NOVAGOLD Advances Its Projects and Strengthens Financial Position
-- Donlin Gold's Preliminary Draft Environmental Impact
Statement (PDEIS) is proceeding on schedule
-- With over $190 million in the treasury, NOVAGOLD is in an
exceptionally strong financial position
-- 2014 expenditures targeted to decline to $30 Million
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 11, 2014) -
NOVAGOLD RESOURCES INC. (TSX:NG)(NYSEMKT:NG) today released its
fourth quarter and year-end financial results and project update
for its flagship 50%-owned Donlin Gold project in Alaska and its
50%-owned Galore Creek copper-gold-silver project in British
Columbia.
Details of the Company's financial results for the year ended
November 30, 2013 are presented in the consolidated financial
statements and in the annual report filed on Form-10K with the SEC
that will be available on the Company's website at
www.novagold.com, on SEDAR at www.sedar.com, and on EDGAR at
www.sec.gov. All amounts are in U.S. dollars unless otherwise
stated and all resource and reserve estimates are shown on a 100%
project basis.
In 2013, NOVAGOLD achieved the following milestones along its
critical path:
- Received the Donlin Gold Environmental Impact Statement (EIS)
Scoping Summary Report prepared by the US Army Corps of Engineers
(the Corps), the lead permitting agency
- Carried out extensive work with the permitting agencies on the
Donlin Gold PDEIS
- Engaged with Alaska Native corporations and other Donlin Gold
stakeholders on community initiatives
- Completed 11,600 meters of drilling at Galore Creek ahead of
schedule and under budget which:
- Identified extensions of the copper-gold mineralization within
and adjacent to the new Legacy zone
- Increased the density of drilling in the Legacy zone sufficient
to prepare an inferred resource
- New drill data will increase resource model confidence
- Continued to maintain a robust balance sheet:
- Reduced convertible debt by $79.2 million, with the remaining
balance of $15.8 million due May 1, 2015
- Realized $54 million in cash proceeds from the exercise of all
of the Company's remaining warrants
- Cash resources are more than sufficient to take Donlin Gold
through permitting and satisfy all current financial
obligations
President's Message
2013 was a very productive year for our company, with
substantial progress on all fronts required to provide our
shareholders with the greatest, and safest, asset with long-term
leverage to gold. First, we advanced the permitting process at
Donlin Gold, which continues on schedule and under budget; Second,
through a successful drilling campaign, we identified significant
extensions to mineralization at Galore Creek, positioning ourselves
to maximize its value; And lastly, following the reorganization of
2012, we further streamlined our processes, substantially reduced
expenditures and strengthened our balance sheet. As a consequence,
NOVAGOLD shareholders are now well-positioned to benefit from the
successful permitting of Donlin Gold, one of the gold industry's
largest and highest-grade gold projects located in a safe
jurisdiction with a well-established mining culture and production
history. These latter factors are particularly important
competitive advantages in an environment of rapidly escalating
resource nationalism around the globe... and in the context of
universal challenges facing the precious metals industry as reserve
grades continue to decline and sources for emerging production to
replace mined-out capacity become increasingly scarce. With close
to 40 million ounces of gold in measured and indicated resources,
and grade averaging 2.2 grams per tonne gold, Donlin Gold has the
key ingredients of scale and quality that are required to build a
modern cost-effective mine located in a jurisdiction with
well-established rules related to permitting, mine development and
operation. When compared to the largest precious metals producing
mines in the world today, Donlin Gold would be at the top with more
than 1,000,000 ounces of annual production and a projected
mine-life of over 27 years. It really ticks all the boxes in terms
of being arguably the most significant undeveloped gold asset in
the world today.
In 2013, Donlin Gold completed its first full year of
permitting. Earlier in the year, 14 public scoping meetings took
place in various Yukon-Kuskokwim villages and Anchorage.
Subsequently, the Corps filed the Donlin Gold EIS Scoping Summary
Report which included comments from the scoping meetings that will
be addressed in the Draft EIS. Throughout the year, we collaborated
with the cooperating agencies as part of the permitting process and
the Corps hosted a number of workshops to review important
components of the baseline data that had been submitted to the
permitting agencies. In addition, NOVAGOLD and Donlin Gold engaged
with Alaska Native corporations and other local stakeholders on
community initiatives, workforce development and local outreach.
The good will and professionalism of our team has been recognized.
Indeed, Donlin Gold is to be congratulated as they received the
Employer of the Year award from the National Association of State
Workforce Agencies. Thus, at a key juncture in the development of
Donlin Gold, in 2013 we clearly have established the foundation
needed for a successful permitting outcome. In 2014, we will build
on this excellent foundation through our ongoing permitting efforts
and community outreach programs.
The Galore Creek exploration and in-fill drilling program
exceeded our expectation in 2013 and confirmed that, beyond the
current 18-year mine life, considerable exploration upside exists.
With more than 11,600 meters drilled, last year's program
demonstrated: an extension of the copper-gold mineralization into,
as well as adjacent to, the Legacy zone; increased the density of
drilling in the Legacy zone sufficient to prepare an inferred
resource; and the results provided additional data needed for mine
planning and design. The work was completed ahead of schedule and
under budget. Additionally, Galore Creek is to be congratulated for
their enhanced safety practices and, most importantly, zero
lost-time injuries.
The results from the 2013 drilling campaign, combined with the
2014 work program focused on next-level mine planning and design,
is expected to enhance the value of Galore Creek and its
marketability. While we continue to evaluate opportunities to
monetize our interest in the Galore Creek project to strengthen our
treasury, we clearly have reason to believe that Galore Creek is
the kind of asset that, in and of itself, one could build a company
around. In sum, it's 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.
I'm very pleased with the financial health of the company. We
have always taken a "no dime before its time" approach to our cash.
Nonetheless, especially at a time when cash is king for everyone in
our space, a great deal of thought and work was invested over the
last two years in streamlining the company's structure and
processes to improve efficiency and reduce costs. NOVAGOLD is now a
much simpler company focused on the development of Donlin Gold...
and also a lot less expensive to run. Despite the deep cuts that we
targeted, the overall expenses to fund the Donlin Gold and Galore
Creek projects came in under the reduced budget.
Meanwhile, we strengthened the balance sheet. We received $54
million in cash proceeds from the exercise of all the company's
remaining warrants and reduced the convertible debt by $79 million
with the outstanding balance of $16 million due in 2015. With a
treasury greater than $190 million, we have sufficient cash on hand
to repay our modest obligations and advance the Donlin Gold project
through the ongoing permitting process. In the spirit of prudent
financial management, and given the stage of development of the
Donlin Gold and Galore Creek projects, our 2014 budget of $30
million represents a 22% reduction year-over-year and positions us
extraordinarily well as a development company. Further details on
the budget are provided in the 2014 Outlook section below.
Today, NOVAGOLD has the projects that are exceptional in scale,
quality, and jurisdictional safety: Donlin Gold is arguably the
world's most significant undeveloped gold project, and Galore Creek
is potentially one of the largest copper mines in the tier-one
jurisdiction of Canada. The Company is well-financed and managed by
a team of mine builders and operators with both an exceptionally
strong track-record of success, and a rigorous alignment with all
of its stakeholders. We are all very proud of what we have achieved
and are looking forward to an exciting future.
In conclusion, we remain more steadfast than ever in our
commitment to develop what will be one of the most coveted precious
metals assets in the world. Patience has and will continue to bring
rewards for all of our stakeholders. We are truly grateful for the
continued support and interest of our shareholders. As always, we
extend a sincere thank you to our employees and our project teams
as well as the governments, Native corporations and First Nations
of the jurisdictions in which we operate for all their hard work
and dedication to the Donlin Gold and Galore Creek projects. We are
also very appreciative for the guidance provided by our Board of
Directors, including their shareholder-friendly and value-focused
vision.
Financial Results |
in thousands of U.S. dollars, except for per share
amounts |
|
Year ended November 30, 2013 $ |
|
Year ended November 30, 2012 $ |
|
Expenses (1) |
14,687 |
|
19,283 |
|
Share-based payments |
12,304 |
|
19,862 |
|
Share of losses - Donlin Gold |
14,620 |
|
16,929 |
|
Share of losses - Galore Creek |
13,352 |
|
23,401 |
|
Other operating expenses |
813 |
|
467 |
|
Total operating expenses |
55,776 |
|
79,942 |
|
|
|
|
|
|
Loss from operations |
(55,776 |
) |
(79,942 |
) |
Other income (expense) |
(3,088 |
) |
64,608 |
|
|
|
|
|
|
Income (loss) for the period |
(62,760 |
) |
(11,829 |
) |
Income (loss) per share, basic and diluted |
(0.20 |
) |
(0.05 |
) |
|
|
|
|
|
Cash and term deposits |
191,262 |
|
254,667 |
|
Total assets |
578,686 |
|
685,242 |
|
Total liabilities |
113,037 |
|
208,431 |
|
(1) General and administrative, salaries and severance,
professional fees, and corporate and development. |
For the year ended November 30, 2013, NOVAGOLD reported a net
loss of $62.8 million (or a loss of $0.20 per share, basic and
diluted) compared to a net loss of $11.8 million (or a loss of
$0.05 per share, basic and diluted) for the prior year. The loss
from operations decreased 30% from $79.9 million in 2012 to $55.8
million in 2013. The decrease resulted from lower general and
administrative expenses and a lower share of losses from equity
investments in the Donlin Gold and Galore Creek projects. In 2013,
Donlin Gold incurred $29.2 million in costs compared to $33.9
million in 2012. The Company's 50% share in 2013 was $14.6 million
for permitting, community engagement and development efforts. Our
share of losses at the Donlin Gold project decreased by $2.3
million in 2013 with activities focused primarily on permitting. In
2013, Galore Creek incurred $26.7 million in costs compared to
$46.8 million in 2012. The Company's 50% share in 2013 was $13.4
million primarily related to the 11,600-meter exploration and
infill drilling program, environmental monitoring, administrative
expenses, as well as site care and maintenance costs. Our share of
losses at the Galore Creek project decreased by $10.0 million due
to a smaller drilling program focused on the 2012 Legacy zone
discovery. Expenses(1) decreased 24% due to the corporate
reorganization costs that were incurred in 2012 for severance and
recruiting.
Net loss attributable to shareholders was $62.8 million ($0.20
per share, basic and diluted) in 2013 compared to a net loss of
$11.8 million ($0.05 per share, basic and diluted) in 2012. The
difference was primarily related to the gain of $76.2 million we
recorded in 2012 compared to a gain of $1.4 million in 2013, as a
result of the decrease in the fair value of U.S. denominated
warrants and the Notes, partially offset by the $24.1 million
reduction in the loss from operations in 2013 compared to 2012. We
also had a $3.9 million tax expense in 2013 compared to a $7.7
million income tax recovery and a $4.2 million net loss from
discontinued operations in 2012.
Liquidity and Capital Resources
As of November 30, 2013, NOVAGOLD has $191.3 million in cash and
term deposits compared to $254.7 million at November 30, 2012. The
decrease in cash is primarily related to $38.3 million used in
operating activities and to fund Donlin Gold and Galore Creek as
well as $79.2 million to repurchase the convertible notes,
partially offset by proceeds of $54.4 million from warrants
exercised. The Company has sufficient working capital available to
repay the remaining $15.8 million of outstanding convertible notes
due in May 2015, to advance Donlin Gold through permitting, as well
as further enhance the value of Galore Creek.
2014 Outlook
In addition to completing all planned activities in 2013,
NOVAGOLD's expenditures were 7% lower than planned at $38.3
million. Moving into 2014, we plan to further reduce our
expenditures to approximately $30 million, which includes
approximately $15 million for our share of expenses at Donlin Gold
and Galore Creek, in addition to $15 million in general and
administrative expenses, interest on the convertible notes and
working capital.
Donlin Gold LLC has approved a work program and budget for 2014,
of which our 50% share is $12 million, to continue to advance the
permitting process through the completion of the PDEIS in late 2014
for agency review in preparation for issuance of the draft EIS for
public review in 2015.
NOVAGOLD and Teck have jointly approved a Galore Creek work
program and budget for 2014, of which our 50% share is $2.5
million. The 2014 work program consists of incorporating the 2012
and 2013 results into a capital efficient work plan that will
advance the Galore Creek project toward a next-level mine planning
and design which also includes technical studies in the areas of
environmental and water management, as well as site layout.
Although the Legacy zone is still open, no drilling is planned for
2014. Given the already large resource and extensive drilling
completed since the last PFS in 2011, it is time to update our
technical understanding of the deposit. In the meantime, we
continue to evaluate opportunities to monetize the value of the
asset.
Conference Call & Webcast Details
NOVAGOLD will host a conference call and webcast on February 12,
2014 at 8:00 am PST (11:00 am EST). The webcast and conference
call-in details are provided below.
Webcast: |
www.NOVAGOLD.com |
North
American callers: |
1-866-318-8611 |
International callers: |
1-617-399-5130 |
Participant Passcode: |
11377161 |
The webcast will be archived on NOVAGOLD's website for one year
and the conference call replay will be available for 14 days. To
access the conference call replay please dial 1-888-286-8010 (North
America), or 1-617-801-6888 (International), followed by your
Access PIN: 47899539. For a transcript of the call please email
info@NOVAGOLD.com.
Filing of Reports Under U.S. GAAP
Effective December 1, 2013, NOVAGOLD ceased to be a "foreign
private issuer" as defined in Rule 3b-4 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and became subject to
the rules and regulations under the Exchange Act applicable to U.S.
domestic issuers. As a result, the Company today filed its first
Annual Report on Form 10-K for the year ended November 30, 2013
and, in addition, furnished on a Form 8-K U.S. GAAP Financial
Statements for the first, second and third quarters in 2013. Our
prior years' annual reports were filed on Form 40-F. The Annual
Report on Form 10-K is available on the Company's website at
www.NOVAGOLD.com, on SEDAR at www.SEDAR.com, and on EDGAR at
www.sec.gov. Shareholders may also receive a hard copy of the
Company's complete consolidated financial statements free of charge
by sending a request to info@NOVAGOLD.com or calling
1-866-669-6227.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company engaged in
the exploration and development of mineral properties in North
America. Its flagship asset is the 50%-owned Donlin Gold project in
Alaska, one of the safest jurisdictions in the world. With
approximately 39,000,000 ounces of gold in the measured and
indicated resource categories (541 million tonnes at an average
grade of approximately 2.2 grams per tonne), Donlin Gold is
regarded to be one of the largest, highest quality, and most
prospective known gold deposits in the world. According to the
updated feasibility study (as defined below), once in production,
Donlin Gold should average approximately 1,500,000 ounces of gold
per year for the first five full years, followed by decades of more
than one million ounces of gold per year on a 100% basis. The
Donlin Gold project has substantial exploration potential beyond
the designed footprint which currently covers only three kilometers
of an approximately eight-kilometer long gold bearing trend.
Current activities at Donlin Gold are focused on permitting,
community outreach and workforce development in preparation for the
construction and operation of this top tier asset. The Donlin Gold
project commenced permitting in 2012, a clearly defined process
expected to take approximately 4 years. NOVAGOLD also owns 50% of
the Galore Creek copper-gold-silver project located in northern
British Columbia. According to the 2011 PFS, once in production,
Galore Creek is expected to be the largest copper mine in Canada, a
tier-one jurisdiction. NOVAGOLD is currently evaluating
opportunities to sell all or a portion of its interest in Galore
Creek and would apply the proceeds toward the development of Donlin
Gold. NOVAGOLD is well positioned to stay the course and take
Donlin Gold through permitting.
Scientific and Technical Information
Certain scientific and technical information contained herein
with respect to Galore Creek is derived from the technical report
entitled "Galore Creek Project British Columbia NI 43-101 Technical
Report on Pre-Feasibility Study" dated effective July 27, 2011. The
Qualified Persons responsible for the preparation of the
independent technical report are Robert Gill, P.Eng., Principal
Consultant and Study Manager (AMEC Americas Limited), Greg Kulla,
P. Geo., Principal Geologist (AMEC Americas Limited), Gregory
Wortman, P. Eng., Technical Director Process (AMEC Americas
Limited), Jay Melnyk, P. Eng. (AMEC Americas Limited), and Dana
Rogers, P.E., Principal Tunnelling Engineer (Lemley International),
each of whom are independent "qualified persons" as defined by NI
43-101.
Scientific and technical information contained herein with
respect to Donlin Gold is derived from the "Donlin Creek Gold
Project Alaska, USA NI 43-101 Technical Report on Second Updated
Feasibility Study" compiled by AMEC. Kirk Hanson, P.E., Technical
Director, Open Pit Mining, North America, (AMEC, Reno), Gordon
Seibel, R.M. SME, Principal Geologist, (AMEC, Reno), Tony Lipiec,
P.Eng. Manager Process Engineering (AMEC, Vancouver) are the
Qualified Persons responsible for the preparation of the
independent technical report, each of whom are independent
"qualified persons" as defined by NI 43-101.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain "forward-looking
information" and "forward-looking statements" (collectively
"forward-looking statements") within the meaning of applicable
securities legislation, including the United States Private
Securities Litigation Reform Act of 1995. All statements, other
than statements of historical fact, included herein including,
without limitation, the timing of permitting and potential
development of the Donlin Gold project, statements relating to
NOVAGOLD's future operating and financial performance, outlook, and
the potential sale of all or part of NOVAGOLD's interest in Galore
Creek are forward-looking statements. Forward-looking statements
are frequently, but not always, identified by words such as
"expects", "anticipates", "believes", "intends", "estimates",
"potential", "possible", and similar expressions, or statements
that events, conditions, or results "will", "may", "could", or
"should" occur or be achieved. These forward-looking statements may
include statements regarding perceived merit of properties;
exploration results and budgets; mineral reserves and resource
estimates; work programs; capital expenditures; timelines;
strategic plans; completion of transactions; market prices for
precious and base metals; intended use of proceeds; or other
statements that are not statements of fact. Forward-looking
statements involve various risks and uncertainties. There can be no
assurance that such statements will prove to be accurate, and
actual results and future events could differ materially from those
anticipated in such statements.
Important factors that could cause actual results to differ
materially from NOVAGOLD's expectations include the uncertainties
involving the need for additional financing to explore and develop
properties and availability of financing in the debt and capital
markets; uncertainties involved in the interpretation of drilling
results and geological tests and the estimation of reserves and
resources; the need for continued cooperation with Barrick Gold
Corporation and Teck Resources Limited for the continued
exploration and development of the Donlin Gold and Galore Creek
properties; the need for cooperation of government agencies and
native groups in the development and operation of properties; the
need to obtain permits and governmental approvals; risks of
construction and mining projects such as accidents, equipment
breakdowns, bad weather, non-compliance with environmental and
permit requirements, unanticipated variation in geological
structures, ore grades or recovery rates; unexpected cost
increases, which could include significant increases in estimated
capital and operating costs; fluctuations in metal prices and
currency exchange rates; and other risk and uncertainties disclosed
in NOVAGOLD's Annual Report filed on Form 10-K for the year-ended
November 30, 2013, filed with the United States Securities and
Exchange Commission and in other NOVAGOLD reports and documents
filed with applicable securities regulatory authorities from time
to time. NOVAGOLD's forward-looking statements reflect the beliefs,
opinions and projections on the date the statements are made.
NOVAGOLD assumes no obligation to update the forward-looking
statements of beliefs, opinions, projections, or other factors,
should they change, except as required by law.
Cautionary Note to United States Investors
This press release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which
differ from the requirements of U.S. securities laws. Unless
otherwise indicated, all resource and reserve estimates included in
this press release have been prepared in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101") and the Canadian Institute of Mining, Metallurgy, and
Petroleum Definition Standards on Mineral Resources and Mineral
Reserves. NI 43-101 is a rule developed by the Canadian Securities
Administrators which establishes standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. Canadian standards, including NI
43-101, differ significantly from the requirements of the United
States Securities and Exchange Commission ("SEC"), and resource and
reserve information contained herein may not be comparable to
similar information disclosed by U.S. companies. In particular, and
without limiting the generality of the foregoing, the term
"resource" does not equate to the term "reserves".
Under U.S. standards, mineralization may not be classified
as a "reserve" unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. Under SEC
Industry Guide 7 standards, a "final" or "bankable" feasibility
study is required to report reserves. At this time, both the Donlin
Gold and Galore Creek projects are without known reserves, as
defined under SEC Industry Guide 7. The SEC's disclosure standards
normally do not permit the inclusion of information concerning
"measured mineral resources", "indicated mineral resources" or
"inferred mineral resources" or other descriptions of the amount of
mineralization in mineral deposits that do not constitute
"reserves" by U.S. standards in documents filed with the SEC.
Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into
reserves. U.S. investors should also understand that "inferred
mineral resources" have a great amount of uncertainty as to their
existence and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
"inferred mineral resource" will ever be upgraded to a higher
category. Under Canadian rules, estimated "inferred mineral
resources" may not form the basis of feasibility or pre-feasibility
studies except in rare cases. Investors are cautioned not to assume
that all or any part of an "inferred mineral resource" exists or is
economically or legally mineable. Disclosure of "contained ounces"
in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report
mineralization that does not constitute "reserves" by SEC standards
as in-place tonnage and grade without reference to unit measures.
The requirements of NI 43-101 for identification of "reserves" are
also not the same as those of the SEC, and reserves reported by
NOVAGOLD in compliance with NI 43-101 may not qualify as "reserves"
under SEC standards. Accordingly, information concerning mineral
deposits set forth herein may not be comparable with information
made public by companies that report in accordance with U.S.
standards.
NOVAGOLD RESOURCES INC.Mélanie HennesseyVice President,
Corporate Communications604-669-6227 or 1-866-669-6227NOVAGOLD
RESOURCES INC.Erin O'TooleAnalyst, Investor Relations604-669-6227
or 1-866-669-6227www.novagold.com
NovaGold Resources (TSX:NG)
Historical Stock Chart
From Sep 2024 to Oct 2024
NovaGold Resources (TSX:NG)
Historical Stock Chart
From Oct 2023 to Oct 2024