NOVAGOLD Chairman Thomas S. Kaplan Addresses Misleading Short-and-Distort Report by Short Seller
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NOVAGOLD Chairman Thomas S. Kaplan Addresses Misleading
Short-and-Distort Report by Short Seller
June 08, 2020 - Vancouver, British Columbia – NOVAGOLD RESOURCES INC. (“NOVAGOLD” or the “Company”)
(NYSE American, TSX: NG) today released a statement issued by Dr. Thomas S. Kaplan, Chairman of NOVAGOLD, who
also represents the largest shareholder of the Company. Dr. Kaplan addresses a blatantly misleading report issued on
the Company by short seller J Capital Resea rch (JCAP) on May 28, 2020. In that report, the Company believes that
JCAP, masquerading as a research firm, is perpetrating, what is known as a short - and-distort scheme designed to
nefariously inject the market with misleading and false negative information about the Company to drive the price of
its security down in order to allow those with short positions to quickly cover them at an artificially low price and, in
doing so, derive a quick profit on the backs of unsuspecting shareholders.
The Company provided a separate detailed response to this attack. This response highlighted, line-by-line, a myriad
of JCAP’s falsehoods and outright lies and scrupulously juxtaposed them against corresponding facts in a multipage
document, linked to a separate press release which can be viewed here:
https://www.novagold.com/investors/news/index.php?content_id=2354.
“With lies you may get ahead in the world – but you can never go back.”
On Thursday morning 10 days ago, I was enjoying a particularly sweet moment, savoring a fine cup of Nespresso’s
(now discontinued) Ethiopian Yirgacheffe-origin coffee – my favorite. For myself, as for many of you, the coffee
drinking ritual is an important one, especially these days, when home and office are now more than ever one and the
same. It was another day under lockdown in our New York City apartment, yet I felt blessed to have a family and
loved ones mostly safe from our common foe, and in as reasonable spirits as one can be when profoundly aware that
tragedy and trauma surround us all. The mood was actually upbeat as my older son had narrowly avoided a ruptured
appendix a couple of mornings before and, benefitting from the combination of his precocious self-diagnosis of
appendicitis, the laser-like focus of our family’s physician, and the surgical staff at New York-Presbyterian/Columbia
Hospital, he was operated on and back at home in his own bed the very same day. This constituted the first “outing”
either of us had in quite some time and was thus memorable in more ways than one. Witnessing my boy up and
about after one day of bed rest only was astonishing, and as gratifying a moment as one could ask for as a parent.
My tranquility was suddenly broken by a flurry of e-mails from friends and colleagues. Had I seen the “hit piece” on
NOVAGOLD? I had not. When I read JCAP’s report, my first reaction was to chuckle because the piece was clearly so
fallacious that I initially assumed it had been written by a child – cooped up kids have far too much time on their
hands these days – or, more likely, a disgruntled short seller. The long winter that had witnessed the cratering of the
gold industry over the past decade had in fact decimated many actors in the space. Some had simply gone by the
wayside, much like the proverbial hare in Aesop’s fable, the victims of fatal flaws that can best be described in broad
strokes as follows: self-inflicted wounds, jurisdictional reckoning, or plain bad luck. Other than a hiccup of collateral
damage when our partner Barrick went through one of its periodic praetorian blood lettings back in 2013,
NOVAGOLD had suffered from none of these afflictions and, tortoise-like, had marched steadily up the value chain
and was now trading at multi-year highs.
It therefore made no sense to me that one would go out of their way to short our stock. And, as Mark Bristow and I
shared a laugh with each other last week, who in their right mind would short a great gold story in a growing bull
market in gold? Be that as it may, the hunters in this case were cunning in their larceny and caught us unawares, as
those who throw a sucker punch (or, as the Aussies call it, a “coward punch”) know in advance that it will.
Conspicuously manipulative in their conflation of events and personalities, we could immediately see the obvious
intent of the document and assumed everyone else would do too. When our largest shareholders expressed not only
solidarity, but also genuine outrage at JCAP’s obvious falsehoods and underhanded ways, we learned that while the
experience may well be new to us, it was not to others.
With little experience in dealing with nefarious actors, we chose the path familiar to us: we would ignore the
defamatory aspects of the piece, and tackle the challenge as if it were a traditional shareholder enquiry. After all, we
pride ourselves on being unusually transparent in our communications and reporting, as evidenced by a previous
exercise in which we invited real analysts to submit any questions they wished to ask of management. True, the two
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situations were apples and oranges – yet their contrast proves to be rather insightful. The enquiry that followed came
from a veteran, industry-leading analyst (John Bridges, who retired last year), who worked at a legitimate firm (J.P.
Morgan) and was honest, fair, and well-meaning in all his research coverage – and, I should add, bullish on the
NOVAGOLD story. He submitted many questions – we answered them all in writing, and he published them. We
translated that success into a regular model of writing in-depth Q&A sections in our Annual Reports that
communicate to our shareholders, or prospective shareholders, the most frequently asked questions of us, so they
can see for themselves not only the answers to what they want to know, but also answers to questions that others
have thought of and that may have escaped them. Believing that an educated consumer is the best and most
steadfast customer, we have often been cited – by true experts like John Hathaway and discerning investors like John
Paulson and Will Danoff – as being a model of transparency and shareholder alignment in our industry.
I am truly proud of the fact that being held to account is something we welcome – and in fact always will. We just
love it. In this instance with JCAP, we knew better than anyone that the contentions at hand did not reflect sincere,
constructive examinations or questions. As to their disgraceful endeavor to paint our management team as the same
one that had crippled NOVAGOLD – long before we entered the scene and began fixing it in 2009 as a white knight,
and turned the Company completely around after taking over management in 2012 – it was downright libelous. In
other words, knowing full well that the claims were mendacious, it became clear that this exercise constituted a
deliberate, if utterly shameless, attempt to manipulate our share price for financial gain.
To that extent, as I saw the volumes spike and our stock slump, the hatchet job was working. Was this even legal, I
wondered? At first, we weren’t sure, but it seemed it shouldn’t be as the misstatements were so blatant as to suggest
defamation or worse. I confess that I am not in the business of trading, and certainly not short-selling, so the whole
phenomenon was completely alien to me. One can easily imagine the shock to our management team. It was hard
for us to even find an analogy. A “sucker punch”? It sure qualified, but these can happen even among friends in a
moment of weakness. So that did not seem strong enough. A Clockwork Orange-inspired, financial adaptation of the
so-called “knockout game”? Perhaps equal in savagery, but also senseless. A “snatch and grab”? Getting closer. Might
it typify a “mugging”? Closer still, as a mugging definitely constitutes a theft, yet can also be both physically and
psychologically scarring. In actual fact, as I googled the singular incident I felt we were experiencing, I found the
precise definition of what had befallen us: a “short-and-distort” campaign.
We are, unfortunately, not the first to fall victim to such a campaign. Indeed, articles have been written about these
schemes, describing some common patterns of how they have been carried out: first, a person or firm purporting to
be a financial analyst publishes statements alleging that the company has acted fraudulently or is otherwise in
financial trouble; then investors with long positions react to the published statements by selling their long positions;
then the company’s share price drops, resulting in a loss of market capitalization, and perhaps worse, a tarnished
reputation; finally, those who have taken short positions on the company cash in on this series of events. One such
article can be found here:
https://www.dlapiper.com/~/media/files/people/weiner-perrie/weinerweberhsu.pdf
We will not stand idly by as a “short and distort” campaign is waged against NOVAGOLD. The statements made by
JCAP about NOVAGOLD are false, misleading, ultimately defamatory, and illegal in many respects. NOVAGOLD
intends to pursue the legal action available to it so that these wrongs can be redressed. Understanding the breadth
of these “short-and-distort” schemes also helps explain why it has taken NOVAGOLD’s management some time to
assemble a comprehensive rebuttal to a succession of perfidies so voluminous and twisted as to require an army of
readers and literally a line-by-line response.
“As the vilest writer hath his readers, so the greatest liar hath his believers: and it often happens, that if a lie
be believed only for an hour, it hath done its work.”
Suffice to say, I unequivocally believe that anyone reading our Company’s response to this catalogue of errors – of
both commission and omission – will conclude that JCAP’s agenda was to manipulate NOVAGOLD’s stock and profit
from an unwarranted and unjustified sneak attack on an organization that has been “doing it right” for at least the
past 8 years that Greg Lang and I have been in charge. As reflected in Jonathan Swift’s rather apt observation about
the utility of falsehood, highlighted above, it is the nature of the beast that the perpetrators make their ill-gotten
gains from unsuspecting shareholders who are duped out of their money after such an assault. For their report is not
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so much populated by “contentions”, as outright mendacities of different complexions. Even so, our rebuttal will
prove devastating to them – an outfit about whose reputation and tactics we have now learned a very great deal
indeed. And the good news, as one reading the above-mentioned article will gather, is that they can no longer “go
back” – redress now exists against their unjustified acts. Our shareholders should be confident in knowing that we
plan to do everything that we are allowed to do within the law to get redress for JCAP’s falsehoods, in whatever
jurisdictions apply the rule of law, and that we plan to do so to the fullest extent of that law. To quote Mario Draghi,
albeit in different circumstances, “We will do whatever it takes.” More prosaically, to those who aided and abetted
this pathetic exercise – we know some of who you are, and the rest we will learn who you are.
Pathetic Doesn’t Begin to Describe It
As one can observe from the Company’s formal response, which itemizes literally hundreds of falsehoods, lies, errors
of fact, and other objects of distortion, JCAP has a lot to answer for.
Tops of the Waves
Let me touch on a few subjects briefly, so as to put them to bed right away. First is the laughable positioning of the
author and his anonymous “experts” as duly qualified to opine on building pipelines in Alaska. On the one side is Tim
Murray, who has no known experience in the space and cites unnamed experts. On the other is CH2M HILL (CH2M) –
real experts that have been serving oil and gas clients in some of the Arctic’s harshest conditions, including the North
Slope, for over 40 years, and a firm that in 2013 represented the 6th largest employer in Alaska and the second-
largest employer in the State’s oil and gas industry. In 2017, CH2M was ranked #22 on Fortune’s 2017 list of “Top 50
Companies that Change the World” for making a positive impact on society. That same year, CH2M was acquired by
Jacobs Engineering Group. One of the deal drivers, as cited in the media, was CH2M’s infrastructure business.
Management definitely stands by the work completed by the CH2M-led group for Barrick and NOVAGOLD, and the
work performed to price the pipeline out inch-by-inch, mile-by-mile.
The Donlin Gold project (the “project”) that was evaluated in the 2011 Second Updated Feasibility Study (FSU2), as
defined below, and Federal and State permitting includes the gas pipeline that is obviously based on a sound design,
completed by highly experienced pipeline engineers. Throughout NOVAGOLD’s detailed response, the Company
refutes every one of JCAP’s comments about the feasibility of the pipeline’s plan. And management continues to look
at ways to optimize development of the pipeline, including a range of partnership and financing options.
NOVAGOLD, along with our Native Corporation partners, also recognize the great benefits of bringing gas to the
region. However, the reality is that a pipeline is not the only option available to the project. The original feasibility
study was also predicated on a barging alternative that remains viable if it is best for all those concerned.
Perhaps it is the libel of the so-called insider selling. The bottom line here is that none of the Company’s insiders have
sold stock other than to exercise options – and in fact have been increasing their shareholdings. It should be
apparent to anyone that stock options do not have any value unless the share price appreciates from the date of
grant, which means that, by definition, non-insiders must also be benefitting from similar conditions. Take it from me.
I have heard from plenty of institutional investors who acknowledge their gratitude to NOVAGOLD’s management for
work well done.
Perhaps it would be JCAP’s utter ignorance about the difference between initial and sustaining capital. Or their failure
to understand that it is not advisable to conduct exploration drilling outside the footprint of the mine being
permitted during the permitting process…hence the gap in drilling between 2011 and now. It is worth noting that
this explicit hiatus ended after receipt of the Federal permits, which is why, in light of the excellent high-grade results
of 2017, the partners renewed drilling with an increasingly robust program in 2020. Why not? The 2017 results were
great, and formally presented in the press release, “NOVAGOLD’s Donlin Gold Project Reports Excellent Results from
the 2017 Drill Program,” dated February 20, 2018. Kelvin Dushnisky, then President of Barrick, declared on that
occasion:
“We are very encouraged by the latest drill results at Donlin Gold, some of which encompassed areas where
relatively little drilling had been previously done. The results are further evidence of the significant potential of this
deposit. We look forward to continuing to collaborate closely with our partner, NOVAGOLD, to advance
optimization work and permitting at this unique project.”
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We actually love to drill, and see huge opportunity to expand the resource – most immediately along strike of the
existing deposit, which comprises only 3 km of an 8 km mineralized belt and which, in its entirety, represents less
than 5% of the total land package. Now under the watch of Mark Bristow, a brilliant geologist, the drill rigs are active
as I write this. Few people know better than Mark what drilling can do to unlock and enhance value, as evidenced by
his signal successes in doing so at Randgold. Considering that my own personal wealth was primarily created
through the drill bit, being able to drill at Donlin Gold is for me a dream come true – and we could not be more
thrilled to have a partner that shares our enthusiasm.
Were I to continue and enumerate all of the falsehoods contained in the JCAP report here, I would merely duplicate
the hundreds of comments provided in the Company’s excellent matrix. And to what end, anyway? The JCAP assault
was never meant to be an “analysis”, but a profit-motivated scare tactic. Still, I feel compelled to focus on a few things
to help those who are witnesses to the event fully understand what they saw happen…and will see unfold in short
order.
The Art of the Steal
The “Original Sin” of the libel can be found in the first incendiary sentences:
“The deposit that will never be mined… For the last 15 years, NovaGold’s management team has systematically
misled investors…”
Let us pause right here. The report essentially opens with a conscious attempt to mislead unsuspecting investors by
inferring that the present “management team” has been leading the Company for 15 years – a deliberate conflation
of two distinct eras of completely different management teams into one. This sentence is written, knowingly and
with malice, to make that investor stop what they are doing, reach for their stockbroker’s telephone number, or
perhaps their trading room if the investor is institutional, and order that person to sell immediately. It is the
equivalent of yelling fire in a crowded theatre, hoping that people will trample over one another for the exits without
even taking a moment to assess the situation. For some investors, they might feel “why even wait: there’s a problem,
get me out!” Those who create the “crisis” know that the sentences are fraudulent. Thus in the inaugural sentence of
the JCAP report lies the first fruit of the poisonous tree of willful “distortion”, defined herein as “to give a misleading
or false account or impression of”.
From this moment forward, as has been conveyed to us by major shareholders, they understood that they were
witnessing a willful and calculated manipulation. Due to our well-known reputation for extraordinary transparency in
our communications and reporting, these knowledgeable investors are unusually well-educated in Donlin Gold.
Hence the outrage that has characterized the response from our institutional shareholder base to this report. But
perhaps it was not the intention of JCAP to address their shameful maneuver to educated investors in the first
instance. It was solely meant to dupe less informed participants to sell shares without a legitimate basis for doing so.
One of the easiest ways to frighten existing shareholders, or encourage others previously uninvolved in the company
to sell shares short, is to imply that the company has been engaged in wrongdoing. As such, the lowest hanging fruit
is to attack “bad” management.
The inference to the uninitiated audience that the management team that ran the Company 15 years ago is the same
management team running the Company now is clearly false. Moreover, the caliber of the managements during
those two eras is, in effect, apples and oranges. To put it in another way, and most vividly: when speaking of the
Chicago Bulls pre and post the entry of Michael Jordan into the mix, MJ is not held accountable for the state of the
Bulls franchise before he arrived and turned their fortunes. To me, as one of the owners of our team, Greg Lang might
as well be Michael Jordan.
Just look at the language. It is not only logical but standard practice in discussing “management teams” to draw clear
distinctions between the eras or tenures of the different teams. This is particularly true – and important – when the
core of the discussion centers around the dichotomy between the respective performances of those teams. In simple
terms, the team that is recruited to turnaround a business that was crippled under the leadership of its predecessors
is never conflated by objective, well-intentioned and professional analysts, with the team that was removed after the
business had been sunk under their watch in the first place. That seems obvious. Particularly as doing so to impugn
the incumbent management constitutes a deliberate distortion.
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Yet throughout the JCAP report, there is a deliberate use of the word “Management” to attack the incumbent
management that has run the Company most successfully, and to the great benefit of NOVAGOLD’s shareholders.
The smear inherent in this distortive conflation of “Management” appears no fewer than 13 times in the report, while
“CEO” appears with a similarly abusive 8 times. The adjective “disingenuous” does not begin to reflect the severity of
this deception. It is in fact a willful disregard for the objectivity that should allow the reader any confidence in the
agenda of the analyst who publishes such obfuscations. It is, however, perfectly understandable that a firm engaged
in nothing more than a cynical and illegal exercise in market manipulation would employ such a subterfuge.
It is axiomatic that the present management cannot be held responsible, directly or tangentially, for actions that took
place prior to their assuming leadership of the Company and which they then effectively fixed. The present
management team has been leading NOVAGOLD for eight years – not 15 – during which time it has not misled
investors in any fashion. To the contrary, their tenure coincides with an era of complete transparency in their
corporate communications, as well as uninterrupted management successes in working with their partner Barrick
Gold to take the Donlin Gold project up the value chain and in addition to unlocking for shareholders the
considerable value of the copper assets they inherited.
This issue bears some elaboration, for within NOVAGOLD’s Annual Reports one can find a clear and open discussion
of the “before and after” events that led to the transition from one management team to another. Indeed, in light of
the opaque and dissembling nature of JCAP’s attempt to obfuscate key facts, let us challenge their assertions with
statements of facts drawn from a publicly filed document – namely, the Company’s 2018 Annual Report. Here was my
direct answer to a question from a shareholder:
“How did you acquire your interest in NOVAGOLD and has your investment thesis changed?
One of the best examples of the buona fortuna that I believe emanates from this precept was the fruit that fell into
my lap in December 2008 when, with the wise counsel of The Electrum Group’s President (and fellow NOVAGOLD
Director) Igor Levental, we entered the NOVAGOLD saga 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 at that time 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; class-
action lawsuits; environmental disputes with the EPA (regarding a modest gold property that was remediated and
divested many years ago); 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 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 saw 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 intervention, what
was never in dispute was that Donlin Gold constituted a rare combination of both jewel and elephant.
I often tell the story about how I gave my team 48 hours to perform the due diligence on NOVAGOLD before
pulling the trigger on the deal – a time frame that should appear to be reckless any time geology is involved. My
reasoning was redolent of the joke about the two hikers who run into a bear in the woods: One hiker starts to run,
while the other calmly kneels and starts to put on his running shoes. The man already running shouts to his
companion and asks what he’s doing. The one tying his laces answers, “Sorry, but I reckon I don’t have to outrun
the bear, I just have to outrun you.” Similarly, I said to my team, “We don’t have to believe NOVAGOLD about
Donlin; we just have to believe Barrick.” Barrick being a first-rate company, the due diligence from public sources
was remarkably straightforward. Only after we had made our investment in NOVAGOLD did we send our chief
geologist, Dr. Larry Buchanan, to walk the property and share his impressions. “Is the deposit what we thought at
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Donlin?” I asked upon his return. “Oh no,” said Larry. Mercifully, he quickly added, “With an 8km strike being 5 or
so percent of the property package, the next Donlin could be at Donlin. Congratulations.”
The problems the Company faced nonetheless were real and rather daunting. It took some doing to clean up
those burdens that made our exercise appear death-defying. But the Company was turned around, we raised
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 8
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 resources1.
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.”
Reading this anew, and remembering fondly what has followed, I must admit that Aristotle was right: a friendship is a
partnership. I am proud to call Greg my friend and, like all NOVAGOLD shareholders, sincerely appreciate what his
leadership and team have done for us.
The NOVAGOLD Advantage
One of the more glaringly positive differentiators of our Company is that management has done nothing about
which it isn’t quite proud since Greg Lang and I took the helm in late 2011. Simple virtues, like not cutting corners
and “doing it right” – our shared mantras from technical work to the environmental and social license we value so
highly – have served our shareholders well and given us considerable credibility. Part of that ethos is that we both
feel deeply that honor – yes, honor – matters. Thus, the vows that we have made to our shareholders, stakeholders,
and partners have been kept and, as a result, our Company has since enjoyed a coterie of exceptionally well-
informed, savvy, and satisfied shareholders. There are clearly attributes that John Paulson, who added 3 million more
shares in the last quarter after 10 years as a shareholder, sees in our story. And Fidelity. And First Eagle. And John
Hathaway. And Jacob Rothschild and the Agnellis. You get the point. I could go on, but a key reason is, basically,
because NOVAGOLD is a pure play on an asset that we regard as “The Next Nevada”. There is no pure play on the
Barrick-Newmont joint venture in Nevada. I wish there were. There is, however, a pure play on the Barrick-
1 Donlin Gold data as per the Second Updated Feasibility Study (as defined herein). Donlin Gold measured resources of approximately 8 M t grading
2.52 g/t and indicated resources of approximately 534 Mt grading 2.24 g/t, each on a 100% basis. Mineral resources have been estimated in
accordance with NI 43-101. See “Cautionary Note Concerning Reserve & Resource Estimates” and “Mineral Reserve and Mineral Resource” table on
the Company’s website.
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NOVAGOLD joint venture in Alaska – which already ranks, incidentally, as the second-largest gold producing State in
the Union, after Nevada.
By “doing it right”, let us start with what we have not done…what I would call successes of omission. First and
foremost, we have never been tempted to use our cash or equity to do something foolish. Sadly for the fortunes of
our industry, using common sense has proven to be a differentiator in and of itself. As Voltaire professed, “Common
sense is not so common.” If, by every metric, one believes one owns one of the best assets on the planet, one simply
does not “deworsify,” as the famed Peter Lynch put it so well. Deal junkies we are not. My family has achieved a
spectacular rate of return in the natural resources space over the past 27 years because of a few, strict principles. One
of them, of course, is trying hard to focus on only large, extraordinary assets. Having achieved 100x multiples in each
of silver, platinum, and natural gas – without the use of leverage and just being long “category killer” assets – I adore
NOVAGOLD’s business model as a pure play on the supreme category-killer, Donlin Gold. While focusing on great
assets, even in an era of asset scarcity, can be like watching paint dry – as evidenced by the last soporific decade in
the gold mining space – that era is likely over for good. We are more confident than ever that it is NOVAGOLD’s time
to shine anew, and we feel privileged to have it as our flagship in the gold space.
Then, there are the successes of commission – those things we promised to do, and meticulously did. Accordingly,
before we were approached with the offer to do a capital raising the last time around, in January 2012, the newly
minted CEO and Chairman of NOVAGOLD laid out a clear roadmap for our investors:
• We promised to spin-off our Alaskan copper assets. That company, spun-off as NovaCopper and now trading
under the name Trilogy Metals to reflect its polymetallic attributes, has performed very well – sporting a
market capitalization of hundreds of millions of dollars;
• In order to make NOVAGOLD the only “pure play” on Donlin Gold in the marketplace, we promised to sell
Galore Creek – a beautiful asset, but “a project too far” for a development-stage Company with a flagship as
ambitious as Donlin Gold. We could have let Galore go in a fire sale. We didn’t. We sold it for real money in a
market where win-win monetization has been the exception, not the rule. The cash position we find
ourselves in, with more guaranteed and potential payments to come, is the envy of our space;
• We declared that, if given an opportunity to show the flexibility of the deposit, we would take it. The drill
results Donlin Gold delivered earlier in 2017 blew through even our own expectations. Who gets 130 meters
of 6 grams, and 64 meters of 5 grams2? We reckon that these constituted some of the best drill results
reported by any project for quite a while;
• Lastly, we stated that this project would be permitted. When anyone pushed back, assuming permitting in
Alaska would be a struggle, we just shrugged our shoulders. The facts pointed to the opposite. All we had
ever heard from our local stakeholders and partners, the Calista Corporation and The Kuskokwim
Corporation (TKC), were strong indications of support. And, after a thorough search online and in the public
records, we could not find any signs of opposition. In fact, the only references to the project in 2012, from a
media standpoint, were positive. Six years later, we received the first-ever joint Federal record of decision –
delivered in a formal ceremony in the presence of the lead agencies, the U.S. Army Corps of Engineers and
the Bureau of Land Management (BLM) – that included extensive input from those who held the reasonable
concerns that any big project would bring. For those who know the industry, this represents an amazing
occurrence practically anywhere in the world.
We also promised to build a first-rate management team to take the Company to the next level. Let’s dispense with
the petty lies. JCAP makes a puerile assertion that management has been “awarding themselves base salaries that
rival those of the CEOs at Newmont and Barrick”. This is not true. Greg’s compensation is roughly half of theirs. And it
2 These represent the two of the top five significant intervals from the 2017 Donlin Gold drill program. Refer to the press rel ease dated February 20,
2018 titled “NOVAGOLD’s Donlin Gold Project Reports Excellent Results from 2017 Drill Program,” for remaini ng significant intervals and additional
information.
NEWS RELEASE
NYSE AMERICAN, TSX: NG
www.novagold.com
Page | 8
is obviously not management but rather NOVAGOLD’s highly qualified Board of Directors that awards compensation,
following a comprehensive review of the facts. But this kind of nonsense is par for the course in JCAP’s “analysis”.
As to the quality of the team, we really lucked out. For in truth they could run a Major mining company. Again, think
pre and post Michael Jordan, for that analogy regarding Greg and his team has real merit for stockholders. Since the
Board of Directors reorganized the Company in early 2012 to focus on Donlin Gold, NOVAGOLD was determined to
recruit top talent with demonstrated track records in large-scale mine permitting, development and operation, with a
particular focus on North America experience. Knowing that a world-class asset warrants world-class professionals,
the Company set out to attract the very best people in their respective specialties. And it did. NOVAGOLD’s current
management, which has been in place for the past eight years, is, as one shareholder put it, ‘straight out of central
casting’. Starting with Greg Lang, NOVAGOLD’s President and CEO, who has over 40 years of diverse experience in
mine operations, project development and evaluations, including eight years as President of Barrick Gold North
America, a wholly owned subsidiary of Barrick Gold Corporation. Greg held progressively increasing operating and
project development responsibilities over his 10-year tenure with Barrick and, prior to that, with Homestake Mining
Company and International Corona Corporation – both of which are now part of Barrick. Major mines that now
represent the foundation of Barrick, such as Cortez Hills, were built under Mr. Lang’s leadership.
Richard Williams, NOVAGOLD’s Vice President Engineering and Development – responsible for all aspects related to
the engineering and technical advancement of Donlin Gold – is yet another star. Richard spent over 30 years with
Barrick Gold developing and operating major mines. He is one of the most highly regarded and experienced leaders
in the autoclave technology that is planned to be used to process ores at Donlin Gold. Importantly, he served as
Project Director of the Pueblo Viejo project in the Dominican Republic, now one of the most successful mines in
Barrick’s portfolio of assets. Richard’s seven-year tenure at Pueblo Viejo capped a career where he progressively held
top operating roles that included the design, construction, and operation of mineral processing facilities of major
mines, such as Goldstrike in Nevada and Mercur in Utah.
David Ottewell is Vice President and Chief Financial Officer of NOVAGOLD, responsible for all aspects of the
Company’s financial management. Dave is a highly accomplished financial executive, with over 25 years of mining
industry experience. Prior to joining NOVAGOLD, he served as Vice President and Controller for Newmont, the largest
gold mining company in the world. Other members of the NOVAGOLD team are equally accomplished in their
respective areas of expertise. In order to attract this caliber of professionals, the Company has to compete to recruit
and retain top talent in the industry. And we did so beautifully.
This remarkable series of kept promises certainly goes a long way in explaining why NOVAGOLD was so successful in
executing on its value-building strategy, with achievements shown in the figure below from our presentation at our
Annual Meeting of Shareholders dated May 14, 2020: