Q2 2022 NovaGold Resources Inc Earnings Call

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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 question Q, you may press Star than one on your telephone key pad 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.

Should you need 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.

Thank you, ariel. Good morning everyone. We are pleased that you have joined us for nov gold's 2022 second quarter financial results and also for an update on the domin gold project. On today's call we have Greg langang, nogold' President and CEO , and David otwell, no 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 eil.

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 curarrency or filings and forward-looking disclaimers included in this presentation. I now have the pleasure of turning the presentation over to our President, CEO gregline fr.

Thank you, Melanie.

I'm glad you could all join us today.

Before we get started I want to take a moment to acknowledge the recent.

Tragic passion of our dearfriend colleague.

And long time Director eager leventh.

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

It will be surely murse.

As will his counsel.

It's characteristic sense of humor.

And his love of life.

nogo gold's Chairman, DR kaplplan, wrote a beautiful tribute to ere. This can be found on our website.

On your Board of directorves.

F year drill program finished strongly with high-grade intercepts and some of the best row results for an open-pit project industry-wide.

Final results for the 2021 drill program were released in the first quarter and provided the basis for activities that demenced at the balon gold project site earlier this year in February .

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

Following the ex excellent results of 2021, we are encouraged by the significant drill program for this year.

Drilling is focused on upside prospects in the ACMA and Lewis pits were drilling has stus far been limited.

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.

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

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

Including engineering activities, for use in an updated feasibility study that, subject to the dond gold Board approval, is expected to commence in the second half of this year.

34 thousand meter drill program is focused on technical exploration, tight-based grid drilling. Both inpit and below pit is the ACMA and Lewis areas, as shown in the circle areas on Slide seven.

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

This program will enable the commenceionate of an updated feasibility study.

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.

And that common gold's exploration potential.

I highlighted on Slide Eight.

The incredible upside exists to increase ounces and extend the mine life beyond the already known three decades of donllet.

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.

Common gold's 2022 expenditures are anticipated to be $6 million, as shown on Slide nine.

But which nogold is responsible for half?

Beyond drilling, theologic modeling and interpretation work. This commitment also supports the advancement of environmental activities and finances our community and external Affairs efforts.

The health and safety of our workforce at donland gold is a priority. Both Noble gold and donllinggold 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.

Slide 10 shows some of our dommon Golden employees during the field season.

dond currently has 150 employees, contractors and student interns.

Most of which are local hires from the 24 communities in the Yukon cus crim region of Alaska.

Slide eleven.

Contains noteworthy updates in the second quarter, including not list of all the major federal and state permits received since through thousand and twelve.

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

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

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 appealed his decision to the Alaska superior court.

A briefing standchedule has not been set by the court and non-line gold and the owners will continue to support the state of Alaska in its defense of their thorough and diligent permitting processes.

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

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

donand gove is fortunate to enjoy time tested partnerships with jista and TKC owners of mineral and surface rights.

This project is on private land that was designated for mining activities through the 1971 alastinnative claim settlement Act.

The key attribute that distinguishes Donlin the most other mining assets in Alaska.

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.

And it shows.

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

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

In the second quarter, bling gold participated in and sponsored multiple local events with sista and ptkc, providing a wide range of critical support and engagement activities throughout the region.

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

Signing a new agreement with stony 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.

Offering statewide events, including the native youth Olympics and the Arctic encounred Symposium, the largest annual Arctic policy event in the United States.

As a principal sponsor of the fiftieth anniversary of the ID arrid.

A thousand miles sled Dog race, often referred to as the last great race.

We're also working with ptkc to charter flightskes to send drinking water to Red devil after a flood temporarily contaminated the local wells.

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

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

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

Double gold recognizes the importance of climate change and the impacts on decisions in the y K region.

The investment community project design, compliance and corporate governance.

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

While providing benefits from economic activity.

We recently released our 2021 sustainability report.

That outlines for work that has been done, both at Noble goal and dominant goal.

You can view this report on our website under the sustainability path.

I'll now turn the call over to daveid otwell noblegos, Vice President and CFO , who will give an update on our second quarter financials.

depe.

Thanks Greg.

Turning to Slide 16, we highlight our second quarter operating performance.

We were reported an operating loss of 13.8 million in the quarter, the four point six million increase from 2021, primarily due to the expanded donling gold work program.

Other income extentse includes an increase in the fair value market Securities and foreign exchange movements, partially offset by lower accretion income due to the maturity of the 75 million do Mont note in July last year.

Second quarter cash flows are highlighted on Slide 17. cash and cash equivalents decreased by 12.8 million, primarily to fund our share of dollin gold and also for corporate administrative expenses.

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

On Slide 18 we note our strong treasury.

Our financial position includes cash and cash equivalent of 72 million. Term deposits of 70.000025 trillion due from luont in 2020. -three.

For the full year, the continue to anticipate spending 46 million, including three million a dollar, 13 million for corporate gma and three million for withholding taxes on share-based compensation and working capital.

I will now turn the presentation back over to Greg, line Greg.

Thank you, Dave.

In our view, donmon gold is a rare gold development asset.

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

bues the project's key attributes.

As shown on Slide nineteen.

Daily size.

No other goal of mine has started production.

With three million ounces and measured indicated resources.

Next scale, expected to be a Min. Announce a year producer with the projected life of at least 27 years.

We have low production cost due to the high grade for a large stecale open pit at 200 a quarter gram, nearly twice the industry average.

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

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

On Slide twenty.

Found and gold is compared to the other development-stage projects at 39 million ounces. It's far and away.

The largest of emerging projects in the gld industry.

It were in production today for the feasibility study, we would BR, the largest gold mining industry.

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

The other development stage projects.

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

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

The grade at two a quartergrams is double the current industry average.

Which provides on and gold.

peroomally low cash cost.

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

Together form an important part of the equation.

On Slide 24 our largest institutional shareholders, such as polulson and company.

Fidelity black rock to shody public investmentund.

First ego and xora see the investment opportunity in NovaGold and clearly understand of the extraordinary gold development asset at Donlin can provide true octane to their portfolios.

As the strong piece for gold on bolds and gathers momentum.

Company is very appreciative of their continued interest and commitment.

conclosing.

It is our belief that diamin gold is poised to become one of the greatest gold stories in the development space.

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

Responsible mining and dedicated to building trust and transparency.

As we continue to work to find ways to improve and enhance the project.

To build a lasting legacy.

Thank you. We will now open the call for questions.

Thank you. We will now begin the question-and-answer session. To join the question you, you may press Star than one on your telephone key pad. You'll hear a tone acknowledging your request.

If you are using a speaker phone, Please pick up your hands at before pressing any keys to withdjow your question. Please press Star that two we will pause for a moment as Coors join the queue once again to join the question Q. you please press Star than one now.

Once again, if you have a question, please press Star, then one.

Thank you everyone. No, I have Ben any questions. Come in we. You have a question from the phone line.

Our first question comes from friend.an es D zto private. Please go ahead.

Hi no, the gold. I really love your company, but I just want to ask you a simple question.

When do you plan? I M starting to mine.

All right. Well 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 a 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.

ok So we're looking at like.

Maybe two years before we start.

And then, as we start in the mind, this built another four year, So we're actually looking at about five or six years down the road.

That's correct for me.

Okay perfect, at least they got- I got- a good answer, I think. Thank you very, very much. We I been following you guys for better than 15 years and I's always like your company.

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

Once again. If you have a question, please press Star than one our next question comes from Lucas Pipes of B Riley Securities. Please go ahead.

Hey good, good morning everyone.

umi wanted to ask- ask a quick question- that the total budget for Donlin, six million, splits 50: 50.

one to what extent are you concerned that inflationary pressures may make certaint upside pressure on that budget and then So you look out to next year? What are some of the items that?

May may drop off, given the drill program has been completed and what are some of the items that might be added. Again looking out to.

Year Thank you, Thank you very much.

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

Expenditure this year is drilling related.

And thus far our productivity has been very strong at the drill rigs and.

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 productvity.

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 in flation it we're certainly feeling some of the effects, such as fuel for the camp in, bring employees in and out, but by and large the impact has been.

Minimal it at the worst thisissue.

You're looking forward to next year. I don't anticipate.

Significant inflationary pressures.

As we move forward with the feasibility study and I think yes it means we update the new feasibility study. We will take into account current market conditions into our capital and operating costs. So.

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.

Thank you Lu. This did now to address the question you raised.

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

Fully completed in terms of spending.

Well we are. We've got about 70% of the drilling completed to date and the assays are coming at a little slowly this year. 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.

About it gotut it okay that's uh that's very helpful right really really appreciate the color and as the fluck.

Alright, Thank you ch.

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

Thank you operator, and thank you everyone for taking the time to get an update on novvole this morning.

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

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