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David Ottewell
vice president
and chief nancial o cer
Do you have problems with groups opposing the project? Native Corporations?
Mr. Deisley: One of the things that really sets NOVAGOLD apart from other gold companies is how committed we are to building and maintaining strong relationships with the local communities.
The Donlin Gold project is situated on private subsurface and surface lands owned by Calista and TKC, respectively. Calista, one of 13 regional Alaska native corporations established as part of the Alaska Native Claims Settlement Act of 1971, selected the area around Donlin Gold speci cally because of its mineral potential. TKC was formed in 1977 and encompasses 10 neighboring village corporations along the Yukon- Kuskokwim River.
Part of the reason Donlin Gold’s relationship with local communities is so strong is that these local communities already have enjoyed tangible bene ts as a result of activities at the project. For instance, since exploration began in 1996, local residents have been employed in a variety of roles, forming up to 90 percent of the workforce at the Donlin Gold camp. The proposed project would employ up to 3,000 workers during construction, and up to 1,000 during operations. Through Donlin Gold’s support of scholarships for Calista and TKC youth, sponsorship of academic and trades fairs, and leadership in development of the Alaska Miners Association’s Mining Workforce Development Plan, we are building a foundation that will provide Calista and TKC shareholders as well as their descendants with the opportunity to thrive as Donlin Gold prospers.
There is always interest in a large proposed mining project in Alaska. However, to date, no organized opposition to the project has emerged. We believe that, in large part, this is because of our strong relationships with the state and federal regulatory agencies, Native Corporations, and other stakeholders throughout the Yukon-Kuskokwim region and Alaska.
The participation agreement that the Galore Creek Partnership and the Tahltan First Nation collaboratively wrote and rati ed raised the bar in our industry, and the relationship has withstood the test of time throughout the life of the project.
Why such a lengthy process to permit Donlin Gold?
Mr. Deisley: Mines in the U.S. are subject to a comprehensive permitting process – and we think that’s a good thing.
The environmental impact statement (EIS) is being prepared under the requirements of the National Environmental Policy Act (NEPA), a law that governs the process under which major projects in the U.S. – such as Donlin Gold – are built. For a project of the size and scale of Donlin Gold, it is not uncommon for an EIS to require four years to be prepared, especially given the depth of the analysis and ample opportunities for the public to provide their input. The EIS process helps facilitate integration and consistency among the permitting agencies, which will be responsible for issuing as many as 100 separate permits and approvals expected for a mine the size and signi cance of Donlin Gold.
What is the company’s cash burn rate and level of outstanding debt?
Mr. Ottewell: Due to careful management of our nancial resources, at the end of the fourth quarter we had over $165 million in cash and term deposits. Our 2015 budget, at approximately $29 million (Donlin Gold, $13 million; Galore Creek, $2 million; G&A, $14 million including joint Donlin Gold studies with Barrick [$1.5 million 50%-share]), is modest given ongoing activities at both Donlin Gold and Galore Creek. We have su cient capital on hand to meet our ongoing obligations, including the repayment of the last $16 million in convertible notes due in May 2015.
Do you have enough money to carry out what you plan to do with your projects?
Mr. Ottewell: We have the funds to pay for our share of costs relating to the permitting of Donlin
Gold and advance technical work at Galore Creek. In an environment where many mining companies are distressed nancially, we are extremely fortunate to have a strong balance sheet, which allows us to continue executing our business plan despite current market conditions.
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