Q2 2023 NovaGold Resources Inc Earnings Call
Speaker 1: Boarded.
Speaker 1: The the has been.
Speaker 2: Thank you for standing by. This is the conference operator. Welcome to the NOA Gold 2023 2nd Quarter Financial Results Conference Call and Vipcast. As a reminder, all participants are in listen-only mode and the conference is being recorded.
Speaker 2: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. The webcast viewer may submit questions through the text box.
Speaker 2: in the lower right corner of the webcast frame. I would now like to turn the conference over to Melanie Hennessy, Vice President, Corporate Communications.
Speaker 3: Please go ahead. Thank you, Aashia. Good morning, everyone. We are pleased that you have joined us for NovaGold's second quarter financial results and for an update on the DeltaGold project.
Speaker 3: On today's call, we have Greg Lang, Nova Gold's President and CEO , and David Odwell, Nova Gold's Vice President and CFO . At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received by email.
Speaker 3: I would like to remind you, 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 CDER filings and forward-looking disclaimers included in this presentation. If you have any questions about EDGE Give Class off known exercises at EDGE.
Speaker 3: I now have the pleasure of turning the presentation over to our President and CEO , Greg Lang. Greg? We first want to thank our President,72, and his staff for Lepman Professor usb
Speaker 4: Thank you, Melody.
Speaker 5: Before we go into the second quarter results.
Speaker 5: I wanted to start today's call by giving you a quick look at the reasons why we and our shareholders are invested in the company.
Speaker 5: Over time, and by keeping our promises to stakeholders, our management team has diligently protected our resources.
Speaker 5: both the Mineral Endowment and our Treasury.
Speaker 5: We substantially de-risked on gold.
Speaker 5: With a commitment to responsible mining, we have dedicated both time and effort to build trust and transparency, and continuously found ways to improve and enhance the project.
Speaker 5: commitment to responsible mining, we have dedicated both time and effort to build trust and transparency and continuously found ways to improve and enhance the project while building a legacy.
Speaker 5: It is our belief that diamond gold
Speaker 5: is among the rarest of gold development assets.
Speaker 5: among the rarest of gold development assets. A tier one asset.
Speaker 5: in a Tier 1 jurisdiction.
Speaker 5: To touch on Donalyn's attributes,
Speaker 5: currently envisioned with approximately 39 million ounces.
Speaker 5: It hosts one of the largest
Speaker 5: and highest grade undeveloped gold endowments in the world.
Speaker 5: That would average over a million ounces per year of gold production for 27 years.
Speaker 5: While looking at the other goal development projects.
Speaker 5: in the Americas as shown on slide six.
Speaker 5: It's by far the largest.
Speaker 5: And with global production continuing to decline,
Speaker 5: it's clear that the industry needs projects with scale, grade, and longevity to ride out multiple gold cycles.
Speaker 1: Thank you.
Speaker 5: With a grade of more than twice the industry average for an open pit project at 2.25 grams, as shown on slide seven.
Speaker 5: Mr. Adams.
Speaker 5: is expected to put Don and Gold as one of the lowest cost producers in the space.
Speaker 5: This in turn enables Don and Gold to potentially become one of the lowest gold producers.
Speaker 5: Excellent exploration potential exists beyond the defined resources located in the Acoma
Speaker 5: and Lewis deposits as shown on the diagram.
Speaker 5: This area occupies only 3 kilometers of an 8 kilometer mineralized belt.
Speaker 5: It represents less than 5% of the total and package.
Speaker 5: As highlighted on slide 8.
Speaker 5: Incredible upside exists.
Speaker 5: to potentially increase ounces and extend my life.
Speaker 5: given that the majority of the land is not yet thoroughly explored.
Speaker 5: As the premier gold development project in Alaska itself, the second largest gold producing state in one of the world's safest jurisdictions.
Speaker 5: Our project benefits.
Speaker 5: from a well-established tradition of responsible mining.
Speaker 5: On the map included on slide 9, we feature the top three gold producing operations in the world.
Speaker 5: and the six largest gold development projects.
Speaker 5: Turn to slide 10.
Speaker 5: Donlin offers unique leverage to gold in a place where one can keep the fruits of that leverage. The after tax, NPV, at $7,800 per ounce and a 5% discount rate was estimated at almost $5 billion.
Speaker 5: Raising substantially if undiscounted. And then another 50% increase at $2,000 per ounce.
Speaker 5: Clearly, we have tremendous leverage to rise in gold prices. As private landowners, both Chilista and TKC are dedicated to developing the environment goals.
Speaker 5: in a way that remains consistent.
Speaker 5: with the elders vision of responsible development while creating jobs.
Speaker 5: and economic benefits for the surrounding communities, as well as protecting the local culture.
Speaker 5: A few quotes are provided from the leaders of both Alaska Native Corporations on slide 11.
Speaker 5: So let's say NTK's knowledge and guidance.
Speaker 5: have been critical over the years of permitting.
Speaker 5: sustainability, and community engagement initiatives.
Speaker 5: We immensely appreciate their meaningful input regarding their land.
Speaker 5: and the significant economic needs required to sustain healthy living for their communities.
Speaker 5: Our partners continued in time-tested collaboration.
Speaker 5: project support, and full engagement are extremely valuable in ensuring responsible and sustainable economic development throughout all phases of the Donlin project.
Speaker 1: Thank you.
Speaker 5: with combination of these attributes.
Speaker 5: Donald Gold has the potential to form a cornerstone.
Speaker 5: of genuine and sustainable economic development in the YK region.
Speaker 5: for many decades to come.
Speaker 5: I will now touch on some of the milestones that were achieved in the second quarter and the ongoing activities at Donowin Gold.
Speaker 5: Turning to slide 13.
Speaker 5: Activities advanced in five key areas during the second quarter.
Speaker 5: First, we updated the geologic and resource models.
Speaker 5: with the data from the drilling we've done over the last few years.
Speaker 5: Secondly, we have reviewed all key project assumptions, inputs, and assumptions.
Speaker 5: and design components for optimization, including engineering, metallurgy, hydrology, and infrastructure.
Speaker 5: Thirdly, we advanced the field work and geotechnical drilling to collect the data for the Alaska Dam safety certificates required for construction and hydrologic drilling to define the depth and flow of groundwater in areas through the planned open pit.
Speaker 5: Fourth, on the project's permits, we maintained the existing federal and state permits in good standing, provided support to the agencies in the defense of these permits. Heart string are issued within seven days until the 19th of October of 2020.
Speaker 5: And to date, all appeals have been unsuccessful.
Speaker 5: often on multiple occasions, and we have full confidence in the process.
Speaker 5: But we never take this for granted. Our project leadership and mitigation teams have always prepared and organized themselves.
Speaker 5: for potential challenges that inevitably come. And fifth.
Speaker 5: We have built long-term value through ongoing engagement with our partners and stakeholders.
Speaker 5: while expanding project support. For example, visits were made to Washington, DC.
Speaker 5: to pursue bipartisan outreach to the Biden administration and the U.S. Congress.
Speaker 5: In early May, traditional tribal council from Crooked Creek
Speaker 5: accompanied Chilista and Donlyn on a visit with the administration and congressional staff.
Speaker 5: to highlight the thoroughness of the project and the partnerships that exist with Native Alaskans that own the land.
Speaker 5: The successful execution of these activities would not have been possible without a dedicated team in Anchorage and a committed workforce at our camp. To Help You continued
Speaker 5: I believe 63%.
Speaker 5: Our local hires.
Speaker 5: They have safely advanced site work and maintained open and transparent communications with all stakeholders.
Speaker 5: safely advanced site work and maintained open and transparent communications with all stakeholders. Thanks for their hard work.
Speaker 5: The 2023 field program at Donman Gold is anticipated to be completed in July .
Speaker 5: The comprehensive work will provide valuable information for the Donlin Gold Board and its owners to consider with respect to an updated feasibility study decision. jet Propulsion Laboratory, USA
Speaker 5: Community and social responsibility represents a wide ranging essential activity.
Speaker 5: That is court, all we do at Donlon and in the communities of the region.
Speaker 5: It has been our consistent practicing philosophy for over 20 years.
Speaker 5: Donovan continues to work with Chilista and TKC in all aspects of outreach and engagement.
Speaker 5: in the areas of education.
Speaker 5: health and safety, cultural traditions, environmental initiatives.
Speaker 5: We are committed to meaningful tribal inclusion.
Speaker 5: throughout all project stages.
Speaker 5: This in-region investments and partnerships continue to expand.
Speaker 5: which further demonstrate the commitment to advancing this exceptional project up the value chain. As shown on slide 14, numerous activities and initiatives have been Cause Pend soul on support of Good subjectsRR usah.org
Speaker 5: for funding in the second quarter.
Speaker 5: For example, Donny was recognized for their support to the village of Crooked Creek.
Speaker 5: following a major flood in the spring. The down on staff are on site to provide support supplies and transportation to those affected.
Speaker 5: In addition, the project's team has partnered with Covenant House in Alaska and the Bethel community for services to address chronic youth shelter. volunteers in purchase in the email box for multiple
Speaker 5: and food security issues in the YK region.
Speaker 5: Education is a key component of Don and Gold's community engagement efforts.
Speaker 5: We're Chorista shareholders and descendant scholarships.
Speaker 5: were funded through the Tehrista Education and Culture Initiative.
Speaker 5: In the second quarter.
Speaker 5: Donland signed additional shared value statements with two villages in the region, bringing the total to 14.
Speaker 5: These documents formalize current engagement with the local communities,
Speaker 5: and expand upon the long-term relationships already established with them and address specific community needs.
Speaker 5: Lastly, Don and Gold held the first informal webinar.
Speaker 5: Subsystems, Communications, Advisory Committee meeting in Antioch.
Speaker 5: All members who completed an application to join the committee have various perspectives on the project.
Speaker 5: As part of the commitment between Don and Gold, Chilista and TKC, the committee was established to maintain a well-defined process.
Speaker 5: between Don and Gold, Chulista, and TKC, the committee was established to maintain a well-defined process for communications.
Speaker 5: dialogue, problem solving, and seeking the input.
Speaker 5: of the broader community regarding substance matters.
Speaker 5: In May, we launched our 2022 Sustainability Report.
Speaker 5: NOVAGOLD's third annual standalone sustainability report, which features a comprehensive review of the company's performance in areas of environmental stewardship, health, safety, and sustainability.
Speaker 5: and social community engagements in corporate governance. During 2022, our achievements,
Speaker 5: pictures on the right of slide 15.
Speaker 5: included an excellent health and safety record with zero loss time accidents spanning over 10 years.
Speaker 5: A project site workforce comprised of more than 80% Alaska native employees.
Speaker 5: and an increase in engagements.
Speaker 5: and an increase in engagements and investment throughout the region.
Speaker 5: Formal corporate climate change and biodiversity policies were developed in 2022.
Speaker 5: Throughout 2023, we will continue to monitor, reflect on, and refine our environmental, social, and governance performance. How our touch scale changes throughout 2021.
Speaker 5: including maintaining strong records of environmental and health and safety data at the Donland Girls Project site.
Speaker 5: partnering with people and communities of the region, and working to enhance our governance practices, including the implementation of our updated human rights,
Speaker 5: and need diversity, equity,
Speaker 5: need diversity, equity, and inclusion policies.
Speaker 5: With that, I will now turn the call over to David Ottawel to review the 2023 second quarter financial results.
Speaker 5: With that, I will now turn the call over to Dave Vadatoel to review the 2023 second quarter financial results. Dave? Dave?
Speaker 6: Thank you, Greg.
Speaker 5: Slide 17 highlights our operating performance. We reported a net loss of $14.6 million in the second quarter, a slight decrease from the prior year quarter.
Speaker 5: through the lower field expenses of Donling Gold and increased interest income on cash and term deposits.
Speaker 5: offset by increased interest expense on the promissory note.
Speaker 5: and higher corporate travel and legal expenses. Second quarter cash flows are highlighted on slide 18.
Speaker 5: Cash and cash equivalents decreased by $7.2 million, primarily to fund our share of Donlin Gulf and for corporate administrative expenses.
Speaker 5: The decrease in cash used in the second quarter of 2023 compared to 2022 was due to a reduction in Donlin Gold funding and higher interest received on cash in term deposits due to the increase in interest rates. On slide 19, the increase in cash used in the second quarter of 2023 compared to the
Speaker 5: We note our Treasury position, which includes cash and cash equivalents of $47 million.
Speaker 5: our treasury position, which includes cash and cash equivalents of 47 million, term deposits of 62 million.
Speaker 5: and $25 million due from Newmont next month. For the full year, we continue to expect to spend $31 million, including $17 million in Donlon, $13 million for corporate G&A, and $1 million for working capital.
Speaker 5: I will now turn the presentation back to Greg.
Speaker 5: I will now turn the presentation back to Greg. OK.
Speaker 5: Thank you, Dave. As shown on slide 20,
Speaker 5: Activities this year are focused on updating the geologic and resource models.
Speaker 5: Field work to collect geotechnical and hydrologic information to complete the design requirements for the Alaska Dam Safety Certificates.
Speaker 5: An ongoing review of key project assumptions and inputs for optimization in engineering, metallurgy, and hydrology.
Speaker 5: We'll continue to advance our permits through the regulatory processes and support the agencies in defending the existing permits.
Speaker 5: We will also continue to engage, maintain, and grow support for our project in the YTA Region and with government entities.
Speaker 5: Ultimately, the comprehensive work
Speaker 5: being completed will provide valuable information for the Donman Gold Board and donors to consider with respect to an updated feasibility study decision.
Speaker 1: Thank you.
Speaker 5: I wish to thank.
Speaker 5: each and every one of our shareholders for choosing to invest with Nova Gold, as well as for their engagement, patience.
Speaker 5: through valuable insight over the years. We look forward to continuing to deliver on our promises.
Speaker 5: and to keeping an open line of communications.
Speaker 5: between us while we strive to reach further milestones together in 2023.
Speaker 5: With that operator, we will open the lines for questions.
Speaker 2: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys.
Speaker 2: To withdraw your question, please press star then 2. The first question comes from Lucas Pipes with B. Riley Securities. Please go ahead.
Speaker 7: Thank you, operator. Good morning, everyone. This is Nick Giles asking a question on behalf of Lucas. Of the components you outlined for optimization, what areas would you say you've seen the most improvement or maybe expect to see the most improvement? Thank you so much for your perspective.
Speaker 5: All right. The optimization has been really touched on every discipline throughout the project, whether it be mining engineering or metallurgy. And I think we've seen a lot of very constructive fine tuning on the metallurgical side.
Speaker 5: And this is no step changes, but optimizing the grain size, controlling the pH to get a few percent additional recovery. So I think the optimizations have all added value to the project, as well as particularly for a part of your.
Speaker 5: increase the depth of their understanding of the project and the work that has been done to date.
Speaker 7: Thank you, Greg. I appreciate that color. Just one more on my end. In the Fiscal Responsibility Act of 2023, I believe there were some favorable permitting reforms and I was hoping to maybe get your view on these and if they may benefit Donlan in any way.
Speaker 5: process for not just mining projects but...
Speaker 5: any natural resource projects in the US. And it's good to see those initiatives. As far as the impact on Donilon, I would describe it as pretty minor or insignificant, and that's largely because our permits are already in place.
Speaker 5: So there's nothing to be streamlined from our point of view now that we've gotten our federal permits have been in hand for several years and we're continuing to advance the remaining state permit which is the tailings dam and dam safety certificate.
Speaker 7: You know, minimal impact on us at this stage. Makes sense. Well, Greg, thank you so much for the color and to you and the team. Continue best of luck.
Speaker 3: We have a question that was submitted by email from David White who is a long-time shareholder and thanks to you for the review of the second quarter results. He wanted to know why do you think Barrick will deviate from its 15% IRR at 1300?
Speaker 3: gold price mandate to develop Donlin given that it won't meet the criteria with the updated FX.
Speaker 5: Well, thank you for the question. Clearly, I don't speak for BEREC on their economic criteria regarding gold price, but I do know that as we looked at investments for generational assets such as Donlin, we were teaching a regulation 252 by ki financial Motors companyika windmill. But548sa BEREC never became looking into infrastructures of gold. We GI we're 6B by let Alliance, but the order is to be 8 BEREC 2 by 5 picks 2 by 5 Roswell
Speaker 5: The IRR is only one aspect that both owners would consider when we get to that stage where we're in a position to make an investment decision. And I think that's a ways out for us. I mean, the immediate issues in front of the owners are wrapping up all of the trade-off studies.
Speaker 5: making the decision on when is the appropriate time to advance a new feasibility statement.
Speaker 6: That's all the questions, operator.
Speaker 6: everybody.
Speaker 5: Thank you for your time. We'll have to enter the conference. Sorry Greg, go ahead. Okay, thank you everybody for joining our call this morning and getting an update on Nova Gold.
Speaker 2: Take care. Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Speaker 1: Thank you.
Speaker 1: The law. What the cre?
Speaker 1: So some.
Speaker 1: The P.