FinanceLooker

Excrept from filing document 2024-11-30

Based on the last sale price on the NYSE American LLC NYSE American of the registrant s common shares on May 31 2024 the last business day of the registrant s most recently completed second fiscal quarter of 3 93 per share the aggregate market value of the voting common shares held by non affiliates was approximately 967 700 000
Certain portions of the registrant s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than April 1 2025 in connection with the registrant s fiscal year 2024 annual meeting of shareholders are incorporated by reference into Part III of this Annual Report on Form 10 K
This Annual Report on Form 10 K contains forward looking statements or information within the meaning of Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995 concerning anticipated results and developments in our operations in future periods planned exploration activities the adequacy of our financial resources and other events or conditions that may occur in the future These forward looking statements may include statements regarding perceived merit of properties exploration results and budgets mineral reserves and resource estimates work programs anticipated timing of updated reports and or studies capital expenditures operating costs cash flow estimates production estimates and similar statements relating to the economic viability of a project anticipated timing and impact of certain judicial and or administrative decisions continued support of the state and federal permitting process future capital raising activities and their related dilutive effects sufficiency of working capital timelines strategic plans including our plans and expectations relating to the Donlin Gold project permitting and the timing thereof the Company s market price market prices for precious metals or other statements that are not statements of fact These statements relate to analyses and other information that are based on forecasts of future results estimates of amounts not yet determinable and assumptions of management Statements concerning mineral resource estimates may also be deemed to constitute forward looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed
Any statements that express or involve discussions with respect to predictions expectations beliefs plans projections objectives assumptions or future events or performance often but not always identified by words or phrases such as expects is expected anticipates believes plans projects estimates assumes intends strategy goals objectives potential possible or variations thereof or stating that certain actions events conditions or results may could would should might or will be taken occur or be achieved or the negative of any of these terms and similar expressions are not statements of historical fact and may be forward looking statements
our expectations regarding the timing and outcome of the appeals to i the federal Joint Record of Decision JROD and permits issued by the U S Army Corps of Engineers Corps and U S Bureau of Land Management BLM ii the State Clean Water Act Section 401 Certification as defined below iii the state pipeline right of way ROW agreement and lease as defined below and iv the application for water rights as defined below
This list is not exhaustive of the factors that may affect any of our forward looking statements Forward looking statements are statements about the future and are inherently uncertain and our actual achievements or other future events or conditions may differ materially from those reflected in the forward looking statements due to a variety of risks uncertainties and other factors including without limitation those referred to in this Annual Report on Form 10 K under the heading Risk Factors and elsewhere
Our forward looking statements contained in this Annual Report on Form 10 K are based on the beliefs expectations and opinions of management as of the date of this report We do not assume any obligation to update forward looking statements if circumstances or management s beliefs expectations or opinions should change except as required by law For the reasons set forth above investors should not place undue reliance on forward looking statements
The grade i e the concentration of metal or mineral in rock that determines the destination of the material during mining For purposes of establishing prospects of economic extraction the cut off grade is the grade that distinguishes material deemed to have no economic value it will not be mined in underground mining or if mined in surface mining its destination will be the waste dump from material deemed to have economic value its ultimate destination during mining will be a processing facility Other terms used in similar fashion as cut off grade include net smelter return pay limit and break even stripping ratio
We do not produce gold or any other minerals and do not currently generate operating earnings Funding to explore our mineral properties and to operate the Company was acquired primarily through previous equity financings consisting of public offerings of our common shares and warrants and through debt financing consisting of convertible notes and the sale of assets We expect to continue to raise capital through additional equity and or debt financings through the exercise of stock options and other such means
We were incorporated by memorandum of association on December 5 1984 under the Companies Act Nova Scotia as 1562756 Nova Scotia Limited On January 14 1985 we changed our name to NovaCan Mining Resources 1985 Limited and on March 20 1987 we changed our name to NOVAGOLD RESOURCES INC On May 29 2013 our shareholders approved the continuance of the corporation into British Columbia Subsequently we filed the necessary documents in Nova Scotia and British Columbia and we continued under the Business Corporations Act British Columbia effective as of June 10 2013 The current addresses telephone and facsimile numbers of our offices are
As of November 30 2024 we had the following material direct and indirect wholly owned subsidiaries NOVAGOLD Resources Alaska Inc NOVAGOLD US Holdings Inc NOVAGOLD USA Inc AGC Resources Inc NOVAGOLD Bermuda Alaska Limited and NOVAGOLD Resources Bermuda Limited On December 1 2024 NOVAGOLD Bermuda Alaska Limited NOVAGOLD Resources Bermuda Limited and NOVAGOLD Argentina Inc were amalgamated with NOVAGOLD RESOURCES INC
Our company culture is the cornerstone of all our human capital programs Empowering every employee to be their best affording every employee the opportunity to make a difference and giving every employee a chance to be heard are among the Company s values Our values extend to the communities in which we work We have adopted a Human Rights Policy focused on our commitment to having a positive influence in the communities where we operate which includes ensuring that we respect human rights
As of the end of fiscal year 2024 50 of our total workforce were women Selection of individuals for executive and other positions with the Company is guided by the Company s policy which prohibits discrimination in any aspect of employment based on race color religion sex national origin disability or age Our board of directors the Board and management acknowledge the importance of all aspects of diversity including gender ethnic origin business skills and experience because it is right to do so and because it is good for our business When considering candidates for executive positions the Board s evaluation considers the broadest possible assessment of each candidate s skills and background with the overriding objective of ensuring that we have the appropriate balance of skills experience and capacity that the Company needs to be successful In the context of this overriding objective we have determined not to set targets for the percentage of women or other aspects of diversity in executive officer positions
NOVAGOLD is committed to fostering cultivating and preserving a culture of diversity equity and inclusion Our employees are one of the most valuable assets we have The collective sum of the individual differences life experiences knowledge inventiveness innovation self expression unique capabilities and talent that our employees invest in their work represents a significant part of our culture reputation and NOVAGOLD s achievements
NOVAGOLD is dedicated to creating an inclusive work environment for everyone We embrace and celebrate the unique experiences perspectives and cultural backgrounds that each employee brings to our workplace NOVAGOLD strives to foster an environment where our employees feel respected valued and empowered and our team members are at the forefront in helping us promote and sustain an inclusive workplace
NOVAGOLD s diversity initiatives are applicable but not limited to our practices and policies on recruitment and selection compensation and benefits professional development and training promotions and the ongoing development of a work environment built on the premise of gender and diversity equity To that end we seek out qualified diverse candidates and encourage them to apply for open positions either from within or outside of the Company We also seek out opportunities to develop a pipeline of qualified diverse candidates in a particular profession when we are unable to find them ourselves For example in 2021 the Company established and continues to fund the NOVAGOLD Mining and Geological Engineering Scholarship at the University of Alaska to help support and encourage undergraduate students seeking bachelor s degrees in mining or geological engineering with a focus on supporting underrepresented students
NOVAGOLD s primary objective is to ensure the health and safety of its employees partners and contractors and is reflected in its Health and Safety Policy Our focus on safety is also reflected at Donlin Gold where a wide ranging set of policies are implemented at the project site and in the Anchorage office In 2024 neither Donlin Gold nor NOVAGOLD had any recordable injuries or lost time incidents LTIs Also see section Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations below
Donlin Gold advanced key activities in 2024 to position the project to update technical work and cost estimates Some of these activities wrapped up in December 2024 such as the completion of metallurgical test work pilot plant in Ontario Canada to confirm proposed optimizations to the flowsheet advanced work to update the Donlin Gold resource model and the submittal of the preliminary design packages for Dam Safety Certification to the Alaska Department of Natural Resources ADNR Comments from the ADNR on the Dam Safety Certification preliminary design packages are anticipated in 2025
NOVAGOLD and Barrick held a Donlin Gold workshop in Alaska in September 2024 to review the important work completed to date as well as to discuss next steps for the Donlin Gold project and related activities for 2025 Subsequently Donlin Gold s board approved a path forward with a 2025 budget of 43 million on a 100 basis Camp operations will resume in the coming months to complete grid drilling to refine mine planning assumptions Efforts will continue to advance key workstreams and preparation for a cost update Additional work will include project and mine planning further advancement of the Dam Safety Certificate applications with work on the Detailed Design Packages steadfast support of pending litigation and ongoing community relations and government affairs activities NOVAGOLD will continue to employ concerted and inclusive efforts to advance the Donlin Gold project for the benefit of all our shareholders and Donlin Gold stakeholders
In 2024 Donlin Gold Calista Corporation Calista and The Kuskokwim Corporations TKC held public open houses in three locations in Anchorage Bethel and Crooked Creek the closest community to the project as well as two Subsistence Community Advisory Committee SCAC meetings the first in Aniak during the second quarter and the second in Anchorage in December Donlin Gold also established three additional Shared Values Statements for a total of 18 Donlin Gold s numerous partnerships in the Y K region and statewide aimed at supporting ecological projects education summer youth employment programs and cultural awareness efforts continue to grow Together these efforts underscore Donlin Gold s ongoing engagement with and commitment to local communities reinforcing existing long term relationships and addressing specific community needs
We will generally be required to mitigate long term environmental impacts by stabilizing contouring re sloping and re vegetating various portions of a site after mining and mineral processing operations are completed These reclamation efforts will be conducted in accordance with detailed plans which are approved by the appropriate regulatory agencies In addition financial assurance acceptable to the regulatory authority with jurisdiction over reclamation must be provided in an amount and form that is determined to be sufficient by the authority to implement the approved reclamation plan in the event that the project owners fail to complete the work as provided in the plan
Our exploration and development activities are subject to various national state and local laws and regulations in the United States which govern prospecting development mining production exports taxes labor standards occupational health waste disposal protection of the environment mine safety hazardous substances disclosure requirements and other matters We have obtained or have pending applications for those licenses permits or other authorizations currently required to conduct our exploration and development programs We believe that we are in compliance in all material respects with applicable mining health safety and environmental statutes and regulations in the United States There are no existing orders or directions relating to our current activities with respect to the foregoing laws and regulations For a more detailed discussion of the various government laws and regulations applicable to our operations and potential negative effects of these laws and regulations see section Item 1A Risk Factors below
We compete with other mineral resource exploration and development companies for financing technical expertise and the acquisition of mineral properties Many of the companies with whom we compete have greater financial and technical resources Accordingly these competitors may be able to spend greater amounts on the acquisition exploration and development of mineral properties This competition could adversely impact our ability to finance further exploration and to obtain the financing necessary for us to develop the Donlin Gold project
Most aspects of our business require specialized skills and knowledge Such skills and knowledge include the areas of geology drilling resource estimating metallurgy mine planning logistical planning preparation of pre feasibility and feasibility studies permitting engineering construction and operation of a mine financing legal human resources accounting investor relations and community relations Historically we have found that we can locate and retain appropriate employees and consultants and we believe we will continue to be able to do so
The raw materials we require to carry on our business are readily available through normal supply or business contracting channels in the United States and Canada Historically we have been able to secure the appropriate equipment and supplies required to conduct our contemplated programs As a result we do not believe that we will experience any shortages of required equipment or supplies in the foreseeable future
Our business can be seasonal as our mineral exploration and development activities take place in southwestern Alaska Due to the northern climate work on the Donlin Gold project can be limited due to excessive snow cover and cold temperatures In general surface work often is limited to late spring through early fall although work in some locations is more readily and efficiently completed during the winter months when the ground is frozen
The price of gold is volatile and is affected by numerous factors all of which are beyond our control such as the sale or purchase of gold by various central banks and financial institutions inflation recession fluctuation in the relative values of the U S dollar and foreign currencies changes in global and regional gold demand in addition to international and national political and economic conditions
We maintain a website at www novagold com and make available through the Investors section of the website our Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K Section 16 filings and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission SEC These reports are also available at the SEC website at www sec gov Certain other information including but not limited to the Company s Corporate Governance Guidelines the charters of key committees of its Board of Directors and its Code of Business Conduct and Ethics are also available on the website Our website and the information contained therein or connected thereto are not intended to be and are not incorporated into this Annual Report on Form 10 K
You should carefully consider the following risk factors in addition to the other information included in this Annual Report on Form 10 K Each of these risk factors could adversely affect our business operating results and financial condition as well as adversely affect the value of an investment in our common shares The risks described below are not the only ones facing the Company Additional risks that we are not presently aware of or that we currently believe are immaterial may also adversely affect our business operating results and financial condition We cannot assure you that we will successfully address these risks and caution that other unknown risks may exist or may arise that may affect our business
An investment in our securities is speculative and involves a high degree of risk due to the nature of our business and the present stage of exploration and development of our mineral properties The following risk factors as well as risks not currently known to us could materially adversely affect our future business operations and financial condition and could cause them to differ materially from the estimates described in the forward looking statements relating to us
The Donlin Gold project is not in production or currently under construction and we have no ongoing mining operations or revenue from mining operations Mineral exploration and development has a high degree of risk and few properties that are explored are ultimately developed into producing mines The future development of the Donlin Gold project will require obtaining permits and financing the construction and operation of mines processing plants and related infrastructure As a result we are subject to all of the risks associated with establishing new mining operations and business enterprises including
The costs timing and complexities of mine construction and development are increased by the remote location of our mineral properties with additional challenges related thereto including access water and power supply and other support infrastructure Cost estimates may increase significantly as more detailed engineering work and studies are completed on a project New mining operations commonly experience unexpected costs problems and delays during development construction and mine start up In addition delays in the commencement of mineral production often occur Accordingly there are no assurances that our activities will result in profitable mining operations or that we will successfully establish mining operations or profitably produce precious metals at the Donlin Gold project
In addition there is no assurance that our mineral exploration activities will result in any discoveries of new ore bodies If further mineralization is discovered there is also no assurance that the mineralized material would be economical for commercial production Discovery of mineral deposits is dependent upon a number of factors and significantly influenced by the technical skill of the exploration personnel involved The commercial viability of a mineral deposit is also dependent upon a number of factors which are beyond our control including the attributes of the deposit commodity prices government policies and regulation and environmental protection requirements
Our success with respect to the Donlin Gold project depends on the cooperation of a third party with whom we have an agreement we hold a 50 interest and the remaining 50 interest is held by the third party that is not under our control or direction We are dependent on the cooperation of a third party for the progress and development of the Donlin Gold project The third party may have different priorities which could impact the timing and cost of development of the Donlin Gold project If the third party defaults on its agreement with us with or without our knowledge it may put the mineral property and related assets at risk The existence or occurrence of one or more of the following circumstances and events could have a material adverse impact on our ability to achieve our business plan profitability or the viability of our interests held with the third party which could have a material adverse impact on our business future cash flows earnings results of operations and financial condition i disagreement with the third party on how to develop and operate the Donlin Gold project efficiently ii inability to exert influence over certain strategic decisions made in respect of the jointly held Donlin Gold project iii inability of the third party to meet its obligations to the joint business or other parties and iv litigation with the third party regarding joint business matters
Although proposed by NOVAGOLD currently the owners have not agreed to commence an updated feasibility study The Company may choose to proceed with a feasibility study for the Donlin Gold project on its own without the participation of the co owner although the Company has not yet made a determination to do so Embarking on a feasibility study is an endeavor requiring significant funding and staffing We expect a feasibility study would take approximately two years to complete once commenced and would require significant management time and attention In addition if the Company ultimately decides to proceed with its own feasibility study for the Donlin Gold project the Company will be required to raise additional capital through means such as equity and or debt financing to successfully complete the feasibility study There can be no assurance that the Company could raise the required capital on terms favorable to it or at all
The Donlin Gold project has not advanced to the commercial production stage and we have no history of earnings or cash flow from operations We expect to continue to incur net losses unless and until such time the Donlin Gold project commences commercial production and generates sufficient revenues to fund continuing operations The development of our mineral properties to achieve production will require the commitment of substantial financial resources The amount and timing of expenditures will depend on a number of factors including the progress of ongoing exploration and development the results of consultants analyses and recommendations the rate at which operating losses are incurred the process of obtaining required government permits and approvals the availability and cost of financing the participation of our partners and the execution of any sale or joint venture agreements with strategic partners These factors and others are beyond our control There is no assurance that we will be profitable in the future
At present our only material mineral property is the interest that we hold in the Donlin Gold project Unless we acquire or develop additional mineral properties we will be solely dependent upon this property If no additional mineral properties are acquired by us any adverse development affecting our operations and further development at the Donlin Gold project may have a material adverse effect on our financial condition and results of operations
We have limited financial resources We will need external financing to develop and construct the Donlin Gold project According to the S K 1300 Report as defined below the total initial capital cost estimate for the Donlin Gold project is approximately 7 402 million which includes the costs related to the natural gas pipeline 100 basis These cost estimates may change materially as our studies are updated Our failure to obtain sufficient financing could result in the delay or indefinite postponement of exploration development construction or production at the Donlin Gold project The cost and terms of such financing may significantly reduce the expected benefits from development of the Donlin Gold project and or render such development uneconomic There can be no assurance that additional capital or other types of financing will be available when needed or that if available the terms of such financing will be favorable Our failure to obtain financing could have a material adverse effect on our growth strategy and results of operations and financial condition
We intend to fund our near term business plan from working capital Longer term our ability to continue future exploration permitting development and construction activities if any will depend in part on our ability to obtain suitable equity debt or other forms of financing If we raise additional funding by issuing additional equity securities or other securities that are convertible into equity securities such financing may substantially dilute the interest of existing or future shareholders Sales or issuances of a substantial number of securities or the perception that such sales could occur may adversely affect the prevailing market price for our common shares With any additional sale or issuance of equity securities investors will suffer dilution of their voting power and may experience dilution in earnings per share
There can be no assurance that we will commence production at the Donlin Gold project or generate sufficient revenues to meet our obligations as they become due or obtain necessary financing on acceptable terms if at all Our failure to meet our ongoing obligations on a timely basis could result in the loss or substantial dilution of our interests as existing or as proposed to be acquired in the Donlin Gold project In addition should we incur significant losses in future periods we may be unable to continue as a going concern and realization of assets and settlement of liabilities in other than the normal course of business may be at amounts materially different than our estimates
The capital costs to take the Donlin Gold project into production may be significantly higher than anticipated As a result of the content updates included in the 2021 Technical Report as defined below and S K 1300 Report the total initial capital cost estimate for the Donlin Gold project is 7 402 million and the total sustaining capital estimate is 1 723 million
Capital costs operating costs production and economic returns and other estimates contained in studies or estimates prepared by or for us may differ significantly from those anticipated by our current or future studies and estimates and there can be no assurance that the initial capital costs incurred to construct and the sustaining capital and operating costs incurred in operating the Donlin Gold project will not be higher than currently anticipated
We cannot predict the effect of these factors on the price of gold A decrease in the market price of gold could affect our ability to finance the development of the Donlin Gold project which would have a material adverse effect on our financial condition and results of operations There can be no assurance that the market price of gold will remain at current levels or that such prices will improve An increase in worldwide supply and consequent downward pressure on prices may result over the longer term from increased production from the development of new or expansion of existing mines There is no assurance that if commercial quantities of gold are discovered that a profitable market may exist or continue to exist for a production decision to be made or for the ultimate sale of gold
Some key impacts which can contribute to financial market turmoil potentially impacting the mining industry include contraction in credit markets resulting in a widening of credit risk imposition of trade tariffs among various countries devaluations high volatility in global equity commodity foreign exchange and precious metal markets and a lack of market liquidity The prices of gold and gold mining company equities have experienced significant volatility over the past few years
A decrease in the price of gold or tightening of credit in the financial markets or other economic conditions including but not limited to consumer spending employment rates business conditions inflation fuel and energy costs consumer debt levels lack of available credit the state of the financial markets interest rates and tax rates may adversely affect our ability to finance development and construction of the Donlin Gold project Specifically
There is ongoing public concern relating to the effect of mining production on its surroundings communities and environment Local communities and NGOs some of which oppose resource development are often vocal critics of the mining industry While we seek to operate in a socially responsible manner opposition to extractive industries or our operations specifically or adverse publicity generated by local communities or NGOs related to extractive industries or our operations specifically could have an adverse effect on our reputation and financial condition or our relationships with the communities in which we operate As a result of such opposition or adverse publicity we may be unable to obtain permits necessary for our operations or to continue our operations as planned or at all See Recent Developments above
Our current and anticipated future operations including further exploration and development activities and commencement of production on the Donlin Gold project require permits from various United States federal state and local governmental authorities There can be no assurance that all permits that we require for the construction of mining facilities and to conduct mining operations will be obtainable on reasonable terms or at all Delays or a failure to obtain such permits or a failure to comply with the terms of any such permits that we have obtained could have a material adverse impact on us
The duration and success of efforts to obtain and renew permits are contingent upon many variables not within our control Shortage of qualified and experienced personnel in the various levels of government could result in delays or inefficiencies Backlog within the permitting agencies could affect the permitting timeline of the various projects Other factors that could affect the permitting timeline include i the number of other large scale projects currently in a more advanced stage of development which could slow down the review process and ii significant public response regarding a specific project Also it can be difficult to assess what specific permitting requirements will ultimately apply to the Donlin Gold project
Unless otherwise indicated mineralization quantities presented in this Annual Report on Form 10 K and in our other filings with securities regulatory authorities press releases and other public statements that may be made from time to time are based upon estimates made by our personnel and independent professionals In addition these estimates are imprecise and depend upon geologic interpretation and statistical inferences drawn from drilling and sampling analysis which may prove to be unreliable There can be no assurance that
Because we have not commenced commercial production at the Donlin Gold project mineralization estimates may require adjustments including potential downward revisions based upon further exploration or development work actual production experience or changes in the price of gold In addition the grade of ore ultimately mined if any may differ from that indicated by drilling results There can be no assurance that the percentage of minerals recovered in small scale tests will be duplicated in large scale tests under on site conditions or at production scale
Mineral resource estimates for mineral properties that have not commenced production are based in many instances on limited and widely spaced drill hole information which is not necessarily indicative of the conditions between and around drill holes Accordingly such mineral resource estimates may require revision as more drilling information becomes available or as actual production experience is gained No assurance can be given that any part or all of our mineral resources constitute or will be converted into reserves
The estimating of mineral reserves and mineral resources is a subjective process that relies on the judgment and experience of the persons preparing the estimates The process relies on the quantity and quality of available data and is based on knowledge mining experience analysis of drilling results and industry practices Valid estimates made at a given time may significantly change when new information becomes available By their nature mineral resource and reserve estimates are imprecise and depend to a certain extent upon analysis of drilling results and statistical inferences that may ultimately prove to be inaccurate There can be no assurances that actual results will meet the estimates contained in studies
Estimated mineral reserves or mineral resources may have to be recalculated based on changes in metal prices further exploration or development activity or actual production experience In addition if production costs increase recovery rates decrease if applicable laws and regulations are adversely changed there is no assurance that the anticipated level of recovery will be realized or that mineral reserves or mineral resources as currently reported can be mined or processed profitably This could materially and adversely affect estimates of the volume or grade of mineralization estimated recovery rates or other important factors that influence mineral reserve or mineral resource estimates The extent to which mineral resources may ultimately be reclassified as mineral reserves is dependent upon the demonstration of their profitable recovery Any material changes in mineral resource estimates and grades of mineralization will affect the economic viability of placing a mineral property into production and a mineral property s return on capital We cannot provide assurance that mineralization identified at the Donlin Gold project can or will be mined or processed profitably
The mineral resource and mineral reserve estimates contained in this Annual Report on Form 10 K have been determined and valued based on assumed future prices cut off grades and operating costs that may prove to be inaccurate Extended declines in market prices for gold may render portions of our mineralization uneconomic and result in reduced reported mineralization Any material reductions in estimates of mineralization or of our ability to extract this mineralization could have a material adverse effect on our ability to implement our business strategy the results of operations or our financial condition
We have established the presence of proven and probable mineral reserves at the Donlin Gold project in accordance with the disclosure definition and standards contained in S K 1300 as defined below and in National Instrument 43 101 Standards of Disclosure for Mineral Projects NI 43 101 There can be no assurance that additional mineral resources will ultimately be reclassified as mineral reserves The failure to increase mineral reserves could restrict our ability to successfully implement our strategies for long term growth and could impact future cash flows earnings results of operation and financial condition
Completion of the development of the Donlin Gold project is subject to various requirements including the availability and timing of acceptable arrangements for power water transportation access and facilities The lack of availability on acceptable terms or the delay in the availability of any one or more of these items could prevent or delay development of the project There can be no assurance that adequate infrastructure including access and power supply will be built that it will be built in a timely manner or that the cost of such infrastructure will be reasonable or that it will be sufficient to satisfy the requirements of the project If adequate infrastructure is not available in a timely manner there can be no assurance that
Access to the Donlin Gold project is limited and there is no infrastructure that serves the project area An approximately 507 kilometer natural gas pipeline is needed to supply fuel to the proposed on site generating plant to provide power for the Donlin Gold project The proposed pipeline would traverse generally undeveloped areas in Alaska that are difficult to access Transportation of most of the supplies needed to construct and operate the Donlin Gold project would be accomplished by barging materials on the Kuskokwim River during the annual shipping season which typically occurs from late April to mid October Two ports would be needed on the Kuskokwim River the first located in Bethel Alaska where ocean barges would transition materials to river barges and the second located approximately 320 kilometers upriver from Bethel A 48 kilometer access road from the upriver port to the project site is needed to deliver the materials Additionally a 1 500 meter airstrip would be built to provide year round access to the project Terrain geologic conditions ground conditions steep slopes river levels ice breakup weather climate change impacts and other natural conditions that are beyond our control along the pipeline and transportation routes present design permitting construction and operational challenges for the project Cost and schedule estimates may increase significantly as more detailed engineering work geotechnical and geological studies are completed
The subsurface mineral and surface rights at the Donlin Gold project are owned by Calista and TKC respectively two Native corporations Donlin Gold operates on these lands pursuant to a Mining Lease with Calista Calista Lease and a Surface Use Agreement SUA with TKC The ability of Donlin Gold to continue to explore and develop the Donlin Gold project depends upon its continued compliance with the terms and conditions of the Calista Lease and SUA Furthermore our ability to continue to explore and develop other mineral properties may be subject to agreements with other third parties including agreements with Native corporations for instance
Electrum Strategic Resources L P Electrum and its affiliate GRAT Holdings LLC hold in the aggregate 25 4 of our issued and outstanding common shares as of January 13 2025 Accordingly Electrum and its affiliates will have significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval including mergers consolidations and the sale of all or substantially all of our assets and other significant corporate actions Unless full participation of all shareholders takes place in such shareholder meetings Electrum and its affiliates may be able to approve such matters itself The concentration of ownership of the common shares by Electrum and its affiliates may i delay or deter a change of control of the Company ii deprive shareholders of an opportunity to receive a premium for their common shares as part of a sale of the Company and iii affect the market price and liquidity of the common shares In conjunction with the January 22 2009 financing we provided Electrum with the right to designate an observer at all meetings of the Board and any committee thereof so long as Electrum and its affiliates hold not less than 15 of our common shares In November 2011 Dr Thomas S Kaplan was appointed Chairman of our Board Dr Kaplan is also the Chairman Chief Executive Officer and Chief Investment Officer of The Electrum Group LLC As long as Electrum and its affiliates maintain its shareholdings in the Company Electrum will have significant influence in determining the members of the Board Without the consent of Electrum we could be prevented from entering into transactions that are otherwise beneficial to us The interests of Electrum and its affiliates may differ from or be adverse to the interests of our other shareholders The effect of these rights and Electrum s influence may impact the price that investors are willing to pay for our shares If Electrum or its affiliates sell a substantial number of our common shares in the public market the market price of the common shares could be adversely impacted The perception among the public that these sales will occur could also contribute to a decline in the market price of our common shares
Certain of our directors and officers also serve as directors or have significant shareholdings in other companies involved in natural resource exploration and development or mining related activities To the extent that such other companies may participate in ventures in which we may participate in or in ventures which we may seek to participate in the directors and officers may have a conflict of interest In all cases where the directors or officers have an interest in other companies such other companies may also compete with us for the acquisition of mineral property investments Any decision made by any of these directors and officers involving the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the Company In addition each of the directors is required to declare and refrain from voting on any matter in which these directors may have a conflict of interest in accordance with the procedures set forth in the Business Corporations Act British Columbia and other applicable laws In appropriate cases the Company will establish a special committee of independent directors to review a matter in which several directors or management may have a conflict Nonetheless as a result of these conflicts of interest the Company may not have an opportunity to participate in certain transactions which may have a material adverse effect on the Company s business profitability financial condition results of operation and prospects
Exploration and other activities at the Donlin Gold project site have created disturbance that must be reclaimed Financial resources spent on reclamation might otherwise be spent on further exploration and development programs In addition regulatory changes could increase our obligations to perform reclamation and mine closure activities There can be no assurance that we will not be required to fund additional reclamation work at the site that could have a material adverse effect on our financial position
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations Our cash equivalents and term deposit investments are held through large Canadian chartered banks with high investment grade ratings These investments mature at various dates over the current operating period A portion of the proceeds from the sale of our Galore Creek assets include notes receivable from a subsidiary of Newmont Corporation Newmont a publicly traded company with investment grade credit ratings The notes receivable included a 75 million note receivable of which payment was received on July 27 2021 and included a 25 million note receivable of which payment was received on July 27 2023 An additional 75 million will be receivable if and when a Galore Creek project construction plan is approved by the owner s No value was assigned to the final 75 million contingent note receivable due to the uncertainty with regards to the approval of a Galore Creek project construction plan The carrying amount of financial assets recorded in the financial statements net of any allowances for losses represents our maximum exposure to credit risk
Liquidity risk is the risk that we will not be able to meet our financial obligations as they come due We manage liquidity risk through regular cash flow forecasts to assess our current and future financial position as well as maintaining a prudent capital structure Accounts payable and accrued liabilities are due within one year from the balance sheet date
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates The risk that we will realize a loss as a result of a decline in the fair value of the term deposit investments is limited because these investments have an original term of less than one year and are generally held to maturity The promissory note owed to Barrick is variable with the U S prime rate Based on the amount owing on the promissory note as of November 30 2024 and assuming all other variables remain constant a 1 change in the U S prime rate would result in an increase decrease of approximately 1 5 million in the interest accrued on the promissory note per annum For more detail with respect to the promissory note see section Item 2 Properties Donlin Gold Project Alaska below
These risks could result in damage to or destruction of mineral properties production facilities or other properties personal injury or death including to employees environmental damage delays in construction or mining operations increased production costs asset write downs monetary losses and possible legal liability We may not be able to obtain insurance to cover these risks at economically feasible premiums or at all Insurance against certain environmental risks including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from mineral production is not generally available to us or to other companies within the mining industry We may suffer a material adverse impact on our business if we incur losses related to any significant events that are not covered by our insurance policies
Exploration construction and production activities may be limited or delayed by inclement weather and shortened exploration construction and operating seasons For example Donlin Gold proposes to transport the bulk of the supplies required to operate the Donlin Gold project to the site from ports in the United States and Canada This would require the supplies to be transported by barge on the Kuskokwim River which is free of ice and open for barge traffic for a limited period each year Delays in the ice breakup or early freeze up low flow levels and water depths or other conditions affecting the Kuskokwim River could delay or prevent Donlin Gold from transporting supplies to the site Any such interference with the delivery of needed supplies to the Donlin Gold project could adversely affect the construction or operation of the project and or the costs associated with these activities which in turn would adversely affect our business
Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions including orders issued by regulatory or judicial authorities enjoining curtailing or closing operations or requiring corrective measures installation of additional equipment or remedial actions any of which could result in us incurring significant expenditures We may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws regulations or permitting requirements It is also possible that future laws and regulations or a more stringent enforcement of current laws and regulations by governmental authorities could cause additional expense capital expenditures restrictions on or suspensions of our operations and delays in the exploration and development of our mineral properties
Our exploration potential development and production activities in the United States are subject to regulation by governmental agencies under various environmental laws To the extent that we conduct exploration activities or undertake new mining activities in other foreign countries we will also be subject to environmental laws and regulations in those jurisdictions These laws address emissions into the air discharges into water management of waste management of hazardous substances use of water protection of natural resources antiquities and endangered species and reclamation of lands disturbed by mining operations Environmental legislation and regulations continue to evolve and the trend has been toward stricter standards and enforcement increased fines and penalties for non compliance more stringent environmental assessments of proposed projects and increasing responsibility for companies and their officers directors and employees Compliance with environmental laws and regulations may require significant capital outlays on our behalf and may cause material changes or delays in our intended activities There can be no assurance that future changes in environmental regulations will not adversely affect our business and it is possible that future changes in these laws or regulations could have a significant adverse impact on some portion of our business causing us to re evaluate those activities at that time
Failure to comply with applicable environmental laws regulations and permitting requirements may result in enforcement actions thereunder including orders issued by regulatory or judicial authorities causing operations to cease or to be curtailed and may include corrective measures requiring capital expenditures installation of additional equipment or remedial actions
Our business is subject to a number of risks and hazards generally including adverse environmental conditions industrial accidents labor disputes unusual or unexpected geological conditions ground or slope failures cave ins changes in the regulatory environment and natural phenomena such as inclement weather conditions floods hurricanes and earthquakes Such occurrences could result in damage to mineral properties or production facilities personal injury or death environmental damage to our properties or the property of others delays in construction or mining monetary losses and possible legal liability
Although we maintain insurance to protect against certain risks in such amounts as we consider reasonable our insurance will not cover all the potential risks associated with a mining company s operations We may also be unable to maintain insurance to cover these risks at economically feasible premiums Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability Moreover insurance against risks such as loss of title to mineral property environmental pollution or other hazards as a result of exploration and production is not generally available to us or to other companies in the mining industry on acceptable terms We might also become subject to liability for pollution or other hazards which may not be insured against or which we may elect not to insure against because of premium costs or other reasons Losses from these events may cause us to incur significant costs that could have a material adverse effect on our financial performance and results of operations
We cannot guarantee that title to our mineral properties will not be challenged We may not have or may not be able to obtain all necessary surface rights to develop a mineral property Title insurance is generally not available for mineral properties and our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained Our mineral properties may be subject to prior unregistered agreements transfers or claims and title may be affected by among other things undetected defects We have not conducted surveys of all the mineral properties in which we hold direct or indirect interests A successful challenge to the precise area and location of these mineral properties could result in us being unable to operate on our mineral properties as permitted or being unable to enforce our rights with respect to our mineral properties This could result in us not being compensated for our prior investment relating to the mineral property
Increases in metal prices tend to encourage increases in mining exploration development and construction activities During past expansions demand for and the cost of contract exploration development and construction services and equipment have increased as well Increased demand for and cost of services and equipment could cause project costs to increase materially resulting in delays if services or equipment cannot be obtained in a timely manner due to inadequate availability and increased potential for scheduling difficulties and cost increases due to the need to coordinate the availability of services or equipment any of which could materially increase project exploration development or construction costs result in project delays or both There can be no assurance that increased costs may not adversely affect our development of our mineral properties in the future
We are dependent on the services of key executives including our President and Chief Executive Officer and other highly skilled and experienced executives and personnel focused on managing our interests and the advancement of the Donlin Gold project in addition to the identification of new opportunities for growth and funding Due to our relatively small size the loss of these persons or our inability to attract and retain additional highly skilled employees required for the development of our activities may have a material adverse effect on our business or future operations
Due to the nature of our business we may be subject to a variety of regulatory investigations claims lawsuits and other proceedings in the ordinary course of our business The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation including the effects of discovery of new evidence or advancement of new legal theories the difficulty of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal There can be no assurances that these matters will not have a material adverse effect on our business
Global climate change is an international issue and receives an enormous amount of publicity We would expect that the imposition of international treaties or U S or Canadian federal state provincial or local laws or regulations pertaining to mandatory reductions in energy consumption or emissions of greenhouse gasses could affect the feasibility of mining projects and increase operating costs
The Donlin Gold project is not directly threatened by current predictions of sea level rise as it is located inland at elevations 150 meters to 640 meters above sea level However changes in sea levels could affect ocean and river transportation and shipping facilities which would be used to transport supplies equipment and personnel to the Donlin Gold project and products from the project to world markets The Donlin Gold project proposes to deliver the vast majority of construction and operations equipment supplies consumables and other required materials to the project site via the Kuskokwim River when it is ice free Historically the Kuskokwim River has been ice free from late April until mid October and models based on historic weather and river flow records predict that there would be sufficient flow in the river to allow the transportation of the required materials to the project site annually If climate changes alter the ice free season or flow patterns of the Kuskokwim River the current supply logistics plan for the project may need to be modified
Climate changes also could affect the availability of water required to sustain operations at the Donlin Gold project Also management of water is an essential component of the project s operating plans Climate change could require modifications to the project s water management plan which may require additional capital investments or increase operating costs if precipitation increases or decreases relative to historic records
Extreme weather events such as increased frequency or intensity of storms increased snowpack prolonged drought and associated fire danger have the potential to disrupt operations Where appropriate the Donlin Gold project has developed contingency plans for managing extreme weather conditions however extended disruptions to supply lines due to extreme weather could result in interruption of activities at the project site delay or increase the cost of construction of the project or otherwise adversely affect our business
The Company s information technology systems used in its operations are subject to disruption damage or failure from a variety of sources including without limitation computer viruses security breaches cyberattacks natural disasters and defects in design Cybersecurity incidents are evolving and include but are not limited to malicious software attempts to gain unauthorized access to data or machines and equipment and other electronic security breaches that could lead to disruptions in systems unauthorized release of confidential or otherwise protected information the corruption of data or the disabling misuse or malfunction of machines and equipment Various measures have been implemented to manage the Company s risks related to information technology systems and network disruptions However given the unpredictability of the timing nature and scope of information or operational technology disruptions the Company could potentially be subject to the compromising of confidential or otherwise protected information destruction or corruption of data security breaches other manipulation or improper use of our systems and networks or financial losses from remedial actions any of which could have a material adverse effect on cash flows financial condition or results of operations
The Company could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective not installed properly or not properly integrated into operations Various measures have been implemented to manage the risks related to the system implementation and modification but system modification failures could have a material adverse effect on the Company s business financial position and results of operations
U S Holders as defined below under Item 5 Market for Registrant s Common Equity Related Shareholder Matters and Issuer Purchases of Equity Securities Certain United States Federal Income Tax Considerations for U S Holders U S Holders should be aware that the Company believes that it was a PFIC for the fiscal year ended November 30 2024 and based on current business plans and financial expectations may be a PFIC in the current tax year and future tax years If the Company is a PFIC for any year during a U S Holder s holding period then such U S Holder generally will be required to treat any gain realized upon a disposition of common shares and any so called excess distribution received on its common shares as ordinary income and to pay an interest charge on a portion of such gain or distributions unless the U S Holder makes a timely and effective QEF Election or a Mark to Market Election each as defined below under Item 5 Market for Registrant s Common Equity Related Shareholder Matters and Issuer Purchases of Equity Securities Certain United States Federal Income Tax Considerations for U S Holders Default PFIC Rules under Section 1291 of the Code A U S Holder who makes a QEF Election generally must report on a current basis its share of the Company s net capital gain and ordinary earnings for any year in which the Company is a PFIC whether or not the Company distributes any amounts to its shareholders A U S Holder who makes the Mark to Market Election generally must include as ordinary income each year the excess of the fair market value of the common shares over the U S Holder s tax basis therein This paragraph is qualified in its entirety by the discussion below under Item 5 Market for Registrant s Common Equity Related Shareholder Matters and Issuer Purchases of Equity Securities Certain United States Federal Income Tax Considerations for U S Holders Each U S Holder should consult its own tax advisor regarding the PFIC rules and the U S federal income tax consequences of the acquisition ownership and disposition of common shares
The Company utilizes a sophisticated network monitoring service as a first line of defense to identify assess manage mitigate and respond to cybersecurity threats which is supplemented by employee training to ensure rapid internal responsiveness should an incident be detected The Company regularly assesses the threat landscape and takes a holistic view of cybersecurity risks with a layered cybersecurity strategy based on prevention detection and mitigation
Recognizing the complexity and evolving nature of cybersecurity threats we have partnered with a third party cybersecurity company to leverage specialized knowledge and insights ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices Our cybersecurity partner works to continuously scan and monitor our networks for threats and vulnerabilities alert management in real time with high risk cybersecurity incidents provide quarterly management updates summarizing recent cybersecurity activity and provide access to a 24 7 incident response team This partnership is actively managed by the Chief Financial Officer CFO to ensure effective implementation
We recognize the importance of developing implementing and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality integrity and availability of our data As a result we have integrated cybersecurity risk management into our broader risk management framework to promote a holistic approach toward assessing identifying and managing material risks associated with cybersecurity threats This integration ensures that cybersecurity considerations are an integral part of the decision making processes throughout our organization
As of the date of this Annual Report we have not identified risks from cybersecurity threats including threats from any previous cybersecurity incidents that have or are reasonably likely to materially affect us including our operations business strategy results of operations or financial condition While we continually work to safeguard the information systems we use and the proprietary confidential and personal information residing therein and mitigate potential risks there can be no assurance that such actions will be sufficient to prevent cybersecurity incidents or mitigate all potential risks to such systems networks and data or those of our third party providers For additional information refer to Item 1A Risk Factors The Company is dependent upon information technology systems which are susceptible to disruption damage failure and risks associated with implementation and or integration above
The Audit Committee has been delegated by and on behalf of the Board direct and primary oversight of the Company s cybersecurity risk exposures and the steps taken by management to monitor mitigate and manage respond to cybersecurity risks and incidents The CFO is responsible for overseeing NovaGold s cybersecurity program and other IT activities No less than annually the CFO briefs the Audit Committee on the effectiveness of the Company s cyber risk management program on a wide range of topics including recent developments vulnerability assessments the threat environment technological trends and information security considerations arising with respect to the Company The Board and the Audit Committee receive prompt and timely information regarding any cybersecurity incident that meets the SEC Canadian Securities Administrators and stock exchange established reporting thresholds as well as ongoing updates and follow up disclosures regarding any such incident until it has been wholly addressed and remediated
Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management team Our Audit Committee is responsible for the Board level oversight of risks from cybersecurity threats Members of our Audit Committee receive updates from the CFO at least annually and more frequently if warranted regarding Company practices programs and other developments related to cybersecurity cyber threats and our cybersecurity risk management and strategy program Our Audit Committee is comprised of Board members with diverse and relevant expertise in risk management and strategy sufficient to oversee cybersecurity risks effectively
We maintain a cybersecurity incident response team composed of professionals across various functions including information technology legal finance accounting and risk This team is trained in managing cybersecurity incidents and leverages the information technology expertise of our third party cybersecurity partner
The Company has adopted the mining disclosure standards of Subpart 229 1300 of Regulation S K Disclosure by Registrants Engaged in Mining Operations S K 1300 The Company is subject to and required to disclose mineral resources and mineral reserves in accordance with S K 1300 While the S K 1300 rules are similar to NI 43 101 rules in Canada they are not identical and therefore two reports have been produced for the Donlin Gold project The information in Item 2 Properties below is common to both reports and contains pertinent information required under S K 1300
The Company retained Wood Canada Limited Wood an unaffiliated third party firm comprising mining experts to update content in its previously filed Donlin Creek Gold Project Alaska USA NI 43 101 Technical Report on the Second Updated Feasibility Study effective November 18 2011 and amended January 20 2012 2011 Mining Study Wood s Qualified Persons QPs completed an exercise to verify which content in the 2011 Mining Study remains current and what was required to update the report content with the latest information Updated content includes operating costs capital costs tax rates long term gold price and the economic analysis Additionally work done on the property since 2011 with respect to exploration drilling permitting and minor mine design changes as a result of recent permitting activities are summarized in the updated content A data verification exercise was completed by each Wood QP co authoring the report This included a September 2020 site visit by two of the report QPs review of the geologic data geologic model and resource model review of metallurgical test work review of designs for mining processing and infrastructure including minor design updates update of capital and operating cost estimates utilizing a combination of cost indices and vendor quotations and an updated economic analysis Canadian NI 43 101 Definitions and CIM Definition Standards for Mineral Resources and Mineral Reserves CIM Definition Standards adopted by CIM Council on May 10 2014 apply for this exercise
The Wood review determined that the report updating exercise resulted in no material change to the Mineral Resources or Mineral Reserves On August 31 2021 the Company voluntarily filed an updated NI 43 101 technical report for the Donlin Gold project in Alaska USA and titled NI 43 101 Technical Report on the Donlin Gold Project Alaska USA with an effective date of June 1 2021 2021 Technical Report reflecting the results of the above exercise The 2021 Technical Report was prepared by Wood The 2021 Technical Report is available on the Company s website on EDGAR at www sec gov and on SEDAR at www sedarplus ca
The Company is a registrant with the SEC and is reporting its exploration results Mineral Resources and Mineral Reserves using the mining disclosure standards of S K 1300 The Company requested that Wood prepare a Technical Report Summary of the Donlin Gold project Alaska USA using the standards of S K 1300 and it is titled S K 1300 Technical Report Summary on the Donlin Gold Project Alaska USA S K 1300 Report current as of November 30 2021 with a report date of November 30 2021 Wood prepared the S K 1300 Report from the 2011 Mining Study of the Donlin deposits that was completed to at least pre feasibility level as defined by S K 1300 at the time of the study Material aspects of the 2011 Mining Study were updated by Wood in 2020 and made current As part of the update process Wood s subject matter experts completed an exercise to verify and update the content of the 2011 Mining Study with the latest information under the supervision of Wood s independent QP co authors of the S K 1300 Report Updated content includes operating costs capital costs taxes forecast long term gold price and the economic analysis Additionally work done since 2011 on the property with respect to exploration drilling permitting and minor project design changes as a result of recent permitting activities are summarized in the S K 1300 Report A data verification exercise was completed by each Wood QP co authoring the S K 1300 Report Wood QPs verified that the updated content of the 2011 Mining Study met at least pre feasibility level of study as defined in S K 1300 and it supports the disclosure of exploration results Mineral Resources and Mineral Reserves using S K 1300 standards The S K 1300 Report is available on the Company s website and on EDGAR at www sec gov
Wood reviewed the geologic and resource models that supported the 2011 Mining Study including comparing them to data from recent drilling programs and determined that they continue to be adequate and suitable to be used for a Mineral Resource estimation Using updated cost inputs from the first calendar quarter of 2020 a gold price of 1 500 per ounce and the geologic and resource models utilized in support of the 2011 Mining Study the contents within an updated optimized pit shell did not show a material change to the Mineral Resources stated in the 2011 Mining Study Therefore the Mineral Resources were considered current as of November 30 2021 and are unchanged as of November 30 2024 They continue to have an effective date of July 11 2011
Similarly using updated cost inputs a gold price of 1 200 per ounce and the geologic and resource models utilized in support of the 2011 Mining Study with appropriate modifying factors applied for Mineral Reserve estimation the previous Mineral Reserve ultimate pit was contained within an updated optimized pit shell Therefore the Mineral Reserves remained current as of November 30 2021 and are unchanged Because the Mineral Reserves are supported by an updated economic analysis they have an effective date of April 27 2021
Outside of verifying the Mineral Resource and Mineral Reserve estimates the primary efforts in the 2021 Technical Report and the S K 1300 Report were financial and permitting updates This includes updates to estimated capital costs operating costs reclamation and closure costs royalties taxes and economic analysis as well as current status of the permits Updated capital costs are based on first calendar quarter 2020 pricing cost indices and current commodity pricing and equipment quotes applied to the engineering designs and material take offs from the 2011 Mining Study except for minor changes made during permitting in the operations water treatment plant and the natural gas pipeline As a result of the content updates the total initial capital cost estimate is 7 402 million which is an increase of 10 8 or 723 million compared to the 2011 Mining Study total initial capital cost estimate Likewise the total sustaining capital estimate is 1 723 million which is an increase of 14 6 or 219 million compared to the 2011 Mining Study total sustaining capital estimate The 2011 Mining Study operating costs were updated to first calendar quarter 2020 by updating key cost drivers like energy labor consumables and freight No material changes to project designs schedules or productivities were made consequently the manning schedules and consumables remain unchanged The updated estimated Life of Mine LOM operating costs total 19 289 million which is 5 90 t mined 38 21 t processed or 635 oz gold sold
A production plan based on the 2011 Mining Study of 53 500 t d open pit gold mine with ore processing by means of flotation pressure oxidation and cyanidation The pit designs and Mineral Reserves were based on the Measured and Indicated Mineral Resource estimates that were verified as remaining current Annual LOM gold production averages 1 13 million ounces per year over a production life of 27 years including 1 46 million ounces per year for the first five full years of production
Based on the economic evaluation the Donlin Gold project generates positive before and after tax economic results Total after tax cash flow is 13 145 million after tax NPV at a 5 discount rate is 3 040 million and the after tax internal rate of return is 9 2 After tax payback is achieved 7 3 years following the start of production
The following descriptions summarize selected information about the Company s 50 interest in the Donlin Gold project located in Alaska USA Except for subsequent events or as otherwise noted the disclosure in this Annual Report on Form 10 K of a scientific or technical nature for the Donlin Gold project is based on both the 2021 Technical Report and S K 1300 Report as of November 30 2021 The S K 1300 Report meets at least a pre feasibility level The 2021 Technical Report and the S K 1300 Report do not incorporate the latest Donlin Gold optimization work on the geologic modeling concepts or other optimization work since these assessments are still underway
The 2021 Technical Report has been filed with securities regulatory authorities in each province of Canada and the S K 1300 Report has been filed with the SEC Portions of the following information are based on assumptions qualifications and procedures that are not fully described herein Reference should be made to the full text of the 2021 Technical Report which is available for review on SEDAR at www sedarplus ca and the S K 1300 Report which is available for review on EDGAR at www sec gov
Paul Chilson P E a Qualified Person and an employee of the Company has approved the mineral reserves and mineral resources included in this Annual Report on Form 10 K as of November 30 2024 and reviewed the reserves and resources in the S K 1300 Report and confirmed that the reserves and resources remain current as of November 30 2024
The Donlin Gold project is a development stage gold project held by Donlin Gold a limited liability company that is owned 50 by the Company s wholly owned subsidiary NOVAGOLD Resources Alaska Inc and 50 by Barrick s wholly owned subsidiary Barrick Gold U S Inc The Company s book value of its investment in the Donlin Gold project is 2 7 million as of November 30 2024
The Company entered into the limited liability company agreement with Barrick LLC Agreement dated December 1 2007 which provided for the creation of Donlin Gold that is jointly owned by the Company and Barrick on a 50 50 basis Pursuant to the LLC Agreement the Company agreed to reimburse Barrick out of future mine production cash flow for a portion of Barrick s prior expenditures on the Donlin Gold project As of November 30 2024 the promissory note including accrued interest amounted to approximately 151 5 million Funding for the project is currently shared by both parties on a 50 50 basis
The Donlin Gold property is located in the Kuskokwim region of southwestern Alaska on private Alaska Native owned mineral and surface land and Alaska state mining claims The property is under the Calista Lease for subsurface rights and some surface rights from Calista and SUA from TKC two Alaska Native corporations Calista is one of 13 regional Alaska Native corporations established as part of the Alaska Native Claims Settlement Act of 1971 ANCSA and under ANCSA has title to the subsurface estate and some surface rights in the region TKC was formed in 1977 when the ANCSA village corporations of Lower Kalskag Upper Kalskag Aniak Chuathbaluk Napaimute Crooked Creek Red Devil Georgetown Sleetmute and Stony River which are located along the middle region of the Kuskokwim River merged Under ANCSA TKC has title to extensive surface estate in the region including most of the project lands The property hosts a gold deposit currently estimated at 33 8 million ounces of proven and probable mineral reserves averaging 2 09 grams per tonne The Company believes that significant exploration potential remains in the Donlin Gold district with prospects to increase mine life and or justify future production expansions See Mineral Reserve and Mineral Resource Estimate below
Other lands required for offsite infrastructure such as the Jungjuk port site the road from the port site to the mine site and natural gas pipeline are categorized as Native State of Alaska conveyed or BLM lands Rights of way are required from other Alaska Native corporations the State of Alaska and BLM for the road and pipeline alignments that cross Native corporation state and federal lands
Donlin Gold obtained the necessary permits and certifications that allowed for the exploration environmental monitoring and Environmental Impact Study EIS baseline data collection efforts The current status of these permits is in line with the termination of the baseline data collection effort temporary closure of the camp in May 2015 and the seasonal reopening of the site for the geological drill program from July to November 2017 the geotechnical drill program in 2019 and 2023 for the Alaska Dam Safety certificate applications and the latest geological drill programs in 2020 2021 and 2022 The active permits include ADNR temporary use of water ADNR Application for Permit to Mine in Alaska approval for the 2020 2021 2022 and 2023 drill programs the Corps individual 404 and nationwide 26 permits Alaska Department of Environmental Conservation ADEC authorizations landfill septic system multisector stormwater general permit sector G air permit and Federal Aviation Administration approval Other permits were either put on hold closed or allowed to expire
On August 7 2012 we announced that Donlin Gold commenced permitting of the project by submitting a draft Plan of Operations and Section 404 Clean Water Act CWA draft permit application to federal and state regulators The Section 404 permit application initiated the environmental review process under the National Environmental Policy Act NEPA which involves preparation of an EIS The Corps selected AECOM formerly URS an independent contractor to prepare the EIS The Notice of Intent for the EIS was published in the Federal Register on December 14 2012 and the NEPA public scoping process was completed on March 29 2013 During the remainder of 2013 and through 2014 and 2015 Donlin Gold worked to address the remaining data needs for the draft EIS Donlin Gold also continued to provide application materials and maintained ongoing dialogue with the key permitting agencies The Corps addressed the cooperating agency comments on the preliminary draft and filed the Notice of Availability for public release of the draft EIS in the Federal Register in November 2015 After the filing of the draft EIS the Corps issued a schedule for public meetings on the Donlin Gold draft EIS in the Yukon Kuskokwim Y K region and Anchorage Alaska The Corps conducted and at the end of May 2016 completed a six month public comment period for the draft EIS including 17 public comment meetings in communities across the Y K region and in Anchorage The Corps received comments from federal and state agencies local and tribal governments Alaska Native organizations businesses special interest groups NGOs and individuals
On April 27 2018 the Notice of Availability of the Donlin Gold final EIS was published in the Federal Register On August 13 2018 the Corps and the BLM issued a joint Federal Record of Decision ROD for the Donlin Gold project Along with the ROD the Corps issued a combined permit under CWA Section 404 and Section 10 of the Rivers and Harbors Act Additionally the BLM issued the Offer to Lease for the ROW for those portions of the natural gas pipeline that would cross federal lands The Pipeline and Hazardous Materials Safety Administration previously issued a special permit for the natural gas pipeline on June 5 2018
Several major State of Alaska permits were also issued and advanced during 2018 through 2023 After a public notice and comment period ADEC issued a Certificate of Reasonable Assurance under CWA Section 401 on August 10 2018 indicating that the CWA 404 permit complies with the state s water quality standards The Alaska Pollutant Discharge Elimination System APDES water discharge permit was issued by ADEC on May 24 2018 and became effective on July 1 2018 Donlin Gold submitted its application to ADEC for the regularly scheduled re issuance of its APDES permit which originally was to expire in January 2024 but has been administratively extended pending renewal The State of Alaska Department of Fish and Game ADFG issued Title 16 Fish Habitat permits for the mine area and transportation corridor on August 30 2018 The new air quality permit was issued by ADEC on July 1 2023 The final approvals of the Donlin Gold Reclamation Plan and the Waste Management Permit were issued by ADNR and ADEC respectively on January 18 2019 On September 18 2023 Donlin Gold submitted timely applications to ADEC and ADNR for renewal of the approval and permit On October 17 2023 ADEC administratively extended the Waste Management Permit pending renewal The Reclamation Plan approval which was also to expire in January 2024 has been administratively extended to January 2026 ADNR issued the easement land leases land use permits and material site authorizations for the proposed transportation facilities and easement for the fiber optic cable on state lands on January 2 2020 On January 17 2020 ADNR s State Pipeline Coordinator Services issued the final state ROW authorization for the natural gas pipeline On June 29 2021 ADNR s Division of Mining Land and Water issued 12 final Water Rights for the mine site and transportation corridor On November 1 2021 ADFG issued two Special Area Permits required for pipeline facilities located within the Susitna Flats State Game Refuge Refuge One permit authorizes the compressor station and the other permit authorizes the section of the pipeline ROW in the Refuge On November 1 2022 ADNR finalized approval of the proposed re location plan for public easements in the mine site and transportation facility areas
Thirteen of the 56 village councils in the Calista Region Native Village of Kasigluk ONC Native Village of Eek Tuluksak Native Community Tununak Council Native Village of Nunapitchuk Chuloonawick Tribal Council Native Village of Kwigillingok Native Village of Kongiganak Chefornak Traditional Council Chevak Native Village Native Village of Napakiak and Quinhagak have adopted resolutions opposing development of the Donlin Gold project
The Calista Lease between Calista and Donlin Gold includes subsurface mineral rights leased from Calista Calista also owns the corresponding surface estate on a portion of these lands the rights to which are also included in the Calista Lease The Calista Lease provides Donlin Gold with rights to approximately 19 988 hectares of Calista owned land The Calista Lease was restated on February 11 2011 to reflect all assignments and amendments made between its original execution on May 1 1995 and February 11 2011 The Calista Lease was amended once again effective June 6 2014 the 2014 Amendment The 2014 Amendment did not affect the lands subject to the Calista Lease as restated on February 11 2011
On June 9 2014 the Company announced that Donlin Gold and TKC reached an updated long term SUA for the Donlin Gold project The SUA with TKC grants non exclusive surface use rights to Donlin Gold for mining activities TKC owns and contributed to the SUA the corresponding surface estate over most of Calista s subsurface estate included in the Calista Lease as well as some additional surface estate The SUA with TKC provides Donlin Gold with rights to approximately 16 923 hectares of TKC owned land
Lyman Resources in Alaska Inc Lyman Resources has an existing placer mining lease covering approximately 1 040 hectares partially covering six sections within the Calista Lease area The Lyman family also has title to approximately 5 7 hectares of surface estate within the Snow Gulch area The Calista Lease grants priority to extraction of the lode mineralization in the event of a conflict of use between lode and placer mining operations provided that a two year notice period is provided to Lyman Resources Lyman Resources the Lyman family and Donlin Gold executed a Surface Lease and Assignment of Mining Lease effective May 9 2012 leasing the Lyman surface estate and assigning the Lyman placer lease within the Calista Lease area to Donlin for Project mining use the Lyman Lease
In addition to the leased land Donlin Gold holds 493 State of Alaska mining claims comprising approximately 29 008 hectares in the Kuskokwim and Mt McKinley Recording Districts The mining claims abut and largely surround northern and western boundaries of the lands subject to the Calista Lease and TKC SUA The mining claims are located on lands that are owned by the State of Alaska 409 and on state selected lands from the BLM 84 All claims are approximately either 16 2 hectares or 64 8 hectares in size
The term of the Calista Lease is to April 30 2031 and extends automatically year to year thereafter so long as either mining or processing operations are carried out on or with respect to the property in good faith on a continuous basis in such year or Donlin Gold pays to Calista an advanced minimum royalty of 3 0 million subject to adjustment for increases in the Consumer Price Index for such year The TKC SUA remains in effect through April 30 2031 and on a year to year basis thereafter so long as the Calista Mining Lease remains in effect The Lyman Lease has an initial term of 20 years but shall be extended while Donlin Gold conducts operations on the property
Additional estimated costs associated with various landowner and lease agreements not already covered in initial capital or G A operating costs average approximately 8 6 million per year during the six pre production years and 2 5 million per year during the 27 operating years Annual rent labor expenditures and filings are required to maintain Alaska State mining claims on state land Mining license tax payments may also apply
The Kuskokwim River is a regional transportation route and is serviced by commercial barge lines A 25 kilometer winter road designated as an Alaska State Highway route and transportation corridor accesses the property from the barge landing at the village of Crooked Creek The Donlin Gold project currently has an all season soft sided camp An adjacent 1 500 meter airstrip is capable of handling aircraft as large as L 100 Hercules approximate cargo capacity of 19 050 kilograms allowing efficient shipment of personnel some heavy equipment and supplies The Donlin Gold project can be reached directly by charter air facilities out of Anchorage and Aniak 80 kilometers to the west
The project area is one of low topographic relief on the western flank of the Kuskokwim Mountains Elevations range from 150 meters to 640 meters Ridges are well rounded and easily accessible by all terrain vehicle Hillsides are forested with black spruce tamarack alder birch and larch Soft muskeg and discontinuous permafrost are common in poorly drained areas at lower elevations The area has a relatively dry interior continental climate with typically less than 500 millimeters total annual precipitation Summer temperatures are relatively warm and may exceed 30 C Minimum temperatures may fall to well below 42 C during the cold winter months
Approximately 1 678 exploration and development drill holes totaling 367 886 meters were completed from 1988 through 2007 in at least six separately managed campaigns Another 108 core holes totaling 33 425 meters were added in 2008 to explore near pit expansions and satellite deposits and for facility related condemnation and geotechnical studies In 2010 six core holes totaling 2 090 meters were drilled for additional pit slope geotechnical drilling In 2017 16 core holes totaling 7 040 meters were drilled in 2020 85 core holes totaling 23 361 meters were drilled in 2021 79 core holes totaling 24 264 meters were drilled and in 2022 141 core holes totaling 42 331 meters were drilled and in 2023 42 core holes totaling 1 840 meters for geotechnical and permafrost studies and 13 RC holes totaling 1 279 meters were drilled for pump tests and the installation of ground water monitoring instrumentation
Approximately 1 396 holes totaling 339 733 meters supported the resource model used in the 2011 Mining Study The remaining holes were either drilled after the completion of the 2011 Mining Study 2017 2020 2021 and 2022 drill programs or were utilized for other purposes such as district exploration carbonate resource facilities condemnation hydrology geotechnical and infrastructure engineering
Airborne geophysics geological mapping and soil sampling over most of the project area Total of 13 525 meters of D9 Cat trenching at all prospects Over 15 000 soil rock chip and auger samples collected Drilling included 3 106 feet of AX core drilling 404 meters in 239 auger holes and 10 423 meters of RC drilling 125 holes First metallurgical tests and petrographic work
The Kuskokwim region of southwestern Alaska is predominately underlain by rocks of the Upper Cretaceous Kuskokwim Group that filled a subsided northeast trending strike slip basin between a series of amalgamated terranes Intermediate composition volcano plutonic complexes intrude and overlie Kuskokwim Group rocks throughout the region
Gold deposits are associated with an extensive Late Cretaceous Early Tertiary gold arsenic antimony mercury hydrothermal system Gold bearing zones exhibit strong structural and host rock control along north northeast trending fracture zones and are best developed where those zones intersect relatively competent host rocks Mineralized material is most abundant in intrusive dikes and sills but sedimentary rocks are also mineralized within strong fracture zones
The site wide surface water and groundwater models developed by BGC are based on extensive drill data and climatic information for the area The groundwater model is currently being updated based on the field work completed in 2023 BGC CEMI Hatch Ltd and SRK Inc provided hydrologic studies design criteria and associated test work for the water treatment plant requirements during construction operations and closure Lorax Environmental performed water quality modeling for the post closure pit lake
The mineral resource defined in the S K 1300 Report is confined to a portion of the property We believe there is considerable potential to increase the mineral resources at the Donlin Gold project Numerous other targets have been identified along the 8 kilometer mineralized gold trend and are defined by surface sampling and various historical drill holes containing significant gold values
Exploration potential in the vicinity of the open pit design in the S K 1300 Report includes extensions along strike to the East ACMA Lewis and Crooked Creek areas Mineralization remains open at depth under the current pit limits Mineralization also remains open to the north of the planned pit and has been tested by shallow trenching and soil sampling with limited drilling undertaken to date
Exploration potential at the Donlin Gold project also exists outside the areas that have been the subject of the mine design in the S K 1300 Report Gold mineralization is associated with an overall north northeasterly trending high level dike sill complex that has been outlined in the regional aero magnetics as a magnetic low The zone approximately 8 kilometers long and 4 kilometers wide consists of a northern dike dominated area and a southern more sill dominated area
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 S K 1300 Report Structural zones in competent sedimentary units account for the remaining 26
Gold bearing sulfides occur in both veins and disseminated zones in mafic igneous bodies rhyodacite dikes and sills and sedimentary rocks Quartz carbonate sulfide pyrite stibnite and arsenopyrite veins are the primary mineralized features but gold also occurs in thin discontinuous sulfide fracture fillings
The most abundant minor elements associated with gold bearing material are iron arsenic antimony and sulfur They are contained primarily in the mineral suite associated with hydrothermal deposition of gold including pyrite arsenopyrite realgar native arsenic and stibnite Minor hydrothermal pyrrhotite marcasite and syngenetic or sedimentary pyrite also account for some of the iron and sulfur
The mineral reserves for the Donlin Gold project were classified using criteria appropriate under the mining disclosure definitions and standards of NI 43 101 and S K 1300 with an effective date of April 27 2021 and are current as of November 30 2024 Paul Chilson P E a Qualified Person and an employee of the Company has reviewed the mineral reserves and mineral resources and material assumptions included in this Annual Report on Form 10 K and confirmed that they remain current as of November 30 2024 The mineral reserves are summarized in the table below
Mineral reserves are reported within the pre feasibility pit designs and supported by a mine schedule featuring variable throughput rates stockpiling and cut off optimization The point of reference for Mineral Reserves estimates is where the reserves are delivered to the mill The pit designs are contained within an optimized pit shell based on the following economic and technical parameters Metal price for gold of 1 200 per ounce reference mining cost of 2 16 per tonne incremented 0 0033 per tonne per meter with depth from the 220 meter elevation equates to an average mining cost of 2 64 per tonne fixed processing cost of 13 78 t processed sustaining capital of 1 54 t processed general and administrative cost of 3 66 t processed stockpile rehandle costs of 0 24 t processed assuming that 45 of mill feed is rehandled variable metallurgical recoveries by rock type ranging from 86 7 in shale to 94 2 in intrusive rocks in the Akivik domain refining and freight charges of 1 21 oz Au royalty considerations of 4 5 NSR and 0 50 t processed and variable pit slope angles ranging from 23 to 43 See Section 12 Mineral Reserve Estimates of the S K 1300 Report
Mineral reserves are reported using an optimized block value BV based on the following equation BV Gold grade Recovery royalties refining costs process operating costs G A cost reported in per tonne processed Assuming an average gold recovery of 89 5 the marginal gold cut off grade would be approximately 0 57 grams per tonne or the gold grade that would equate to a 0 001 BV cut off at these same values
Mineral reserves are reported on a 100 ownership basis and a 50 ownership basis The 50 basis is attributable to NOVAGOLD through their 50 ownership interest in the joint venture that owns the mineral rights and manages the Donlin Gold project Tonnage and grade measurements are in metric units Contained gold ounces are reported as troy ounces
Mineral reserves and resources have been estimated using a life of mine long term gold price assumption of 1 200 per ounce Mineral resources are based on a Whittle pit optimized for all measured indicated and inferred blocks assuming a gold selling price of 1 200 per ounce Operating and capital costs are estimated over the life of mine
Mineral resources were classified using criteria appropriate under the mining disclosure standards of S K 1300 by application of the NSR based cut off that incorporated mining and recovery parameters and constraint of the mineral resources to a pit shell based on commodity prices The mineral resources exclusive of mineral reserves are summarized in the table below
Mineral resources are reported exclusive of mineral reserves Mineral resources are reported on a 100 ownership basis and a 50 ownership basis The 50 basis is attributable to NOVAGOLD through their 50 ownership interest in the joint venture that owns the mineral rights and manages the Donlin Gold project property
Mineral resources are reported in place point of reference and contained within a conceptual measured indicated and inferred optimized pit shell using the following assumptions gold price of 1 200 per ounce variable process cost based on 2 1874 sulfur grade 10 65 administration cost of 2 29 per tonne processed refining freight marketing selling costs of 1 85 per ounce recovered stockpile re handle costs of 0 20 per tonne processed assuming that 45 of mill feed is re handled variable royalty rate based on royalty of 4 5 Gold price selling cost and a variable metallurgical recovery depending on the host rock type ranging from 86 to 94 Assuming an average recovery of 89 5 and average sulfur grade of 1 07 the marginal gold cut off grade is 0 47 g t These technical and economic parameters are those that were used in the 2011 Mining Study to establish reasonable prospects of eventual economic extraction Based on the QP s review of the estimate there would be no material change to the Mineral Resources if a gold price of 1 500 oz was used and other economic parameters were updated to the 2020 parameters used in the Mineral Reserve estimate Therefore the 2011 Mineral Resource statement is considered current and is presented unchanged See Section 11 Mineral Resource Estimates of the S K 1300 Report
The estimated mine life is 27 years based on a nominal processing rate of 53 500 tonnes per day Annual gold production over the projected mine life averages 1 13 million ounces per year including 1 46 million ounces per year for the first five full years of production The total initial capital cost estimate is approximately 7 402 million The project s estimated after tax net present value at a 5 discount rate NPV 5 is 3 040 million using the base case gold price of 1 500 per ounce The internal rate of return IRR at the same gold price is 9 2
Due to gold being associated with sulfide mineralization primarily arsenopyrite and pyrite the ore is considered refractory and requires POX pre treatment to liberate the gold prior to CIL leaching Sulfide flotation concentration is required prior to POX to concentrate the sulfide content to a level sufficient to fuel the POX operation
Concentrate is recovered from the primary rougher flotation followed by regrinding of the tailings prior to secondary rougher flotation The secondary rougher concentrate is processed through a cleaner scavenger circuit producing a concentrate which is combined with the primary rougher concentrate for treatment by POX The final tailings from the secondary rougher flotation tailings is thickened and due to their neutralizing potential is then utilized to modify the pH of the POX discharge solution prior to being transported to the TSF
The oxidized concentrate from the POX operation would then be cyanide leached in a conventional CIL circuit to produce a pregnant gold bearing solution Gold from the solution is absorbed onto activated carbon which is later stripped gold desorbed from carbon in an elution circuit The pregnant solution after elution is fed through electrowinning EW cells where cathodes are plated with gold bearing materials which are periodically removed dried in a retort and melted in an induction furnace to produce doré bars
Mercury naturally occurs in the Donlin Gold project ores and mercury abatement controls will be installed in six areas of the process facilities including POX hot cure EW retort refinery furnace and carbon regeneration kiln In these control systems mercury will be collected for off site shipment and management Chemicals will be added to tailings to limit the potential for mercury releases from the TSF
Based on the S K 1300 Report the operating mine life is estimated to be 27 years with the nominal processing rate of 53 500 tonnes per day Commercial gold production is expected after a period of approximately 6 years for basic and detailed engineering and construction In addition the Donlin Gold board must approve a construction program and budget before construction of the Donlin Gold project can begin The timing of the initiation of the required engineering work of the Donlin Gold board s approval of a construction program and budget market conditions and receipt of all required governmental permits and approvals will determine whether and when construction of the Donlin Gold project will begin
Preproduction covers the first 15 months of the mine plan when mining activities will focus on providing sufficient ore exposure for plant start up Ore mined during preproduction will be stockpiled and rehandled to the process during operations Average mine production increases progressively in the initial years until the peak rate of 425 000 tonnes per day is reached in Year 6
Waste rock from open pit mining will be placed in an ex pit WRF in the American Creek Valley east of the pit area or in a backfill dump in the ACMA pit The ultimate footprint of the WRF covers an area of approximately 9 square kilometers Approximately 2 232 million tonnes of waste rock and overburden will be placed in the WRF and 425 million tonnes will be placed in the ACMA pit backfill dump Approximately 91 million tonnes of waste rock will be used for construction purposes and 17 million tonnes of overburden will be stockpiled and used later for reclamation purposes
Waste rock will be characterized by its potential for acid generation and assigned reactivity categories Non acid generating rock will be placed directly in the WRF along with less reactive potentially acid generating PAG rock PAG5 Some of the more reactive PAG rock PAG6 will be encapsulated in cells in the WRF to prevent water infiltration through them The most reactive PAG rock PAG7 will be backfilled in the ACMA pit beneath the ultimate pit lake water level
The TSF in the Anaconda Creek basin will be a fully lined impoundment with a cross valley dam downstream main dam in the valley The tailings dam will be constructed of compacted rock fill using the downstream method with a composite liner on the upstream face The tailings impoundment footprint will be lined with a linear low density polyethylene liner over a layer of broadly graded silty sand and gravel acting as low permeability bedding material and providing secondary containment Material for construction will be sourced from the plant site and fuel farm during initial construction and from the open pit for the later raises during operations
There is sufficient area within the project area to host an open pit mining operation including the proposed open pit waste rock facility TSF and process facilities primary and pebble crushers coarse ore conveyor and coarse ore stockpile concentrator flotation water treatment plants POX oxygen plant boiler house utility corridors leach refinery cyanide destruct and access walkways Other planned site infrastructure is comprised of access roads airstrip accommodation camp fuel tank farm dual fueled power plant truck shop truck wash workshops and vehicle repair facilities assay laboratory administration facilities and change rooms Donlin Gold has secured the surface rights for the areas that may host these facilities
The project is a greenfield site The on site infrastructure for the project includes three main development sites in remote locations the mine and plant site area including the power plant the permanent camp and the airstrip The plant site power plant and fuel tank farm will be on a ridge above the proposed TSF The layout of the plant site was designed to take maximum advantage of the natural topography The layout also provides for efficient movement of equipment and material products around the site
The off site infrastructure for the project includes three main development sites in remote locations the Jungjuk port site and mine access road the natural gas pipeline and the Bethel port facilities The Jungjuk port site is situated upriver from Bethel on the Kuskokwim River near the mouth of Jungjuk creek A port to mine access road Jungjuk road approximately 48 kilometers long will traverse varied terrain from the Jungjuk port site to the mine site A spur road approximately 4 8 kilometers long will serve the proposed project airstrip The primary purpose of the Jungjuk road is to transport freight and diesel from the Jungjuk port site to the mine site mostly by conventional highway tractors tankers and trailers The natural gas pipeline is described under the Power heading below The proposed Bethel port will be situated near the town of Bethel a community of approximately 6 080 residents that is the main existing port on the Kuskokwim River and is an administrative and transportation hub for the 56 villages in the Y K region The existing Bethel port is the northernmost medium draft port in the United States and is served by ocean going barges The proposed port would serve as a trans shipment point from ocean barges to river barges to supply the project during the summer ice free period
Natural gas will be delivered to site by an approximately 507 kilometer 356 millimeter diameter pipeline to supply an on site power generation facility The S K 1300 Report contemplates that the electric power for the site will be generated from a dual fueled natural gas and diesel reciprocating engine power plant with a steam turbine utilizing waste heat recovery from the engines The power plant consists of two equal halves each consisting of six reciprocating engines and a separate steam turbine The total generation facility is nominally rated at 182 MW initially and will increase to 215 MW after four years with the addition of two more generators one in each half to allow for N 2 redundancy thus allowing planned maintenance and predicted outages without cutting back production
The pipeline would commence at the west end of the Beluga Gas Field approximately 48 kilometers northwest of Anchorage at a tie in near Beluga located in the Matanuska Susitna Borough and would run to the mine site The pipeline would receive booster compression supplied by one compressor station No additional compression along the pipeline route would be required The pipeline would have capacity to transport approximately 2 million cubic meters per day of natural gas
Water requirements for the proposed project have been summarized in a Water Resources Management Plan which has been subject to review by state and federal agencies Water primarily will be sourced from the two drainages American and Anaconda Creeks within the mine footprint and pit dewatering In some years the water supply from these sources may not be able to meet the makeup water requirements for the plant In these circumstances additional water will be obtained primarily from a proposed reservoir in Snow Gulch
The marketing plan is for the owners of Donlin Gold to take in kind their respective shares of the gold production which they can then sell for their own benefit Under the LLC Agreement the manager shall give the members prompt notice in advance of the delivery date upon which their respective shares of gold production will be available
The total initial capital cost estimate for the Donlin Gold project is approximately 7 402 million The project s estimated after tax NPV at a 5 discount rate is 3 040 million with an IRR after tax at 9 2 using the base case gold price of 1 500 per ounce The undiscounted break even gold price is 930 per ounce and at a 5 discount rate is 1 180 per ounce In the S K 1300 Report the overall economic viability of the project was evaluated by both discounted and undiscounted cash flow analyses based on the engineering studies and cost estimates discussed in the S K 1300 Report
Doré refining and shipping charges were estimated at 1 21 per ounce based on escalating to 2020 the actual refining charges for Barrick s Goldstrike operations and a quotation for transportation and insurance costs from the Donlin Gold project site to a U S based refinery utilized in 2011 In addition 0 1 of gold produced from the mine is deducted as a cost of refining
The current hydrometallurgical process selection renders any contained silver into a greater refractory state which provides less than 10 silver recovery through standard metal leaching As a consequence silver is not included in the Mineral Resource and Mineral Reserve estimates and no silver credit has been applied to the Donlin Gold project
To fund the 1 361 million reclamation and closure costs the Donlin Gold project provides 412 million at closure by contributing to a Trust Fund commencing in Year 5 and continuing through the end of operations with annual contributions of 7 8 million In addition to the Trust Fund financial assurance in the form of letters of credit and or surety bonds is required to construct and operate the mine Per the Donlin Gold Project Reclamation Plan Approval from ADNR financial assurance in the amount of approximately 322 million must be submitted in a form and substance approved by ADNR The cost to maintain this financial assurance is assumed to be 0 4 of the total assured amount annually This equates to approximately 1 3 million per year paid from the start of construction through the end of operations
There were no changes in reported mineral resources and reserves reported for the years ended November 30 2024 and 2023 Paul Chilson P E a Qualified Person and an employee of the Company has reviewed the mineral reserves and mineral resources and material assumptions included in this Annual Report on Form 10 K and confirmed that they remain current as of November 30 2024
The Company has internal controls for reviewing and documenting the information supporting the mineral resource and mineral reserve estimates describing the methods used and ensuring the validity of the estimates These internal control processes were not materially impacted by the adoption of S K 1300 in 2021 Information that is used in the mineral resource and mineral reserve estimation process was reviewed and approved by appropriate qualified persons that prepared the content of the NI 43 101 and S K 1300 reports for the Donlin Gold project The mineral resources and mineral reserves are subject to our internal review process on an annual basis which includes review by NOVAGOLD s Qualified Person based in our corporate office in Salt Lake City Utah USA
Mineral resources and mineral reserves are estimates that are imprecise and depend upon geologic interpretation and statistical inferences drawn from drilling and sampling analysis which may prove to be unreliable See Risk Factors The quantities for our mineral resources and mineral reserves are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated
Periodically we are a party to or otherwise involved in legal proceedings arising in the normal course of business Management does not believe that there is any pending or threatened proceeding against the Company which if determined adversely would have a material adverse effect on our financial position liquidity or results of operations There are no material proceedings pursuant to which any of our directors officers or affiliates or any owner of record or beneficial owner of more than 5 of our securities or any associate of any such director officer or securityholder is a party adverse to us or has a material interest adverse to us
Pursuant to Section 1503 a of the Dodd Frank Act issuers that are operators or that have a subsidiary that is an operator of a coal or other mine in the United States are required to disclose specified information about mine health and safety in their periodic reports These reporting requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of 1977 the Mine Act which is administered by the U S Department of Labor s Mine Safety and Health Administration MSHA During the fiscal year ended November 30 2024 the Company and its subsidiaries were not subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503 a of the Dodd Frank Act Donlin Gold LLC is the operator of the Donlin Gold project Donlin Gold LLC is not a subsidiary of the Company for purposes of Section 1503 a of the Dodd Frank Act because the Company does not control Donlin Gold LLC
Our common shares trade on the NYSE American and on the Toronto Stock Exchange TSX under the symbol NG On January 13 2025 there were 545 holders of record of our shares which does not include shareholders for which shares are held in nominee or street name The Company believes that more than half of our common shares are beneficially owned by investors in the United States
We have never declared or paid dividends on our common shares and our current business plan requires that for the foreseeable future any future earnings be reinvested to finance growth and development of our business We will pay dividends on our common shares only if and when declared by our Board In determining whether to declare dividends the Board will consider our financial condition results of operations working capital requirements future prospects and other factors it considers relevant
The following generally summarizes certain Canadian federal income tax consequences generally applicable under the Income Tax Act Canada and the regulations enacted thereunder collectively the Canadian Tax Act and the Canada United States Income Tax Convention 1980 the Convention to the holding and disposition of our common shares
Comment is restricted to holders of common shares each of whom at all material times for the purposes of the Canadian Tax Act and the Convention i is resident solely in the United States for tax purposes ii is a qualifying person under and entitled to the benefits of the Convention iii holds all common shares as capital property iv deals at arm s length with and is not affiliated with NOVAGOLD v does not and is not deemed to use or hold any common shares in a business carried on in Canada vi is not an insurer that carries on business in Canada and elsewhere and vii is not an authorized foreign bank as defined in the Canadian Tax Act each such holder a U S Resident Holder
Certain U S resident entities that are fiscally transparent for United States federal income tax purposes including certain limited liability companies may not in all circumstances be entitled to the benefits of the Convention Members of or holders of an interest in such an entity that holds common shares should consult their own tax advisers regarding the extent if any to which the benefits of the Convention will apply to the entity in respect of its common shares This summary does not deal with special situations such as the particular circumstances of traders or dealers in securities or holders who have entered into a derivative forward agreement synthetic equity arrangement or synthetic disposition arrangement each as defined in the Canadian Tax Act in respect of the common shares Such holders should consult their own tax advisors
Generally a U S Resident Holder s common shares will be considered to be capital property of such Holder provided that the U S Resident Holder is not a trader or dealer in securities did not acquire hold or dispose of the common shares in one or more transactions considered to be an adventure or concern in the nature of trade i e speculation and does not hold the common shares in the course of carrying on a business
This summary is based on the information contained in this Form 10 K the current provisions of the Canadian Tax Act and the Convention in effect as of the date prior to the date hereof all specific proposals to amend the Canadian Tax Act and Convention publicly announced by or on behalf of the Minister of Finance Canada prior to the date hereof Proposed Amendments and the administrative policies and assessing practices of the Canada Revenue Agency the CRA published in writing by the CRA prior to the date hereof This summary assumes that the Proposed Amendments will be enacted in the form proposed although no assurance can be given that the Proposed Amendments will be enacted or otherwise implemented in their current form if at all Other than the Proposed Amendments this summary does not take into account nor anticipate any changes in law or in the CRA s administrative policies or assessing practices whether by way of judicial legislative governmental or administrative decision or action although no assurance can be given in these respects Except as otherwise expressly provided this summary does not take into account any provincial territorial or foreign tax considerations which may differ materially from those set out herein
This summary is of a general nature only is not exhaustive of all possible Canadian federal income tax considerations and is not intended to be and should not be construed as legal or tax advice to any particular U S Resident Holder U S Resident Holders are urged to consult their own tax advisers for advice with respect to their particular circumstances The discussion below is qualified accordingly
Generally for the purposes of the Canadian Tax Act all amounts relating to the acquisition holding or disposition of common shares including dividends adjusted cost base and proceeds of disposition must be converted into Canadian dollars based on the relevant exchange rate as determined in accordance with the Canadian Tax Act
A U S Resident Holder to whom NOVAGOLD pays or credits or is deemed to pay or credit a dividend on such holder s common shares will generally be subject to Canadian withholding tax and NOVAGOLD will be required to withhold the tax from the dividend and remit it to the CRA for the holder s account The rate of withholding tax under the Canadian Tax Act is 25 of the gross amount of the dividend but should generally be reduced under the Convention to 15 or if the U S Resident Holder is a company which is the beneficial owner of at least 10 of the voting stock of NOVAGOLD 5 of the gross amount of the dividend For this purpose a company that is a resident of the United States for purposes of the Canadian Tax Act and the Convention and is entitled to the benefits of the Convention shall be considered to own the voting stock of NOVAGOLD owned by an entity that is considered fiscally transparent under the laws of the United States and that is not a resident of Canada in proportion to such company s ownership interest in that entity
A U S Resident Holder who disposes or is deemed to dispose of one or more common shares generally should not incur any liability for Canadian federal income tax in respect of any capital gain arising as a consequence of the disposition unless the common shares constitute taxable Canadian property as defined in the Canadian Tax Act of the U S Resident Holder at the time of disposition and the U S Resident Holder is not entitled to relief under the Convention
Generally a U S Resident Holder s common shares will not constitute taxable Canadian property of such holder at a particular time at which the common shares are listed on a designated stock exchange as defined in the Canadian Tax Act which currently includes the TSX and NYSE American unless both of the following conditions are concurrently met
at any time during the 60 month period that ends at the particular time more than 50 of the fair market value of the common shares was derived directly or indirectly from one or any combination of real or immovable property situated in Canada Canadian resource properties as defined in the Canadian Tax Act timber resource properties as defined in the Canadian Tax Act or options in respect of interests in or for civil law rights in such properties whether or not the property exists
Even if the common shares constitute taxable Canadian property to a U S Resident Holder under the Convention such a U S Resident Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized by such holder on a disposition of such common shares provided the value of such common shares is not derived principally from real property situated in Canada within the meaning of the Convention
This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U S federal income tax considerations that may apply to a U S Holder as a result of the acquisition ownership and disposition of common shares Furthermore this summary does not take into account the individual facts and circumstances of any particular U S Holder that may affect the U S federal income tax considerations applicable to such U S Holder Except as specified below this summary does not discuss applicable tax reporting requirements Accordingly this summary is not intended to be and should not be construed as legal or U S federal income tax advice with respect to any U S Holder U S Holders should consult their own tax advisors regarding the U S federal U S state and local and non U S tax consequences relating to the acquisition ownership and disposition of common shares
No ruling from the U S Internal Revenue Service the IRS or legal opinion from legal counsel has been requested or will be obtained regarding the potential U S federal income tax considerations applicable to U S Holders as discussed in this summary This summary is not binding on the IRS and the IRS is not precluded from taking a position that is different from and contrary to the positions taken in this summary In addition because the authorities on which this summary is based are subject to various interpretations the IRS and the U S courts could disagree with one or more of the positions taken in this summary
This summary is based on the U S Internal Revenue Code of 1986 as amended Code regulations promulgated by the U S Department of the Treasury whether final temporary or proposed Treasury Regulations U S court decisions published rulings and administrative positions of the IRS and the Convention that are applicable and in each case in effect as of the date of this document Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time and any such change could be applied on a retroactive or prospective basis which could affect the U S federal income tax considerations described in this summary This summary does not discuss the potential effects whether adverse or beneficial of any proposed legislation that if enacted could be applied on a retroactive or prospective basis
For purposes of this section a U S Holder is a beneficial owner of common shares that for U S federal income tax purposes is a a citizen or individual resident of the United States for U S federal income tax purposes b a corporation or other entity classified as a corporation for U S federal income tax purposes that is created or organized in or under the laws of the United States or any state in the United States including the District of Columbia c an estate if the income of such estate is subject to U S federal income tax regardless of the source of such income or d a trust if i such trust has validly elected to be treated as a U S person for U S federal income tax purposes or ii a U S court is able to exercise primary supervision over the administration of such trust and one or more U S persons have the authority to control all substantial decisions of such trust
For purposes of this summary a Non U S Holder is a beneficial owner of common shares that is neither a U S Holder nor a U S partnership or other pass through entity This summary does not address the U S federal income tax considerations applicable to Non U S Holders relating to the acquisition ownership and disposition of common shares Accordingly Non U S Holders should consult their own tax advisors regarding the U S federal U S state and local and non U S tax consequences including the potential application of and operation of any tax treaties relating to the acquisition ownership and disposition of common shares
This summary does not address the U S federal income tax considerations applicable to U S Holders that are subject to special provisions under the Code including U S Holders that a are tax exempt organizations qualified retirement plans individual retirement accounts or other tax deferred accounts b are financial institutions underwriters insurance companies real estate investment trusts or regulated investment companies or that are broker dealers dealers or traders in securities or currencies that elect to apply a mark to market accounting method c have a functional currency other than the U S dollar d own common shares as part of a straddle hedging transaction conversion transaction constructive sale or other integrated transaction e acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services f hold common shares other than as a capital asset generally property held for investment purposes within the meaning of Section 1221 of the Code g are subject to special tax accounting rules with respect to their common shares h own directly indirectly or by attribution 10 or more by voting power or value of the outstanding shares of the Company i are partnerships and other pass through entities and investors in such partnerships and entities j are S corporations and shareholders therein k are subject to the alternative minimum tax k are U S expatriates or former long term residents of the United States or l hold common shares in connection with a trade or business permanent establishment or fixed base outside the United States U S Holders that are subject to special provisions under the Code including U S Holders described immediately above should consult their own tax advisors regarding the U S federal U S federal alternative minimum U S federal net investment income U S federal estate and gift U S state and local and non U S tax consequences relating to the acquisition ownership and disposition of common shares
If an entity or other arrangement that is classified as a partnership or other pass through entity for U S federal income tax purposes holds common shares the U S federal income tax consequences applicable to such partnership or pass through entity and the partners of such partnership or owners of such pass through entity generally will depend on the activities of the partnership or pass through entity and the status of such partners or owners Partners of entities that are classified as partnerships and owners of pass through entities for U S federal income tax purposes should consult their own tax advisors regarding the U S federal income tax consequences relating to the acquisition ownership and disposition of common shares
This summary does not address the U S state and local U S estate and gift U S federal net investment income U S alternative minimum tax or non U S tax consequences to U S Holders relating to the acquisition ownership and disposition of common shares Each U S Holder should consult its own tax advisor regarding the U S state and local U S estate and gift U S federal net investment income U S federal alternative minimum tax and non U S tax consequences relating to the acquisition ownership and disposition of common shares
Subject to the PFIC rules discussed below a U S Holder that receives a distribution including a constructive distribution with respect to a common share will be required to include the amount of such distribution in gross income as a dividend without reduction for any Canadian income tax withheld from such distribution to the extent of the current or accumulated earnings and profits of the Company as computed for U S federal income tax purposes To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company such distribution will be treated first as a tax free return of capital to the extent of a U S Holder s tax basis in the common shares and thereafter as a gain from the sale or exchange of such common shares see Sale or Other Taxable Disposition of Common Shares below However the Company does not intend to maintain the calculations of earnings and profits in accordance with U S federal income tax principles and each U S Holder should therefore assume that any distribution by the Company with respect to the common shares will constitute ordinary dividend income Subject to applicable limitations dividends paid by the Company to non corporate U S Holders including individuals generally will be eligible for the preferential tax rates applicable to long term capital gains for dividends provided certain holding period and other conditions are satisfied including that the Company not be classified as a PFIC as discussed below in the tax year of distribution or in the preceding tax year Dividends received on common shares by corporate U S Holders will not be eligible for the dividends received deduction The dividend rules are complex and each U S Holder should consult its own tax advisor regarding the application of such rules
Subject to the PFIC rules discussed below upon the sale or other taxable disposition of common shares a U S Holder generally will recognize capital gain or loss in an amount equal to the difference between a the amount of cash plus the fair market value of any property received and b its tax basis in such common shares sold or otherwise disposed of Such gain generally will be treated as U S source for purposes of applying the U S foreign tax credit rules unless the gain is subject to tax in Canada and is re sourced as foreign source under the Convention and such U S Holder elects to treat such gain or loss as foreign source see a more detailed discussion at Foreign Tax Credit below Any such gain or loss generally will be capital gain or loss which will be long term capital gain or loss if at the time of the sale or other disposition such common shares are held for more than one year Preferential tax rates apply to long term capital gains of a U S Holder that is an individual estate or trust There are currently no preferential tax rates for long term capital gains of a U S Holder that is a corporation Deductions for capital losses are subject to significant limitations under the Code
The Company generally will be a PFIC if for a given tax year a 75 or more of the gross income of the Company for such tax year is passive income or b 50 or more of the assets held by the Company either produce passive income or are held for the production of passive income based on the fair market value of such assets Gross income generally includes all revenues less the cost of goods sold plus income from investments and from incidental or outside operations or sources and passive income includes for example dividends interest certain rents and royalties certain gains from the sale of stock and securities and certain gains from commodities transactions Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporation s commodities are stock in trade or inventory depreciable property used in a trade or business or supplies regularly used or consumed in a trade or business and certain other requirements are satisfied
For purposes of the PFIC income test and asset test described above if the Company owns directly or indirectly 25 or more of the total value of the outstanding shares of another corporation the Company will be treated as if it a held a proportionate share of the assets of such other corporation and b received directly a proportionate share of the income of such other corporation In addition for purposes of the PFIC income test and asset test described above passive income does not include any interest dividends rents or royalties that are received or accrued by the Company from a related person as defined in Section 954 d 3 of the Code to the extent such items are properly allocable to the income of such related person that is not passive income
Under certain attribution rules if the Company is a PFIC U S Holders will be deemed to own their proportionate share of any subsidiary of the Company which is also a PFIC a Subsidiary PFIC and will be subject to U S federal income tax on a a distribution on the shares of a Subsidiary PFIC and b a disposition of shares of a Subsidiary PFIC both as if the U S Holder directly held the shares of such Subsidiary PFIC
The Company believes that it was a PFIC for the fiscal year ended November 30 2024 and based on current business plans and financial expectations may be a PFIC in the current tax year and future tax years No opinion of legal counsel or ruling from the IRS concerning the status of the Company as a PFIC has been obtained or is currently planned to be requested The determination of whether the Company or a subsidiary of the Company was or will be a PFIC for a tax year depends in part on the application of complex U S federal income tax rules which are subject to differing interpretations In addition whether the Company or subsidiary will be a PFIC for any tax year depends on the assets and income of the Company and each such subsidiary over the course of each such tax year and as a result cannot be predicted with certainty as of the date of this document Accordingly there can be no assurance that the IRS will not challenge any determination made by the Company or subsidiary concerning its PFIC status or that the Company and any subsidiary was not or will not be a PFIC for any tax year U S Holders should consult their own tax advisors regarding the PFIC status of the Company and any subsidiary of the Company
If the Company is a PFIC the U S federal income tax consequences to a U S Holder of the acquisition ownership and disposition of common shares will depend on whether such U S Holder makes a QEF election a QEF Election or makes a mark to market election under Section 1296 of the Code a Mark to Market Election with respect to its common shares A U S Holder that does not make either a QEF Election or a Mark to Market Election will be referred to in this summary as a Non Electing U S Holder
A Non Electing U S Holder will be subject to the rules of Section 1291 of the Code with respect to a any gain recognized on the sale or other taxable disposition of the common shares and b any excess distribution paid on the common shares A distribution generally will be an excess distribution to the extent that such distribution together with all other distributions received in the current tax year exceeds 125 of the average distributions received during the three preceding tax years or during a U S Holder s holding period for the common shares if shorter
If the Company is a PFIC under Section 1291 of the Code any gain recognized on the sale or other taxable disposition of common shares including an indirect disposition of shares of a Subsidiary PFIC and any excess distribution paid on the common shares or a distribution by a Subsidiary PFIC to its shareholder that is deemed to be received by a U S Holder must be ratably allocated to each day of a Non Electing U S Holder s holding period for the common shares The amount of any such gain or excess distribution allocated to the tax year of disposition or excess distribution and to years before the Company became a PFIC if any would be taxed as ordinary income The amounts allocated to any other tax year would be subject to U S federal income tax at the highest tax applicable to ordinary income in each such year and an interest charge would be imposed on the tax liability for each such year calculated as if such tax liability had been due in each such year A Non Electing U S Holder that is not a corporation must treat any such interest paid as personal interest which is not deductible
If the Company is a PFIC for any tax year during which a Non Electing U S Holder holds common shares the Company will continue to be treated as a PFIC with respect to such Non Electing U S Holder regardless of whether the Company ceases to be a PFIC in one or more subsequent years If the Company ceases to be a PFIC a Non Electing U S Holder may terminate this deemed PFIC status with respect to the common shares by electing to recognize gain which will be taxed under the rules of Section 1291 of the Code discussed above as if such common shares were sold on the last day of the last tax year for which the Company was a PFIC
In the event the Company is a PFIC and a U S Holder makes a QEF Election for the first tax year in which its holding period of its common shares begins such U S Holder generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to its common shares However a U S Holder that makes a QEF Election will be subject to U S federal income tax on such U S Holder s pro rata share of a the net capital gain of the Company which will be taxed as long term capital gain to such U S Holder and b the ordinary earnings of the Company which will be taxed as ordinary income to such U S Holder Generally net capital gain is the excess of a net long term capital gain over b net short term capital gain and ordinary earnings are the excess of a earnings and profits over b net capital gain A U S Holder that makes a QEF Election will be subject to U S federal income tax on such amounts for each tax year in which the Company is a PFIC regardless of whether such amounts are actually distributed to such U S Holder by the Company However a U S Holder that makes a QEF Election may subject to certain limitations elect to defer payment of current U S federal income tax on such amounts subject to an interest charge If such U S Holder is not a corporation any such interest paid will be treated as personal interest which is not deductible
A U S Holder that makes a QEF Election generally a may receive a tax free distribution from the Company to the extent that such distribution represents earnings and profits of the Company that were previously included in income by the U S Holder because of such QEF Election and b will adjust such U S Holder s tax basis in the common shares to reflect the amount included in income or allowed as a tax free distribution because of such QEF Election In addition a U S Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of common shares
The procedure for making a QEF Election and the U S federal income tax consequences of making a QEF Election will depend on whether such QEF Election is timely A QEF Election will be treated as timely if it is made for the first year in the U S Holder s holding period for the common shares in which the Company was a PFIC A U S Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U S Holder files a U S federal income tax return for such year
A QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election If a U S Holder makes a QEF Election and in a subsequent tax year the Company ceases to be a PFIC the QEF Election will remain in effect although it will not be applicable during those tax years in which the Company is not a PFIC Accordingly if the Company becomes a PFIC in a subsequent tax year the QEF Election will be effective and the U S Holder will be subject to the QEF rules described above during a subsequent tax year in which the Company qualifies as a PFIC
The Company will make available to U S Holders upon their written request all information and documentation that a U S Holder making a QEF Election with respect to the Company is required to obtain for U S federal income tax purposes Such information may be included on the Company s website However U S Holders should be aware that the Company can provide no assurances that it will provide any such information relating to any Subsidiary PFIC Because the Company may own shares in one or more Subsidiary PFICs and may acquire shares in one or more Subsidiary PFICs in the future U S Holders will continue to be subject to the rules discussed above with respect to the taxation of gains and excess distributions with respect to any Subsidiary PFIC for which the U S Holders do not obtain the required information to file a QEF Election U S Holders should consult their own tax advisor regarding the availability of and procedure for making a QEF Election with respect to the Company and any Subsidiary PFIC
A U S Holder may make a Mark to Market Election only if the common shares are marketable stock The common shares generally will be marketable stock if they are regularly traded on a a national securities exchange that is registered with the SEC b the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934 or c a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located provided that i such foreign exchange has trading volume listing financial disclosure and other requirements and the laws of the country in which such foreign exchange is located together with the rules of such foreign exchange ensure that such requirements are actually enforced and ii the rules of such foreign exchange ensure active trading of listed stocks If such stock is traded on such a qualified exchange or other market such stock generally will be regularly traded for any calendar year during which such stock is traded other than in de minimus quantities on at least 15 days during each calendar quarter Each U S Holder should consult its own tax advisor regarding whether the common shares constitute marketable stock
A U S Holder that makes a Mark to Market Election with respect to its common shares generally will not be subject to the rules of Section 1291 of the Code discussed above However if a U S Holder does not make a Mark to Market Election beginning in the first tax year of such U S Holder s holding period for common shares or such U S Holder has not made a timely QEF Election the rules of Section 1291 of the Code discussed above will apply to certain dispositions of and distributions on the common shares
A U S Holder that makes a Mark to Market Election will include in ordinary income for each tax year in which the Company is a PFIC an amount equal to the excess if any of a the fair market value of the common shares as of the close of such tax year over b such U S Holder s tax basis in such common shares A U S Holder that makes a Mark to Market Election will be allowed a deduction in an amount equal to the excess if any of i such U S Holder s adjusted tax basis in the common shares over ii the fair market value of such common shares but only to the extent of the net amount of previously included income as a result of the Mark to Market Election for prior tax years
U S Holders that make a Mark to Market Election generally also will adjust their tax basis in the common shares to reflect the amount included in gross income or allowed as a deduction because of such Mark to Market Election In addition upon a sale or other taxable disposition of common shares a U S Holder that makes a Mark to Market Election will recognize ordinary income or loss not to exceed the excess if any of a the amount included in ordinary income because of such Mark to Market Election for prior tax years over b the amount allowed as a deduction because of such Mark to Market Election for prior tax years
A Mark to Market Election applies to the tax year in which such Mark to Market Election is made and to each subsequent tax year unless the common shares cease to be marketable stock or the IRS consents to revocation of such election U S Holders should consult their own tax advisors regarding the availability of and procedure for making a Mark to Market Election
Although a U S Holder may be eligible to make a Mark to Market Election with respect to common shares no such election may be made with respect to the stock of any Subsidiary PFIC that a U S Holder is treated as owning because such stock is not marketable Hence the Mark to Market Election will not be effective to eliminate the interest charge described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC
Under Section 1291 f of the Code the IRS has issued proposed Treasury Regulations that subject to certain exceptions would cause a U S Holder that had not made a timely QEF Election to recognize gain but not loss upon certain transfers of common shares that would otherwise be tax deferred e g gifts and exchanges pursuant to corporate reorganizations in the event the Company is a PFIC during such U S Holder s holding period for the relevant shares However the specific U S federal income tax consequences to a U S Holder may vary based on the manner in which common shares are transferred
Certain additional adverse rules will apply with respect to a U S Holder if the Company is a PFIC regardless of whether such U S Holder makes a QEF Election For example under Section 1298 b 6 of the Code a U S Holder that uses common shares as security for a loan will except as may be provided in Treasury Regulations be treated as having made a taxable disposition of such common shares
In any year in which the Company is classified as a PFIC a U S Holder will be required to file an annual report with the IRS containing such information as Treasury Regulations and or other IRS guidance may require U S Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules including the requirement to file an IRS Form 8621
The PFIC rules are complex and U S Holders should consult their own tax advisors regarding the PFIC rules and how they may affect the U S federal income tax consequences of the acquisition ownership and disposition of common shares in the event the Company is a PFIC at any time during such holding period for such common shares
The amount of any distribution paid in foreign currency to a U S Holder in connection with the ownership of common shares or on the sale exchange or other taxable disposition of common shares generally will be equal to the U S dollar value of such foreign currency based on the exchange rate applicable on the date of receipt or if applicable the date of settlement if the common shares are traded on an established securities market regardless of whether such foreign currency is converted into U S dollars at that time If the foreign currency received is not converted into U S dollars on the date of receipt a U S Holder will have a basis in the foreign currency equal to its U S dollar value on the date of receipt A U S Holder that receives foreign currency and converts such foreign currency into U S dollars at a conversion rate other than the rate in effect on the date of receipt may have a foreign currency exchange gain or loss which generally would be treated as U S source ordinary income or loss for foreign tax credit purposes Different rules apply to U S Holders who use the accrual method of tax accounting U S Holders should consult their own U S tax advisors regarding the U S federal income tax consequences of receiving owning and disposing of foreign currency
Dividends paid on the common shares will be treated as foreign source income and generally will be treated as passive category income or general category income for U S foreign tax credit purposes Any gain or loss recognized on a sale or other disposition of common shares generally will be United States source gain or loss Certain U S Holders that are eligible for the benefits of Convention may elect to treat such gain or loss as Canadian source gain or loss for U S foreign tax credit purposes The Code applies various complex limitations on the amount of foreign taxes that may be claimed as a credit by U S taxpayers In addition Treasury Regulations that apply to foreign taxes paid or accrued the Foreign Tax Credit Regulations impose additional requirements for Canadian withholding taxes to be eligible for a foreign tax credit and there can be no assurance that those requirements will be satisfied The Treasury Department has recently released guidance temporarily pausing the application of certain of the Foreign Tax Credit Regulations
Subject to the PFIC rules and the Foreign Tax Credit Regulations each as discussed above a U S Holder that pays whether directly or through withholding Canadian income tax with respect to dividends paid on the common shares generally will be entitled at the election of such U S Holder to receive either a deduction or a credit for such Canadian income tax Generally a credit will reduce a U S Holder s U S federal income tax liability on a dollar for dollar basis whereas a deduction will reduce a U S Holder s income that is subject to U S federal income tax This election is made on a year by year basis and applies to all foreign taxes paid whether directly or through withholding by a U S Holder during a year The foreign tax credit rules are complex and involve the application of rules that depend on a U S Holder s particular circumstances Accordingly each U S Holder should consult its own U S tax advisor regarding the foreign tax credit rules
Under U S federal income tax law and Treasury Regulations certain categories of U S Holders must file information returns with respect to their investment in or involvement in a foreign corporation For example U S return disclosure obligations and related penalties are imposed on individuals who are U S Holders that hold certain specified foreign financial assets in excess of certain threshold amounts The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions but also unless held in accounts maintained by a financial institution any stock or security issued by a non U S person any financial instrument or contract held for investment that has an issuer or counterparty other than a U S person and any interest in a non U S entity U S Holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions Penalties for failure to file certain of these information returns are substantial U S Holders should consult their own tax advisors regarding the requirements of filing information returns including the requirement to file an IRS Form 8938
Payments made within the U S or by a U S payor or U S middleman of dividends on and proceeds arising from the sale or other taxable disposition of common shares will generally be subject to information reporting and backup withholding tax if a U S Holder a fails to furnish such U S Holder s correct U S taxpayer identification number generally on IRS Form W 9 b furnishes an incorrect U S taxpayer identification number c is notified by the IRS that such U S Holder has previously failed to properly report items subject to backup withholding tax or d fails to certify under penalty of perjury that such U S Holder has furnished its correct U S taxpayer identification number and that the IRS has not notified such U S Holder that it is subject to backup withholding tax However certain exempt persons generally are excluded from these information reporting and backup withholding rules Backup withholding is not an additional tax Any amounts withheld under the U S backup withholding tax rules will be allowed as a credit against a U S Holder s U S federal income tax liability if any or will be refunded if such U S Holder furnishes required information to the IRS in a timely manner
The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U S Holder A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax and under certain circumstances such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement Each U S Holder should consult its own tax advisors regarding the information reporting and backup withholding rules
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U S HOLDERS WITH RESPECT TO THE ACQUISITION OWNERSHIP AND DISPOSITION OF COMMON SHARES U S HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES
The following Management s Discussion and Analysis MD A provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of NOVAGOLD RESOURCES INC incorporated in British Columbia Canada and its subsidiaries collectively NOVAGOLD the Company our and we This item should be read in conjunction with our Consolidated Financial Statements and the notes thereto included in this annual report
The following MD A generally discusses our consolidated financial condition and results of operations for 2024 and year over year comparisons between 2024 and 2023 Discussions of our consolidated financial condition and results of operations for 2023 and year over year comparisons between 2023 and 2022 are included in Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations in the Company s Annual Report on Form 10 K for the fiscal year ended November 30 2023 filed with the Securities and Exchange Commission on January 24 2024 are incorporated by reference into this MD A
We operate in the gold mining industry primarily focused on advancing the Donlin Gold project in Alaska The Donlin Gold project is held by Donlin Gold LLC Donlin Gold a limited liability company owned equally by wholly owned subsidiaries of NOVAGOLD and Barrick We record our interest in the Donlin Gold project as an equity investment which results in our 50 share of Donlin Gold s expenses being recorded in the income statement as an operating loss The investment amount recorded on the balance sheet primarily represents unused funds advanced to Donlin Gold
Our corporate goals include continuing to advance the Donlin Gold project toward a construction decision maintaining support for Donlin Gold among the project s stakeholders promoting a strong safety sustainability and environmental culture maintaining a favorable reputation of NOVAGOLD and preserving a healthy balance sheet Our operations primarily relate to the delivery of project milestones including the achievement of various technical environmental sustainable development economic and legal objectives obtaining necessary permits completion of feasibility studies preparation of engineering designs and the financing to fund these objectives
Donlin Gold advanced key activities in 2024 to position the project to update technical work and cost estimates Principal activities included the substantial completion of metallurgical test work at a pilot plant in Ontario Canada to confirm proposed optimizations to the flowsheet field and geochemical data collection to continue updating source characteristics for groundwater and surface water models for both operational and closure planning as well as advancement of the Donlin Gold resource model Results derived from the considerable technical work performed over these past twelve months will serve as inputs into updated feasibility work
The Donlin Gold board must approve an updated feasibility study construction program and budget before the Donlin Gold project can be developed The timing of the required engineering work and the Donlin Gold board s approval of an updated feasibility study construction program and budget the receipt of all required governmental permits and approvals and the availability of financing commodity price fluctuations risks related to market events and general economic conditions among other factors will affect the timing of and whether to develop the Donlin Gold project Among other reasons project delays could occur due to public opposition litigation challenging permit decisions requests for additional information or analysis limitations in agency staff resources during regulatory review and permitting or project changes made by Donlin Gold
In collaboration with Calista and TKC Donlin Gold actively engages stakeholders and governments in the Y K region Alaska and Washington D C The project s location on private lands selected under the 1971 Alaska Native Claims Settlement Act is a significant feature setting it apart from most other mining assets in Alaska and guiding our outreach efforts Donlin Gold s enduring partnerships with Calista and TKC are pivotal in facilitating comprehensive outreach throughout the Y K region
Our outreach in Alaska particularly in the Y K region and in Washington D C has strengthened community engagement and reinforces the project s social license The Company appreciates the diligent contributions of the Donlin Gold team partners and stakeholders and remains dedicated to developing the project to its full potential In collaboration with Calista and TKC the mineral and surface rights holders Donlin Gold LLC has made significant strides in local community and government engagement across the Y K region Alaska and Washington D C including advancing the project s development and permitting efforts Over decades our commitment to engaging with the 62 stakeholder communities in the Y K region has built meaningful relationships enhanced investment and reinforced our social license This longstanding dedication underscores the approach of the Donlin Gold project and its partners Calista and TKC to foster robust relationships with both local communities and governmental entities built on trust transparency respect and partnership
To that end Donlin Gold led numerous projects and activities in 2024 Calista TKC and Donlin Gold hosted public Open Houses in Anchorage Bethel and Crooked Creek providing Alaskans and local residents with the opportunity to learn more about the project and to engage in open and transparent discussions Donlin Gold hosted a project site tour for a group of residents from Crooked Creek and Georgetown which are the project s closest neighboring villages
NOVAGOLD remains committed to stakeholder engagement and community development working closely with Tribal communities and Alaska Native Corporations to identify needs and collaboratively develop solutions that enhance and uplift communities fostering sustainable growth and shared prosperity for future generations To that end NOVAGOLD representatives were on the ground in Alaska providing extensive support to the Donlin Gold team in their outreach efforts Donlin Gold established three additional Shared Values Statements for a total of 18 which formalize Donlin Gold s ongoing engagement with local communities reinforce existing long term relationships and address specific community needs In 2024 over 12 000 direct engagements were conducted with key stakeholders
Donlin Gold Calista and TKC held two Subsistence Community Advisory Committee SCAC meetings in 2024 the first in Aniak and second in Anchorage This committee which is composed of people from the Y K region reflects the ongoing commitment to establishing a structured process for communication dialogue problem solving and gathering input from the broader community on subsistence matters throughout the life of the project The SCAC committee provides a forum for sharing information questions and ideas from the communities in the Y K region with Donlin Gold Calista and TKC as well as bringing information about the project back to their respective communities
Recognizing the importance of ecological stewardship in the Y K region since mid 2023 Donlin Gold has intensified efforts with our Alaska Native Corporation partners to monitor survey and engage in the dialogue on salmon fisheries in the Kuskokwim and Yukon River watersheds In 2024 Donlin Gold launched a salmon smolt monitoring program on the George River a tributary of the Kuskokwim River in partnership with the Native Village of Napaimute to assess smolt health and migration patterns an initiative that will continue into 2025 Restoration of a portion of the historic Lyman placer site which included significant stream and pond habitat creation including aquatic life access and use was completed in 2024 Aquatic restoration work on a reach of Snow Gulch previously disturbed by historic mining will start in 2025
In addition Donlin Gold s In It for The Long Haul Backhaul Program a long standing initiative to collect and safely dispose of hazardous household electronic waste including appliances from Y K villages recycled approximately 140 000 pounds of material in 2024 for an impressive total of approximately 803 000 pounds of hazardous materials removed from the Y K region since the program began in 2018
Donlin Gold s partnership with the Crooked Creek Traditional Council has supported the Summer Youth Employment program providing local youth with hands on experience in various work environments while also assisting Elders The Donlin Gold project continued sponsoring the RurAL CAP Elder Mentor Program which connects youth with Elders to foster intergenerational knowledge and support academic engagement and school readiness across the State Donlin Gold also shipped dictionaries to all school districts in the Y K region for third graders as part of The Dictionary Project a national effort to promote literacy and creative thinkers a project they have participated in annually since 2012
Donlin Gold has also reaffirmed its commitment to the Alaska School Activities Association supporting high school level athletic academic and fine arts programs statewide Donlin Gold s ongoing financial contributions highlight our steadfast dedication to enhancing educational and extracurricular opportunities for students throughout Alaska
The Alaska Pollutant Discharge Elimination System permit which was originally set to expire in 2023 as well as the Waste Management Permit which was set to expire in January 2024 are administratively extended by the Alaska Department of Environmental Conservation until renewed The Reclamation Plan which was also set to expire in 2024 is administratively extended until 2027
In September 2022 thirteen tribes sent letters to the Corps and the EPA The letter to the Corps requests that it consider requiring an EIS on the Donlin Gold project and revoke the Clean Water Act Section 404 permit the 404 permit in light of what the tribes consider new information since the final EIS was issued in 2018 Additionally the EPA letter requested that it initiate a Clean Water Act Section 404 c veto process for the Donlin Gold project In early January 2023 Donlin Gold and Calista both submitted responses to the Corps on why the requests to prepare a supplemental EIS or revoke the 404 permit should not be granted In January 2023 Donlin Gold also provided a response to the EPA describing why the agency should not initiate a 404 c process To date neither the Corps nor EPA has responded to the tribes letters
On June 28 2021 Earthjustice representing Orutsararmiut Native Council ONC filed an appeal of the ADEC Commissioner s decision upholding the ADEC s Clean Water Act Section 401 water quality certification in Alaska Superior Court In December 2021 at the request of the State of Alaska and Donlin Gold the Alaska Superior Court suspended the case and remanded it to ADEC to allow for consideration of additional technical materials on mercury and temperature After an administrative process the Commissioner reaffirmed ADEC s issuance of the 401 Certification on August 18 2023 The suspension of the previously filed Alaska Superior Court case was then lifted and Earthjustice filed its opening brief with the Alaska Superior Court in January 2024 Briefing is complete and oral arguments were held on August 30 2024 A decision is anticipated from the Alaska Superior Court in 2025
On September 20 2021 Earthjustice representing ONC Cook Inletkeeper and three Y K villages filed an appeal of the State pipeline ROW authorization in Alaska Superior Court On April 12 2023 the Alaska Superior Court affirmed ADNR s issuance of the ROW lease in the Earthjustice case Earthjustice appealed the Superior Court s decision to the Alaska Supreme Court On May 25 2022 Earthjustice representing ONC and five Y K villages filed an appeal of ADNR s issuance of certain water rights permits to Donlin Gold in Alaska Superior Court After briefing and oral argument on September 1 2023 the Alaska Superior Court affirmed ADNR s decision on Donlin Gold s water rights permits On October 2 2023 Earthjustice appealed the Superior Court s decision to the Alaska Supreme Court Earthjustice s opening brief was submitted to the Alaska Supreme Court on January 4 2024 Response briefs from the State of Alaska and Donlin Gold were completed in April 2024 and Earthjustice subsequently filed their reply brief in May 2024 Briefing on Earthjustice s appeal of the Alaska Superior Court affirmation of ADNR s issuance of the State pipeline ROW lease to the Alaska Supreme Court was completed in February 2024 Oral arguments for both the water rights permits and the State pipeline ROW were held November 12 2024 and a decision is anticipated in 2025
On April 5 2023 Earthjustice representing ONC and six Y K villages filed suit against the U S government in Anchorage Federal District Court the Federal District Court asking the Federal District Court to invalidate the Donlin Gold Joint Record of Decision which included the U S Army Corps of Engineers issuance of the 404 permit and the Department of Interior Bureau of Land Management s issuance of the ROW lease for the portions of the pipeline on Federal lands The U S Department of Justice DOJ is defending the issuance of the permits by those Federal agencies The State of Alaska Donlin Gold and Calista were granted intervenor status in this case The DOJ filed their brief supporting the issuance of the JROD and the sufficiency of the environmental analysis in the Final Environmental Impact Statement on April 2 2024 Amicus briefs supporting the project were filed by the village of Crooked Creek and the Alaska federal Congressional delegation Oral arguments were held on June 24 2024 and the Federal District Court issued a decision on September 30 2024 The decision rejected the plaintiffs arguments on two of the three issues raised in the litigation but agreed with plaintiffs that the federal agencies took too narrow of a view in analyzing the impact of a theoretical release from the TSF The Federal District Court requested supplemental briefing on the appropriate remedy for addressing this issue On October 7 2024 the plaintiffs filed a request for reconsideration on one of the issues on which the Federal District Court had ruled against the plaintiffs and at DOJ s request the Federal District Court suspended the schedule for briefing on the appropriate remedy until after the Federal District Court ruled on plaintiffs motion for reconsideration On December 23 2024 the Federal District Court denied plaintiffs request for reconsideration The Court reestablished the remedy briefing schedule with initial briefs from all parties now due on January 31 2025 and response briefs from all parties due on February 14 2025
To date all permits and approvals granted to Donlin Gold by federal and state agencies remain issued and in place while the legal challenges described above proceed We recognize the importance of preparedness and organization in these matters With the unwavering support of Donlin Gold and its owners we will continue to back the state and federal agencies in defending their thorough and diligent permitting processes and are committed to working with the federal agencies and all stakeholders on an appropriate remedy to address the Federal District Court s decision
Net loss decreased by 1 182 from 2023 primarily due to lower field expenses at Donlin Gold partially offset by higher corporate general and administrative expenses increased interest expense on the promissory note lower interest income on cash and term deposits and other income related to a gain in the fair market value of marketable securities and proceeds received for the 2021 sale of the Company s interest in the San Roque mineral property Donlin Gold expenses were lower with reduced site activity in 2024 compared to fieldwork and geotechnical drilling for the Alaska Dam Safety certificates and hydrological drilling to support mine planning and design in 2023 General and administrative costs increased primarily due to higher professional fees and employee compensation partially offset by lower stock based compensation expense related to forfeiture of options and performance share units due to the departure of certain former employees
Professional fees increased due to consulting fees primarily related to ongoing efforts to enhance the value of the Donlin Gold project by evaluating alternatives to further advance the project Salaries and benefits increased primarily due to hiring of additional staff Income tax expense relates to passive income taxable in Canada on a portion of interest income earned by U S subsidiaries and for withholding taxes on the sale proceeds received during the first quarter of 2024 related to the 2021 sale of the Company s interest in the San Roque mineral property in Argentina
With total cash and term deposits of 101 224 the Company has sufficient working capital available to cover anticipated funding of the Donlin Gold project and corporate general and administrative costs for at least the next two years at current spending levels Additional capital may be required to complete an updated Donlin Gold feasibility study Considerable additional capital will be required if a decision to commence engineering and construction is reached by Donlin Gold Future financing to fund construction is anticipated through debt and equity offerings project specific debt and or other means Our continued operations are dependent on our ability to obtain additional funding or to generate future cash flows However there is no assurance that we will be successful in our efforts to raise additional capital on terms favorable to us or at all For further information see section Item 1A Risk Factors Our ability to continue the exploration permitting development and construction of the Donlin Gold project and to continue as a going concern will depend in part on our ability to obtain suitable financing
Promissory note payable to Barrick of 151 522 including accrued interest at U S prime plus 2 compounded semi annually The promissory note and accrued interest are payable from 85 of the Company s share of revenue from future Donlin Gold project production or from any net proceeds resulting from a reduction of the Company s interest in Donlin Gold At the current interest rate of 9 5 interest on the note in fiscal year 2025 will total approximately 14 942
Spending on operating activities in 2024 increased by 4 856 compared to the prior year primarily due to increased corporate general and administrative expenses lower interest income on cash and term deposits and higher income tax withholding related to passive income taxable in Canada on a portion of interest income earned by U S subsidiaries Cash provided from investing activities in 2024 increased by 19 683 compared to the prior year primarily due to a net reduction of term deposits held in 2024 and lower Donlin Gold funding requirements Financing activities reflect 174 of withholding tax on PSUs as defined below that vested at 100 during the year and settled with the issuance of net common shares The PSU awards that matured and vested in December 2024 at 25 of the grant amount were also settled with the issuance of net common shares
As of January 13 2025 the Company had 334 646 571 common shares issued and outstanding Also as of January 13 2025 the Company had i a total of 8 838 001 stock options outstanding 7 816 967 of those stock options with a weighted average exercise price of 6 21 and the remaining 1 021 034 with a weighted average exercise price of C 7 62 and ii 1 225 100 performance shares units PSUs and 284 378 deferred share units DSUs outstanding Upon exercise of the foregoing convertible securities the Company would be required to issue a maximum of 10 960 029 common shares
During the fourth quarter of 2024 we incurred a net loss of 10 860 compared to a net loss of 10 421 in the fourth quarter of 2023 The increase in net loss primarily resulted from higher corporate general and administrative expenses increased interest on the promissory note lower interest income partially offset by reduced activity at Donlin Gold
A portion of the proceeds on the sale of the Company s 50 interest in the Galore Creek project to Newmont included a contingent note for 75 000 receivable upon the approval of a Galore Creek project construction plan by the owner s The Company has assigned no value to the contingent note receivable as management determined that approval of Galore Creek project construction was not probable as of the closing of the Galore Creek sale and management s assessment did not change as of November 30 2024 The contingent note will be recognized only when in management s judgement payment is probable and the amount recorded will not reverse in future periods
Investments in unconsolidated ventures over which the Company can exercise significant influence but does not control are accounted for under the equity method and include the Company s investment in the Donlin Gold project Donlin Gold LLC is a non publicly traded equity investee holding the Donlin Gold project We identified Donlin Gold as a Variable Interest Entity VIE as the entity is dependent on funding from its owners All funding ownership voting rights and power to exercise control is shared equally on a 50 50 basis between the owners of the VIE Therefore the Company has determined that it is not the primary beneficiary of the VIE
The Company s maximum exposure to loss is its investment in Donlin Gold of 2 597 as of November 30 2024 The Company reviews and evaluates its investment in the Donlin Gold project for other than temporary impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable Events that could indicate impairment of an investment in an affiliate include a significant decrease in long term expected gold price a significant increase in expected operating or capital costs unfavorable exploration results or technical studies a significant decrease in reserves a loss of significant mineral claims or a change in the development plan or strategy for the project Management reviewed potential impairment indicators and determined that there were none as of November 30 2024
We grant share based compensation awards in exchange for employee services including a stock option plan and a PSU plan The fair value of awards granted under the plans are recognized in the Consolidated Statements of Loss over the related service period The fair values of stock options are estimated at the time of each grant using a Black Scholes option pricing model and the fair values of PSUs are measured at each grant date using a Monte Carlo valuation model The fair value estimates may be impacted by certain variables including but not limited to stock price volatility employee stock option exercise behaviors additional stock option and PSU grants estimates of forfeitures the Company s performance and the Company s performance in relation to its peers
We grant members of the Board DSUs whereby each DSU entitles the directors to receive one common share of the Company or the market value thereof in cash at the Company s option when they retire from service with the Company The fair value of the DSUs is measured at the date of the grant in amounts ranging from 50 to 100 of directors annual retainers at the election of the directors The fair value is recognized in the Consolidated Statements of Loss over the related service period
During 2024 we had 149 000 PSU awards that vested at 100 and 47 000 DSU awards that vested and were settled with the issuance of common shares As of November 30 2024 we had 2 348 of unrecognized compensation cost related to 4 361 486 non vested stock options expected to be expensed and vest over a period of approximately two years Also as of November 30 2024 we had 1 633 500 non vested PSU awards outstanding of which 408 400 were fully expensed and vested in December 2024 at 25 of the grant amount which were subsequently settled with the issuance of common shares The remaining 1 225 100 non vested PSU awards with 3 715 of unrecognized compensation cost will be expensed over a period of approximately two years
The interest rate on the promissory note owed to Barrick is variable with the U S prime rate Based on the amount owing on the promissory note as of November 30 2024 and assuming all other variables remain constant a 1 change in the U S prime rate would result in an increase decrease of approximately 1 5 million in the interest accrued on the promissory note per annum The promissory note and accrued interest are payable from 85 of the Company s share of revenue from future mine production or from any net proceeds resulting from a reduction of the Company s interest in Donlin Gold
We have audited the accompanying consolidated balance sheets of NOVAGOLD RESOURCES INC and its subsidiaries the Company as of November 30 2024 and 2023 and the related consolidated statements of loss and comprehensive loss equity deficit and cash flows for each of the three years in the period ended November 30 2024 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of November 30 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of November 30 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended November 30 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of November 30 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the COSO
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Report of Management on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that i relates to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matter below providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates
As described in Notes 2 and 4 to the consolidated financial statements on July 27 2018 the Company sold its interest in the Galore Creek project the sale As part of the consideration for the sale the Company received a 75 million note the contingent note receivable which is contingent upon the approval of a Galore Creek project construction plan by the owner s The Company has not assigned a value to the contingent note receivable as management determined that Galore Creek project construction approval was not probable as the closing of the Galore Creek sale or in subsequent periods Management s assessment did not change as of November 30 2024 The contingent note will be recognized when in management s judgment it is probable that the payment will occur and that the amount recorded will not reverse in future periods
The principal considerations for our determination that performing procedures relating to the recognition of the contingent note receivable is a critical audit matter are the judgment by management when determining if recognition was required which in turn led to a high degree of auditor judgment and subjectivity in performing procedures and evaluating management s assessment of the probability of whether a Galore Creek project construction plan will be approved
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to management s assessment of the basis for recognizing the contingent note receivable These procedures also included among others evaluating the reasonableness of management s assessment regarding the probability of the owner s of the project approving the Galore Creek project construction plan This included considering both publicly available information and the latest annual progress report provided by the owners of the project to the Company under the terms of the sale agreement
NOVAGOLD RESOURCES INC and its affiliates and subsidiaries collectively NOVAGOLD or the Company operate in the mining industry focused on the exploration for and development of gold mineral properties The Company has not realized revenues from its principal asset The Company s principal asset is a 50 interest in the Donlin Gold project in Alaska USA The Donlin Gold project is owned and operated by Donlin Gold LLC Donlin Gold a limited liability company that is owned equally by wholly owned subsidiaries of NOVAGOLD and Barrick Gold Corporation Barrick
The Consolidated Financial Statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States US GAAP The preparation of the Company s Consolidated Financial Statements in accordance with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of expenses during the reporting period The Company bases its estimates and assumptions on historical experience and on various other assumptions that are believed to be reasonable under the circumstances Actual results could differ from the amounts recorded in these Consolidated Financial Statements
The functional currency for NOVAGOLD RESOURCES INC is the Canadian dollar and the functional currency for the Company s U S operations is the U S dollar Therefore gains and losses on U S dollar denominated transactions and the effect of translating U S dollar denominated balances of Canadian operations are recorded in net loss The effects of translating the Company s Canadian operations from the Canadian dollar to the U S dollar are recorded in Other comprehensive income loss
A portion of the proceeds related to the sale of Galore Creek to Newmont includes a 75 000 note receivable contingent upon the approval of a Galore Creek project construction plan by the owner s The Company has not assigned a value to the contingent note receivable as management determined that the approval of the Galore Creek project construction was not probable as of the closing of the Galore Creek sale or in subsequent periods The contingent note will be recognized when in management s judgement it is probable that the payment will occur and that the amount recorded will not reverse in future periods
Investments in unconsolidated ventures over which the Company has the ability to exercise significant influence but does not control are accounted for under the equity method and include the Company s investment in the Donlin Gold project The Company identified Donlin Gold as a Variable Interest Entity VIE as the entity is dependent on funding from its owners All funding ownership voting rights and power to exercise control is shared equally on a 50 50 basis between the owners of the VIE Therefore the Company has determined that it is not the primary beneficiary of the VIE The Company s maximum exposure to loss is its equity investment in Donlin Gold
The equity method is a basis of accounting for investments whereby the investment is initially recorded at cost and the carrying value is adjusted thereafter to include the investor s pro rata share of post acquisition earnings or losses of the investee as computed by the consolidation method Cash funding increases the carrying value of the investment Profit distributions received or receivable from an investee reduce the carrying value of the investment
Donlin Gold is a non publicly traded equity investee owning an exploration and development project Therefore the Company assesses whether there has been a potential triggering event for other than temporary impairment by assessing the underlying assets of the equity investee for recoverability and assessing whether there has been a change in the development plan or strategy for the project If the underlying assets are not recoverable the Company will record an impairment charge equal to the difference between the carrying amount of the investee and its fair value
The Company accounts for income taxes using the liability method recognizing certain temporary differences between the financial reporting basis of the Company s liabilities and assets and the related income tax basis for such liabilities and assets This method generates deferred income tax liabilities and assets for the Company as measured by the statutory tax rates in effect The Company derives its deferred income tax charge or benefit by recording the change in deferred income tax liabilities and asset balances for the year
The Company s deferred income tax assets include certain future tax benefits The Company records a valuation allowance against any portion of those deferred income tax assets when it believes based on the weight of available evidence it is more likely than not that some portion or all of the deferred income tax assets will not be realized
The Company records share based compensation awards exchanged for employee services at fair value on the date of the grant and expenses the awards in the Consolidated Statements of Loss over the requisite employee service period The fair values of stock options are determined using a Black Scholes option pricing model The fair values of PSUs are determined using a Monte Carlo valuation model The fair values of PSU retention incentive awards are based on their grant date market prices The Company s estimates may be impacted by certain variables including but not limited to stock price volatility employee stock option exercise behaviors additional stock option grants estimates of forfeitures the Company s performance and the Company s performance in relation to its peers
Basic and diluted income loss per share are presented for Net income loss Basic income loss per share is computed by dividing Net income loss by the weighted average number of outstanding common shares for the period Diluted income per share reflects the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted Diluted income per share is computed by increasing the weighted average number of outstanding common shares to include the additional common shares that would be outstanding after conversion and adjusting net income for changes that would result from the conversion Only those securities or other contracts that result in a reduction in earnings per share are included in the calculation
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures ASU 2023 07 expands public entities segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and interim disclosures of a reportable segment s profit or loss and assets The standard is effective for the Company s Annual Report on Form 10 K for the fiscal year ended November 30 2025 and subsequent interim periods with early adoption permitted The Company does not expect the adoption to have a material impact on the consolidated financial statements or disclosures
In December 2023 the Financial Accounting Standards Board FASB issued Accounting Standards Update ASU 2023 09 Income Taxes Topic 470 Improvements to Income Tax Disclosures ASU 2023 09 enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information The standard is effective beginning with the Company s Annual Report on Form 10 K for the fiscal year ended November 30 2025 and subsequent interim periods with early adoption permitted The Company is currently evaluating the impact of the guidance on the consolidated financial statements
In March 2024 the SEC issued a final rule that requires registrants to disclose climate related information in their annual reports and in registration statements In April 2024 the SEC chose to stay the newly adopted rulemaking pending judicial review of related consolidated Eighth Circuit petitions If the stay is lifted certain disclosures may be required in annual reports for the year ending November 30 2026 filed in 2027 The Company is currently monitoring the outcome of political and legal developments surrounding the new rules and in the meantime is evaluating the impact of the rules on its consolidated financial statements
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker The chief operating decision maker who is responsible for allocating resources and assessing the performance of the operating segments has been identified as the Chief Executive Officer The Chief Executive Officer considers the business from a geographic perspective considering the performance of our investment in the Donlin Gold project in Alaska USA Note 5
On July 27 2018 the Company sold its interest in the Galore Creek project to a subsidiary of Newmont Corporation Newmont for cash proceeds of 100 000 a 75 000 note due upon the earlier of the completion of a Galore Creek pre feasibility study or July 27 2021 a 25 000 note due upon the earlier of the completion of a Galore Creek feasibility study or July 27 2023 and a contingent note for 75 000 due upon approval of a Galore Creek project construction plan by the owner s The Company received from Newmont 75 000 on July 27 2021 and 25 000 on July 27 2023
On November 3 2021 the Company sold its 49 interest in the Minas San Roque project in Argentina to Marifil S A a subsidiary of International Iconic Gold Mines Ltd Iconic for cash proceeds of C 250 upon closing a C 750 note receivable due on November 1 2022 and a C 1 000 note receivable due on November 1 2023 On closing the Company determined the fair value of the notes was nil Iconic completed the C 750 note payment due on November 1 2022 in December 2022 and the C 1 000 note payment due on November 1 2023 in January 2024
The Donlin Gold project is owned and operated by Donlin Gold a limited liability company in which wholly owned subsidiaries of NOVAGOLD and Barrick each own a 50 interest Donlin Gold has a board of four representatives with two representatives selected by Barrick and two representatives selected by the Company All significant decisions related to Donlin Gold require the approval of at least a majority of the Donlin Gold board
The following amounts represent the Company s 50 share of the assets and liabilities of Donlin Gold Donlin Gold capitalized the initial contribution of the Donlin Gold property as Non current assets Mineral property with a carrying value of 64 000 resulting in a higher carrying value of the mineral property for Donlin Gold than that of the Company
The Company has a promissory note payable to Barrick of 151 522 comprising 51 576 in principal and 99 946 in accrued interest at U S prime plus 2 compounded semi annually The average effective interest rate was 10 5 10 3 and 6 8 in 2024 2023 and 2022 respectively The promissory note resulted from the agreement that led to the formation of Donlin Gold where the Company agreed to reimburse Barrick for a portion of their expenditures incurred from April 1 2006 to November 30 2007 The promissory note and accrued interest are payable from 85 of the Company s share of revenue from future mine production or from any net proceeds resulting from a reduction of the Company s interest in Donlin Gold The carrying value of the promissory note approximates fair value
The Company leases office space under non cancelable operating leases with original lease terms of five years These leases require monthly lease payments that may be subject to annual increases throughout the lease term Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional five years These optional periods have not been considered in the determination of Right of Use ROU assets or lease liabilities associated with these leases as management did not consider it reasonably certain it would exercise the options Certain of our leases include payments that vary based on the Company s level of usage and operations These variable payments are not included within ROU assets and lease liabilities in the Consolidated Balance Sheets Additionally short term leases which have an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets
Pursuant to the Company s Notice of Articles filed under the Business Corporations Act British Columbia the Company is authorized to issue 10 000 000 preferred shares without par value The authorized but unissued preferred shares may be issued in designated series from time to time by one or more resolutions adopted by the directors The directors have the authority to determine the preferences limitations and relative rights of each series of preferred shares As of November 30 2024 and 2023 no preferred shares were issued or outstanding
The Company s financial instruments consist of cash and cash equivalents term deposits accounts receivable receivable from Donlin Gold accounts payable and accrued liabilities and promissory note The fair value of the promissory note approximates its carrying value based on accrued interest at U S prime plus 2 and the terms for repayment from future mine production or from any net proceeds resulting from a reduction of the Company s interest in Donlin Gold The fair values of the Company s other financial instruments approximate their carrying value due to the short term nature of their maturity The Company s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents term deposits accounts receivable receivable from Donlin Gold accounts payable and accrued liabilities and promissory note The Company s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy The fair value of the marketable equity securities was 3 387 as of November 30 2024 2 102 as of November 30 2023 calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company
Share incentive awards include a stock option plan for directors executives employees and eligible consultants a PSU plan for executives employees and eligible consultants and a DSU plan for non executive directors of the Company As of November 30 2024 29 350 311 common shares were available for future share incentive plan awards under all three plans
Stock options granted under the Company s share based incentive plans generally expire five years after the date of grant and vest in one third annual increments beginning on the first anniversary of the date of grant The value of each option award is estimated at the date of grant using the Black Scholes option pricing model The Black Scholes option pricing model requires the input of subjective assumptions including the expected term of the option award and share price volatility The expected term of options granted is derived from historical data on employee exercise and post vesting employment termination experience The expected volatility is based on the historical volatility of the Company s shares at the date of grant over the same length of term These estimates involve inherent uncertainties and the application of management s judgment
The Company has a PSU plan that provides for the issuance of PSUs in amounts as approved by the Company s Compensation Committee Each PSU award entitles the participant to receive one common share of the Company at the end of a specified period The Compensation Committee may adjust the number of common shares for the achievement of certain performance and vesting criteria established at the time of grant The actual performance against each of these criteria generates a multiplier that varies from 0 to 150 Thus the common shares that may be issued varies between 0 and 150 of the number of PSUs granted as reduced by the amounts for participants no longer with the Company on the vesting date
The value of each PSU granted is estimated at the grant date using a Monte Carlo simulation model The Monte Carlo simulation model requires the input of subjective assumptions including the share price volatility of the Company s stock as well as a comparator index and the correlation of returns between the comparator index and the Company s shares Expected volatility is based on the historical volatility of the Company s shares and the comparator index at the grant date As new PSUs and stock options are generally granted on the same date many of the key valuation input assumptions are the same for both share incentive award types
As of November 30 2024 the Company had 1 633 500 non vested PSU awards outstanding of which 408 400 were fully expensed and vested in December 2024 at 25 of the grant amount and subsequently settled with the issuance of common shares The remaining 1 225 100 non vested PSU awards with 3 715 of unrecognized compensation cost will be expensed over a period of approximately two years On December 15 2022 181 700 PSUs were granted to the Company s executive officers as a retention incentive and vested on June 30 2024
The Company has a DSU plan that provides for the issuance of DSUs in amounts where the directors receive half of their annual retainer in DSUs and have the option to elect to receive all or a portion of the other half of their annual retainer in DSUs Each DSU entitles the directors to receive one common share or the market value thereof in cash at the Company s option when they retire from the Company The Company granted 76 781 43 658 and 38 470 DSUs to directors with a weighted average grant day fair value of 4 62 5 04 and 5 74 per DSU during 2024 2023 and 2022 respectively The Company issued 46 405 48 446 and 52 930 common shares under the DSU plan to directors that retired from the Company in 2024 2023 and 2022 respectively As of November 30 2024 there were 314 715 DSUs outstanding
U S net operating losses arising in tax years ending after December 31 2017 can be carried over to each taxable year following the tax year of loss indefinitely The Company has capital loss carry forwards of approximately 344 655 as of November 30 2024 November 30 2023 355 516 for Canadian tax purposes These tax losses are carried forward indefinitely
Future use of U S loss carry forwards is subject to certain limitations under provisions of the Internal Revenue Code including limitations subject to Section 382 which relates to a 50 change in control over a three year period and are further dependent upon the Company attaining profitable operations Ownership changes occurred on January 22 2009 and on December 31 2012 and the U S tax losses related to NOVAGOLD Resources Alaska Inc and its investment in Donlin Gold for the three year periods prior to the change in control may be subject to limitation under Section 382 Accordingly the Company s ability to use these losses may be limited or they may expire un utilized Losses incurred to date may be further limited if a subsequent change in control occurs
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax asset Significant pieces of objective negative evidence evaluated include the cumulative loss incurred as of November 30 2024 Such objective evidence limits the ability to consider other subjective evidence such as management s projections for future growth On the basis of this evaluation as of November 30 2024 a valuation allowance of 299 829 November 30 2023 293 536 has been recorded in order to measure only the portion of the deferred tax asset that more likely than not will be realized However the amount of deferred tax asset considered realizable may change if estimates of future taxable income during the carryforward period are positive or if objective negative evidence in the form of cumulative losses is no longer present in which case additional weight may be given to subjective evidence such as management s projections for growth
There were no uncertain tax positions as of November 30 2024 2023 and 2022 The Company recognizes interest and penalties related to uncertain tax positions if any as income tax expense Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheet As of November 30 2024 2023 and 2022 there were no accrued interest and penalties related to uncertain tax positions The Company is subject to income taxes in Canada and the United States With few exceptions the tax years that remain subject to examination as of November 30 2024 are 2018 to 2024 in Canada and 2019 to 2024 in the United States
An evaluation was performed under the supervision and with the participation of our management including our principal executive officer and principal financial officer of the effectiveness of our disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Exchange Act as of the end of the period covered by this Annual Report on Form 10 K Based on the foregoing our management concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded processed summarized and reported within the time periods specified in the SEC rules and forms and such information is accumulated and communicated to our management including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements providing reasonable assurance that receipts and expenditures of our assets are made in accordance with management s authorization and providing reasonable assurance that unauthorized acquisition use or disposition of our assets that could have a material effect on the financial statements would be prevented or detected on a timely basis Because of its inherent limitations internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected
Management conducted its evaluation of the effectiveness of our internal controls over financial reporting based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission Based on this evaluation management concluded that our internal control over financial reporting was effective as of November 30 2024
The information in our definitive Proxy Statement filed pursuant to Regulation 14A promulgated under the Exchange Act for the 2024 Annual Meeting of Shareholders the 2024 Proxy Statement regarding directors and executive officers and Section 16 reporting information appearing under the headings Election of Directors Information Concerning the Board of Directors And Executive Officers and Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters is incorporated by reference in this section Finally the information in our 2024 Proxy Statement regarding the Audit Committee under the heading Statement of Corporate Governance Practices is incorporated herein by reference
We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer Chief Financial Officer and Corporate Controller or persons performing similar functions This Code of Business Conduct and Ethics is posted on our website www novagold com We intend to satisfy the disclosure requirement under Item 5 05 of Form 8 K regarding an amendment to or waiver from a provision of the Code of Business Conduct and Ethics that applies to our principal executive officer principal financial officer principal accounting officer or controller or persons performing similar functions by posting such information on our website at the address specified above
Our Code of Business Conduct and Ethics and charters for each committee of our Board are also available on our website The Code of Business Conduct and Ethics and charters are also available in print to any shareholder who submits a request to Corporate Secretary NOVAGOLD RESOURCES INC 201 South Main Street Suite 400 Salt Lake City UT USA 84111
The information appearing in our 2024 Proxy Statement under the headings Compensation Committee Interlocks and Insider Participation Compensation Discussion Analysis Tabular Disclosure of Executive Compensation Non Executive Director Compensation and Compensation Committee Report is incorporated by reference in this section
The number of options available for future issuance is a number equal to eight percent of the issued and outstanding common shares from time to time less the number of outstanding options The 17 915 839 options available for future issuance represent 5 35 of the Company s issued and outstanding common shares as of November 30 2024
Assumes vesting at 100 of PSU grant amount PSUs can vest anywhere from 0 to 150 of the PSU grant amount depending upon performance against established quantitative performance criteria The PSUs issued and outstanding represent approximately 0 49 of the Company s common shares issued and outstanding as of November 30 2024
The number of PSUs available for future issuance is a number equal to three percent of the issued and outstanding common shares from time to time less the number of outstanding PSUs The 8 403 515 PSUs available for future issuance represent 2 51 of the Company s issued and outstanding common shares as of November 30 2024
The number of DSUs available for future issuance is a number equal to one percent of the issued and outstanding common shares from time to time less the number of outstanding DSUs The 3 030 957 DSUs available for future issuance represent 0 91 of the Company s issued and outstanding common shares as of November 30 2024
Amendment dated January 13 2010 to Limited Liability Company Agreement dated December 1 2007 between Donlin Gold LLC Barrick Gold U S Inc and NOVAGOLD Resources Alaska Inc incorporated by reference to Exhibit 10 2 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Limited Liability Company Agreement dated December 1 2007 between Donlin Gold LLC Barrick Gold U S Inc and NOVAGOLD Resources Alaska Inc incorporated by reference to Exhibit 10 8 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Employment Agreement between the Registrant s wholly owned subsidiary NovaGold USA Inc and David Ottewell dated September 10 2012 incorporated by reference to Exhibit 10 17 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Amendment dated July 15 2010 to Limited Liability Company Agreement dated December 1 2007 between Donlin Gold LLC Barrick Gold U S Inc and NOVAGOLD Resources Alaska Inc incorporated by reference to Exhibit 10 18 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Amendment dated June 1 2011 to Limited Liability Company Agreement dated December 1 2007 between Donlin Gold LLC Barrick Gold U S Inc and NOVAGOLD Resources Alaska Inc incorporated by reference to Exhibit 10 19 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Employment Agreement between the Registrant s wholly owned subsidiary NOVAGOLD Resources Alaska Inc and Gregory A Lang dated January 9 2012 incorporated by reference to Exhibit 10 20 to Registrant s Annual Report on Form 10 K for the year ended November 30 2013 filed with the Securities and Exchange Commission on February 12 2014
Employment Agreement between the Registrant s wholly owned subsidiary NovaGold USA Inc and Richard A Williams dated January 8 2013 incorporated by reference to Exhibit 10 1 to Registrant s Quarterly Report on Form 10 Q for the fiscal quarter ended August 31 2024 filed with the Securities and Exchange Commission on October 2 2024
Employment Agreement between the Registrant s wholly owned subsidiary NovaGold USA Inc and Peter Adamek dated July 25 2024 incorporated by reference to Exhibit 10 2 to Registrant s Quarterly Report on Form 10 Q for the fiscal quarter ended August 31 2024 filed with the Securities and Exchange Commission on October 2 2024
We have audited the accompanying financial statements of Donlin Gold LLC the Company which comprise the balance sheets as of November 30 2024 and November 30 2023 and the related statements of loss and comprehensive loss equity and cash flows for each of the three years in the period ended November 30 2024 including the related notes collectively referred to as the financial statements
In our opinion the accompanying financial statements present fairly in all material respects the financial position of the Company as of November 30 2024 and November 30 2023 and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America
We conducted our audit in accordance with auditing standards generally accepted in the United States of America US GAAS Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for the design implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error
In preparing the financial statements management is required to evaluate whether there are conditions or events considered in the aggregate that raise substantial doubt about the Company s ability to continue as a going concern for one year after the date the financial statements are available to be issued
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditors report that includes our opinion Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control Misstatements are considered material if there is a substantial likelihood that individually or in the aggregate they would influence the judgment made by a reasonable user based on the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditors report that includes our opinion Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control Misstatements are considered material if there is a substantial likelihood that individually or in the aggregate they would influence the judgment made by a reasonable user based on the financial statements
Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error and design and perform audit procedures responsive to those risks Such procedures include examining on a test basis evidence regarding the amounts and disclosures in the financial statements
On December 1 2007 Barrick Gold U S Inc Barrick and NOVAGOLD Resources Alaska Inc NOVAGOLD formed Donlin Gold LLC a Delaware limited liability corporation the Company to advance the Donlin Gold Project in Alaska Barrick and NOVAGOLD each own a 50 interest in the Company Donlin Gold LLC has a board of four directors with two nominees selected by each company All significant decisions related to Donlin Gold LLC require the approval of both companies The Company currently depends on Barrick and NOVAGOLD for all of its funding and has received commitments from its shareholders that they will fund the Company for the next twelve months from the date of the financial statement These financial statements have been prepared pursuant to Rule 3 09 of SEC Regulation S X for inclusion in NOVAGOLD Resources Inc s 10 K as the Company is an equity investee of NOVAGOLD Resources Alaska Inc a wholly owned subsidiary of NOVAGOLD Resources Inc
The Company s Board of Directors approved the Project s Updated Feasibility Study in July 2012 The Company subsequently initiated the permitting process The U S Army Corps of Engineers the Corps issued the final Environmental Impact Statement EIS on April 27 2018 On August 13 2018 the Corps and the Bureau of Land Management BLM issued a joint Federal Record of Decision ROD for the Donlin Gold Project along with their respective federal permit authorizations Several major State of Alaska authorizations have also been issued including the approval of the Donlin Gold Reclamation and Closure Plan Waste Management Permit Water Discharge Permit Permit to Appropriate Water Title 16 Fish Habitat Permits for the mine area and right of way agreements with the State and BLM At the end of 2024 four appeals remained active in both the State of Alaska and U S Federal courts concerning permits granted for the project These include the appeal of the Alaska Department of Environmental Conservation ADEC Clean Water Act Section 401 Certificate of Reasonable Assurance at the State Superior Court level appeals regarding the state pipeline right of way and the water rights in the State s Supreme Court and one appeal concerning the EIS ROD and associated federal permits in the U S Federal Court
The preparation of the Company s financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period The significant area requiring the use of management estimates and assumptions relates to environmental reclamation and closure obligations The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances Accordingly actual results will differ from amounts estimated in these financial statements
On initial recognition plant and equipment are recorded at cost subject to a ten thousand dollar threshold for capitalization Plant and equipment are subsequently measured at cost less accumulated depreciation Depreciation is recorded over the estimated useful life of the assets at the following annual rates
Operating lease ROU assets represent the Company s right to use an underlying asset for the lease term and lease liabilities represent the Company s obligation to make lease payments arising from the lease ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term The Company uses its estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments The operating lease ROU asset also includes any upfront lease payments made and excludes lease incentives and initial direct costs incurred The Company s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option Lease expense for minimum lease payments is recognized on a straight line basis over the lease term Leases with a term of 12 months or less are not recorded on the balance sheet The Company s lease agreements do not contain any residual value guarantees
All direct costs related to the acquisition of mineral property interests are capitalized Mineral property exploration expenditures are expensed when incurred When it has been established that a mineral deposit is commercially mineable an economic analysis has been completed and permits are obtained the costs subsequently incurred to develop a mine on the property prior to the start of mining operations are capitalized Capitalized costs will be amortized following commencement of commercial production using the unit of production method over the estimated life of proven and probable reserves
The Company records a liability based on the best estimate of costs for site closure and reclamation activities that the Company is legally or contractually required to undertake The liability is estimated using expected discounted cash flows based on engineering and environmental reports and accreted to full value over time through periodic charges to income Adjustments to the reclamation obligation arising from changes in estimates are recorded as a component of the mineral property
The Company is not a taxable entity for income tax purposes Accordingly no recognition is given to income taxes for financial reporting purposes Tax on the net income loss of the Company is borne by the owners through the allocation of taxable income loss Net income for financial statement purposes may differ significantly from taxable income for the owners as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the shareholders agreement
Management assesses the possibility of impairment in the carrying value of its long lived assets whenever events or circumstances indicate that the carrying amounts of the asset or assets group may not be recoverable Management calculates the estimated undiscounted future net cash flows relating to the asset or assets When the carrying value of an asset exceeds the related undiscounted cash flows the asset is written down to its estimated fair value which is usually determined using discounted future cash flows Management s estimates of mineral prices mineral reserves foreign exchange rates production levels and operating capital and reclamation costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long lived asset It is possible that material changes could occur that may adversely affect management s estimates
The Donlin Gold Project is located in the Kuskokwim region of southwestern Alaska on private Alaska Native owned mineral and surface land and Alaska state mining claims The property is under lease for subsurface mineral rights from Calista Corporation and surface land rights from The Kuskokwim Corporation two Alaska Native corporations The mineral property was jointly owned by Barrick and NOVAGOLD through an unincorporated joint venture prior to the formation of the Company Upon formation of the Company the mineral property contributed was recorded based on the predecessor accounting values of Barrick and NOVAGOLD As such mineral property includes the historic acquisition cost as the partners initial contribution to the Company
The Company received management administrative services and third party contracted services on behalf of the Company from Barrick for 452 in 2024 332 in 2023 and 1 288 in 2022 and received from NOVAGOLD third party contracted services on behalf of the Company for 815 in 2024 923 in 2023 and 681 in 2022 Both Barrick and NOVAGOLD amounts are included in General and Administrative and drilling studies and engineering expense
The Company has accounts payable to Barrick at November 30 2024 of 84 2023 474 for reimbursement of management administrative services and third party contracted services on behalf of the Company and to NOVAGOLD of 144 2023 243 for reimbursement of third party contracted services on behalf of the Company
Significant reclamation and closure activities include rehabilitation and decommissioning of the camp and drill sites Although the ultimate amount or timing of reclamation costs cannot be predicted with certainty the estimated discounted cash flows required to settle the Company s obligations for work undertaken at the site to date is 1 640
During the year the discounted reclamation cost estimate was accreted resulting in a change in the measurement of the liability of 80 with a revised estimate of timing and amount resulting in an adjustment of 78 The estimated cash flows are assumed to commence in five years from the balance sheet date
The Company leases certain assets such as mineral property leases that are an exception to applying lease accounting under ASC 842 These mineral property leases coincide with the currently projected Donlin Gold mine life with provisions for a further extension should production continue beyond that Future minimum annual mineral property lease payments are 3 567 in 2025 3 567 in 2026 3 567 in 2027 3 567 in 2028 and 3 567 in 2029 totaling 17 835

Company Name	NOVAGOLD RESOURCES INC Vist SEC web-site
Category	GOLD & SILVER ORES
Trading Symbol	NG