donlen, which.
As I will repeat is unique in its combination of attributes it will in one or two stages be the largest pure gold producing mine in the world located in the second.
Largest gold producing state in the premier jurisdiction in the world that is for us as investors in this space the Holy Grail. If I did not believe that were true I would put the company into play and I would pivot to something else.
Because I believe it's true I, absolutely I'm convinced that as people start to scramble for investment in gold equities, one of the only true go to stocks and perhaps Z highest valued.
Development stage equity will be Nova gold, because if it's half interest and donlin.
The 39 million ounces would be the largest.
Gold mine to go into production when it does as you've seen from Greg's charts, we truly believe that the exploration potential at Donlin is second to none.
That's just along the eight kilometers, which we've drilled in the past 39 million ounces are only drawn from three kilometers of that we believe that there's a lot more gold at donlin and when those exploration results.
Are able to be shown in months or years, hence and if gold isn't a bull market I truly believe that companies that are able to add high quality high grade reserves and safe places easily or quickly will be very very rewarded in there.
Share prices and a bear market nobody cares in a bull market great drill results are like catnip.
Donlin is a perfect play there two ways to play it we are a pure play at Novagold and for those who want exposure to a big cap with diversified production you've got Barrick some will own both one thing I can tell you in out.
Our opinion Donlin is in terms of its potential the next Nevada actually the reserves are not altogether dissimilar to the joint venture. There are no pure plays on the Barrick Newmont joint venture I wish there, where but that is a great story I do believe.
Donlin will be.
The next great story in North America, and Novagold provides an absolutely pure play on.
In quotes the next Nevada.
Next.
The leverage to gold at Donlin, we've all known these are numbers based on the feasibility study that was a conducted in 2000 or concluded in 2011, a lot of input costs have fallen since then unfortunately, they fall and even further.
There in some respects it over the course of the last couple of months. If you look at the price of oil and other inputs. The bars that you see here npvs at 5% Npvs, It's zero I have zeroed out myself that donlin will be valued.
Using a zero percent discount rate, it's what American assets were valued at before the go or go to the gold mantra took hold and at that time just to show you have times have changed there wasn't new Indonesia. There was no Africa, there was no Peru, even it was.
<unk> or Canada, Australia, South Africa, and the United States.
You note at 2000 dollar gold I believe the potential is for.
The gold to multiply many fold $2000 to me is not a number that's just going to be something that gold slices through on its way to the next equilibrium level next.
We have a very strong shareholder base and with US for years, we are I hope I'm one of their best performance, it's no constellation if you're not necessarily up the most in or up in absolute terms, but in relative terms, we've done right.
Well common refrain from our shareholders is that they get comfort that the owners live above the store.
The relationship between Greg and his team and myself, representing the largest shareholder are truly impeccable, but I can also say that the relationship that we enjoy with our shareholders Fidelity Paulson Blackrock Vanek first eagle.
Hope Ville X or a Jay a knee.
Imperia and we have wonderful shareholder base, everyone knows that if they want to talk to me all they have to do send me an email or send Melanie any email and I'm nothing if not responses from the opposite of reclusive, but the point here that I would stress is this if you want to know everything.
Which we've done well, we'll do in the future read our annual report from last year and from this year, we pride ourselves on having an annual report that is a comprehensive and transparent enough that when we actually go visit our shareholders. They want to talk about other stuff because they know and.
Exactly where we stand on every issue our Q in a is meant to be comprehensive.
Read it a lot of work goes into it a lot of calories, our burned up in doing it and that's to make your jobs easier.
Next.
So we have stakeholders, who recognize we have a tier one asset unique in its qualities as well as jurisdictional safety our balance sheet means that we do not have to raise money under duress at all to the contrary if them.
Market does stupid stuff and it goes into December Colibri rooms were one of the only companies it could actually buy back shares and do so without impairing our future to the contrary our production profile will be the largest pure gold mine in the safest jurisdiction. The leadership team could run I made.
Your mining company and once again I have to stress we're in a place that loves our asset we could not enjoy better support from our local partners and stakeholders Teekay see into listed there absolutely wonderful partners the stay.
Great and the federal government could not be more supportive of what we're doing.
Next.
[noise] the appendix.
Anyone can gain access to it and I now hand, the baton back to our CEO Greg.
Thank you.
Mr. Chairman, we would now open the lines for questions.
Thank you Sir we will now begin to question and answer session joined the question could you give me press Star then one on your telephone keypad, he will kick on and knowledge in your quick [laughter].
You're using speaking from please be copy a happy for pressing genkey.
Two we did all your question please press Pakistan.
We will talk for a moment at college going into Q.
Our first question is from Lucas pipes that with B. Riley FBR. Please go ahead.
Hey, good morning, everyone I hope everybody is safe and healthy and.
Great.
Have a.
Good good good safe place here to get to get through this unprecedented time [laughter].
Tom and and Greg I wanted to.
Ask first about kind of.
A question I get fairly frequently these today and that's in terms of the potential to tell us the mine here I'm, obviously, not but right now with the health and health concerns out there but.
With gold price is generally stronger.
What are your thoughts at this point.
What would you have to see from here to go into development.
I appreciate your thoughts thank you.
[noise] rig should I begin from a macro standpoint.
Sure.
In all filling the blanks Super. Thank you very much Lucas very good to hear your voice and I hope to you and your loved ones are doing fine.
To answer your question.
We've always said that the time to build Donlen extrinsic of the studies that are being done and optimizations in drilling and you know are the partners all being ready to go extrinsic of that hour.
You being that we are very bullish on the price of gold is the time is on our site.
We don't have use it or lose it provisions and my sense is that the moment will come I'm in a not dissimilar weight to the way that Justice Potter Steward one answered the question how do you define pornography I cant define it.
I know it when I see it.
And my sense is that we will see that with Nova gold stock in the Twentys and in the Thirtys with gold or I'm going to are approaching new highs.
When Barrick shareholders are clamoring for growth and in Safe places.
And so I think that we are more accuen can perhaps also because of the fact that we keep in close contact with some really really superb mines as shareholders. We're very attuned to the fact that this is the kind of things that you'll know it when you see it the true.
This is that every month that goes by another jurisdiction becomes more challenging than an investable.
And unfortunately I strongly believe that that's a trend that is not going to a date in anyway.
And so our view is that as Novagold becomes a go to stock because of its pure play status with Donlen, you're going to see different scenarios open up but I want to see the stock price right.
The multiples of where it is.
I think that's exactly the scenario that we are going to see so far this scenario is playing out almost as if I scripted it.
And so the best answer that I can see is.
We have smart people, who our shareholders, we keep in close touch with them as they say the owner lives above the the store, we know how to crystallize value.
This the play is proceeding as it was written.
Watch this space.
Greg do you want to answer on some of the things that the that we're doing Meanwhile.
Sure.
I think the best thing to do is yeah I'll go back in time, a two years ago. Yeah, there's we'd been conducting our ongoing optimization studies one of the concepts was doing a Ah you know building in stages, where to smaller higher grade starter project. So I two years ago, we drove 16 Olson.
Tremendous thickness is at a high grade intercept so we took that data and yeah really updated our geologic model.
And the program that we've just a hit the pause button on was really a.
Intended about 80 holes, which is the biggest program at Donlin in many years was intended to validate the new model. We're a high grade structural controls and also to look for extensions of high grade mineralization that would be my early in the life to the project both of which would.
Are you know certainly enhance the value. So you know events of overtaken us, but oh I'm optimistic that grabbed by mid summer. Maybe later will resume drilling and no answer the questions that were supposed to ourselves it could enhance the value.
Of the project so at least the focus for for this year will be a on the drilling and geology. If the project I think everybody knows our partner's CEO Dr. Bristow is there geologists and a very keen interest in a geology. So we're we're all anxious to Ah you know when the time is right. We can do so safely.
They get back to our our drilling so that will you know really take us through probably to the ended the year and if not early into next year and that will then be in a position to make a decision on.
Updating feasibility study and in the meantime will continue to wrap up our remaining state permits.
That's very helpful. I appreciate all of that color and then just quick follow up on kind of the gold market more broadly.
Tom You mentioned.
Gold is still under owned under allocated could you expand on that just a little bit I think that's a point many of us that are little bit closer to the goal or investments based off overlooking forget.
And then just in terms of to pathway from here, obviously, the markets broadly has and super choppy and Gogo and gold miners got a little bit mixed up and limit.
Well, so kind of when you think through what the year may have in store I know, it's difficult markets or so turbulent, but but how do you think kind of gold will navigate its way through that I would appreciate your perspective on the special thanks.
Sure.
First of all gold I'm getting hit at the outset of financial crisis.
Is not unusual in fact, it happened during the financial crisis, and Oh, eight or nine when it really hit gold was nearly $700 an ounce. It went to 600 and I remember so many people were telling me or asking me how could they.
Possibly happen, it's not working and I sit and wait it is working well how can you say that I said, because it's giving people in exit there no bids for what they want to sell gold is something you can always find a buyer for weight watch what happens next it'll take out the 700 and.
You'll see that's exactly what happened.
When when I when I was interviewed and it's it's even more the case in silver, but just to give you a sense of the sentiment so in silver and I said this.
No. It was on the you know the Bloomberg show what happens is in the financial crisis silver take sit on the Chin.
Big time, then it gets really hard hit.
Then as gold moves up as a monetary metal silver's monetary status moves it up in sympathy with gold and then because it is quote the poor man's gold. It outperforms gold there was a rhythm to these things so gold getting hit initially is normal when you see gold to take out the.
1700.
You're going to start to see much greater institutional interest in gold when it takes out the 1900 level. The 2000 2100 level 2200 level, you're going to see enormous interest I'm in the T.S. and then.
The the mining companies I would not be surprised and those scenarios to see and I pressed to thing this with all the cautionary statements that Melanie referenced at the beginning I would not be surprised to see Nova Golden the twentys or thirtys in those scenarios as people call up their brokers and say if.
Me and asset in a safe place that I'm not going to get fired for owning and with a management team that you Trust.
There aren't that many that's just the sad fact of the industry. So you're going to see the equivalent of Hoover dam going through in a garden hose for those assets that are in a safe place. So because of the small capitalization of the gold mining equities, you're going to see very very big moves before that.
Generalist starts to locate their money and the truth is people in the financial World often are much happier buying things after they've doubled tripled or quadrupled. They did they don't like to buy up when it was down because the implication is what do other people know that they don't so rising prices be get.
People, saying, Oh, it's now big enough to be an asset class remember bitcoin Bitcoin was derided and then at a certain point why only for the reason that surprise went up.
People said, Oh, it's now big enough to be investable now we can create Ats now we can have an l. location. The only difference was the price went up well, it's going has its own issues, but one thing about gold gold is the best brand.
The history of the World, It's a bigger brands an apple it's a bigger Brendan Coca Cola when gold goes up.
And people start to get gold fever, and there's a shareholder who's the who who if he's on we'll know I'm talking about him wouldn't go when people get gold fever forget. It you know it's everybody wants it whether they're in the entities or is there in Papua New Guinea.
It's recognized and everybody in principle once more of it so.
It's the kind of thing that watch as the fundamentals unfold and then the torrent of money coming into something so under owned both as a metal.
In terms of its real free float and in terms of the equities particular, particularly especially those in jurisdictionally investable areas, it's going to be the generational trade of our lifetime.
So just watch this space, it's happening, it's it's coming into play the jurisdictional issues Alones, which nobody talks about really I mean, they're only going to become accentuated by the economic cycles that we're in so as people realize less goal.
It is going to come out mining projects that people might have thought would be finance will never be finance and also that there aren't that many companies, which are in safe places you're going to see the kinds of moves I'm not talking about something that hasn't been seen but you're going to see the kinds of moves.
That you saw in bitcoin the difference being that.
Gold mines can't be recreated on a computer they can't be they can't be recreated integral Raj you either have the asset when the game of musical chairs a ends or you don't and as I said, even if you find that day. It will take you 10, 15 20 years for it to come on.
As to the market, it's a perfect storm.
And for those people, who are gold bowls extrinsic of any of the fear Factor's I am I hasten to add once again, you're starting to see the chickens come home to roost and it will be.
An amazing site, when the others, who haven't been bullish, but our persuaded by the values and the guns locks and the Mobiuss is I'm just tutors start to come into the picture one thing because they're listening to me per se.
But they'll be listening to someone else and it will be from many different reasons and you know what.
We'll take it.
Okay.
Tom This is very helpful. I really appreciate all all your color.
Matt that gold can help so ER.
Not not get on unchanged like Bitcoin Atlas quantum computer. So so that will be something interesting to see other they fit the years to come but I hope everybody state, Dave and is healthy and best of luck. During this time. Thank you very much.
Thank you Lucas.
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Mhm.
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