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Q&A

Most Common questions

What are the key milestones and goals for 2017?
  • Advance the Donlin Gold project toward a construction/production decision.
  • Advance Galore Creek mine planning and project design.
  • Maintain a healthy balance sheet.
  • Maintain an effective corporate social responsibility program.
  • Evaluate opportunities to monetize Galore Creek.
Why should I be interested in NOVAGOLD today?
  • Due to diligent financial management over the past five plus years, the Company has a strong balance sheet of over $88 million in cash and term deposits, sufficient to execute on our stated objectives to permit the Donlin Gold project
  • With a management team that has a solid track record of securing financing for, permitting, building and operating major mines in North America, we have the experience, determination and conviction to bring Donlin Gold to a construction decision.
  • Donlin Gold is among very few large high-grade open-pit gold projects on the horizon.
  • As the second largest gold-producing State in the U.S., Alaska has a well-established mining tradition and is a great jurisdiction in which to do business.
  • With one simple and clear strategy, NOVAGOLD is focused on the unwavering execution and delivery of our business plan.

We have a long term view and believe that NOVAGOLD offers investors all the leverage they could wish for when gold prices move higher, and when the equity may be even more precious than the metal itself. The collapse in oil prices is a reminder to investors that, unlike oil, gold is not a commodity. It is, first and foremost, a kind of currency that people have accepted as a store of value long before paper currencies. If anything, the understanding and appreciation for gold is only going to improve since it is the only currency that cannot be printed at a time when major reserve currencies are being debased. After a 40-year secular trend of attempted demonetization, gold is re-asserting itself as the only financial asset that doesn’t represent someone else’s liability. Time is clearly on our side to have an extraordinary return on the Company’s investment in Donlin Gold.

What makes the Donlin Gold project so unique among other large undeveloped projects?

It all comes to down to geology, potential, economics, location, partnerships and management.

Geology – With approximately 39 million ounces of gold in the measured and indicated resource categories (541 million tonnes of gold at an average grade of 2.2 grams per tonne), and an additional approximately six million ounces (92 million tonnes at an average grade of 2.0 grams per tonne) in inferred resources, Donlin Gold is one of the world's largest known undeveloped gold deposits. These are excellent numbers, placing Donlin Gold well within the top 1 percent of known global gold deposits in terms of size. It's also blessed with exceptionally high grades when compared with its peers. As we've seen in the recent downdraft in the mining industry, this kind of quality counts. With Donlin Gold having a measured and indicated resource grade of 2.2 grams per tonne, it is one of the highest-grade known large open-pit gold deposits. Its grade is where the average grade of the industry was ten years ago, and is believed to be more than double the average grade of the projects currently in development.

Potential – The second updated feasibility study filed three years ago demonstrated that, as envisioned, Donlin Gold will become one of the largest single gold-producing mines in the world, averaging approximately 1,500,000 ounces of gold production in the first five years of operation and, assuming no expansion, approximately 1,100,000 ounces per year over its 27-year life. And that's assuming no more higher-grade ore is found – or any additional ore at all, for that matter. In addition to its already large mineral endowment, Donlin Gold has excellent exploration potential, with the opportunity to expand the current open-pit resource both along strike and at depth. Considering that the current pit occupies only part of a three-kilometer area that is itself only a portion of an eight-kilometer mineralized belt, in NOVAGOLD's view it is likely that Donlin Gold's mine life, already measured in decades, or ultimate production profile – or both – is likely to be greater than anticipated.

Economics – During the first five years, Donlin Gold's cash costs are slated to be $411 per ounce of gold; over the life of mine, the average is expected to be $635. All-in costs are expected to be $532 and $735 respectively. This is very favorable in today's world. As this number is a function of our having such enormous reserves, it is yet another example of why size matters. Donlin Gold's leverage to higher gold prices is exceptional. Its after-tax Net Present Value (NPV), using $1,200 per ounce and a 5 percent discount rate, was estimated at $547 million, as per the NOVAGOLD news release announcing the results of the Donlin Gold second updated feasibility study. This number rises to $6.2 billion if undiscounted. Importantly, the resultant NPV sensitivity analysis showed a more than eight-fold increase in value to $4.6 billion at $1,700 per ounce of gold ($14.6 billion if undiscounted), and then a nearly 50 percent further increase in NPV to $6.7 billion at $2,000 per ounce of gold. At the zero discount rate with which North American assets may once again be rated, that number rises to more than $19 billion.

Location – Unstable and changing geopolitics, including but not limited to economic and political instability, have altered how the market views investment opportunities on the frontier. According to PricewaterhouseCoopers, "ongoing geopolitical issues…threaten the development and advancement of projects…around the globe” (Mine 2014: Realigning expectations). In fact, in our view, it's not an overstatement to say that jurisdictional risk represents the single greatest threat to the mining industry. Many companies and assets in the developing world have been victims of sovereign risk with unanticipated tax increases, royalties, civil unrest, permitting delays, corruption and resource nationalism. Market analysts, commentators, and investors are taking note of the actions by a number of governments to impose higher taxes and royalties on gold and other metal mines in their assessment of project value. We believe that the fact that Donlin Gold is located in Alaska, America's second largest gold producing state, on private lands already designated for mining and owned by Native Alaska corporations, distinguishes the project from other undeveloped open pit gold projects. In summary, as a corollary to this heightened awareness, we believe that when sentiment returns to the space, Donlin Gold's location in the United States will give NOVAGOLD a tremendous competitive advantage during a time when heightened resource nationalism and jurisdictional uncertainty is second only to investor sentiment as the most significant factor negatively affecting shareholder value among natural resource companies.

Partnerships – Donlin Gold enjoys broad support, including from our Alaska Native Corporation stakeholders, the Calista Corporation (Calista) and The Kuskokwim Corporation (TKC), who own the mineral and surface rights to Donlin Gold. Our well-established track record of social engagement and environmental stewardship in the community is a huge plus. The government of Alaska cites Donlin Gold as a model project for responsible development, a reputation that was reinforced in 2014 by a unique strategic alliance with the National Fish and Wildlife Foundation. That's not something you see every day, and we're proud of it.

Management – NOVAGOLD's operating management team is among the most solid in their credentials and pedigree as any you'll find in the industry. Greg Lang, president and CEO, has been fortunate to work with some of the most experienced individuals in the gold industry and on some of its greatest assets. He ran Barrick's top assets – their North American operations – as president for eight years before joining NOVAGOLD. During the majority of his 30-year career, Greg rose through the ranks with Barrick and the companies it had acquired, Homestake Mining and International Corona. Greg leads a team of experienced industry veterans. Dave Deisley joined NOVAGOLD from Goldcorp; Dave Ottewell joined NOVAGOLD from Newmont; Mélanie Hennessey joined from Hecla; Ron Rimelman joined from Tetra Tech; and Richard Williams joined NOVAGOLD from Barrick right after bringing into production the mammoth Pueblo Viejo project. Each of these individuals left senior positions at these senior companies because they too see in Donlin Gold a truly unique and attractive gold asset in an era defined by quality asset scarcity.

In summary, Donlin Gold has size and extraordinary grade, industry-leading projected output, a low-cost structure, a company-making mine life, excellent exploration upside, strong local partnerships, and jurisdictional safety. Donlin Gold is a truly unique and attractive gold asset in an era defined by asset scarcity with leverage to rising gold prices in a strong gold environment. Finally, Donlin Gold is well-advanced in the permitting process; positioned to be ready to construct when market sentiment will support construction of a major new gold mine.

Briefly discuss the remaining steps in the permitting process for Donlin Gold.

We are in the final stages of Donlin Gold's Environmental Impact Statement (EIS) process. The process of preparing an EIS, as required by the National Environmental Policy Act (NEPA), commenced in December 2012 with the publication of a Notice of Intent by the U.S. Army Corps of Engineers (the "Corps”). Permitting an asset such as Donlin Gold is an intensive undertaking that requires both in-depth expertise and extensive collaboration among multiple parties. The Corps has now completed and distributed the preliminary final EIS for review by the cooperating agencies. The cooperating agencies completed their review and submitted their input to the Corps on schedule in mid-September 2017. The final EIS is anticipated to be published in 2018, followed by a record of decision (ROD).

Other major state permits continue their advancement and are scheduled to be finalized concurrently with the Corps’ ROD or shortly thereafter. Notably, the Alaska Department of Environmental Conservation, Division of Air Quality issued the final Prevention of Significant Deterioration permit on June 30, 2017, and the draft water discharge, integrated waste management and reclamation and closure plan permits are expected to be released for public comment by the end of 2017. We look forward to achieving these key project permitting milestones.

Apart from the ongoing permitting process, what other pre-development work at the Donlin Gold project is outstanding?

The permitting process was initiated based on the project described in the Second Updated Feasibility Study dated November 18, 2011 and amended and filed on January 20, 2012. Additional engineering work is required to advance the project design from feasibility-level to construction-ready level. Some field work, for example drilling to further define geotechnical conditions in the area of the proposed tailings dam embankment, will be undertaken in support of the engineering. Field work also will be undertaken along the natural gas pipeline right-of-way to finalize the pipeline alignment and location of borrow sites and river crossings. As engineering specifications are finalized, orders will be placed for mine equipment, plant components (e.g., mills, crushers, motors, and pumps), pipe, and other materials. All of these actions will be identified in a well-thought-out project execution plan that the project team will use to manage the project scope and to reduce the risks inherent in project execution. The first development works would be the execution of site capture, which includes early works consisting of port facilities, airport, roads and camp.

What is the purpose and progress of the $8-million drill program?

Barrick Gold and NOVAGOLD jointly developed the program to gather additional geochemical and structural data regarding the deposit that will strengthen their understanding of the mineralized zones and deepen their knowledge of the structural controls.

The program includes 22 planned core drill holes; 9 holes of which have been completed as of October 3rd, 2017 (4,502 meters). An update will be provided once the results have been received.

How has the drill program impacted your anticipated burn rate for 2017?

By carefully managing our treasury, we have remained financially strong with over $88 million in cash and term deposits as of August 31, 2017, which is more than sufficient to deliver on our stated objectives of completing permitting activities at Donlin Gold, and advancing the current drill program and related optimization work with Barrick. 

For the full year, we continue to expect to spend approximately $27 million, including $11 million for general and administrative costs, $14 million to fund our share of expenditures at the Donlin Gold project, and $2 million at the Galore Creek project.

How much risk do you see of environmental litigation delaying the project?

NOVAGOLD believes that the risk of environmental litigation delaying the project is small, however, should there be any delays, we are prepared to work through them and keep the process moving forward. With an asset that has a life of mine of ~30 years, we maintain a view that is long-term while taking a methodical approach to ensure that each step is completed properly – even if that means taking a bit more time.  Although there are never any guarantees that no one will file a lawsuit seeking to prevent development of a new mining project, we believe that the strong relationships established over 20 years by Donlin Gold with the Calista Corporation, owner of the mineral estate, The Kuskokwim Corporation (TKC), owner of the surface estate, local communities in the Yukon-Kuskokwim Region, and the State of Alaska mitigates this risk substantially.

In Alaska, the Alaska Native Claims Settlement Act (ANCSA), came into effect in 1971 and was intended to resolve long-standing issues surrounding aboriginal land claims in Alaska, as well as to stimulate economic development throughout Alaska. The settlement established Alaska Native claims to the land by transferring titles to twelve Alaska Native regional corporations and over 200 local village corporations. A thirteenth regional corporation was later created for Alaska Natives who no longer resided in Alaska. The Native Corporations must share 70% of their profits with the other Native Corporations. In essence you have more than 50% of the voting population that stands to benefit from this project.

Part of the reason Donlin Gold’s relationship with local communities is so strong is that these local communities already have enjoyed tangible benefits as a result of activities at the project. For instance, since exploration began in 1996, local residents have been employed in a variety of roles, forming up to 90 percent of the workforce at the Donlin Gold camp. The proposed project would employ up to 3,000 workers during construction, and up to 1,000 during operations. Through Donlin Gold’s support of scholarships for Calista and TKC youth, sponsorship of academic and trades fairs, and leadership in development of the Alaska Miners Association’s Mining Workforce Development Plan, we are building a foundation that will provide Calista and TKC shareholders and their descendants with the opportunity to thrive as Donlin Gold prospers.

How do you apportion value to NOVAGOLD?

NOVAGOLD should be seen through two prisms. One is as a growth story. The other is as a value play. In the United States, Barrick and we are on the path to building the largest pure gold mine in the world. We are also the co-owner with Teck of what is expected to be one of Canada's biggest and lowest-cost copper mine. Donlin Gold and Galore Creek are two spectacular assets by any measurement. And then of course we have a strong balance sheet…which means we don't need to access capital until we wish to do so. Together with our strong balance sheet give us extraordinary leverage, as well as financial flexibility. In fact, they may well render NOVAGOLD unique.

Of course, our flagship is our 50 percent-owned Donlin Gold project. In Donlin Gold, NOVAGOLD offers an unrivaled opportunity for investors seeking leverage to gold through a uniquely attractive asset that – in terms of size, grade, exploration potential, production profile, and jurisdictional safety – is quite possibly the most important gold project in the world today. How does one value that? We believe that we are returning to the environment that existed two decades ago, before the frontier investing that began with Yanacocha, when assets in the United States were valued using zero percent discount rates and were arbitraged against what were perceived as the then "risky” jurisdictions…Australia, South Africa, and Canada. For so many reasons, we see that era is well and truly over, and the arc as returning to premium valuations for North American assets. Yes, it may take longer to permit a mine in the USA. But when you have permitted and built the mine here…you own it! Using that kind of analysis, Donlin Gold's Net Present Value (NPV) approaches $20 billion with gold at $2,000. That's not to say that even that sum is the true value in our minds. It assumes no further exploration upside and additional mine life, which we do not expect. It also assumes no capex optimization which, in a world of crushed energy (think oil and gas) and commodities (think iron) inputs, and a new realism among equipment and service providers, is also likely a bit conservative. Indeed, we would argue that traditional NPV analysis is flawed when it comes to valuing a mine with a "category killer” mine life … as it diminishes the value of the production beyond a decade. This is absurd, as it is mine life which creates the most value. Lastly, put aside that we believe gold will go much higher than $2,000 to reach a logical equilibrium level for supply and demand. For all of these reasons, we believe one thing: NOVAGOLD is certainly a cheap unexpiring option.

It should be noted that sentiment is like the seasons, and it is surely fickle. In 2010, when gold equities last had a nice run, NOVAGOLD's share price surged from $5 to $16 in a matter of weeks. That was before there was a Feasibility Study on Donlin Gold, and a Pre-Feasibility Study on Galore Creek. That was before new management was brought in with the credentials to build major mines. Today, we are permitting Donlin Gold, and Galore Creek (in which Teck invested C$373 million to complete its 50% earn-in obligation in 2011) has been shown to be an excellent copper asset. Our balance sheet is among the strongest in the space, ensuring that even if gold falls before it rises we do not need to come to our shareholders for money…for many years. And our management team can manage a major mining company. So what we believe is this: many who are presently espousing a hunker-down mentality in the gold industry will be clamoring, when the next leg in the bull market unfolds, to seek out projects with leverage and growth in safe places. In an era defined by asset scarcity, NOVAGOLD provides one of the few institutional-quality ways to gain exposure to both. If past is prologue, and we believe it will be, when gold prices and sentiment return, there is the potential for our  shares to reach new highs.

Assets

Do you have all the surface rights and exploration licenses in place to mine at the Donlin Gold project for as long as there is potential?

Yes. Donlin Gold has a mining lease with Calista Corporation and a surface use agreement with The Kuskokwim Corporation with co-terminus terms that grant Donlin Gold the rights to mine so long as the company believes there is valuable mineral potential at the property.

Why such a lengthy process to permit Donlin Gold?

The permitting process in the United States is rigorous, and rightly so. It is the very reasonable price we pay for having security of tenure in one of the world's safest jurisdictions. As managers of a valuable piece of real estate with a significant mineral endowment, we are the most supportive advocates of the government agencies that are our counterparts in this process. We know that the more comprehensive and transparent the work that is done on the front end, the better the outcome for all stakeholders in Donlin Gold. We support the thorough and professional approach taken by the Corps in preparation of the EIS, and are encouraged by our joint-progress in providing all agencies and the public with ample time and opportunity to thoroughly review, as well as to provide meaningful input into, the permitting process. Donlin Gold has made a focused effort for the past 20-plus years to collect comprehensive environmental baseline data and lay the groundwork with local and regulatory stakeholders for the success of the project.

How many ounces of gold do you anticipate Donlin Gold will produce a year?

Once in production, Donlin Gold is expected to be one of very few mines in the world producing more than one million ounces of gold. In the first five years, the project is expected to produce 1,500,000 million ounces of gold per year and greater than 1,000,000 million ounces of gold per year over its 27-year mine life. Furthermore, the project has significant exploration potential as its current mineral endowment covers only three kilometers of an eight-kilometer-long mineralized corridor. This provides support for our belief that Donlin Gold, once built, should provide investors with many years of wealth-generating opportunities.

How would you describe the Donlin Gold ore body? Is there potential for a smaller scale project requiring lower initial capital and providing better economics in this gold price environment? Or does the large infrastructure requirement make a smaller scale project difficult economically?

Gold-bearing rock within the Donlin Gold deposit is present in two adjacent areas known as the ACMA and Lewis pits. By completion of mining, the two pits would merge at the surface into one roughly oval, open-pit mine with dimensions roughly 2.2 miles long by 1 mile wide. The ACMA pit would have an ultimate depth of approximately 1,850 feet and Lewis would be 1,653 feet deep. Mining of the ACMA pit is proposed in nine phases and the Lewis pit in six phases. The initial mining of the two pits would be independent, but they would partially merge later in the life of the mine. Overburden from the final stages of the Lewis pit would be placed into the ACMA pit, partially backfilling it.

Within the orebodies, southeast-dipping north-northeast-oriented fracture zones are the primary control on gold bearing vein distribution within the north-northeast mineralized corridors. Composite vein zones or mineralized corridors range up to 30 meters in width and extend for hundreds of meters along strike. Intrusive rocks and to a lesser extent competent massive greywacke are the most favored host rocks, and act as a secondary control on the mineralization. Gold distribution in the deposit closely mimics the intrusive rocks, which contain about 74% of the mineral resource identified in the second updated Donlin Gold Feasibility Study (Donlin Gold FS). Structural zones in competent sedimentary units account for the remaining 26%.

Prior to making a construction decision, the owners will revisit and update the Donlin Gold FS based on current market conditions. NOVAGOLD and Barrick already have initiated their review of the Donlin Gold FS, apart from the work being advanced by Donlin Gold, to identify the project components that offer the greatest opportunities for enhancing project efficiencies, execution, operation and hence economics. At this point, Donlin Gold's scale is affected by the need to develop access, fuel, and power infrastructure for the project. While the owners will consider all potentially viable options for design, construction, and operation of a successful project, the best project design available today is the one that Donlin Gold is seeking to permit.

How would you describe the exploration potential of the Donlin Gold property beyond the 39 million-ounce resource already identified?

Donlin Gold has excellent exploration potential, with the opportunity to expand the current open-pit resource both along strike and at depth. Considering that the current pit occupies only part of a three-kilometer area that is itself only a portion of an eight-kilometer mineralized belt, in NOVAGOLD's view it is likely that Donlin Gold's mine life, already measured in decades, or ultimate production profile – or both – is likely to be greater than anticipated.

Can you briefly describe the social stakeholders in the Donlin Gold project and how are you managing your community relations and obligations?

Local communities are our neighbors – and at Donlin Gold, they're the owners of the minerals and land on which the project will be built and operated. Over nearly 20 years of activities at Donlin Gold, we have consistently sought to build strong community partnerships, reach equitable participation agreements with Calista Corporation (the owner of mineral rights) and TKC (the owner of surface rights), and establish good communication with local communities as well as state and federal regulators. At the same time, we collected extensive environmental baseline data to facilitate permitting of the project and developed training and employment programs to engage the local population and businesses in the advancement of Donlin Gold. We're very proud of the relationships that we have with our community partners. We have taken the time to listen to their concerns and carefully designed our project to mitigate those concerns. We welcome the scrutiny that the permitting process entails, given the importance of a project of this size to the state and to the region.

Would Teck buy your interest in Galore Creek?

Only Teck can answer that question. Teck has a right of first refusal with respect to a sale by NOVAGOLD of its interest in the Galore Creek Partnership.

How do you view the opportunity at Galore Creek? What copper price would you need before market participants take interest in the project?

Galore Creek is expected to be one of the largest and highest quality low-cost copper producers in Canada, one of the few safe jurisdictions remaining for copper miners. The 2011 Galore Creek pre-feasibility study incorporates a mining and operating facility processing at a nominal 95,000 tonne-per day capacity – and forecasts production of 9 billion pounds of copper, 8 million ounces of gold, and 136 million ounces of silver over an approximate 18-year mine life. Cash costs are forecast to average $0.80 per pound of payable copper (at base metal price assumptions). Each owner has invested greater than $250 million in the Galore Creek project.

With our partner Teck, we continue to work on technical studies in project mine planning and design, as well as waste rock and water management. We expect this effort to further improve the value and marketability of the Galore Creek project. When the market improves, Galore Creek will warrant the attention that it deserves as an incredibly valuable polymetallic deposit in British Columbia with the potential to be a core asset for any mining company. Our shareholders will benefit from improved copper market conditions as the value realized from disposition of all or part of our 50% interest in Galore Creek will help strengthen our cash position and contribute toward the development of Donlin Gold.

Funding options

What gold price do you need to see before the economics are attractive enough for a large gold miner (potential partner) to take interest in developing Donlin Gold?

While the gold price at a particular date will influence a decision to develop Donlin Gold, gold price alone will not be determinative. Share price matters equally. NOVAGOLD believes that Donlin Gold is a truly unique and attractive gold asset in an era defined by quality asset scarcity and may well be the first large new mine to be built when market sentiment turns. In these circumstances, we anticipate that NOVAGOLD shares will be multiples of where they are today, and hopefully a multiple of where the company did the last round of financing four years ago. As the shares are as precious as the metal, we have no more a desire to give them away than we do the gold at Donlin Gold. Fortunately, we expect both to rise to where we will be able to confidently make a construction decision.

What do you think is a reasonable estimate for capex in the current environment? Can you provide specific opportunity levers?

The capital cost issue used to be cited as the key challenge facing Donlin Gold. NOVAGOLD does not believe it will be when the construction decision is ready to be made. Right now, with commodities and services soft, it's clear that the feasibility study was completed at the peak of the last commodity cycle and that multiple input costs have fallen. Even if that weren't the case, it should be noted that the total capital cost estimate for Donlin Gold, which came in at $6.7 billion and included $1 billion in contingencies, was meant to be conservative and sufficiently robust to withstand the deserved scrutiny that many projects have faced since the industry experienced a series of capital expenditure blowouts. Our aim is for Donlin Gold not only to meet expectations, but to exceed them. To that end, many opportunities have been identified for potential reduction of the capital cost amount, including turning over construction and operation of significant infrastructure and ancillary projects – such as the gas pipeline, oxygen plant, and port operations – to other third-party owner/operators. Such exercises are routine for projects blessed with long mine lives.

The Alaska State government is facing a decline in oil revenues. Have you had conversations with them for a potential partnership to fund a portion of the project? How supportive are they in general and in what ways?

Donlin Gold has not discussed any specific proposals with the State of Alaska, but has had general conversations with the state regarding potential opportunities for state financing for infrastructure components of the project. While Alaska derives more than 90% of its revenues from oil production, the state’s ability to support economic development does not depend on annual funding. The Alaska Industrial Development and Export Authority (AIDEA) was created by the Alaska Legislature in 1967 "in the interests of promoting the health, security, and general welfare of all the people of the state, and a public purpose, to increase job opportunities and otherwise to encourage the economic growth of the state, including the development of its natural resources, through the establishment and expansion of manufacturing, industrial, energy, export, small business, and business enterprises…" AIDEA financed the Delong Mountain Transportation System, one of AIDEA’s original projects, to support the development of the Red Dog mine in northwest Alaska, one of the world’s largest producing zinc mines. The Delong Mountain Transportation System comprises the infrastructure for the transport of concentrate from the Red Dog mine site to a port where lightering barges are used to load ships that carry the concentrate to off-shore smelters, including: a 52-mile all-weather gravel industrial haul road, a port facility, an offshore conveyor system, a fuel storage and distribution facility, concentrate storage facilities, on-site power, and residential quarters for up to 96 workers. The Delong Mountain Transportation System is illustrative of the types of investment that AIDEA can make to support resource development in Alaska.

Valuation drivers

What gold price do you believe NOVAGOLD’s stock is implying currently? What is your long-term view on the price of gold?

We believe that the gold price is disconnected from gold equity valuations in general. Such divergences and overshooting happens sometimes when investors feel disappointed…in all markets by the way, not just precious metals. Fortunately, NOVAGOLD has the luxury of not needing to be concerned about the current price of gold. We have a long-term view and believe that NOVAGOLD offers investors all the leverage they could wish for when higher gold prices return. The recent collapse in oil prices is a reminder to investors that, unlike oil, gold is not a commodity. It is, first and foremost, a kind of currency that people have accepted as a store of value long before paper currencies. From the Americas to the deepest recesses of Europe, Africa, and Asia, humanity has regarded gold as a form of currency since the beginning of recorded history. That's not going to change. Gold is a better global brand than Coca-Cola. If anything, the understanding and appreciation for gold is only going to improve since it is the only currency that cannot be printed at a time when major reserve currencies are being cheerfully debased – among them the US Dollar, the Euro, the Pound Sterling, the Yen, and even the Swiss Franc. After a 40-year secular trend of attempted demonetization, gold is re-asserting itself as the only financial asset that doesn't represent someone else's liability. Time is clearly on our side to have an extraordinary return on the Company's investment in Donlin Gold.

How much value do you think the market is assigning to Galore Creek? How much value do you ascribe to the Galore Creek project?

Galore Creek is a great asset, which is why each of NOVAGOLD and Teck have invested greater than $250 million in the project. It's an asset a company can be built around, and is expected to be one of the largest and highest-quality, low-cost copper producers in Canada – one of the few safe jurisdictions remaining for copper miners. Although we continue to evaluate opportunities to monetize our interest in the Galore Creek project to support development of Donlin Gold, we are fortunate to have the flexibility to continue to enhance the value of the asset with minimal spending as we wait for market conditions to improve.

Donlin Gold has a significant capex requirement, is it economical?

The capital requirements for the Donlin Gold project were released as part of the Second Updated Feasibility Study filed in November 2011. As we progress through permitting and get closer to a decision on construction, the Donlin Gold partners will update the feasibility study and take a fresh look at the overall capital requirements, underlying costs and potential cost saving opportunities.

When comparing Donlin Gold to other assets that have been developed recently, the estimated capital cost of $200 per ounce of reserves, compares favorably. Especially given that Donlin Gold is expected to be around for many decades to come. Should we be successful in adding more reserves – these numbers are expected to be lower. These days, many big, capital-intensive projects are under scrutiny – some for perfectly legitimate reasons; however we believe that capital costs should never be considered in isolation. Once permits are obtained, NOVAGOLD will be in a position to evaluate a construction decision based on market conditions at that time.

Does NOVAGOLD participate in the Direct Registration of Shares (DRS)?

Yes, NOVAGOLD participates in the Direct Registration of Shares with the Company's transfer agent, Computershare. For more information on DRS, share transfers, lost certificates, or a change of address, please contact Computershare www.computershare.com.

Still Have a Question?

Please email info@novagold.com. While we may not be able to post all questions on the website, we will respond promptly to everyone.

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