Q2 2024 NovaGold Resources Inc Earnings Call

Thank you for standing by this is the conference operator welcome to the noble goal. It's 2024 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 presentation, there will be an opportunity to ask questions.

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That's casting yours myself my question does the text box in the lower right corner of the about Kathryn.

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I would now like to turn the conference over to Melanie Hennessey, Vice President Corporate Communications. Please go ahead.

Good morning is she has her sleeves that you have joined us.

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Speaker Change: And also for an update on the vulnerable.

On today's call, we have another gold's president and CEO, Greg Lang.

And David Ottawa, Lowe, 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.

Yes.

I will now turn the presentation over to our president and CEO, Greg Lang right.

Thank you Melanie.

Good morning, everyone.

During today's call by highlighting why both we and our shareholders regard donlin gold as a tier one asset.

Speaker Change: I want to emphasize our investment thesis and why assets such as Donlin.

We see only vital to the industry.

Let's discuss the impressive attribute of the Donlin Gold project is shown on slide five.

First.

The project, both almost 40 million ounces of gold.

Great well, we're two grams per tonne, which is more than double the industry average.

Projected wildlife, there's almost three decades.

Just on only on our current resources.

This ensures our long term stay.

Oh operation.

Speaker Change: Moreover.

Donlin gold is set to produce around a million ounces a year.

Speaker Change: As a low cost solidifying its position as one of the top producers in the industry.

With landholdings that offer significant exploration potential for future growth.

Supported by an experienced management team with a strong track record in mine development across the Americas.

And gold has secured all federal permits required for the development and the majority of the state permit.

Straining our readiness.

Speaker Change: For a successful and advancement.

Situated on private Mi designated land in Alaska, The project benefits from the state supported mining regulations provide a stable regulatory environment.

Our long standing partnerships with <unk> and.

And a couple of quick Corporation.

Strengthen our social license to operate.

These factors collectively position Donlin gold as a cornerstone project with robust potential and significant long term value.

Central to outline Donlin Gold's journey.

The early 19 Hungered origins onshore.

As shown on slide six to the strategic reorganization initiated over a decade ago under the leadership of Doctor Thomas Chaplin, our chairman and myself.

Yes.

Since snowball golf restructuring our primary objective has been crystal clear.

The advance Donlin development are priced assets in Alaska to explore its potential.

We have maintained a steadfast commitment to the pursuit of this mission.

The next logical and critical step for the project is to update the feasibility study with the goal of positioning donlin favorably for a construction decision when the market conditions of law.

Our dedication to advancing this flagship project underscores our unwavering loyalty to our stakeholders.

Long term shareholders.

Sharing their trust and investment are met with tangible progress and value creation.

On slide seven.

Speaker Change: We emphasize the crucial role of choice.

And TK see private landowners and the development of Donlin gold.

Speaker Change: Their commitment aligns closely with the elders vision of responsible growth.

Contributing to job creation, and economic prosperity, and the preservation of cultural heritage within the local communities.

With land designated for mining activities over 50 years ago their stewardship demonstrate our steadfast dedication.

These sustainable development.

Brought the permitting process sustainability initiatives.

Community and engagement.

And so Lister and PK see have offered invaluable expertise and guidance leveraging their deep understanding of the land.

Economic significance to bolster community wellbeing.

There are enduring partnerships and steadfast support are critical to ensuring the responsible.

And progressive development of Donlin gold across all phases.

These collaborative efforts underscore donlin gold's potential to become a cornerstone lasting and responsible economic development in the Yukon Kuskokwim region.

Sure future generations.

Looking at slide eight Alaska is established as a world leading mining jurisdictions ranked third on mm 120 global jurisdiction and only one of 12 to achieve a double rate double a rating.

In the World risk report by mining Journal Intelligence.

It is renowned for its robust and procure environment, particularly in mining and stands out globally for safety and the well defined permitting processes.

As the second largest gold producer in the United States Alaska.

Alaska has the facilitated the success of numerous companies.

Underpinned by our government actively supports and recognizes the importance of responsible natural resource development.

Speaker Change: Turning to one of Donlin golds distinctive qualities as currently envisioned it ranks among the world's largest and highest grade undeveloped open pit gold reserves when compared with other development project.

In the Americas as shown on slide nine.

As global gold production trends downward the industry faces a scarcity of high quality development stage project.

Demand from projects characterized by scale grade and longevity.

Problems increasingly critical for navigating multiple gold cycle.

Secondly.

Speaker Change: Moreover, with degree of almost two and a quarter grams per tonne easily exceeding the industry average for open pit project as indicated on slide 10.

<unk> is positioned to emerge as one of the most cost effective producers in the industry.

Speaker Change: Turning to slide 11, the bar chart illustrate donlin Gold's post tax net present value across various oil price scenarios.

Today's gold price is positioning toward the higher end of the chart, indicating a potential value exceeding $25 billion with no discount rate applies.

Speaker Change: Approximately $15 billion and a 5% discount rate.

Significant exploration opportunities exist beyond the defined resources in the asthma and Lewis deposits.

As shown on the graphic in the upper right hand corner of slide 12.

Speaker Change: With the current resources covering only three kilometers of an eight kilometer belt there is substantial potential to expand it.

The reserves and extend the mine life through further exploration of the land.

Slide 13.

Speaker Change: Highlights Novo Gold's 2023 achievements across environmental stewardship health and safety.

Social engagement.

In corporate governance.

Our latest sustainability report.

Published in April thoroughly assess is novel Gold's ESG performance in all of these critical areas.

We extend our sincere appreciation to donlin gold or Alaska Native Corporation partners.

And local community stakeholders for their excellent collaboration in shaping and achieving our ESG objectives.

There are invaluable contributions have been pivotal in the planning execution and success.

These initiatives.

The safety and wellbeing of our workforce remain of utmost importance.

Exemplified by our decade long record without a lost time incident at the Donlin Gold site.

Where a significant proportion of our team comprises of local hires.

Speaker Change: [noise] together.

These efforts reinforce our pledge to uphold the highest standards of sustainability and responsibility.

As we advance.

Toward our future goals.

I will now discuss some of the milestones achieved at the Donlin Gold project in the second quarter as well as our ongoing activities.

Moving to slide 13.

Yeah.

Speaker Change: The significant progress we've made in the Donlin Gold project is easily demonstrated with the strong backing from the owners and the Donlin Gold Board. We've made notable advancements.

Our resource model is being actively enhanced and updated through efforts led by an independent third party.

Significant progress has also been made in our metallurgical test work at a pilot plant in Ontario, Canada.

This work aims to validate optimizations to the flow sheet.

Which we expect to complete later this year.

We have been updating our groundwater and surface water models, incorporating the latest Seo pages from Geoscience hydrology.

Continuing to collect data to update the.

The geochemical characteristics for future mine closure planning.

Moreover, our efforts to support regional infrastructure have continued focusing on narrowing the scope of work and advancing regional energy opportunities.

These ongoing technical endeavors are all geared towards positioning donlin gold favorably for future development.

Turning to slide 16.

Speaker Change: Our ongoing collaboration with Chavista, Teekay C and local leaders and education health.

Cultural crystallization and environmental stewardship.

Continued in the second quarter across 62 white shade communities.

With the goal to build strong relationships.

Donlin gold signed at 17 shared values statement.

Emphasizing.

Our agreement and engagement with local communities to address their specific needs.

The third subsidence community Advisory Committee meeting was held in aniak in the second quarter.

Fostering a structural platform for communication.

Dialogue problem solving and gathering community input.

On substantive issues.

The project team has been actively monitoring the salmon fisheries and the cost of a claim in Yukon River watersheds and with local tribes have identified opportunities to enhance salmon Population's health with Alaska Native corporations to plan and launch a juvenile.

Speaker Change: Wow Salmon monitoring initiative and the George River.

Significant tributary to the cost per quote request.

Additionally.

Educational initiatives.

<unk> sponsoring the lower cost of Commscope drift strict annual college and career fair remain key for the project.

Furthermore, Donlin gold travel with the Crooked Creek traditional council to Washington D. C to advocate for the Donlin Gold project.

Directly engaging with the U S Department of Justice and the Alaska Congressional delegation.

In April.

U S Senators, Lisa Murkowski, and Dan Sullivan, along with U S Representative Mary <unk> Tovah submitted a joint amicus briefs in the federal Court.

Referring to Donlin is one of our Alaska is most important and necessary economic development projects in one of the most impoverished regions in this state.

These efforts underscore the importance of engagement and preparedness throughout the rigorous permitting process.

Cornered by a bipartisan outreach in the U S Department of Justice.

Donlin gold is.

He is a federally permitted project situations are private land designated for mining activities under the Alaska Native claims settlement Act over 40 years ago.

It is a distinct feature setting donlin apart from many other mining ventures.

Last year.

Speaker Change: Slide 17.

Details all the federal and state permits and certificates obtained to date.

We recognize the critical importance of jurisdictional safety.

Speaker Change: Particularly amongst global variations and permitting standards.

Alaska stands as one of the worlds safest environments for free enterprise, both politically and socially stable.

Offering investors peace of mind.

Mr gradually underscores our commitment to navigating the complexity of today's world with diligence.

Speaker Change: And for sure.

Looking at slide 18.

In the second quarter the dam safety certifications.

Eliminated design packages were submitted to the Alaska Department of natural resources on June 17th.

Speaker Change: In Federal litigation on the joint record of decision, including the 404 permit opening briefs were submitted in February.

Donlin gold.

She listed in the state of Alaska filed their intervenors reached on April 16th.

Amicus briefs supporting the project were filed by the village of Crooked Creek and the Alaskan congressional delegation.

Oral arguments were held on June 24th.

And their decision is anticipated in early 2025.

We recognize the importance of meticulous preparation and organization and navigating the rigorous permitting processes in both the United States and in Alaska.

Our dedication remains steadfast as we continue to collaborate closely with federal and state agencies to navigate this comprehensive project.

We highly value the bipartisan support and engagement for the Donlin Gold project both in Alaska.

And in Washington D C.

With that I will turn the call over to David Ottawa.

To review, our second quarter financial results.

Dave.

Thank you Greg.

Slide 20 highlights our operating performance.

We reported a net loss of $13 7 million in the second quarter.

One 9 million decrease from the prior year quarter, primarily due to.

Lower Donlin gold project costs with no field program this year.

Partially offset by increased interest expense on the promissory note.

Speaker Change: And increased general and administrative costs due to promotion and hiring of additional staff, along with professional and consulting fees.

Related to our evaluation of options to advance Donlin Gold project.

Cash flows are highlighted on slide 21.

In the second quarter cash and term deposits decreased by $4 9 million, primarily for corporate administrative expenses and our share of Donlin gold funding, partially offset by interest income and working capital changes.

Our net use of cash and term deposits was $2 3 million lower than the prior year quarter due to lower donlin gold funding requirements, partially offset by increased administrative costs.

On slide 22, we note our strong treasury.

Our financial position includes cash and cash of nearly $53 million.

And term deposits of $60 million.

Speaker Change: For the year to date Donlin gold funding and corporate G&A are in line with our budget.

For the full year, we expect to spend approximately 31 billion.

17 million for corporate G&A.

And 14 nine for Donegal.

I will now turn the presentation back over to Greg.

Greg: Thank you Dave.

Sure as most people saw the announcement, Dave has been our CFO for 12 years and he is moving on to the next stage in life and retiring and we want to thank Dave for being a valued member of the team at Nova gold for over 12 years.

Deeply grateful for his many contributions to novo gold.

Greg: During his tenure.

Greg: Last December the Donlin Gold Board approved a $28 million budget for the year as shown on slide 23.

This budget includes ongoing resource modeling mine planning metallurgical test work regional infrastructure support.

Hydrology work closure planning.

And importantly, the advancement of dam safety certificate applications.

As well as ongoing support for pending litigation government Affairs community engagement.

And our various sponsorships.

Discussions with Barrick are ongoing to continue advancing donlin gold up the value chain as we remain fully committed to its development.

Additionally, on behalf of the Novo team I would like to spend extend again, our sincere appreciation to Dave Ottawa.

As she moves on your retirement.

We would also like to welcome and congratulate Peter Adam.

Who will assume the role of CFO in July.

With resolute confidence Novo abused the Donlin Gold project is a prime investment in the gold market.

That appears utilizes an exceptional opportunity for leveraging scarce and high quality assets in safe jurisdictions.

Appreciative of our shareholders stock support valuable guidance, we remain committed to enhancing shareholder and stakeholder value responsibly acknowledging there are crucial presence and long term interests.

Their decision to invest in our company and their continued solidarity and engagement are deeply value.

As custodians of the company.

We are focused on executing our strategy and advancing the value of the Donlin gold project in a safe.

And responsible manner to yield substantial progress and create value.

Operator, we are now prepare.

Prepared to take questions.

Thank you.

To join the question queue you May Press Star then one on your telephone keypad.

I tell them acknowledging your request.

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And Italia question. Please press Star then two.

First question comes from Lucas pipes, B Riley security.

Please go ahead.

Thank you very much operator, and good morning, everyone just a sexual if other symbol and asking question on behalf of Lucas pipes.

And just I wanted to touch on permitting.

So where state level permitting stage now.

And when you would expect to receive to.

To receive the decision and.

When would you when do you expect the decision regarding dam safety certifications, which you submit it.

Just 10 days ago. Thank you.

Alright, well. Thank you for the question Yeah. It's noted in our materials. The only significant state permit that we do not have in hand is the dam safety certificates issued for the tailings dam as well as.

Several water retention structures.

Yeah to be clear the you know the federal permits in the 404.

So it takes good no authorized as donlin to.

Greg: Disturb work at site and that includes your tailings dam, but in Alaska the structures such as the tailings dam and water retention study structures are yeah, they're administered by the state.

And one of the aspects of the permit application is that you have to have a fully designed and engineered drawing to support your applications.

We started the geotechnical work necessary to do that last season and this year, we've been finalizing our dam.

Design and that and as we noted the preliminary package has been submitted to the state.

I think the process is pretty well defined and it's moving along fine and we would anticipate you know roughly two two and a half year approval process, which would be.

Be done concurrently when the owners make the decision to move forward with the feasibility study so at any rate the tailings dam approval.

Permits are not on a critical path item, but we are steadily advancing.

Thank you very much good and my second one is on Capex. So 14 million is the remaining capex in 2020 four.

Maybe can you provide what level of capital spending you would expect in 'twenty or 'twenty five.

Yeah.

Well Ed.

At this stage, we have not guided on our expense expenditures planned for the new year and of course, a lot of that will depend on when we make the decision to initiate the new feasibility study yeah, we typically prepare our budgets.

Later in the third quarter and fourth quarter and will you at that time be in a position to guide the marketplace on our future expenditures.

Thank you very much this is helpful and.

Wish you best of luck. Thank you.

Thank you for your questions.

We have a shareholder question coming from the land span and Joe. Furthermore, with gold at an all time high what are the other key market conditions required to commence operation.

Well I think.

As you know that gold is at an all time high and I think that is certainly one of the key factors that will drive here I'll take maybe the investment decision at Donlin. Yeah. Other factors include market conditions, how the equities are viewed and how the debt markets are.

How we would finance the project, but certainly the key driver in the value of Donlin gold and really any gold mining project is the price of gold and we have the view that gold prices are pretty good right now, but we think there is a substantial.

Substantial room to see them run higher in the coming years.

I would anticipate that when we finish our feasibility study gold prices will be significantly higher than what we see today positioning the owners to make a construction decision.

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

Well everyone. Thank you for taking the time to get an update.

Greg: On Nova goal and we look forward to updating you as we continue to advance the Donlin project.

Good day.

This concludes today's conference call you may disconnect your line. Thank.

Thank you for participating and have a pleasant day.

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