Q1 2020 Earnings Call
There will be an opportunity to ask questions.
He joined a question Q Yumi Press Star then one on your telephone keypad.
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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 in over gold 2021st quarter financial results for an update on the Donlin Gold project on today's call. We have Dr., Tom Shanklin, Novagold Sherman, Greg Lang, Novagolds, President and CEO, and David Ottewell, Nova gold to.
As CFO.
At the end of the webcast, we will take questions close 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 and goals, which are likely to involve risks detailed in our various Edgar and SEDAR filings and forward looking disclaimers included in this 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.
Our most important objective right now is to secure health and safety ever employees.
Burton others and contractors <unk>.
In that regard for employees are working from home.
Working all non essential travel.
And you say most visit blockers pursue engaged and social distance.
No the Golden our partner through Donlin Gold L Street.
Implemented a wide range you set of policies consistent with the state of Alaska's health and social service requirements and recommendation.
These precautions include screening all employees and contractors visiting trip to the site.
Evaluating and each individual who might be exhibiting symptoms to determine if they need to be isolated.
Implementing more frequent sanitation practices.
Conducting safety meetings to address.
The current situation.
The Donlin gold drill program commenced as planned in February and continued through March However, donlin gold will temporary pause the program.
Go into care and maintenance and killed travel restrictions and other cobot 19 measures in the region or used and it is safe for employees and contractors.
To return to the site.
Moving to slide five Donlin gold in Alaska is a 50 50 joint venture with.
Eric.
Alaskan mining is an important part of the Alaskan economy, and becoming even more important.
As the oil industry and tourism or collapsing.
There are six producing mines and numerous exploration and development projects that are advancing across the state as shown on the map.
The future of smaller communities is a serious concern for many residents of western Oscar and Donlin Gold offers a brighter future with training and opportunities for young people to move closer to home and continue their substance way of lives.
With other resource and streams experience seem low or no growth.
The opportunities in mining present, good paying jobs.
Closer to home for Alaskans living in the rural parts of the state.
Slide six highlights that first quarter operational activities with the receipt of several state permits early in the year and preparations for the drill program. We had three rigs on site in early March.
We've also continued the advancement of the multi year Sag investigation needed for the Alaska Damn safety surgery patients and we continued our community investment initiatives with our native partners Scherlis Fair and P. Casey.
Our record of successful permitting continued with the receipt of Donlin Gold final easements for the access road and fiber optic cables.
Including the receipt of land use and land use permit and authorizations for the proposed transportation facilities on state Atlanta.
Additionally, the division of oil and gas finalize the right away lease for the natural gas pipeline.
All of this happened just in 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 on your commitment to environmental.
And governance best practices.
Donlin gold progress.
Ongoing optimization efforts to establish a plan for 2020 that would allow the owners or greater understanding of the recently prepare geologic model and high grade mineralization controls.
All of which has the potential to benefit the project.
Will serve as a basis for an updated study.
The drill rigs on site are completing their holes and then we will pause to program and go into care and maintenance.
No, but gold's most important objectives is to secure the health and safety of its employees and they will not return to the site.
No it is safe to do so.
While the global Health crisis has a short term impact.
It is not yet known how long the program timeline will need to be adjusted.
We will keep you posted.
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 nominally in mobile gold participated in numerous community activities in projects as highlighted on slide eight.
Donlin worked with Teekay C and the state of Alaska to upgrade.
And improve health and safety standards of water and sewer services in the middle customers, whom area.
In partnership with Teekay see the village of could create and then the Pine you tried gong unfunded and provide a technical data to extend and maintain the ice road through the the the winter months.
This improved the safety and access to remote communities.
We routinely me with our partners boards, and we've been able to project update to Teekay C.
And the middle class couldn't villages.
We also saw courted regional basketball tournaments in the Battle 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 made corporation partners the meetings and travel Council and stakeholder meetings more recently, we have of course shifting to phone calls and conference calls.
Given the ongoing situation.
Well the team recognizes the success of the state permits issued in the first quarter three will we remind our shareholders at Donlin Gold project is already.
Federally permitted.
Numerous state permits are in hand as listed on the table on slide nine.
One of the remaining state permits 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, David Ottewell.
Dave.
Thank you Greg.
[noise] first quarter 2020 cash flows are highlighted on slide 10.
Cash used in operations was 2.6 million higher than in 2019.
The majority of the increase resulted from higher Donlin gold funding the advances in real program.
And withholding taxes eight Unvested PS use in addition to lower interest income.
[music].
The increase in our stock price and its performance in relation to the S&P TSX Global Gold index led to a higher bested value Keith Hughes and resulted in more taxes would help.
We ended the quarter with cash and term deposits of 140.7 million.
On slide.
Slide 10 highlights of our great performance or first quarter 2020, our net loss increased by 0.3 million to 6.6 million, primarily due to higher gnh and donlin cost as well as lower interest income.
The DNA increase resulted 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 continue to anticipate spending of approximately 31 million in 2020.
Which includes 20 million.
Fund our share of expenditures at Donlin Gold project, and 11 million for general and administrative cost.
At Donlin gold $11 million plan for the drilling program and with the remaining 9 million for permitting in kidney engagement.
Back to our CEO Greg.
Okay.
Thank you Dave.
Past couple of months have been memorable to the Gulf markets. It's times like these that we are particularly reassured to be invested in a unique project like Donlin gold.
Federally permitted project in a jurisdiction where the rule of law is not a novelty with strong long term partnerships with Chairlifts fair and Teekay C.
Which are all rare attributes in today's world of declining grades in smaller deposits.
On slide 13, we compare donlin golds 40 million ounces.
213, other development stage projects in the industry.
You look at the peer group.
Donlins resource is better than twice the size of the nearest competitors.
Five times the size of the air.
While the scale of the resources rare.
Another is the grade as shown on slide 14.
The average creative 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 fit the global average grade continued to decrease year over year from 2018 to 2019.
With scale and grade if it was built today donlin gold would be the largest producing gold mining industry.
For the long term investor Theres additional value that comes with a mine that has a multi decade lifespan.
Almost 30 years of production just from the current resource.
As envisioned Donlin gold would average in May and then 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.
The accident Louis deposits can be seen on slide 16, as you can see the topography at Donlin is favorable for development.
It is rare in mining projects today at both the mineral and surface rights to the project land are privately owned.
In our case by our long term partners chilis there.
And the Teekay C.
Shown on slide 17, the ackman Louis deposits contain the resources, but occupy mainly three kilometers of eight kilometer gold bearing tree.
We've done extensive drilling over 1400 holes totaling 340000 meters.
Our focus is continuing to optimize the project.
Are there clearly future opportunities for expansion.
Of the resource along your known mineralized trend.
When their time is right.
We will resume exploration and drilling.
There's tremendous value and having a project like donlin gold on private land.
Alistair owns and mineral rights and locally Teekay see owns the surface rights.
We have life of mine agreements with both partners, who have been deeply involved and supported from the start as highlighted on slide 18.
We've been partner since 1995, and we're thankful for chilis care and Teekay, Steve long term support.
And commitment to the project success.
We support their mandate.
Thanks to help them develop their land for the economic benefit of the regions and all stakeholders involved.
Got a genuine owners interest and seeing the project go for them.
Times like this we are all experiencing or responding to the Kogan 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.
Engagement helps 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 wellbeing and well being of the communities.
And assistance to you figure for our product.
We're partnering to improve the environment.
We're always recognizing the importance of preserving traditional lifestyles.
While bringing 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 Captain.
Who will give us his insights into gold.
Huh.
Thank you very much Greg and I, certainly hope that all of you were on the coal.
And those of our friends in shareholders, who arent that to our words full upon you.
In a state of safety and good health these are.
Unfortunately, the very interesting times that the Chinese would refer to and all of us have to be an even greater.
Cognizance of the challenges that will 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 asset and expression to which I'm indebted to mark Bristow at Barrick.
But also some thing, 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 goldcorp at the time.
When he came into Nova gold I came into Novagold had 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 in.
The world, which combines the reserve grade production capability.
Exploration potential the mine life, the leverage to gold and 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 written 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 markets.
But we went through a sick a cyclical downturn from 2011 ish until last year.
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 had had its last real pulled 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.
The chart pattern will not be dissimilar to that which I'm really has characterize the Dow Jones from the early 19 eighties to where it has been recently the 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, but on occasion. It rhymes you can see that gold is actually playing out the bull market in a way that is not dissimilar.
What we saw in the 19 seventies I do believe that the chart patterns and chart patterns to me are just brain waves on the historian by background I'm I don't believe that fit technicals rule, but on the other hand have learned that if the fundamentals are right and the technicals corroborate.
Them.
You really know 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 beginning of the next leg in the secular bull market like number one having taken us from 250 to 1900 like number two it pulled.
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've seen 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 prices much higher than I had been forecasting over the longer term and the reason for that.
That is not so much a consequence of dependent 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.
That would lead to measures.
Which would be from a macro standpoint very gold bullish.
That's happening it was going to happen any way those who are bullish on gold are not in any way profiteers, they're just people who believe in a currency that cannot be printed regardless of circumstances.
We can move to the next slide.
Again economics, one a 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 who can remember with peak oil looks like.
Like 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 is that a new technology, such as fracking or horizontal drilling cannot.
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 a time.
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 when to Yanacocha and set off the animal spirits, the gold where the gold is philosophy that took people.
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.
The Intel for I think made that come in several years ago and he was spot on and the truth is we're seeing it in the market.
You can move on.
Question about central banks central banks or.
What I called the ultimate insider buyers that there's 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 they consider to be reserves are 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 through.
Through the nine days 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 ILS. We are is that over the course of the last year being bullish on gold has gone from something that is derided.
Or markets 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 which.
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 goal 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 its.
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 multiply 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 market 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 gold 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 this 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 park.
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 owner.
In 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.
The 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.
I have as the Kaplan doctrine.
I liked it definitely appeal to my Vanity and the truth is that from the time that I enunciated. It's doctrine in 2012 at a conference that John Paulson convened a on 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 of 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 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 to their I see why they went into a place where there was de facto where do your age.
Ah 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 own.
Next.
There's no doubt in my mind that Donlin, 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 wouldn't 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 in donlen.
The 39 million ounces would be the largest the 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.
10, none.
That's just along the eight kilometers, which we've drilled in the past the 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 is in 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 in 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 boasts 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 conducted in 2000 concluded in 2011, a lot of input costs have fallen since then unfortunately, they fall in 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 zero doubt 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 a Indonesia. There was no Africa, there was no Peru, even it was.
Canada, Australia, South Africa, and the United States.
You know at 2000 dollar gold I believe the potential is for.
Novagold 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 and or up in absolute terms, but in relative terms, we've done rather well of common refrain from our shareholders is that they get comfort that the owners live above the store.
Our 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 Tocqueville X or a J any.
In period, 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 mail and I'm 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.
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 assets 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 the.
Market does stupid stuff and it goes into December Colibri rooms were one of the only companies that 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 a major 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 Angeles to there absolutely wonderful partners the state and the federal government could not be more supportive of what we're doing.
Next.
The appendix.
Anyone can gain access to it and I now hand, the baton back to our CEO Greg.
Right.
Thank you.
Mr. Chairman, we would now open the line for questions.
Thank you Sir we will now begin the question and answer session joined your question Q Any press Star then one on your telephone keypad.
Okay cone and knowledge and uniquely.
So if you're using a beacon from please pick up you have to be for pressing Jensen.
Do we do know your question please press package.
We will talk for a moment at college going into Q.
Our third question its drums, Lucas pipes that with B. Riley FBR. Please go ahead.
Hey, good morning, everyone I hope everybody is safe and healthy and.
We do 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 mean, obviously not right now with the health health concerns out there but.
With gold prices generally stronger.
What are your thoughts at at this point.
What would you have to see from here to go into development.
I appreciate your thoughts thank you.
Greg should I begin from a macro standpoint.
Sure and 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.
Our view 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 that 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 but 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 we're 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 really 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 and 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 you know go back in time, a two years ago nodes, we'd been conducting our ongoing optimization studies.
And the concepts was a are you know broken in stages, where to smaller higher grade started project.
Our two years ago, Redrill 16 holes and a tremendous Oh goodness is at a high grade intercept so we took that data and yeah really updated our geologic model.
And the program that.
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 mine early in the life for the project both of which would Ah, yes, certainly enhance the value. So you know events of overtaken us, but oh I'm optimistic that down 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 at the project I think everybody knows our partner's CEO Dr. Bristow is or geologists and the very keen interest in a geology. So we're we're all actions to you know when the time is right. We can do so safely.
They get back to our our drilling so that will really take us through probably to the end of year not early into next year and that will then be in a position to make a decision and.
Updating usability studies and in the meantime will continue to wrap up our remaining stake.
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 allocate it could you expand on that just a little bit I think thats a coin many of us that are little bit closely to the gold investments based off overlooking forget.
And then just in terms of the pathway from here, obviously, the markets broadly asked and Super choppy and Gogo and gold miners got a little bit mixed up and limit.
And as well so kind of when you think through.
The year May have an store I know it's difficult markets.
So turbulent, but well how do you think kind of gold will navigate its way through that I would appreciate your perspective on these questions. Thanks.
Sure.
First of all goal.
Getting hit at the outset of a 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.
That 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 are 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 seven hundreds 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 you know it was on the you know the Bloomberg show what happens is in the financial crisis.
Silver takes it 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 men'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 to.
1700.
You're going to starts 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 in the T.S. and then.
The the mining companies I would not be surprised and those scenarios to see and I pressed the thing this with all the cautionary statements that Melanie referenced at the beginning I would not be surprised to see novagold and 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 the 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 an 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 the end.
Generalist starts to allocate 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's down because the implication is what do other people know that they don't so rising prices be get people, saying Oh it.
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 the price 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 bitcoin has its own issues, but one thing about gold gold is the best brand in the history of the World. It's a bigger brands in 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 it's everybody wants it whether they're in the end deals or is there in a Papa 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 alone, 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 financed 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.
Is 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 in a garage you either have the assets.
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 onto the market, it's a perfect storm.
And for those people, who are gold bowls extrinsic of any of the fear Factor's I I hasten to add once again, you are starting to see the chickens come home to roost and it will be.
And amazing site, when the others, who haven't been bullish, but our persuaded by the values and the gun blocks and the Mobiuss is I'm just tutors.
Start to come into the picture won't be because they're listening to me per se, but there'll be listening to someone else and it will be for many different reasons and you know what.
We'll take it.
Okay.
Congress is very helpful. I really appreciate all all your color.
At that goal can help so.
Not not get on unchanged since like Bitcoin Atlas quantum computer. So so there will be something interesting to see over the.
For years to come but.
By the state, Dave and is healthy and luck. During this time, thank you very much.
Thank you Lucas.
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