Q3 2024 NovaGold Resources Inc Earnings Call
Thank you for standing by the conference operator, welcome to another call. It 2024 third quarter financial results conference call and webcast.
Binder: Binder, all participants are in listen only mode.
Binder: <unk> is being recorded.
Binder: After the presentation, 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, a pressing star then zero.
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Binder: I would now like to turn the conference over to Melanie Hennessey, Vice President corporate communication Batesville.
Speaker Change: Please go ahead.
Melanie Hennessey: Good morning, everyone and thank you for joining us for Nova golds third quarter financial results and for an update on the Donlin Gold project.
Speaker Change: On today's call, we have Nova Gold's, President and CEO, Greg Lang, and Peter out and I know, the Gold's Vice President and CFO.
Speaker Change: At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received by email.
Speaker Change: I would like to remind everyone 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.
Speaker Change: I will now turn the presentation over to our President and CEO, Greg Lang Greg.
Greg Lang: Thank you Melanie and good.
Greg Lang: Good morning, everyone.
Greg Lang: To begin today's call I want to highlight why donlin gold.
Greg Lang: U S a tier one asset by us and our shareholders.
Greg Lang: Especially given the scarcity of high quality projects.
Greg Lang: <unk> jurisdiction.
Greg Lang: And the recent surge in the price of gold.
Greg Lang: Let's examine the impression features of the Donlin Gold project is detailed on slide five.
Donlin, both 39 million ounces of gold at an average grade of two in a quarter grams per ton.
Greg Lang: More than double the industry average.
Greg Lang: With the projected mine life of nearly three decades based on our known resources.
Greg Lang: Gold promises of long term stable and low cost operation that would be one of the leading producers in the industry.
Greg Lang: With substantial exploration potential.
Greg Lang: For future growth.
Greg Lang: Yeah.
Greg Lang: Backed by an experienced management team with a proven track record in mine development across the Americas.
Greg Lang: Donlin gold has secured the necessary federal permits.
Greg Lang: And the majority of the state permits demonstrating readiness for successful advancement.
Greg Lang: I'm Gonna situated on private land designated for mining and one of the world's top jurisdictions.
Greg Lang: Reinforces our social license to operate through our long standing partnerships, which Arista and teekay seat.
Greg Lang: Together these factors position Donlin gold.
The cornerstone project with significant long term value and strong potential.
Greg Lang: One of the standout features of Donlin gold is its ranking among the largest and highest grade undeveloped open pit reserves worldwide.
Greg Lang: Particularly compared to other gold projects in the Americas as depicted on slide six.
Greg Lang: Global Gold production continues to decline the industry faces a shortage of high quality development stage projects.
This creates a heightened demand for projects that are characterized by scale reach and longevity.
Greg Lang: All of these that are vital.
Greg Lang: To successfully navigating various gold price cycles.
Greg Lang: Moreover, with the grant of two in a quarter grams were double the industry average for open pit projects as illustrated on slide seven.
Speaker Change: <unk> is poised to become one of the most cost effective producers in the gold industry.
Speaker Change: Currently ranked third out of 120 global jurisdictions and only one of 12 to achieve a AAA rating in the world risk report by the mining Journal.
Speaker Change: He is renowned for its strong and secure environment, especially in the mining sector as shown on slide eight.
Speaker Change: His reputation not only boost investor confidence.
Speaker Change: <unk> perfectly with the promising attributes of Donlin gold.
Speaker Change: Second largest gold producer in the United States.
Speaker Change: This robust regulatory framework.
Speaker Change: And commitment to responsible development creates a supportive climate.
Speaker Change: On slide nine we highlight the significant contributions of Jewish and T. J C.
Speaker Change: Private landowners T Donlin partners.
Speaker Change: Their commitment closely aligned with the elders vision of responsible growth emphasizing job creation economic prosperity.
Speaker Change: And the preparation of cultural heritage within the local communities.
Speaker Change: With land designated for mining activities over 50 years ago their stewardship.
Speaker Change: Exemplifies our strong dedication to sustainable development.
Speaker Change: Without the permitting process sustainability initiatives and community engagement efforts to illustrate and.
Speaker Change: T K C have provided invaluable experience.
Speaker Change: Leveraging our deep understanding of the land economic importance to enhance community wellbeing.
Speaker Change: The partnership is crucial for the responsible development of the Donlin Gold project at every stage.
Speaker Change: Reinforcing its potential as a cornerstone of lasting economic development.
Speaker Change: The Y K region for future generations.
Speaker Change: Moving to slide 10, we outline donlin robust permitting status.
Speaker Change: Federal permits and most of the state permits in hand, we continue to support the agency's maintaining permits in good standing.
Speaker Change: Defending the permits against legal challenges.
Speaker Change: During the project ongoing approval.
Speaker Change: Okay.
Speaker Change: The permitting process in Alaska involves expensive shareholder engagement.
Speaker Change: Particularly within the local communities.
Speaker Change: While navigating giroud sticks, no comps should ease to be demanding lastest political and social stability.
Speaker Change: Rides are reassuring investment environment.
Speaker Change: Reinforcing our commitment to managing the regulatory processes effectively.
Speaker Change: Turning to slide 11.
Speaker Change: No one called is backed by a veteran management team with proven track Records and mine development throughout the Americas.
Speaker Change: Our team brings extensive experience with leading gold producers.
Speaker Change: Yes, his deep knowledge and building and operating.
Speaker Change: Large scale open pit and underground mines.
Speaker Change: Significant exploration opportunities exist well beyond the defined resources, the asthma and Lewis pits as.
Speaker Change: Trade it in the graphic on the corner of slide 12.
Speaker Change: Only three kilometers of an approximate eight kilometer gold bearing trend the resource underscores the substantial potential to increase ounces and extend the mine life through ongoing exploration.
Speaker Change: On slide 13.
Speaker Change: The chart illustrates the post tax net present value at various gold prices.
Speaker Change: With today's gold price approaching the upper end of the chart. This reflects the value of over $30 billion and zero discount.
Speaker Change: Right.
Speaker Change: Our approximately $11 billion at a 5% discount rate.
Speaker Change: This projection underscores donlin substantial economic potential in the current gold price environment.
Speaker Change: I will now discuss the third quarter milestones reached and the ongoing project activities.
Speaker Change: During the third quarter.
Speaker Change: We advanced several key activities as outlined on slide 15.
Speaker Change: First our resource model is actively being updated.
Speaker Change: Yeah.
Speaker Change: We have made substantial advancements.
Speaker Change: In our metallurgical testing at a pilot plant in Ontario, Canada aimed at validating optimizations to the flow sheet, which we anticipate completing two.
Speaker Change: Towards the end of this year.
Speaker Change: Additionally, our work on the dam safety certifications is moving forward with most preliminary design packages already submitted to the Alaska Department of natural resources in June.
Speaker Change: But to be finalized by year end.
We anticipate receiving feedback on these packages in 2025.
Speaker Change: Furthermore, we are updating our groundwater and surface water models by incorporating the latest data from geoscience hydrology and gathering data to refine the geochemical characteristics for future operational planning.
Speaker Change: These technical activities and ongoing efforts have delivered highly valuable insights for the Donlin board and its owners and we will continue to contribute critical data to guide our strategy and advancing the project.
Speaker Change: If we move to slide 16.
To highlight our ongoing collaborations with Jewish to Teekay.
Speaker Change: T K C and local leaders and education community health cultural preservation and environmental stewardship across the 62, Yukon Kuskokwim communities.
Speaker Change: Our enduring partnerships with <unk>.
Speaker Change: And T. K C have been essential for advancing project development and permitting.
Speaker Change: Through our commitment to engaging with these communities we have built meaningful relationships.
Speaker Change: <unk> investments and strengthened our social license.
Speaker Change: In July.
Speaker Change: We hosted a site tour for residents of Crooked Creek, and the native village of Georgetown.
Speaker Change: Along with Calista and Teekay Street.
Speaker Change: We held a public open house in Anchorage, Alaska, providing local alaskans the chance to learn more about the project and engage in open discussions.
Speaker Change: The government team continues to actively monitor and survey salmon fisheries in the Yukon and Pascal who watersheds.
Speaker Change: Notably during the third quarter.
Speaker Change: We partnered with the village pardon mute and launched the salmon smoked monitoring program on the George River.
Speaker Change: But you should tributary of the Kuskokwim River to assess smoked health and migration patterns.
Speaker Change: We proudly supported.
Speaker Change: For the long haul backhaul program for the seventh year.
Removing and recycling over 140000 pounds hazardous household materials and electronic waste for a total of almost 800000 pounds. Since the program began in 2018.
Speaker Change: Turning to slide 17 progress on the dam safety certification continued in Q3 with the majority of the preliminary design packages submitted to the Alaska Department of natural resources in June.
We anticipate completing this process are you.
Year end.
Speaker Change: In terms of state litigation regarding downloads water rights permits in the state pipeline right away leash briefing has been completed and oral arguments have been issued and scheduled for November 12.
Speaker Change: All the other state cases have been fully briefed.
And federal mitigation on the joint record of decision, including the 404 permit and the Bureau of land management right away.
Speaker Change: Quarter end on September 30th.
Speaker Change: The court issued a decision upholding the federal agencies analysis of two of the three issues raised in the litigation.
Speaker Change: Where the court agreed with the plaintiffs the federal agencies.
Speaker Change: Took to narrow our view in analyzing the impact of a theoretical released from the storage tailings facility.
Speaker Change: The court did not vacate the permits and ordered a supplemental briefing on the appropriate remedy.
Speaker Change: Which is scheduled to be completed in early November.
Speaker Change: With a deep understanding of the regulatory landscape Donlin and its partners are dedicated to supporting federal and state agencies in overcoming.
Speaker Change: Various challenges to the project permits.
Speaker Change: We recognize the importance of meticulous preparation and organization and navigating their rigorous permitting processes in both.
Speaker Change: I did state in Alaska.
Speaker Change: Our steadfast commitment drives us to collaborate closely with these agencies and we greatly value bipartisan support and engagement for the Donlin Gold project both in Alaska.
Speaker Change: And in Washington D C.
Speaker Change: With that I will now turn the call over to Peter adamant.
Peter adamant: To review the.
Peter adamant: Q3 financial results Peter.
Peter adamant: Peter.
Peter adamant: Yeah.
Peter adamant: Thank you Greg.
Speaker Change: Slide 19 highlights our operating performance.
Speaker Change: We reported a net loss of $10 7 million in the third quarter of 2024 0.4 million decrease from the comparative prior year quarter, primarily due to <unk>.
Greg Lang: Lower stock based compensation expense related to forfeiture options and performance share units and lower Donlin Gold project costs with no field program. This year. This was partially offset by increased interest expense on the promissory note.
Greg Lang: Lower interest income on cash and term deposits and increased general and administrative costs due to hiring of additional staff, along with higher professional and consulting fees.
Greg Lang: Okay.
Greg Lang: Slide 20 highlights our cash flows in the third quarter of 2020 for cash.
Speaker Change: Cash and term deposits decreased by $7 million, primarily due to corporate administrative expenses and our share of Donlin golds funding, partially offset by interest income and changes in working capital.
Greg Lang: Yeah.
Greg Lang: On slide 21, we highlight our strong treasury.
Our financial position includes cash and cash equivalents of $45 6 million and term deposits of $60 million.
Greg Lang: Year to date, Nova Gold's corporate G&A costs, and Donlin gold funding are in line with our 2020 for budget.
Greg Lang: For the full year, we continue to expect to spend approximately 31 million, including approximately $17 million for corporate G&A and 14 million for Donlin gold.
Greg Lang: With that I will now turn the presentation back over to Greg.
Thank you Peter.
Speaker Change: Subsequent to the quarter.
Speaker Change: Eric and Nova Cold held their annual workshop in Alaska.
Speaker Change: To review the work completed to date disc.
Speaker Change: Discuss the related 2025 activities and look at the next steps for the project.
Speaker Change: We remain on budget.
Speaker Change: Focused on completing project related activities and advancing the Donlin gold project to an updated feasibility study.
Speaker Change: To be optimally positioned to maximize the benefits for all stakeholders and shareholders.
Nova Gold: With total confidence Nova cold views the Donlin Gold project is a prime investment in the gold market.
Speaker Change: SAP channel opportunity to leverage scarce.
Speaker Change: High quality assets in safe jurisdictions.
Speaker Change: We deeply appreciate the unwavering support and trust of our long term shareholders, whose commitment and guidance have been instrumental in the company's success.
Their decision to invest in their ongoing engagement are invaluable to us.
Speaker Change: We remain focused on executing our status strategy.
Speaker Change: Highest standards of safety and social responsibility.
Speaker Change: All while delivering progress.
Speaker Change: To enhance shareholder.
Speaker Change: Stakeholder value.
Speaker Change: Thank you.
Operator, we are now prepared to take questions.
Speaker Change: Thank you.
Speaker Change: Now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
Speaker Change: Airtel and acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to the Jai a question. Please press Star then two.
The first question comes from Lucas pipes with B Riley Security. Please go ahead.
Speaker Change: Thank you very much brighter visit the federal Shabalin asking question on behalf of Lucas pipes.
Speaker Change: Greg you mentioned that the final documents.
Speaker Change: Expect it to be submitted by year end and comments on dam safety are anticipated in 2025.
Speaker Change: So is this the only major permits left for you and if so do you have an.
Speaker Change: An estimate of when in 2025, you you would expect to receive it. Thank you.
Speaker Change: Alright, well. Thank you for joining the call on behalf of Lucas you'll be the tailings dam and related water retention structures are the last remaining permit that.
Jack needs of all of the major permits and yeah, we have waited a deliberately till mid stage to do that.
Speaker Change: Because it's fairly costly undertaking with a lot of geotechnical drilling and it really is not on the critical path.
So now that we're you know hearing decision quite we felt it appropriate to advance the dam safety certifications.
Speaker Change: A pretty rigorous process in Alaska.
We're filing all the preliminary design packages now there'll be reviewed by the state we anticipate approval probably in a year year and a half you know well in advance of our.
Speaker Change: Our decision on the project. So the permits are in hand, we're moving forward and it's not on the critical path for development.
Thank you got you. Thanks, a lot and my second one is on.
Speaker Change: And.
Speaker Change: Date on feasibility study in the future so.
Speaker Change: With current gold prices.
Speaker Change: High gold prices are would you consider reflecting a reflection at least in the web data visibility study.
Mark Bristow: Well, we've no we're working with just completed our annual workshop with our partner has been Alaska, Mark Bristow and I attended that and that's the time of year, where we lay out the plans for 2025 and that will.
Mark Bristow: The price of gold is intriguing right now and helps.
Speaker Change: Projects like Donlin move forward.
Speaker Change: We'll be guiding on our 2025 work plan towards the end of this year with our and then early next year with our ongoing budget presentation. So yeah I expect more from US early in the new year or late this year on the 2025 planned activities.
Speaker Change: Got you. Thanks, so much and then the last one if you if you allow me to squeeze.
Speaker Change: I've got in 2025 on Capex. So it's it's clear picture for the rest of 'twenty 'twenty, four but what about 2025 and what's what's the current cash burn rate and yeah, and if you when you when we would expect guidance for Capex for next year. Thank you very much.
Speaker Change: All right well as Sir Peter highlighted in his presentation you are a treasury.
Speaker Change: So still very strong with over $100 million.
Speaker Change: Burn rate I would anticipate it going up next year with the increased activity. This year was about $30 million you might see that up a little higher next year, but at any rate we have sufficient cash on hand to continue to advance the Donlin project.
Speaker Change: Thanks, Greg I appreciate all the detail and continued best of luck.
Greg Lang: Thank you.
Speaker Change: We have one question coming from the webcast Greg.
Speaker Change: And can you speak to the different studies that have been done in a staged approach for the for the advancement of Donlin.
Speaker Change: Sure you'll donlin.
Speaker Change: As you originally envisioned and as permitted with the large scale open pit project with.
No rate of approximately 53000 tonne a day over.
Speaker Change: Over the years, we have considered various scenarios for donlin, which including building into the project in stages to minimize the upfront capital burden.
Speaker Change: Did that ship building two stages, maybe half now half of the year. So we've considered many alternatives and we will continue to advance.
Speaker Change: So alternatives to optimize our investment in the project when we go to update our feasibility study.
Speaker Change: Great No further questions from the webcast.
Speaker Change: Okay.
Speaker Change: Everyone. Thank you for taking the time to give you an update on Nova Cold and we look forward to providing continued updates as the year progresses.
Speaker Change: Good day.
Speaker Change: This brings to close today's conference call you may disconnect your lines.
Speaker Change: For participating and have a pleasant day.
Speaker Change: Yeah.
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