Page 17 - NOVAGOLD_2016_AnnualReport
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What sort of cost-saving opportunities do you see?
The owners are actively studying ways to minimize their initial capital outlays and improve the project’s economics. In 2011, the total capital cost estimate for Donlin Gold came in at $6.7 billion. At this point, we’ve identi ed a number of possibilities, such as phased execution, the implementation of modular construction techniques, the use of selective mining methods, and the automation of certain mining activities. For a long-life project such as Donlin Gold, today’s equipment leasing terms could be the preferred route to  nance some of the initial capital. Capital could also be shared through additional third-party  nancing or owner/operator opportunities (e.g. gas pipeline, port facilities, and oxygen plant). Results from these analyses should crystalize requirements which we expect will lower the owner’s initial capital outlays and add value over those described in the second updated feasibility study dated November 18, 2011 and amended and  led on January 20, 2012.
The work being completed by both Barrick’s and NOVAGOLD’s experienced mine builders and operators should enhance the value of the project at the time when the owners (1) decide to update the 2011 feasibility study and (2) initiate the engineering work required to advance the project design from feasibility level to basic and then detailed engineering.
An updated version of Donlin Gold’s development plan should also help us de ne the right structure for project  nancing. We
are con dent that when the price of gold comes back to levels which would yield acceptable returns to the owners of Donlin Gold, the cost of both equity (through high share price) and debt (through low interest rates) for project development should be very attractive.

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