Q2 2022 NovaGold Resources Inc Earnings Call

Speaker 1: The.

Speaker 1: C.

Speaker 2: Thank you for standing by. This is the conference operator. Welcome to the Nova gold second quarter 2022 financial results conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation there'll be an opportunity to ask questions. To join the quest Q, you may press Star than one on your telephone vpad should you need assistance. During the conference call, you may signal an operator by pressing Star and zero. Webcast viewers may submit questions through the text box on the lower right corner of the webcast frame.

Speaker 2: Should ye e assistance during the conference call. You may signal an operator by pressing Star and zero. I would now like to turn the conference over to Melanie henesy, Vice President, corporate communications. Please go ahead.

Speaker 3: Thank you, ariel. Good morning everyone. We are pleased that you have joined us for NovaGold's 2022 second quarter financial results and also for an update on the domin gold project.

Speaker 3: On today's call. We have Greg Lang, over gold's President and CEO , and David otwellde, gold' Vice President and CFO . At the end of the webcast we will take questions on the phone and respond to the questions received by e-mail.

Speaker 3: I would like to remind participants that, as stated on Slide 3, any statements made today may contain forward-looking information, such as projections and goals which are likely to involve risk, detail in our various Ed curren or filings and forward-looking disclaimers included in this presentation. I now have the pleasure of turning the presentation over to our presentident, CEO bgline Greg.

Speaker 4: Thank you, Melanie.

Speaker 4: I'm glad you could all join us today.

Speaker 4: Before we get started, I want to take a moment to acknowledge the recent and tragic passing of our dear friend, colleague and long time Director eaggo levenah.

Speaker 4: With whom I had the pleasure of working with for well over 30 years.

Speaker 4: He will be sorely missed, as will his counsel, his characteristic sense of humor.

Speaker 4: And his love of life.

Speaker 4: Noble gold's Chairman, DR Kaplan, wrote a beautiful tribute to ere. This can be found on our website.

Speaker 4: On your Board of Directors.

Speaker 5: Last year's throughill program finished strongly with high-grade intercepts and some of the best row results for an open pit project industry-wide.

Speaker 4: The final results for the 2021 drill program were released in the first quarter and provided the basis for activities that commenced at the downlin gold project site earlier in this year in February .

Speaker 4: With the largest forecast spend on the project in over a decade.

Speaker 4: The exllent excellent results of 2021. We are encouraged by the significant drill program for this year.

Speaker 4: Drilling is focused on upside prospects in the ACMA and Lewis pits, where drilling has thus far been limited.

Speaker 6: In the second quarter, the team of 150 people at Donlin were advancing drill activities at a good pace, with more than 70% of the planned drilling completed to date.

Speaker 4: We expect the first set of assay results from this program to be issued this summer.

Speaker 4: Geologic modeling and interpretation. Work to update the resource model is underway.

Speaker 4: Including engineering activities, for use in an updated feasibility study that, subject to the Donlin Gold Board approval, is expected to commence in the second half of this year.

Speaker 5: thethirty-four thousand leader drill program is focused on technical explora: tion, tightesspace grid drilling both inpit and below pit in the ACMA and Lewis areas, as shown in the circle areas on Slide seven.

Speaker 4: These results will be added to the geologic modeling and interpretation work for an updated resource model.

Speaker 4: This program will enable the commencement of an updated feasibility study.

Speaker 5: While we continue with the drill program, permitting and modeling work, we have not lost sight of one of the project's most important attributes.

Speaker 4: And Matt comallin, gold's exploration potential.

Speaker 4: As highlighted on Slide Eight.

Speaker 4: The incredible upside exists to increase ounces and extend the mine life beyond the already known three decades at Donlin.

Speaker 4: A footprint that covers only three kilometers of an eight kilometer gold bearing trend, which is on less than 5% of our total land package up in Alaska.

Speaker 5: stomon gold's 2022 expenditures are anticipated to be $6 million, as shown on Slide nine.

Speaker 4: For which nogold is responsible for half.

Speaker 4: Beyond drilling, geologic modeling and interpretation work. This commitment also supports the advancement of environmental activities and finances our community and external affairs efforts.

Speaker 5: The health and safety of our workforce at donland gold is a priority. Both Noble gold and donland gold have implemented strict safety protocols and COVID-19 mitigation measures remain in place to ensure the staff rotations are conducted in both an efficient and safe manner.

Speaker 4: Slide 10 shows some of our doommon gold employees during the field season.

Speaker 6: bonthem currently has 150 employees, contractors and student interns.

Speaker 4: Most of which are local hires from the 24 communities in the Yukon cuscrim region of Alaska.

Speaker 7: Slide eleven.

Speaker 4: Contains noteworthy updates in the second quarter, including a list of all the major federal and state permits received since two thousand and twelve.

Speaker 8: The division of what Alaska's division of environmental protection water permit upheld before a one certification of the clean water Act.

Speaker 4: Following the state's decision, earth Justice and OC requested that the commissioner conduct additional judcarry hearings on the part of the vision of water's decision related to potential water temperature effects in crooked CTE.

Speaker 6: The Commissioner denied the appeal on the state of Alaska's issuance of water rights for the mine and transportation facilities over in the second quarter. Earth Justice appeal his decision to the Alaska's superior court.

Speaker 4: A briefing schedule has not been set by the court, and dononland gold and the owners will continue to support the state of Alaska in its defense of their thorough and diligent permitting processes.

Speaker 6: Down and gold has applied for a new air quality permit, which is expected to be in place when the extension of the current permit expires, about a year from now.

Speaker 4: We expect the same of Alaska will issue a draft for the new permit from public comment in the second half of this year.

Speaker 7: Dona gove is fortunate to enjoy time tested partnerships with jista and TKC owners of mineral and surface rights.

Speaker 4: This project is on private land that was designated for mining activities through the 1971 Alaska Native claim settlement Act.

Speaker 4: This is a key attribute that distinguishes donlling for most other mining assets in Alaska.

Speaker 6: Our long-standing commitment to meaningful tribal consultation throughout the project development and permitting has been demonstrated over decades of reliable and independent engagement with the communities.

Speaker 6: And it shows.

Speaker 4: donomond gold received its federal permits in 2018 and most of the key permits from the state are also in place.

Speaker 4: This represents a tremendous achievement and is the product of substantial undertaking over many years that ensured a diligent thorough, transparent and inclusive process for all stakeholders from a Y-K region.

Speaker 6: In the second quarter, donlinggold participated in and sponred multiple local events with toista and TKC, providing a wide range of critical support and engagement activities throughout the region.

Speaker 5: As shown on Slide 13, some of these dollin gold activities included.

Speaker 4: Signing a new agreement with sonony River, a village in the lik region. We now have a total of nine shared value statements that include educational, environmental and social initiatives to support the villages.

Speaker 7: sponsoring statewide events, including the native youth Olympics and the aric encounters Symposium, the largest annual Arctic policy event in the United States.

Speaker 8: As a principal sponsor of the fiftieth anniversary of the ID arrived.

Speaker 8: A thousand miles led Dog race, often referred to as the last great race.

Speaker 4: We are also working with pkc to charter flights to send drinking water to Red devil after a flood temporarily contaminated the local wells.

Speaker 4: We are also sponsoring and participating in numerous other events during the second quarter.

Speaker 5: As shown on Slide 14, Noble gold has approached the disclosure of our environmental, social and government's performance pragmatically as a development-stage company.

Speaker 8: Disclosing benchmarks that we believe are the most relevant measures of our performance at this stage.

Speaker 9: Noble goal. Recognizes the importance of climate change and the impacts on decisions in the y K region.

Speaker 4: The investment community project design, compliance and corporate governance.

Speaker 8: We believe that mines can be developed in collaboration with people who have the local knowledge to help minimize the environmental impacts.

Speaker 8: While providing benefits from economic activity.

Speaker 8: We recently released our 2021 sustainability report.

Speaker 8: That outlines are work that has been done both at Noble gold and donwin gold.

Speaker 8: You can view this report on our website under the sustainability tab.

Speaker 7: I'll now turn the call over to Dave otwell novvo goes, Vice President and CFO , who will give an update on our second quarter financials.

Speaker 10: Dave.

Speaker 10: Thanks Greg. Turning to Slide 16, we highlight our second quarter operating performance.

Speaker 11: We reported an operating loss of 13.8 million in the quarterthe four point six million increase from 2021, primarily due to the expanded donomlin gold work program.

Speaker 11: Other income extent includes an increase in the fair value market of security and foreign exchange movements, partially offset by lower accretion income due to the maturity of the sey-five million remont note in July last year.

Speaker 9: Second quarter cash flows are highlighted on Slide seventeen.

Speaker 11: Cash and cash equivalent decreased by 12.8 million, primarily to fund our share of dolling gold and also for corporate administrative expenses.

Speaker 11: Compared to the prior year quarter. The increase in spending was again due to donlling gold's expanded work program.

Speaker 10: On Slide 18, we know our strong treasury.

Speaker 11: Our financial position includes cash and cash equivalent to seventy-two million.

Speaker 11: Term deposits of 70.000025 trillion due from newont in 2020. -three.

Speaker 11: Over the full year, we continue to anticipate spending 46 million, including three million of dollar, 13 million for corporate gma and three million for withholding taxes on share-based compensation and working capital.

Speaker 11: I will now turn the presentation back over to Greg Lang Greg.

Speaker 6: Thank you, Dave.

Speaker 8: In our view, dond gold is a rare gold development asset.

Speaker 8: The reason for such a unique status, beyond providing investors with pure leverage to gold.

Speaker 8: The reason for such a unique status, beyond providing investors with pure leverage to gold, lies in the project's key attributes.

Speaker 4: As shown on Slide 19, namely size. No other goal of mine has started production with three million ounces and measured the indicated resources.

Speaker 8: scot's scale, expected to be a, may announce a year producer with the projected life of at least 27 years.

Speaker 8: We'll have low production cost due to the high gren for a large scale open pit at 200 a quarter grams, nearly twice the industry average.

Speaker 4: Growth exploration potential are planned beyond the 27 years of production.

Speaker 4: And being in Alaska, one of the great mining jurisdictions in the world, and our private land designated for mining.

Speaker 7: On Slide twenty.

Speaker 4: donland gold is compared to the other development-stage projects.

Speaker 8: At 39 million ounces. It's far and away.

Speaker 8: The largest of emerging projects in the gold industry 'were in production today for the feasibility study. We would the largest gold mine in the industry.

Speaker 8: With an average production of over one million ounces a year, approximately four times.

Speaker 8: Over a million ounces a year, approximately four times the other development stage projects.

Speaker 5: The next slide just compares the top three goal producing operations and the far the five largest development stage projects.

Speaker 8: Clearly donlwin is in the top Tier of gold mining assets.

Speaker 5: The grade at two and a quarter grams is double the current industry average.

Speaker 8: Which provides on gold.

Speaker 8: Which provides, on gold, exceptionally low cash costs.

Speaker 5: Our stock shareholders, some of whom have provided support for well over a decade.

Speaker 4: Together form an important part of the equation. On Slide 24 our largest institutional shareholders, such as Paulson and company.

Speaker 8: Fidelity, black rock, the Saudi public investment fund first ego and xor see the investment opportunity in novblegold and clearly understand of the extraordinary gold development asset at Donlin can provide true octane to their portfolios.

Speaker 4: As the strong TAs for gold unfolds and gathers momentum. The company is very appreciative of their continued interest and commitment.

Speaker 6: In closing, it is our belief that donomin gold is poised to become one of the greatest gold stories in the development space.

Speaker 4: We have protected these resources substantially, derisk the project over many years and are committed.

Speaker 4: Responsible mining and dedicated to building trust and transparency.

Speaker 4: As we continue to work, five ways to improve and enhance the project.

Speaker 8: To build a lasting legacythank you. We will now open the call for questions.

Speaker 5: Thank you. We will now begin the question-and-answer sessionto join the question Q, you may press Star than one on your telephone cpad. You'll hear t acknowledging your request.

Speaker 2: If you are using a speaker phone, Please pick up your hands set before pressing any keys to withjoraw your question. Please press Star that two we will pause for a moment as callors join the queue. Once again to join the question qyou please press Star than one now.

Speaker 2: Once again: if you have a question, please press starter than one.

Speaker 11: Thank you everyone. Now I have there been any questions, come in our online.

Speaker 2: We do have a question from the phone line.

Speaker 2: Our first question comes from fran. Es dzto private, Please go ahead.

Speaker 12: Hi no, the gold know I really love your company, but I just want to ask a simple question.

Speaker 12: When do you plan on M starting to mindine?

Speaker 11: All right fran, Thank you for your comment on the company and following us. We're this year we'll be finishing up the drill program and we have stated with our partner that we will make a decision on the feasibility study in the second half of this year. Assuming we move forward the updated feasibility study, we'll take about a year your, and at that point we will be in a position to make a construction decision and, depending on the scale of the project, approximately three to four years to build.

Speaker 5: Because So we're looking at like.

Speaker 12: Maybe two years before we startand then, as we start, in the mind that built another four year. So we'll actually look at at about five or six years down the road.

Speaker 11: That's correct for.

Speaker 6: Okay perfect, So we say I've got a good answer. I thank you very, very much. We have been the call over you guys for better than 15 years and I always, always liked your company.

Speaker 4: Well Thank you for that brand. We appreciate your dedication over the ups and downs over the last 15 years.

Speaker 5: Once again. If you have a question, please press Star than oneour next question comes from Lucas Pipes of b-riley Securities. Please go ahead.

Speaker 13: A good good morning everyone.

Speaker 14: I wanted to ask- ask a quick question- that the total budget for donalin, six million, splits 50: 50.

Speaker 13: one to to what extent are you concerned that inflationary pressures may make ert upside pressure? On on, on on that budget and then So you look out to next year. What are some of the items that?

Speaker 13: May may drop off, you know, given given the drill program has been completed and what it would, some of the items that might be added again looking out to next year. Thank you, Thank you very much.

Speaker 4: allright Lucas well Thank you Thank you for joining the call on your question. I'll break it into pieces as far as the inflationary pressures on this year's program. Most of our.

Speaker 4: Expenditure this year is drilling related and thus far our productivity has been very strong at the drill rigs and.

Speaker 4: Because there is such a high-fixed component of operating at camp, the main thing you can do to control the cost is have good drill productivity.

Speaker 4: So we've been achieving great productivity. We're about 70% through the program and because of the productivity we anticipate our drilling related costs- which is most of our budget- to come in below the budget. So inflation: we're certainly feeling some of the effects, such as fuel for the camp and bring employees in and out, but by and large the impact has been.

Speaker 4: Minimal at the worst this year. You're looking forward to next year. I don't anticipate.

Speaker 4: Significant inflationary pressures as we move forward with the feasibility study and I think yes certainly as we update the new feasibility study. We will take into account current market conditions into our capital and operating costs. So.

Speaker 4: We're fortunate that we're at the stage right now, while we are not really we're- mindful of what's happening with inflation, but it's not impacting our day-to-day activities this year.

Speaker 15: Thank you, Lucas. Did mat address the question you made? thats.

Speaker 16: Yes that's, that's. That's very helpful in terms of the the, the drill program. When X when would it be?

Speaker 13: Fully completed. In terms of spendingwell we are. We've got about 70% of the drilling completed to date and the assays are coming in. A little slowly, this Sue, but we will have the be ready to release the first approximately one-third of the results in the near future. We would expect that the current rate of drilling, that drilling will be done sometime in September , October range and that we would have a couple months lag time on continuing to get the assays back.

Speaker 5: It got it okay. That's. That's very helpful right, really really appreciate the color and that's the fluck.

Speaker 5: itgot itokay, that's. That's very helpful, right? Really really appreciate the color and that's the fluck. All right, Thank you because.

Speaker 1: This concludes the question-and-answer session. I would like to turn the conference back over to Greg for any closing remarks.

Speaker 15: Thank you operator, and thank you everyone for taking the time to get an update on novvogo this morning.

Speaker 17: Thank this concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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