NovaGold Resources Inc. Q2 2023 Earnings Call

Thank you for standing by this is the conference operator welcome to the Knoll will go 2023 second quarter financial results Conference call and webcast. As a reminder, all participants are in listen only mode and the conference is being recorded after the.

Asian, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star and zero.

The cast viewers myself my questions through the text box in the lower right corner of the webcast frame I would now like to turn the conference over to Melanie Hennessey, Vice President corporate Communications.

Please go ahead. Thanks.

Yes.

Thank you yeah. Good morning, everyone. We're pleased that you've joined us for local Gold's second quarter financial results and for an update on the Donlin Gold project.

On today's call, we have Greg Lang, <unk>, President and CEO , and David Ottawa, 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.

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 SEDAR filings and forward looking disclaimers included in this presentation.

I now have the pleasure of turning the presentation over to our president and CEO , Greg Lang great.

Thank you melody.

Before we go into the second quarter results.

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.

Overtime.

And by keeping our promises to stakeholders our management team has diligently protected our resources.

Both the mineral endowment.

Our treasury.

We substantially Derisked Donlin gold.

With our commitment to responsible mining we have dedicated both time and effort to build trust and transparency and <unk>.

Tenuously found ways to improve and enhance the project.

Building a legacy.

It is our belief the donlin gold.

He was among the rarest of gold development asset.

Tier one out there.

Tier one jurisdiction.

To touch on dollars attribute.

As currently envisioned.

With approximately 39 million ounces.

One of the largest <unk>.

Highest grade undeveloped Goldman downwards in the world.

That would average over a million ounces per year of gold production for 27 years.

Well looking at the other gold development project.

As shown on slide six.

It's by far the largest.

With global production continuing to decline.

Clear does the industry need projects with scale grade and longevity to ride out multiple gold cycle.

With a greater more than twice the industry average for an open pit project at two in a quarter grams as shown on slide seven.

This advantage is expected for Donlin gold is one of the lowest cost producers in the space.

This return enables donlin gold potentially become one of the lowest coal producers.

Excellent exploration potential exists beyond the defined resources located in the asthma.

And Lewis deposits as shown on the diagram.

This area occupies only three kilometers of an eight kilometer mineralized belt.

Represents less than 5% of the total land package.

As highlighted on slide eight.

Critical upside exist to potentially increases often and extend the mine life.

Given that the majority of the land is not yet thoroughly explored.

Premier Gold development project in Alaska.

Well the second largest gold producing state in one of the worlds safest jurisdictions are.

Our project benefits.

From a well established tradition of responsible mining.

I mean, that's included on slide nine we feature the top three golf position operations in the world.

And the sixth largest gold development projects.

Turning to slide 10.

Rahman offers unique leverage to gold in a place where one to keep the fruits of that leverage.

The after tax NPV at $700 per ounce and a 5% discount rate was estimated at almost $5 billion.

Racing substantially if undisc Johnny.

And then another 50% increase our $2000 per ounce COO.

Clearly, we have tremendous leverage to rising gold prices.

As private landowners, both the Arista and PTC are dedicated to develop pretty donlin gold in a way that remains consistent with the elders vision of responsible development, while creating jobs.

Doug.

And the economic benefit for the surrounding communities as well as protecting the local culture.

A few quotes are provided from the leaders of both Alaska Native Corporation on Slide 11.

There were certain pitches knowledge and guidance.

It's been critical over the years of permitting sustainability and community engagement initiatives.

We eventually appreciate there are meaningful input regarding bare land and the significant economic needs.

Required to sustain healthy living for their community.

Our partners continued and time tested collaboration.

Project support and full engagement.

Our extremely valuable in ensuring responsible and sustainable economic development.

Throughout all phases of the Donlin project.

With the combination of these attributes.

Donlin gold has the potential to form cornerstone.

Genuine and sustainable.

Economic development in the Y K region.

For many decades to come.

I will now touch on some of the milestones that were achieved in the second quarter and the ongoing activities at Donlin gold.

Turning to slide 13.

Activities advanced in five key areas during the second quarter.

First.

We updated geologic and resource model.

The data from the drilling we've done over the last few years.

Secondly, we have reviewed all key project assumptions input.

And design components for optimization, including engineering metallurgy, hydrology and infrastructure.

Certainly.

We advanced the field work.

Drilling to collect the data for the Alaska Dam safety certificates required for construction.

The hydrologic drilling to define the depth and flow of groundwater generically the planned open pit.

Fourth on the project permits.

We maintained existing federal and state permits are in good standing provided support to the agency in the defense of these permits and today all appeals have been unsuccessful offered on multiple occasions, and we have full confidence in the prospects.

But we never take this for granted.

Project leadership and reputation teams have always prepared and organized themselves for potential challenges.

Evidently Trump.

And fifth.

We have built long term value to ongoing engagement with our partners and stakeholders, while expanding project support.

For example visits were made to Washington D C pursue bipartisan outreach to the by the administration and the U S Congress.

In early May.

No.

Tribal Council from Crooked Creek Company, Calista, and Darwin on a visit with the administration and congressional staff to highlight the thoroughness of the project and the partnerships that exist with native alaskans to own the land.

The successful execution of these activities would not have been possible without a dedicated team in acreage and committed workforce that are too.

63%.

Our local hires.

We have safely advanced site work and maintained open and transparent communications with all stakeholders.

Thanks to their hard work.

Tony Truesdale program at Donlin Gold is anticipated to be completed in July .

The comprehensive work will provide valuable information for the Donlin Gold board and its owners consider with respect to an updated feasibility study decision.

For Nova Cold community and social responsibility.

Represents a wide ranging essential activity.

That is core to all we do at Donlin and then the communities of the region.

It has been our consistent practicing philosophy.

Over 20 years Donlin continues to work with Calista and Teekay tea in all aspects outreach and engagement.

In the areas education.

Health and safety cultural tradition environmental initiatives.

We're committed to meaningful private inclusion.

Throughout all project pages.

This in region investment and partnerships continue to expand.

Which further demonstrates our commitment to advancing this exceptional project up the value chain.

As shown on slide 14, numerous activities and initiatives.

Funding in the second quarter.

For example, diamond was recognized for their support to the village of Crooked Creek.

Following a major flood in the spring.

The dollar staff on site to provide support supplies and transportation to those affected.

In addition, the project team has partnered with Covenant House in Alaska, and the breadth of community for services to address chronic use shelter.

And food security issues and the like it region.

Education is a key component.

When Gold's community engagement efforts, where the rest of the shareholders and the shrimp and scholarships were funded through the terrestrial education and culture initiatives.

In the second quarter.

Donlin assigned additional shared value statement with two villages in the region, bringing the total to 14.

These documents.

Formalized current engagement with local communities.

To expand upon our long term relationships already established with them.

And address the shipping community needs.

The Ashbury Donlin gold held the first informal.

Consistent Communications <unk> Advisory Committee meeting.

All members, who completed an application to join the committee, having various perspectives on the project.

As part of the commitment between Donlin gold Calista and PK see.

The committee was established to maintain a well defined process for communication style.

Dialogue.

Problem solving.

And shifting the input.

But the broader community.

Guarding subsidence matters.

In May we launched our 2022 sustainability report.

Local Gold's third annual Standalone sustainability report, which features a comprehensive review of the company's performance in the areas of environmental stewardship.

Safety.

And social community engagement.

Corporate governance.

During 2022 our achievements.

Victory is on the right of slide 15.

Included in excellent health and safety record with zero lost time accidents.

Over 10 years.

Project site workforce comprised of more than 80% Alaska native employees.

And an increase in engagement.

In investment throughout the region.

Barack corporate climate change and biodiversity policies were developed in 2022.

Brought 'twenty two 'twenty three we will continue to monitor reflect.

And we're fine our environmental social and governance performance.

Including maintaining strong records of environmental health and safety data at the Donlin Gold project site.

Partnering with people and communities of the region.

And working to enhance our governance practices.

Including the implementation of our updated human rights.

And need diversity equity.

In inclusion policies.

With that.

I will now turn the call over to David without a well to review the 2023 second quarter financial results.

Dave.

Thank you Greg.

Slide 17 highlights our operating performance.

Reported a net loss of $14 6 million in the second quarter.

A slight decrease from the prior year quarter.

Due to lower field expenses of Donlin gold and increased interest income on cash and term deposits.

Set by increased interest expense on the promissory note.

And higher corporate travel and legal expenses.

Second quarter cash flows are highlighted on slide 18.

Cash and cash equivalents decreased by $7 2 million.

Primarily to fund our share of Donlin gold and for corporate administrative expenses.

The decrease in cash used in the second quarter of 2023.

Third to 2022.

Due to a reduction in donlin gold funding and higher interest received on cash and term deposits.

Due to the increase in interest rates.

On slide 19, we note our treasury position, which includes cash and cash equivalents of $47 million.

Term deposits of 62 million and.

And 25 million due from Newmont next month.

For the full year, we continue to expect to spend $31 million, including 17 million of Donlin.

$13 million for corporate G&A, and 1 million for working capital.

I'll now turn the presentation back to Greg.

Right.

Thank you Dave.

As shown on slide 20.

Activities. This year are focused.

On updating the geological and resource models.

The old work to collect geotechnical and hydrological information to complete the design requirements relaxed the dam safety certificates.

The ongoing review of Che project assumptions and inputs for optimization and engineering metallurgy.

Eyedrop Archie.

We'll continue to advance our permits through the regulatory processes and support the agencies in defending the existing permits.

We will also continue to engage maintain and grow support for our project.

And the why China region, and with government entities.

Ultimately the comprehensive work.

When completed will provide valuable information from the Donlin Gold board and its owners consider with respect to an updated feasibility study decisions.

I wish to thank.

Each and every one of our shareholders for choosing to invest with Novo goal.

As well as for their engagement patient.

Valuable insights over the years.

We look forward to continuing to deliver on our promises.

And to keeping an open line of communication.

Between us.

While we strive to reach further milestones to go.

Weather in 2023.

Okay.

With that operator.

We will open the lines for questions.

Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.

We'll hear a tone acknowledging your request for using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

The first question comes from Lucas pipes with B Riley Securities. Please go ahead.

Thank you operator, good morning, everyone. This is Nick Childs asking a question on behalf Lucas.

All of the components you outlined for optimization what areas would you say you you've seen the most improvement or maybe expect to see the most improvement. Thank you. Thank you so much for your prospectus.

All right.

Optimization has been really touched on absolutely disciplined throughout.

Yeah throughout the project, whether it be mining engineering or metallurgy, and I think we've.

We've seen a lot of very constructive fine tuning on the metallurgical side initially.

Step changes, but you know optimizing to the grind size controlling the ph two you'll get a few percent additional recovery.

The optimization you should have all added value to the project as well as you know, particularly for our partner.

Increase the depth of their understanding of the project and the work that has been done to date.

Thank you Greg I appreciate that color and just one more on my end.

In the fiscal responsibility act of 2023, I believe there were some some favorable permitting reforms and I was hoping to maybe get your view on these and if they may benefit donlin in any way, despite having having federal permitting.

<unk>. Thank you very much.

All right.

I'm very very astute observation. There has there have been a I would say positive development on trying to streamline the permitting process for not.

Not just mining projects.

Any natural resource projects in the U S.

And it's you know it's good to see those initiatives.

As far as the impact on Donlin I would describe it is.

Pretty minor are insignificant and that's largely because of our permits are already in place. So there is nothing you know nothing to be streamlined from from our point of view now that we've gotten our our federal permits have been in hand for several years and we're continuing to advance.

The remaining state permits, which is the tailings dam and dam safety certificates.

Yeah minimum impact on our system stage.

It makes sense for Greg. Thank you so much for the color and she and the team continued best of luck.

Thank you.

We have a question that was submitted by email from David White, who is a long time shareholder and thank you for the review of the second quarter results. He wanted to know why do you think Barrick will deviate from that 15% IRR at 1300.

Gold price mandate to develop donlin, given that it won't meet their criteria with the updated.

Well. Thank you. Thank you for the question, Yeah, clearly I don't.

State for Barrick on here, you have economic criteria regarding gold price, but I do know that we as we looked at our investments for generational assets such as Donlin gold.

I R. R is only one aspect.

Both owners would consider when we.

To get to that stage, where we're in a position to make an investment decision and I think that.

Congratulation out fresh I mean, the immediate issues and in front of the owners are wrapping up all of the trade off studies and are making a decision on what is the appropriate time to advance feasibility.

That's all the questions operator.

Thank you everybody.

I would like.

Time.

Yeah.

Sorry, Greg go ahead.

Okay great.

Everybody. Thank you for joining our call this morning, and giving you an update on that regard.

Take care.

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

Okay.

Thank you.

Okay.

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