Novagold Resources Inc. (NG)

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NovaGold Resources Inc. (NG)

Q4 2012 Earnings Call

February 12, 2013 11:00 am ET

Executives

Mélanie Hennessey - VP, Corporate Communications

Greg Lang - President & CEO

David Ottewell - VP & CFO

Analysts

John Bridges - JPMorgan

Derek Macpherson - National Bank Financial

Kerry Smith - Haywood Securities

Presentation

Operator

Good day, ladies and gentleman, and welcome to the NovaGold Fourth Quarter Conference Call and Webcast. My name is Matthew and I will be your operator for today. At this time, all participants are in listen-only-mode. We will conduct a question-and-answer session toward the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

And now, I would like to turn over the call to Mélanie Hennessey, Vice President, Corporate Communications. Please proceed.

Mélanie Hennessey

Thank you, Matthew. Hello everyone. On today's call we have Greg Lang, NovaGold's President and CEO; and David Ottewell, NovaGold's Vice President and CFO.

At the end of the formal part of the presentation we will take questions both by telephone and by email. Before we get started I would like to remind our listeners that any statements made today by the management team may contain forward-looking statements. Such statements include projections and goals which are likely to involve risks detailed in our various SEDAR filings and in various forward-looking disclaimer included in the fourth quarter and year end financials release, as well as in this presentation.

With that, I have the great pleasure of introducing Greg Lang, NovaGold's President and CEO. Greg

Greg Lang

Thank you, Mélanie. It's been a year of many accomplishments for NovaGold. The company successfully completed a number of milestones throughout 2012, and the fourth quarter was no exception, as we can see in Slide 4.

As a result of much hard work and cooperative effort between the State of Alaska and the company, NovaGold completed the transfer of Alaska Gold Corporation, including the Rock Creek project to the Bering Straits Native Corporation.

The notice of intent to preparing Environmental Impact Statement for Donlin Gold was published on December 14th in the federal register. This is a very important milestone in the permitting process.

Our senior management team was further strengthened with the appointment of David Deisley, as Executive Vice President and General Counsel; and David Ottewell, as our Chief Financial Officer.

To recap the year, we strengthened our balance sheet in the first quarter by competing one of the year's largest offerings at nearly double the price of our previous equity sale.

We have a strong cash position with $253 million at November 30th, and additional proceeds of $54 million from the exercise of warrants subsequent to year-end. With reduced expenditures going forward, we have sufficient financial resources to advance Donlin Gold through permitting and satisfy all pending financial obligations.

NovaCopper was successfully launched as an independent company, which is led by Rick Van Nieuwenhuyse. NovaCopper owns the Upper Kobuk Mineral Project and contains one of the highest grades copper deposits in the world. It has the potential to be one of the sectors most exciting new districts.

Lastly, the most important milestone in 2012 was the approval of the Donlin feasibility study in July, which was followed by the commencement of permitting.

Slide 5, illustrates the key attributes which make Donlin Gold unique. With measured and indicated resources of 30 million ounces, it's the largest gold development project in the world. The quality is just as important as quantity. With a grade of 2.2 grams, Donlin is blessed with exceptionally high grade for a large open pit deposit. It's a grade that can be very forgiving in comparison to an industry average of a gram or less. In addition to size and grade Donlin has great exploration potential and will get substantially bigger over the long-term.

The existing reserves and resources are situated in a 3 kilometer section of a gold belt that extends at least 8 kilometers. With production greater than a million ounces a year over the life of the mine, Donlin's life is measured in decades. It would be the largest gold producing mine if it was in production today.

At a time when world class assets are rapidly being defined by where in the world they're located, Donlin is in Alaska, one of the safest jurisdictions and a state that welcomes responsible mine development. With resource nationalism becoming a prominent concern for mining companies and investors, we're fortunate to be in Alaska. Because of these attributes, we believe NovaGold will emerge as one of only a handful of premier, institutional quality, must own gold equities.

It's now my pleasure to introduce David Ottewell, who joined us in the fourth quarter as Vice President and Chief Financial Officer. David comes to us from Newmont where he was Vice President and Controller, responsible for all global accounting at Newmont. This is Dave's first NovaGold quarterly call. We're happy to have him on board. David.

David Ottewell

Thank you, Greg. I'm very pleased to be here and part of the NovaGold team. Turning to our financial results on Slide 7, our share of Donlin funding for the year was $18.5 million. In 2013 we expect our share to decrease to $15 million as permitting activities continue.

At Galore Creek 27,000 meters of exploration and geotechnical drilling was completed in 2012 with our share of funding at $16.3 million. In 2013, we expect our share to be $8 million, primarily for follow-up drilling and testing new targets.

Read the rest of this transcript for free on seekingalpha.com