NOVAGOLD

For taking a few minutes to get an update on NOVAGOLD. As I’m sure everyone is aware, our presentation does contain forward-looking statements. I’m gonna start my presentation this afternoon with just a quick snapshot of a transaction that we recently announced. Through an all-share transaction, we are acquiring the 40% of Donlin that we don’t own from the Paulson Companies. Once this transaction is completed in the next couple of months, we will be the 100% owner of one of the largest undeveloped gold deposits in the country, with a mine life of almost 30 years and an annual output of over a million ounces a year. The transaction has been very well received, and we anticipate approval in due course.

Looking back at some of the milestones of the last few years, and particularly this year. Early this year, we announced the appointment of Fluor to update our feasibility study. Supporting Fluor is Hatch, an industry leader in pressure oxidation, Worley, a pipeline specialist, and WPPS, a power plant specialist. This work commenced early in the new year, and we’re anticipating completing it middle of next year. We recently announced the appointment of Endeavor and Macquarie, industry-leading firms that specialized in helping mining companies arrange financing for their project. This work is well underway. Catalysts upcoming are, of course, the conclusion of this transaction. By year-end, we’ll be guiding on a more definitive completion schedule for the bankable feasibility study, and we continue to recruit new roles and fortify the team at NOVAGOLD.

The transaction we’ve announced is really very sensible. For the first time, and really in more modern history, 100% ownership of Donlin will be under one roof. Under this transaction, Paulson’s 40% interest in the project will be translated into NOVAGOLD shares. And NOVAGOLD shareholders have acquired this at approximately a 10% discount to the imputed value from NOVAGOLD. From a governance point of view, Paulson will have the right to vote less than 20% of their shares. They will be granted two appointees to our board. John Paulson will become the chairman with Tom Kaplan, and Marcelo Kim will be their other board representative. This governance really protects the independence of NOVAGOLD and preserves best practice in governance. It’s of course subject to the normal regulatory approvals, and we expect to close in December.

What does this really do for the shareholders? It creates really the leading US development company. Donlin was already an impressive endowment at our 60% ownership. As the 100% owner, it’s immediately accretive on many key metrics. And this simplifies life. We’ve always in the past had to run a three-legged race with a partner. Although we were fully aligned with Paulson, it still simplifies life. All decisions and operational efficiency will come under a single point of contact at NOVAGOLD. We believe long term, this will improve our access to the capital we need to build the mine and creates a better aligned structure and one point of contact for our stakeholders up in Alaska.

And this, when you really think about a company that has an endowment of over 45 million ounces, that will be New NOVAGOLD. When you compare that to the other major North American-focused producers, we’re really near the top of the chart, just behind Agnico and Equinox. And it really speaks to the value this transaction has created and the future annual production rates of New NOVAGOLD and our place in the industry. This takes a look at selected market cap of where New NOVAGOLD sits today. And as we move the project closer and closer to production, we fully expect our market cap will be commensurate with our output of over a million ounces a year. I mentioned earlier this transaction is accretive to shareholders immediately, and that’s because of the approximate 10% discount that was applied when the transaction was announced. It’s also accretive on many other metrics, but most importantly, it adds to our endowment on a per share basis.

Paulson is well known in the investment circles. A year, a year and a half or so ago, when we were working to raise the money to purchase the interest from Barrick, Paulson was a key part of that. You look back on his track record of investing, and he’s made his wealth and his reputation primarily on the housing trade and his ability to foresee the economic trends that other people overlooked. Presenting just before myself today was Perpetual Resources, which is another company significantly owned by Paulson, and they’ve tracked their progress toward taking this asset all the way into production. Paulson has been a long-term, steadfast shareholder of NOVAGOLD.

And this slide really looks back at where NOVAGOLD has been from an equity performance. Granted, markets are somewhat choppy right now, and a lot of things are unsettling them. But when you look back at NOVAGOLD just before the announcement with Barrick, we were about a $3 stock. Since then, we’ve been higher and lower, but this transaction has really freed NOVAGOLD to chart its own path and do what we expected we needed to do for many years, which is update the feasibility study and move this project forward to a construction decision. That really gave you a snapshot of where we’re at with the pending transaction with Paulson and the rationale behind it.

Now I’ll really take a look at NOVAGOLD and really the attributes that we bring to investors in the company. This slide really looks at the leverage that Donlin project brings to NOVAGOLD on a 100% basis. Right now let’s just not study the chart in detail, but focus on $4,000 an ounce, which is approximately the price today, a little bit lower. And you look at the valuation there of almost over $20 billion in net present value at $4,000 gold; undiscounted, it’s significantly higher. And North American producers used to trade at zero discount rates, and those days will come back again, given all the uncertainty in the financial markets. But we’re a genuinely levered gold play with assets in safe jurisdictions.

Gold is really taking its place as a currency. When you look at the supply pressures on the industry, production is declining, new discoveries are dropping, and all of that, just on the fundamentals of supply and demand, will push the gold prices higher. Demand is at an all-time high by the central banks, and that will continue to drive the price higher. Gold has outperformed most other financial instruments for many years. This slide takes a look back at where the Dow Jones has been in almost 50 years, and this is what a bull market genuinely looks like. The blip in 1987, most people can’t even detect that on this chart. And this is what gold is doing today as it’s moved through $2,000, $3,000, $4,000, over $5,000 periodically. But we are in the early stages of a long-term secular gold bull market.

Donlin has other key attributes, grade among them. When you look at the grade of Donlin at two and a quarter grams, you compare that to the industry grade of about a gram. It’s that high grade that gives Donlin low cash costs of production and really positions this asset well to ride out any imaginable price cycle. It is truly one of the more significant assets in the gold industry, and it’ll have among the lower quartile of cash operating costs.

The other exciting aspect about the Donlin Gold project is we’ve really just started to explore there. This slide is just a snapshot of the 8-kilometer gold-bearing system at Donlin. Our 45 million ounces of resources reside in less than 3 kilometers of this 8-kilometer belt. We’ve got gold-bearing drill holes all up and down this belt, and when the time is right, we will continue to explore this largely underexplored property. And it’s also important to note that what’s illustrated on this slide is about 7.5% of our total land holdings in and around Donlin. NOVAGOLD and Donlin also hold additional claims throughout the state of Alaska. We really are positioning ourselves to build a future business in the great state of Alaska.

Permitting. We often hear about what a time-consuming process this is. Well, it certainly is, but really we’re done. We completed the federal permitting process a few years ago. We had a joint record of decision from two federal agencies, and we’re wrapping up the remaining state permit that we don’t have, and that’s related to the tailings dam and water retention structures, and that’s proceeding as planned and will be completed well in advance of a construction decision. And Alaska is a great location. It’s the second-largest gold-producing state in the US. Got tremendous potential up there, and it’s a state that really appreciates the importance of a strong resource economy. This is just a quote from the governor. He’s followed the Donlin project very closely, and it’s important to him, and it’s important to the state of Alaska to move this project forward. We’re often asked if the change in administration impacts Donlin, and the answer is no. We’ve always enjoyed strong bipartisan support for the project, and we expect that will continue.

The other important aspect of the Donlin project, which really separates it from many other projects, is we are on private land that’s owned by two Alaska Native corporations. Calista owns the mineral rights, and TKC owns the surface rights. We’ve got life of mine agreements in place with both of these native groups, and being on private land with the underlying native ownership has really been a very important aspect of moving Donlin forward and maintaining the broad bipartisan support we enjoy.

We’ve been down this road before. I spent many years with Barrick. Richard Williams, who’s our vice president and chief operating officer, he was the project lead for Pueblo Viejo project that Barrick and Gold Corp. built in the Dominican Republic. Very successful project, and by coincidence, Pueblo Viejo was built by Fluor, and Hatch were also involved in that project, and these are the teams that we’ve brought over to Donlin, people we know that have done work like this and will complete the project. Underneath Fluor is the specialist firms in the areas of pressure oxidation, pipelines and power plants. Frank Arkis, our project director, has built many projects all over the world in Arctic conditions and otherwise, so he certainly is really well-suited to lead the feasibility study and, as time moves forward, take the project through construction.

Now, treasury is very strong still. We did an equity raise earlier this year, so we’ve got about 370 million in cash. When we agreed to purchase Barrick’s interest in Donlin, one of the things that we negotiated with that deal was an old promissory note that we owed to Barrick that had a face value of about 170 million. We negotiated the option to buy that out within 18 months of the transaction for the set price of 100 million. So part of the use of proceeds from our last equity raise will go to completely retire any obligation that we had to Barrick and leaves NOVAGOLD balance sheet unencumbered. When you look at after paying off that note, we will still have a significant treasury, and we see that we have sufficient liquidity to complete the feasibility study and take us beyond that as we consider our options to finance the project in the future.

NOVAGOLD has always enjoyed strong institutional support. We talked about Paulson and their role in helping us acquire the interest from Barrick. They have been a long-term shareholder of NOVAGOLD. I think they’ve been invested in the company since about 2010. Other shareholders, Electrum is Dr. Thomas Chaplin’s gold investment vehicle. Lingotto is European money. Fidelity, BlackRock, all long-term blue chip investors that are bullish on gold and have been with the company a long time. They’ve been supportive, and they understand where we’re going, and they’ve been along for a long time.

So really just to wrap up what Donlin is to NOVAGOLD and to our shareholders. We’re a federally permitted mine. We have a production profile well in excess of a million ounces a year. Mine life measured in decades. Permitting is completed. It took us six years and over $150 million. A lot of people said you couldn’t permit a mine in Alaska, but we’ve proven that is to be not the case. We have our permits in hand. We’re sustainability focused on how we approach this project design to minimize its impact on the environment. We’ve got high grade, two and a quarter grams, and we’ve got scale at over a million ounces a year. Very few mines coming on have these attributes.

The world is more complicated, and jurisdictional safety is key, and it’s one of the foundations of the investment thesis behind Donlin and behind NOVAGOLD, and that assets in safe places will command a premium. Blue sky, we’ve talked about that. We’ve only just scratched the surface at Donlin, and with over 40 million ounces, you saw the comparison slides I presented earlier. That really puts Donlin as one of the future industry leaders in terms of production and market cap. The land ownership is key. Private land designated for mining by the federal and state governments and transferred to the economic benefit of the native people in the region. We’ve also got an experienced team that knows how to take these projects forward. Thank you. I might have a couple minutes for questions.

As Greg said, we have a few minutes for questions. Why did Barrick sell Donlin, and at what price per share did you do the private placement? Were there warrants issued?

Well, let’s break that into pieces. Barrick, they were focused on other things. I think we were second in their development pipeline behind Reko Diq in Baluchistan, so Barrick made a hard pivot to go to copper in far-flung places. We think that created an opportunity for us. They were focused on other things. Willing seller, willing buyer, and we completed the transaction, and I think the market has certainly viewed our role in that as very positive. On the question on our equity raise, we raised equity earlier this year at about $10 a share. Were there warrants issued? Not with this raise.

Greg, just one question from me. Is something like Queen or maybe as far as offer something that we can introduce in a bankable feasibility study, or is that more longer-dated optionality?

I think the exploration potential along the trend is longer term for the company. Once we’ve initiated the permitting and the feasibility study, you basically freeze your models until you get the feasibility study completed, and that’s where we’re at. We’ve wrapped up. We’ve incorporated all the drilling of recent years into our geologic model, and we’ll be taking that forward with the feasibility study. As we move forward, we’ll begin exploring up and down trend, but that’s much longer dated benefit to the project. Thank you.

Thanks, Greg. [audience applauding]