Q3 2019 Earnings Call
Thank you for your patience, we will be beginning momentarily.
Thank you for standing by this is the conference operator, welcome to the Nova Gold third quarter 2019 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 question.
To join the question Q you May press Star one on your telephone keypad.
Did you need assistance during the conference call you May signal, an operator by pressing star Zero I would now like to turn the conference over to Melanie Hennessey Vice President Corporate Communications. Please go ahead.
Thank you saw that's good morning, everyone and we're pleased that you've joined up another golds third quarter financial results and also for an update on the Donlin Gold project on today's call. We have Dr. Thomas cap when all the Gold's Chairman, Greg Lang, Novagolds, President and CEO and David Ottewell another goals.
President and CFO .
At the end of the webcast, we will take questions, both my phone and bite size.
Before we get started.
I would like to remind our listeners that I've 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 disclaimer is included in this presentation.
With that I had the pleasure of introducing Greg Lang, Novagolds, President and CEO Greg.
Thank you Melanie and good morning, everyone.
Our primary asset is different but really permitted donlin gold project in west during Alaska that is 50% owned by noble goal.
And 50% by our long term partner Barrick gold.
Good.
It's located about 300 miles west of Anchorage, Alaska as shown on slide four.
Slide five provides an overview of the achievements the noble gold team has accomplished this year.
Federal permitting is complete and state permitting for the pipeline right away lease transportation quarter leases and damn safety certificates are progressing nicely.
Good Donlin cap was reopened in May and safety training, what's conclude earlier in the quarter.
During July Donlin gold commenced the site investigation and the collection of geotechnical information.
For the advancement.
Engineering for the tailings dam.
We're also making good progress on our product object optimization work.
Tenure to investing incredible amount of time and resources in our outreach efforts on various initiatives with our Native Corporation partners sure Lister.
And she Casey.
On slide six looking a little deeper into our third quarter activities.
We're in the final stage of integrated scoping level optimization work into a study that will serve as the basis for an updated project development plan when the time is right.
With federal permitting complete our operational focus in the quarter centered on furthering our geologic understanding.
And integrating optimization analysis into our strategies.
No, but gold is working with barracks, new management and technical team to advance the project in a financially disciplined manner with the strong focus on engineering excellence.
Our mental stewardship.
Strong safety culture.
And continued community engagement.
Approval of the Alaska Damn safety certificate for the tailings storage facility requires a thorough and step wise process to deliver.
A final dam construction package to the state for approval.
This program consists of geotechnical core drilling test pets, overburden and various hydraulic tests.
And your physical surveys.
Final approvals are expected by year end to authorize facilities associated with the projects transportation corridor and the sections of the gas pipeline.
That reside on state lands.
We are dedicated to keeping our community partnerships strong and engaging environmental educational and cultural activities.
To that end in the third quarter noble gold and dominant participated in numerous activities.
Putting those highlighted on slide seven.
We were key sponsors of a program to remove household hazard hazardous material.
From 14 isolated villages on the Costco Ocwen wherever.
No gold and Donlin gold continued their outreach efforts with our Native Corporation partner Trulicity.
Do you have meetings with tribal councils and key stakeholders in the Yukon Kuskokwim region during the quarter.
We believe that our community engagement and support connectors catalysts for sustainable improvements in the quality of life for many people affected by poverty.
And lack of economic opportunities.
And with that I'll turn the call over to our Chief Financial Officer, David Oddo.
Okay.
Thank you Greg.
Slide eight highlights our operating performance.
The third quarter, we reported an 8.1 million net loss.
Operations.
Somewhere to the prior year.
Higher cost at Donlin gold due to the commencement of field work to support the applications for Alaska Damn safety certificates increased interest expense on the promissory note payable to Barrick.
Foreign exchange losses.
Were offset by lower share based compensation costs and increased interest income and accretion of notes receivables.
In the third quarter 20 team, we sold our interest in the Galore Creek project and recorded a loss of 80.6 million.
Difficult cash flow highlights are outlined on slide nine.
Third quarter, we spent 4.1 million point 3 million higher than the prior year quarter.
Total net spending increased primarily due to higher cost at donlin gold related to the commencement of field work, partially offset by.
Increased interest income on term deposits.
In the prior year quarter, we received net proceeds of 99.3 million from the sale of our interest in Galore Creek.
We ended the current quarter with 152.9 million.
Cash and term deposits.
In 2019, we continue to expect to spend a total of 24 million, including 13 million for our share of Donlin gold and 11 million for corporate general and administrative costs as highlighted on slide 10.
At Donlin Gold <unk>.
2019 spending is expected to increase in the fourth quarter with the ramp up a field work and detailed engineering to support the applications for Alaska Damn safety certificates.
As a result of our Galore Creek sale last year to Newmont, we have a 100 million receivable with an additional 75 million contingent on a galore Creek construction decision.
And with that I'll turn the back the call back over to Greg.
Thank you Dave.
Yeah. These are exciting times to be into gold space and invested in a unique project like dawn.
Good spreads really permitted.
The strong long term partnership and the communities of Western Alaska, and then a jurisdiction.
For the rule of law is not a novelty.
On slide 11, we compare donlin golds, almost 40 million ounces in resources.
14, other development stage projects.
You take a hard look at the peer group, you'll see the donlin is better than twice the size the nearest comparable.
And more than five full bigger.
Jimmy average.
The scale of the resource is a key attribute.
Another attribute is the grade as shown on slide 12.
The average grade of Donlin sets it apart from other large scale open pit deposits.
Donlins grade of two and a quarter grounds is double the industry average.
With scale and grade if donlin was built today would be the largest gold mine in the industry.
Foreign Investor there's additional value that comes with the mine with a multi decade lives.
That's currently in vision.
Its first five years Donlin gold would produce a married and a half drops as a year followed by.
Over a million ounces year over its almost 30 year.
Mine life as shown on slide 13.
There are few existing.
Plan mines.
With an output like this.
Looking at comparable scale mining operations Donaldson would rank among the top producers.
Right sure 14 shows the 10 largest producing mining operations globally.
Only four of these mines are expected to produce more than a million ounces. This year.
Further illustrating that projects like donlin are scarce and are needed to replace the industrys diminishing reserves.
With years of study behind Us and roughly 1400 drill holes as shown on slide 15.
We have a deep understanding of the deposit and up the resources as we prepare for the next stage of development.
That's my and Louis deposits can be seen on slide 16.
It's hard to create donlin has clearly favorable for development.
It's a rare mining project today, both the mineral and surface rights to the project land are privately owned and in our case, our long term partners Cialis step and Teekay see RV owners.
[noise].
As shown on slide 17.
The akhmed Louis deposits, which contain 39 million ounce resource occupy only three kilometers.
An eight kilometer gold bearing Travis.
Our focus is on continuing the optimization program.
However, there are clearly significant future opportunities for substantial expansion of the resource.
When the time is right we will resume exploration.
[noise] mining is an important part of the Alaska economy.
As shown on slide 18, with numerous exploration and development projects like Doglegs advancing.
With other resource industries experiencing low or no growth.
Opportunities in mining present, good paying jobs close to home for Alaskans living in the remote part of the state.
The shrinking population.
The smaller communities is a serious concern for many residents of western Alaska, and Donlin gold offers a different future with training and opportunities for young people to live and work closer to home.
As highlighted on slide 19, being in a geopolitically safe jurisdiction.
It's another key attribute.
Of the Donlin Gold project.
As the second largest gold producing state in the U.S.
Alaska supports and welcomes responsible development.
In fact, the pressure Institute ranked Alaska globally, using it to invest mutt attractiveness and gags.
Something that many other gold development projects that do not have in their favor.
Alaska is a great place to be doing business.
There's tremendous value, having a project like donlin located on private lounge.
As shown in Blue on Slide 22 list to own the mineral rights.
And T.J.C. owns the surface rights.
Donlin has life of mine agreements with both partners, who have been deeply involved and supportive from the very beginning.
We've been partner since 1995, we're thankful fortune Lister and PK sees long term support and commitment to the project.
We support their mandate.
Through the Alaska Native claim settlement back to help them develop their lab.
Economic benefit of the regions and the stakeholders involved.
They have an owner's interest being the project go forward.
Positive record up decision in August last year, and the completion of the federal permitting process or significant milestones in the advancement of Donlin gold.
This was the first ever joint record of decision that was signed back to federal agencies.
As shown on slide 21.
The lead for the core and the BLM at the time were present.
For the signing ceremony.
We're very pleased with the record up decision.
The project was approved in its entirety with no unusual stipulations.
The Novagold team has reached some significant milestones, particularly with the receipt of key federal programs.
Well, we have been working through the state permitting process.
The timeline for development.
Shown on slide 22.
He is now within the owners control.
We've taken the next steps with the start of an extensive field program. This year.
We will continue to advance donlen.
In a financially disciplined matter with the strong focus on environmental stewardship.
And social responsibility.
As shown on slide 23, we implement our social programs in four important areas.
Regarding the health and safety of our people onsite and throughout the region and on the river during the various seasons.
We support the well being of communities and assisting there you.
Casey.
And recognizing the importance of preserving traditional lifestyles.
Bringing tangible long lasting benefits to our community partners.
And with that I will now turn the call over to our chairman Dr. Kaplan, who will give us his insights.
The goal.
Yeah.
Thank you very much Greg.
I'd like to take the opportunity of the quarterly call to be able to highlight.
Some of the.
Features that make.
Donlin that make no buckled in my mind than that of the Electrum group the larger share holder the very best vehicle.
From a risk reward basis.
In the entire gold space.
I'll do that by highlighting not only our leverage and the fact that we're in a place where we can keep the fruits of that leverage when the time comes that shareholders to do so but also.
Some of the changes, which were now starting to see into gold market obviously.
The sentiment as well as the price of gold is markedly changing and has been considerably altered over the course of the last several months.
The leverage to gold that Donlin enjoys you see that's a different NPV is you see it it NPV five and you see it NPV euro.
It's my belief after having been in this business for 25 years.
That's a those very very you high quality assets, particularly with exploration potential, but absolutely within jurisdictions that are favorable will trade with zero percent antibodies and this is extreme tick up the fact that so.
Much of the worlds that is trading below zero percent, that's rendering gold a high yielding currency by comparison.
What do you see here is a story, which regardless of your NPD assumptions its going to explode in value. If your remotely bullish on gold I'm on record as having said that I do believe that gold will have its first real style.
In the trading range between three and $5000 an ounce.
What we can see with Donlin is that the leverage is absolutely extraordinary.
And.
Hi, This is what makes donlin so attractive it's the fact that the leverage is there and that when the time comes to ring. The cash register will actually be able to keep it. It's also that which will make no. The gold one of the very you go to stocks we've been.
The investment.
Diverse.
Moving to page 25.
Our view is that a gold is engaged in a long term secular bull market, one which started at $250 an ounce went to $1900 why it's been in a correction pattern.
And it's now embarking what's the possibility of some head fakes year in there to shake out new comers on a move that will take us way past, new highs and into a completely different equilibrium level. When you consider that the first 12 years of what we call Lake one.
Of the gold full market, so gold and every year higher and where it's again, regardless of whether there was a strong dollar a weak dollar a inflation fears deflation fears political stability political instability.
Strong commodities, we commodities its three year gold and at higher.
That is what we call the bull market. The fact that something could go from 250 to 19 100, and then have a correction it's perfectly normal I would point out but those of you who enjoyed charts as I do my background is that the his story I didn't I view charts, that's being emblematic of human brain waves.
In both instances and the 19 seven days as well is what were experiencing now we saw beautiful soft serve bottoms, which preceded are very very strong impulsive moves to the upside.
That's bottoms, what those saucers tend to get tested.
But our opinion is that whether or not we have those head fake.
This is the time that people should be understanding that you have confirmation that goal is embarking on the next move up the bull market, one, which I would hazard a guess.
Could easily last as long as the first leg certainly the second leg and so we're talking about really decade long moves. This is just the beginning of what has the potential to be feet generational trade.
All of us.
I've never been uncomfortable with that being alone and my thesis and taking the view that eventually people will come around to my point of view and I have no problem waiting years for that to happen.
If you look on slide 26, and 27, however, what you'll notice is that.
It's starting to attract more it here and.
Not only people who have understood its virtues from a supply demand standpoint, or a number of years people like John Hathaway people like John Paulson Nicky. So we're it's Eric Sprouts myself from others, who are in that space than has been in its for years.
It's starting to attract is very broad range.
The other intellectual discipline I.
I think it's fair to say, having almost coined the phrase hyper rationality that nobody would accuse rate valeo as being either irrational or sentimental when it comes to investment analysis and yet.
Ray has put it in a very beautifully succinct way bolt is the currency. We have dollars. We have euros. We again, we have sold if you don't have 10% of your assets and bolt. There's no sensible reason other than you don't know it's street and you don't know the economics of it.
Without going into any of the other macro aspect.
He rightly points to I love the weight that he concludes don't let traditional bias sees rather than an excellent analysis and in the way if you're doing this and what he's referencing is the fact that.
Up until literally several months ago other than the very few interested people out there the idea of being able to raise the concept of investing in gold in any way was viewed as being just on the precipice of being a cave dweller bolt was a barbara.
It's relic if you were in and I see and you were talking about looking at gold people were looking at you as if you were throw back to a different Iraq. What we've seen though is that you couldn't be viewing it from the point of view as a trade or a long term investor it doesn't matter.
You're in a position now where.
Very very smart money names are starting to look at the favorable attributes of gold.
And not being shouted down or you're right it as being bold bugs or any other form of insect and that range hits from people with.
A great sense of smell as to trades like Jeff can block and pull through their Jones and Stanley Druckenmiller to those who've seen multiple cycles like Jay could roll child.
Paul Singur to those who view it through the put some of the emerging markets like 10 wrote off I'm very interesting Lake I'm not long ago marked mobiuss, whose expertise of course, it's in the emerging markets made the comment.
The long term prospect of gold is up up up I think you'll have to be buying it at any level.
So no different ways to look at goal in terms of people understanding that from a risk standpoint, it represents a great trade.
I'd also like to point to and article that was in Barron's just a few weeks ago in which yen snorts Big made a comment at the very end of his interview in which he said many central banks are stepping up bulk purchases they scrambled to find preserve currencies, they like Nobody's Cry, England.
<unk> goes up so there's really no anchor on how high it can go.
It is actually a very important point that he's making there what's the time in the eighties and the ninety's when conceptually central banks might have stepped in cell gold either because they wanted to take a profit because that's at least resistance for a central bank or was to sell something that was done.
Mining.
Or because there were fears that rising gold price might indicate inflation.
Which back in the old days was viewed as being the central responsibility of the central banks to try to inhibit.
No central bankers, who have returned to the market and are buying bold and large quantities because they more than anybody else understand the precarious nature of the reserves they hold the bonds or other currencies, which can be frankly the.
Central bankers are now competing with investors for a very very scarce assets and as far as their concern. Both can go as high as the market wants to take it because they would love.
People to start thinking that they have managed to be successful in reintroducing inflation into the global economy. So the psychology as well is the arithmetic central banks is now in your favor the central Bank trend, it's clearly your friend.
Now you have others, who like Sam's, though we've never really looked at gold and are looking at I think very intelligently from the standpoint of supply and demand I might say that because that tends to be the area in which I focused because I do believe that there are many many macro reasons to own gold.
But I think sit the secret sauce in terms of our aspect of looking at gold is from the vantage point of the industry, which is so absolutely challenge.
So let's look at slide 28.
This is a beautiful formation just as a picture of the gold Bull market as I Express it shows Cold Lake one going from 250 to 1900, we've had the pull back and now with that false or bottom we have.
Embarked upon the next leg, what's going to take at higher.
Sure supply and demand economics, one no one demand drivers are clear diversification safe Haven currency debasement Central bank purchasing protection from inflation deflation and emerging market demand.
It's the supply pressures.
So far so exciting for someone who's in the business.
The discovery rates of bolt or at an all time low exploration budgets are at an all time low ore grades have collapse falling by 50% over the last decade as a consequence, it's just basic math. If you have one mine producing at a gram a tonne another at two grams a ton.
And all other factors are equal the one producing at a gram a tonne has a cost base. It's twice as high as the one that's producing a two grams a tonne if rates are falling costs are rising jurisdictional risk, which a decade ago people, who didnt care about the contrary people paid premiums for asset.
In difficult jurisdiction.
That's completely flipped.
It used to be when I got into the business 25 years ago that people started to state.
You have to go with old is doesn't matter doesn't matter with the jurisdiction as if anything they convince themselves that it was better to go to Africa Asia to South America, because it appeared to be easier to permits and the country seems to be more welcoming of mining.
Well it is easier to permit in those other jurisdictions and having a permitted mine in a safe jurisdiction for.
For us is the Holy Grail, that's where you're going to see the zero percent discount rate, that's where you're going to see people flocking not creating bubbles in those scarce assets in state jurisdiction, but it also means that the first.
A wave of investment that's really going to be the the most juicy is into those vehicles that provide you with great assets in safe places. It also means that a lot fewer mines are going to be developed than people thought because it's much harder to get financing for a mine in it.
Jurisdiction.
Where essentially they want to take you over some of them are clever and they wait until you have actually got the door at the airport.
Others, not its clever and they indicate that they're going to change the rules, while you're developing it or before you have gone into production. Meanwhile, on top of all of this is the fact that central bankers, who could be relied upon to provide goals are now competing to acquire the gold.
While the mining companies, who are supposed to be making money and even find it.
So let's look on page 29.
This chart sells everything you need to know.
What do you see is the decline in reserves, what you see it the decline in discoveries.
And effectively.
So.
[laughter] barn door has been closed even oh.
Okay.
Oh for you've made that discovery your production it'll be over 20 years.
Especially if it's going to be in places, where you really want to commit your capital for 20 years and not worry about changes in regime insurgencies.
Do your a or de facto confiscation. So if you want to be in places, where you actually permit something that after your permitted you know that you can keep it.
There aren't really very many opportunities and even if they exist it it would take decades, which basically means that.
The horse is already out of the barn.
Nothing is going to change that in our view there are no new technologies out there. This isn't like hydrocarbons. If you go to page 30, what you see is that the majors are burning through their reserves faster than they can replace them.
But unlike in the hydrocarbon industry and I know that went extremely well there is no such thing its horizontal drilling there is no such thing its fracking and the reality is there is no such thing it's huge traffic reserves that a new technology would be able to come in and disrupt.
And exploit.
It's over.
Page 31, again refers to the central banks being buyers.
I would view the central banks as being the smartest up the smart money in this instance, because they more than anybody else really understand how flimsy or the reserves they hold or and there's no question if anything the trend among a population is that they want to see their gold repatriated.
From other places back to their own homelands, because they understand that gold represents a one financial assets that does not reflect somebody else's liability to repay you.
It's that's kind of bought promenade.
That provides a safe haven central banks as well as individuals by being able to have told you are able to played the role of your own central bank or just with assets that nobody else is responsible for being.
On page 32.
We're very proud of this chart, a we have and extremely strong.
I'm, an extremely fateful shareholder base or who have understood that over the years every promise that we've ever made every targets that we've ever aimed for.
Every strategic objective that we described in detail.
Have been met there it's not one.
Promise that this management team I'm, beginning with Greg Lang and his executive group, but also myself the electrum group and the those who have been supporting management have not fulfilled and our shareholders have seen it we promise to turn novagold into a pure play.
And on what that meant selling below or not for pennies, but for real money that men spinning out trilogy, which in of itself has been a a very strong success story in the marketplace that meant being able to permit donlen at a time when people really weren't.
Sure I'm, what it looks like to permit a major project in Alaska, especially when it's going to be a project that either one or two phases is going to be the largest single gold producing mine in the world, but in the safest jurisdiction in the world We did it.
Everything that we said that we would do has been done and this is reflected in the kind of shareholder base that anyone would be proud of people who've been with us for very long time like Paulson fidelity van <unk>, we have new people who have a made.
The us the first development story that they've added to their portfolios people such as first Eagle and X or this is really really a great group and it indicates that on a wide variety of levels, our strategy of being able to take a donlin up the value chain and b.
Pure play on an entire get strict what we think actually has the potential to be as big as the joint venture between Barrick and new month.
It's an extraordinary story, it's a way for people to get overleveraged, they could want in the ideal jurisdiction. So on page 33 to summarize what you haven't novagold on a 360 degree basis.
You've got a company, which has an extraordinary balance sheet between cash on hand, and thats. The ruble receivables almost a quarter of a billion dollars with the heavy lifting of permitting the behind us the assets I think good redefine what a tier one assets.
It looks like in terms of its five it's great. It's exploration potential. The fact that it is permitted in North America optimization between Barrick and ourselves, it's going along extremely well the shareholders are supportive and smart money our production profile will make.
That's one of the largest assets.
Potentially the largest single bolt producing assets in the world.
And it's being taken up the value chain by a management team that's been they're done that with a track record of success.
In difficult jurisdictions, but the truth is your company has a pure play on the.
You need.
Donlin gold asset, which also happens to be located in the best jurisdiction in the world What do you own we will be able to keep.
So with that I turn it back to Greg and open up the field to questions. Thank you very much.
Thank you your job.
Right now.
Happy to take any questions.
We will now begin the question and answer session to join the question Q You May Press Star one on your telephone keypad, you'll hear a tone acknowledging your request.
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Our first question comes from Lucas pipes with B. Riley FBR. Please go ahead.
Hey, good morning, everyone and thank you very much shot Tom for the description on the Gulf markets and appreciate it dose a different perspectives you were providing they're very helpful.
I wanted to ask a little bit about kind of.
Putting the this gold price in perspective, two to the equity valuation off off Novagold, a tough Tom Greg kind of how do you think about valuation of know a golf shares today and then.
In the past you commented on but not doing it down around but when we look over the kind of recent months, so you've got pretty close.
I would say at one point crossed across the prior.
Sure issuance level, it is that something that you'd be looking at or or given given the very bullish view on gold is that something where you think look I'm trying to signal that the trend. This our friend, we can weigh them be patient here. Thank you very much for your perspectives.
Greg <unk> go ahead.
I look at Palmarejo, great to have you on the coal.
Look we are gold bowls, and everything that we have seen.
Over the last few months.
As only reinforces our conviction that this full market will be the likes of which one really gets to experience in their lifetime.
In fact, if anything one of the most pleasant surprises for me is the way in which just over the last three four months generalists.
Going on Bloomberg.
With C N D C.
And make the case for goal.
With only a hint of a raised eyebrows.
The interviewer.
That I did not expect become until gold made new highs now don't view that as a country indicator don't view that as being a sign that the gold has Paul there will be pullbacks, along the way, but what it tells me.
Is that.
Whereas I would've thought that.
Some people would take the risk of talking about gold only when gold meet new highs because that's human nature.
The the uniqueness of goal.
And the way in which gold has so many books on which people of various stripes looking at gold through various lenses and hang their hat.
Comfortably and intellectually shows me that the gold the Bull Mark is going to sharper and it's going to go higher than even I predicted in other words this and then.
Phase, which I expected to last for a month, it's not much more he's truncated.
But the fact is gold remain the most underestimate under own financial asset. So you'll have more people going out there and putting on a record that you can buy goal and not be a bug or cave dweller.
And that in turn as gold prices go up is going to allow more and more funds managers to feel comfortable.
That they can go to their brokers and ask her interesting stories and I think that really could see a bubble.
When they ask for really interesting stories in places, where they might be willing to go on vacation.
So it could be Nevada, where people might want to go in BAML or whatever happens in Vegas is in Vegas or it could be a whale watching her salmon fishing in Alaska, it could be going to the great barrier reef and Australia, but the first thing that they're going to be thinking of is gives me great assets.
Great management in places that.
I can tell my I see you want to gold exposure. This gives us leverage in places where we can keep it that's me will be a bubble.
It's going to happen, perhaps sooner than I would've otherwise expected because what I'm not seeing his people coming in to the gold space talking about it.
And being rebuked ridicule fourth you're right. It I remember when Bob Zelek without the World Bank.
Oblique reference to gold being part of a basket of reference point for central bankers He was pilloried.
Hillary.
That is over now a lot of it has to do with central bank behavior, a lot that has to do with macros a lot of it has to do that were in such unchartered waters, where 30% of debt is the yielding below zero I mean, we aren't in such unchartered waters that whether it's looking at both from the supply demand standpoint, which to me is funds.
A mental underpinning of why I feel on a risk adjusted basis. Both is the best investment in the world, but it could also be Mark Mobiuss. His point of view or were kind of broke off point of view about emerging markets.
Or it could be central bankers or it could just be these wanting the currency they sent the debate.
This means we are in for a big deal and people can you get away with expressing their view without being impugned that it's huge from a psychological standpoint, and the arithmetic impacted that it's going to use that there's going to be much more money being willing to golden willing to go into gold at much higher prices.
Because people will steal lets afraid of being ridicule.
As far as were concerned.
Witnessing this and I would be.
Misleading you if I said that at any point, we were remotely with our finger on the trigger.
I've said, we don't do down rounds, because we don't do Dod rounds.
But what I've also said if if you look at our past experience and silver and platinum and hydrocarbons.
Usually surrounds that we do.
And it's not meant to be this way deliberately are usually about double or triple where the previous round was and that's because every time, we raise capital and this was what we did in 2012, when we raised $330 million, we always raised more than enough money in that round. So that we can get.
The next milestone and fit and hunker down until the market resumes going in our direction at which point then we can think about doing a raids. There is zero reason for Nova gold to even.
Deterring doing a raise until that stock, it's many times more than where it is today.
If I had to make a prediction I would say that once we take out the nine in the half anyone who wants to sell at that point really could who was in the 2012 offering.
But more than that it means that we're on our way to where we were in 2010, we went from five to six seen in a matter of weeks.
When we had lots of headwinds people were skeptical about what it's like the permit in Alaska, We didn't have a management team that could build the mine we had a week balance sheet, they're all kinds of issues.
Oh relations with Barrick were very different than they are now those things are now tailwinds rather than headwind. So I can easily see our company going into the twentys or thirtys when someone would say a you know what let's start talking about building. That's mine now by the way I love to lose.
No I think the matter of.
The fact that in silver we made a couple of hundred times, our money hundred times in platinum and 100 times in hydrocarbon there was one with great up.
They were great asset, but they weren't unique.
Donlin is truly unique in the world and there's no reason for us to dilute our holdings at low prices at this point I would say that our shares are more valuable than the metal itself.
Other than that Lucas I don't have a strongly held opinion [laughter].
[laughter] back to you.
Okay.
This is up and very helpful and I very much share your opinion I I have more questions, but I'll jump back into into Q4 now really appreciate all the all the color. Thank you.
Thank you lift this.
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Lucas if you have any more questions. Please go ahead as you read the last person in the Q.
Great all right, Oh, well, Greg or quick question for you on the.
Development.
Plans are unfortunately, I cannot attend to Denver gold for him, but the feedback.
I got a said you are considering a kind of smaller project scale could you elaborate on on that kind of what what exactly are you looking out there and when you may have finalized plans on on that front. Thank you very much.
Sure Lucas.
You know for some time, we've been looking at donlin through a little bit different life and was conceived in the feasibility study you know the feasibility study always envisioned donlin is a large scale mining project in the capital intensive projects.
No not that these ability study was completed in 2011 and that was largely driven by Burke and in those days they had a much stronger balance sheet and a goal to get to 9 million ounces a year. So it was always conceived as bigger is better but the work we've been doing or in the last year or so has been.
A stage development approach, where we would look good that's you know building or a starter project is perhaps half scale of what weve permitted and then expanding it out of cash flow at some stage in the future and that's a certainly an approach that's been done many times in the gold industry and Oh.
Oh, no goldenberg are very very interested in advancing.
So I think.
To give you some a book and it wouldn't be a project you about half the throughput or.
What was originally conceived.
Smaller equipment and there's opportunities to enhance the grade, particularly in the early years, and that's where our focus since then and where the drilling that we've done on the project has a has let us too. So we're pretty encouraged by that we've been meeting where representatives from our partners last couple of days here at office in Salt Lake.
Hey, John Steel Rod quick.
Others, and we're laying out the a program for 2020, and we'll be releasing the particulars of that program with Ah you know when we announce our 2020 budget and the work time, Matt. So a couple of months from now I will put a little bit more color on what's ahead for the dominant.
Correct in the next year.
All right that.
That's very helpful. Thank you. Thank you Craig.
But my last question as to the guards to some of the common Tom that you made on.
The lack of major discoveries and.
The goal space and how the majors that kind of.
Feasting on their prior discoveries and and essentially cut.
Cutting into the principal kind of thinking about in financial terms do you think there's.
Do you think there's still ability.
Up the majors to change that course, if they were to increase there.
Exploration budgets.
What they'd be able to find more or do you think it would just in a new era, where even if significant capital was was deployed you couldn't really changed that trend. Thank you for your perspective.
I think that it's already game over.
One of the reasons why in answer to your first question I basically took a relax view that quarter of $1 billion no debt low burn rate time is on our side.
We're not a $6 stock or we're not a $7 thought were 26 or $27 stock.
On our way to potentially much higher and one of the reasons is.
It's already a perfect storm.
In terms of the gold price and one of the reason.
That it's perfect storm is because the majors are not making big buffer is.
They're just simply not I'm not a new ones that are going to be able to really fill their pipeline in any significant way, they're best chance of increasing reserves.
Is the probably like what you see in Eric and new month in Nevada.
Working near existing discoveries, there's an expression youre its bad expression in today's world [laughter] actually coming it's conservationists, but you expression is if you're going out in search of elephant go to elephant country.
I happened to believe that.
One of the great virtues of Donlin and there's so many of them.
Is the fact that it's been so under explored.
Yeah, we have 40 plus million ounces on three kilometers of any kilometer belt you saw that no particular charts, but that a kilometer belt.
Which we think means that our resources.
Oh.
Potentially a that kilometer belt, there's only a few percentage points of the entire land package now why hasn't that fit for explored that's a function of personalities.
After the failed a takeover bid.
By Barrick Novagolds before we came into the story.
Eric basically almost put down their tools in that sense that said look you know we're going to do what we need to do but we're not going to give no buckled stick with which they can beat us over the head and say you see there with so much more here there was a reason for us to and our shareholders to reject the takeover bid.
Never underestimate the power personalities to change a reality had barrick.
Taken this asset.
We would have had a whole different world for Barrick first of all.
They wouldn't have had to try to build pascua Lama, which is up very very very tough story and if they wanted more copper they didn't have to go to that'd be a they could've had it at Galore Creek.
So that was really smart they knew what they want it to do unfortunately for them.
They lost and they became very bidder for its the previous management team those relations certainly ameliorated when the Electrum group came in and became their counterparty in many respects and of course was absolutely shown by the fact that Greg Lang, who was president of Barrick North America at that.
30 years being with Barrick and its predecessor companies for the first time left in order to be able to join.
With no, but both he became CEO I became chairman because we both saw in Nova gold.
An asset that was unique.
But another part of the assets that people really think about is the unbelievable whites one that exists that the next donlin could be at.
<unk>.
My geologists.
From Electrum believe that there's great potential to be able to find another donlin at Dublin.
What we certainly know is that when you talk about adding reserves, they're very few companies in the world that have five 6 million ounces adjacent to the pace, but definitely a few more drill holes to add them into the reserve category. There haven't been that many five six.
You know discoveries in the gold space in the last three four or five years that wouldn't be ill in gold and yet it just sitting there and the fact is that we have more good drill holes along strike.
I think that are in terms of being able to add reserves for any company.
The lowest hanging fruit is step out drilling at Donlin and regional exploration. This story is just beginning none of that it's factored into the potential npvs of this story just from the 40 million ounces.
2000 dollar gold, which to me is not even a real number you're talking about an asset that's worth $20 billion.
After that accrues to us, which takes us into the Twentyth and the Thirtyth, which is my belief.
Approximate approximates a reasonable valuation, but with so many future.
Opportunities, it's like having an incredible option.
All the goal.
In the right place.
But where you're given no value for the exploration upside with a potential that you could have additional game changing event.
When I look at the gold industry and I see what people are producing from not to mention the places they're producing from and then I compare us being able to be a pure play on the next Nevada.
Back to me is all I need to know I know I don't know about other mining companies I'm not going to judge who has the best prospects are not we are seeing that in some instances people are producing at higher grades than the reserve grades which indicates some high grading going on as you said eating into the principal.
Selling a little bit at the family silver, perhaps all we know is that we're dealing with a great.
Tactically twice the industry average, we'll have the largest single gold producing mine in the world in the safest place in the World exploration upside said right. There for US. It's the perfect story, we can't sell it feel bullish on both my problem is I couldn't even think of anything else.
So I'd, rather replace it with and I've been doing this for 25 years and my whole business revolves around rate assets.
Great assets have control great asset my teams have found great asset, but never unique assets. This for us is.
The Holy Grail.
Tom I really appreciate your perspective best of luck I'm excited to follow the progress and look forward to ask speaking again soon thank you.
Thank you look good.
Well, everyone that concludes our call. This morning. Thank you for taking the time to get enough period.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
HM.
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