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Q:
What makes the Donlin Gold project unique among other large undeveloped projects? What’s so exceptional about the ore body?
Greg Lang
president and CEO NOVAGOLD
Rob Kcrmarov
senior vice president global exploration Barrick Gold
A:
A:
John Bridges*
analyst
J.P. Morgan
A:
Double the Grade of the Average Deposit
World
1) 2014 average grade of open-pit and underground deposits with gold as primary commodity and over 1 Moz in measured and indicated resources, sourced from SNL Metals & Mining.
2) Donlin Gold data as per the second updated feasibility study effective November 18, 2011, as amended January 20, 2012. Represents 100% of measured and indicated resources of which NOVAGOLD’s share is 50%. Measured and indicated resources are inclusive of proven and probable reserves.
Average Grade 1
Average Grade 2
1.12
2.24
g/t
g/t
Donlin Gold
12
Donlin Gold represents tremendous value for all of our stakeholders. With the stated 39 million ounces of gold in the measured and indicated resource category – at an average grade of 2.24 grams per tonne – Donlin Gold is one of the largest and highest-grade undeveloped open-pit gold deposits in the world. With this endowment, the future mine is expecting to yield, on average, approximately 1,100,000 ounces of gold per year over its projected 27-year life, and even more in the first five years. This is especially important in an industry where average grades are declining and sources for emerging significant production are increasingly scarce. The grade at Donlin Gold is more than double the average grade of other gold projects currently in development. As a result of the asset’s scale and quality, the economics of the project are incredibly attractive, with life-of- mine cash costs of $585 per ounce. Plus, we’re very comfortable working in Alaska, where the Company is genuinely welcome not only by its Native Corporation partners, but also by other stakeholders. Responsible mining is welcome in Alaska.
With 39 million ounces of measured and indicated resources, the Donlin Gold ore body is one of the largest unexploited gold resources in the world. There are also a number of excellent opportunities to expand the resource in areas north of the main deposit, and at 2.24 grams per tonne, the gold grade at Donlin Gold is considerably higher than average industry grades. In sum, the potential of the Donlin Gold project is undisputed. It is a world class asset with the potential to generate significant value for Barrick, NOVAGOLD and our community partners.
NOVAGOLD continues to be focused on the permitting
of Donlin Gold, a process I’ve characterized as a quiet haven
of permitting peace in a volatile precious metals sector. The project has approximately two years of permitting left to go.
I’m comforted by the fact that the Company is able to see this important process through without needing to raise any more money. The permitting process is in effect an implicit guarantee that every constituency affected by the project has a chance to voice its concerns and the Company has the capacity to respond to these concerns thoroughly. Once this process is over and the permits are issued, all parties should be ready to proceed on a path toward production. That doesn’t mean that Donlin Gold would be built in any gold price environment. I’m gratified by the fact that both Barrick and NOVAGOLD are clearly on record as saying that the price of gold must be right before Donlin Gold is built. With so many macro- and micro-economic factors pointing to a more robust price environment than we see today, investors in NOVAGOLD should be well-positioned to derive a lot of value from the successful and timely development of Donlin Gold.
*Mr. Bridges’ comments are based on published research.