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shareholders – for making the role of chairman a joy rather than a duty, as together we take up the value chain the single most exciting asset in the gold space.
1 You’ve been in the NOVAGOLD story for 11 years now. Please tell us how your involvement happened.
We at Electrum entered the NOVAGOLD saga on December 31, 2008 as something of a white knight, purchasing the company’s shares for the very first time in order to save it from existential challenges across an extraordinarily broad front. Putting aside the fact that the economic environment on that New Year’s Eve was not particularly permissive of any investment at all, our intervention appeared – even to our closest friends – as akin to catching a falling knife. The news on NOVAGOLD was littered with fires that desperately needed to be put out: debt coming due that would have put it into bankruptcy, class-action lawsuits, environmental disputes with the EPA (regarding a modest gold property that was successfully reclaimed and in fact divested many years ago), general loss of credibility with investors and analysts,
and hostility from at least one of its key partners. I
could go on. But being that we were not irrational by
nature – and that it’s certainly much more fun to
speak to what transpired afterward – we reached the
conclusion that taking control of the company would
prove to be worth it.
As a bit of background, I had long coveted
exposure to the Donlin story. Watching from a
distance from the early 2000s, I felt that I had missed
the chance as NOVAGOLD’s shares rose from pennies
to several dollars on the back of drilling that produced
what were clearly among the best exploration results
in the gold industry. I wasn’t the only one who
recognized this potential – Barrick not only shared my
view, but also tried to buy the company in 2006. The
failure of their takeover attempt was to have
enormous implications for both companies. While it
was separate company-specific and financial crisis-
related factors that crippled NOVAGOLD and led to our timely intervention, what was never in dispute was that Donlin Gold constituted a rare combination of both jewel and elephant. As the fuse on the rescue was short, only after we had made our investment in NOVAGOLD were we able to send Electrum’s chief geologist, Dr. Larry Buchanan, to walk the property and share his impressions. Larry’s team had led the discovery and exploration at San Cristobal in Bolivia, which resulted in the identification of what we now know are likely billions of ounces of silver and millions of tons of zinc – and his opinion meant a great deal to me personally as well as professionally. “Is Donlin what we thought it was?” I asked upon his return. “Oh no,” said Larry. Mercifully, he then quickly added that the 35 million ounces1 identified were only part of a larger mineralized trend. “I could see the potential to double what they have,” he said. I wasn’t expecting that. He then added that there might also be additional
1) Represents measured and indicated mineral resources previously reported by NOVAGOLD and supported by a past technical report, “Nova Gold Resources Inc., Donlin Creek Gold Project, Alaska, USA, NI 43-101 Technical Report”, effective April 1, 2009. Represents 100% of measured and indicated mineral resources reported, inclusive of proven and probable reserves, of which NOVAGOLD’s share was 50% on April 1, 2009. Measured resources, inclusive of proven reserves, totaled 10 million tonnes grading 2.53 grams per tonne, and indicated resources, inclusive of probable reserves, totaled 469 million tonnes grading 2.29 grams per tonne. This estimate has been superseded by the estimate contained in the Second Updated Feasibility Study effective November 18, 2011 and amended January 20, 2012. For current mineral reserves and resources, refer to “Cautionary Note Concerning Reserve & Resource Estimates” and “Mineral Reserves & Mineral Resources” table page 46.
   A Resource More Than Five Times the Size of the Peer Group Average
Donlin Gold* 39.0
         7.3Moz Moz
peer group average†
* Donlin Gold estimates as per the second updated feasibility study, effective November 18, 2011, amended January 20, 2012. Represents 100% of measured and indicated mineral resources, inclusive of mineral reserves, of which NOVAGOLD’s share is 50%. See “Mineral Reserves & Mineral Resources” and associated information on page 46. † Peer group data based on company documents, public filings, and websites as of January 31, 2020. Comparison group of 14 projects based on large (2Moz P&P cut off ), North/South American gold-focused development projects with >75% projected revenues from gold.
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