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capital with allies – especially the Paulson and Soros funds – and NOVAGOLD’s shares, having been priced for bankruptcy, returned by 2010 to the level at which Barrick had made its 2006 bid.
In 2011, not long after Barrick and NOVAGOLD announced the results of the feasibility study on Donlin, I was introduced to Greg Lang, a 25-year veteran of Barrick and its predecessor companies. Greg’s career had been marked by both escalating promotions and successive wins. After running Barrick’s Australian operations, he had been given responsibility for much of the Western Hemisphere where, by the time we had met, he had served eight years as president of Barrick Gold North America. His experience in overseeing the permitting and building of large mines – including the Cortez Hills Mine in Nevada, which impressively came in within budget and on time – epitomized what I was looking for. Having concluded that the Donlin deposit displayed all the makings of the Holy Grail for a gold investor, I sought a CEO who could take Donlin through permitting. When Igor Levental and Gil Leathley spoke about Greg, it seemed fated. His Homestake pedigree, one he shared with Igor and Gil, was an added plus. Indeed, I have always found that most everyone who worked well with the legendary Harry Conger possessed that subtle combination of intelligence and character that I seek in my colleagues.
As it happened, my appetite coincided with Greg Lang’s desire to be engaged with a pure play on the
asset he thought could be the greatest gold mine in the world. He was an educated consumer, having sat on the Barrick side of the table during the hostile takeover attempt, and then as a Barrick representative on the Donlin Gold LLC board. We had an immediate meeting of the minds, nodding to each other as we ticked off
the attributes that rendered Donlin not just a great development-stage asset, but also possibly the best. Never before, said Greg, had a gold mine started with nearly 40 million ounces in measured and indicated resources.* Some, including Goldstrike, would eventually reach that. But started there? And there was probably more gold, we agreed. For an engineer, of course, for whom grade is king, the high grades and consistency of the orebody, as well as the site’s gentle topography, moderate climate, and the excellent community relations that Rick Van Nieuwenhuyse had nurtured, all made Greg feel that this would be not just a mine, but possibly one of the finest of the dozens he had visited around the world throughout his career. Once in production, we calculated, it could potentially represent the largest pure gold producer in the world.
As if this weren’t enough, the project is in what I believe to be the safest address in the world. Before
going into energy in East Texas, I had made my bones in Bolivia, Zimbabwe, South Africa, and the Congo. At
the time of Electrum’s investment in NOVAGOLD, I happened to be one of the largest holders of mineral rights in the Islamic world, from West Africa to Pakistan. In due course, by the time I met Greg, resource nationalism had led me to conclude that the era characterized by the mantra “go where the gold is” was coming to a close. Sure, it took longer to permit a mine in the United States, but at least you could keep your property when the marathon ended. You needn’t fear waking up to find out that what you thought you had in your possession the night before was no longer what you owned in the morning – never mind additional factors such as political instability, insurgencies, and terrorism. Finding myself repeating the old Woody Allen line “I’m not afraid of death; I just don’t want to be there when it happens,” I realized that the credo that had guided me through the years – namely, “acquire category-killer assets that give the greatest leverage to the investment thesis” – needed the following corollary: “ jurisdictions that will allow one to keep the fruits of that leverage.” With a sentimental tear to acknowledge the more swashbuckling successes of my youth, I shifted Electrum’s portfolio from “half North America/half ‘other’” to “90% North America.”
I’ve never looked back. Apart from the fact that the list of previously investible countries has literally imploded, destroying billions of dollars of value in even well-managed companies and proving Electrum’s strategic withdrawal to North America to be both right and luckily timed – Greg and I were now becoming more convinced that Donlin could be not just the best asset in the gold development space, but literally unique.
Uniqueness is a bold claim. But the contention is fairly straightforward. We have yet to find an asset that compares in its combination of size, grade, exploration potential, production profile, all-in cash costs, mine life, and jurisdictional safety. In other words, what I believe to be the greatest undeveloped gold deposit in the world is located in the second-largest gold-producing state, in one of the safest jurisdictions in the world. I consider Donlin Gold to be the very definition of unique. Donlin is an asset that, when the sentiment in this
* Donlin Gold project estimates as per the second updated feasibility study effective November 18, 2011 and amended January 20, 2012. Represents 100% of measured and indicated resources, of which NOVAGOLD’s share represents 50%. Measured and indicated resources are inclusive of proven and probable reserves. Measured resources total 8M tonnes grading 2.52 g/t Au, and indicated resources total 534M tonnes grading 2.24 g/t Au. Proven reserves total 8M tonnes grading 2.32 g/t Au, and probable reserves total 497M tonnes grading 2.08 g/t Au. See “Cautionary Note Concerning Reserve & Resource Estimates” on page 39.

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