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Q:
What does the Donlin Gold asset represent for your company? And what does it mean to the people of the Yukon-Kuskokwim region?
A:
Mélanie Hennessey
vice president, corporate communications NOVAGOLD
Leonard Morgan
resident Aniak, Alaska
A:
Significant Upside Value
Net Present Value (NPV) (US$ in millions)
30,000 25,000 20,000 15,000 10,000
6.2B 5,000
$1,200
27.0B
8.2B
$1,300
14.6B 11.6B
19.2B
$1,500
$1,700
$2,000 $2,500
Gold Price $USD/oz
NPV at 5% NPV at 0%
Donlin Gold estimates as per the second updated feasibility study effective November 18, 2011, as
amended January 20, 2012 . All dollar figures are in USD and reflect after-tax net present value (at a 0% and 5% discount rates) of the Donlin Gold project as of 1/1/2014. At a 5% discount rate, the net present value is: $547m @ $1,200/oz gold; $1,465m @ $1,300/oz gold; $3,147m @ $1,500/oz gold; $4,581m @ $1,700/oz gold; $6,722m @ $2,000/oz gold; and $10,243m @ $2,500/oz gold. Project development costs prior to 1/1/2014 are treated as sunk costs.
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Donlin Gold is indeed remarkable. It has size and extraordinary grade, industry-leading projected output, a low-cost structure, a company-making mine life, excellent exploration upside, strong local partnerships, and jurisdictional safety – all the key ingredients that are required to build a modern, cost-effective mine. In an era defined by quality asset scarcity, Donlin Gold is a truly unique and attractive gold asset that offers investors all the leverage they could wish for when higher gold prices return.
But the project represents even more than that. Donlin Gold is located in the Yukon-Kuskokwim region of Southwest Alaska, an area of dispersed communities whose Alaska Native residents are largely dependent on subsistence living and traditional ways of life. Given the remote location of these communities, the cost of living is very high – and wage employment opportunities are extremely limited. Consequently, youth move to cities in order to obtain education, workforce training, and employment, further weakening local communities and their economies. Through economic stimulus and job creation, in addition to social and community development, Donlin Gold has the opportunity to bring tangible benefits
to these areas that are often under-served and economically challenged. Moreover, the project could create a unique incentive for people to return to their region, enhancing economic development and opportunity in a way that is consistent with traditional ways of life.
I am from the village of Aniak. I have been there for most of my life. Aniak is not very big, about 600 or 700 people. It
is growing, but the youth have to move elsewhere. There is nothing going on for them there or in any other village right now. So many people are out of work; there are no jobs available. But if a project like Donlin Gold came through, there would be new opportunities. People are already getting ready for it, and they are really excited. Actually, a large part of the reason that
I have stayed in Aniak for so long is to see the development
of the project and its impact on the region. You can see that
kids are more into education now that they know about
job opportunities that the project will bring. They have the motivation to work hard, achieving higher levels of training and education so that they can plan for their future.