NOVAGOLD Refutes False and Misleading Statements in Law Firm Solicitation Release
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NOVAGOLD Refutes False and Misleading Statements in Law Firm Solicitation Release
The law firm release, published July 8, 2020 in an attempt to solicit clients, is based entirely on a fundamentally
flawed “report” issued by J Capital Research (JCAP) that reiterates numerous false and misleading statements
published by the short seller on May 28, 2020 about the positions and expertise of two of the most professional
and experienced mining teams in the world – NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the Company”) and
Barrick Gold Corporation (“Barrick”); and
Shareholders should rely on NOVAGOLD’s comprehensive rebuttals, which were issued on June 8, 2020 and
include a media release, Chairman’s letter to shareholders, and line-by-line Fact Matrix countering each of the short
sellers’ false and misleading statements.
July 9, 2020 - Vancouver, British Columbia – NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the Company”) (NYSE
American, TSX: NG) today responds to the misconceived effort by a law firm, Hagens Berman (the “law firm”), to solicit
clients and continue the spread of malicious and false information regarding the Company, following the defamatory
attack perpetrated by a short seller against the Company and its flagship Donlin Gold project in Alaska on May 28, 2020.
NOVAGOLD RESPONDS TO LAW FIRM’S FOUR INACCURATE STATEMENTS
NOVAGOLD responds to the four misrepresentations below that were included in the law firm’s solicitation release
distributed July 8, 2020:
1. MISREPRESENTATION: “the company’s co-owner, Barrick, told investors it does not even include Donlin
in its 10-year plan”
NOVAGOLD and BARRICK: A DEDICATED AND ALIGNED PARTNERSHIP IN DONLIN GOLD LLC
Firstly, Barrick is not NOVAGOLD’s co-owner. It is the Company’s partner in the project. Secondly, this statement by
JCAP is cherry-picked and out of context in a deliberately distortive manner for the purpose of misleading investors
and injuring its shareholders. The elementary reason Barrick ‘hasn’t included Donlin Gold in its new 10-year plan’ is
because the partners, Barrick and NOVAGOLD, are fully aligned in working toward a construction decision at a time
when both the project optimization is complete and market conditions are favorable for their shareholders. To
suggest otherwise is tantamount to creating negative news where none exists . In actual fact, during the same fourth
quarter 2019 earnings conference call1 referenced in the law firm’s solicitation, Dr. Mark Bristow, Barrick’s President
and CEO, said that Donlin Gold “offers a huge optionality to the gold price across multiple gold price cycles in an excellent
jurisdiction” and said that the partners are working on a phased program this year to validate updated geological and
resource models which have identified areas of higher grade that could improve returns for the overall project . With
four drill rigs presently on site in furtherance of this strategy, we look forward to testing these new geological
concepts within what is already exceptionally high grade for a large open-pit gold mining project. Indeed, spending
at Donlin Gold in 2020 is projected at its highest level since 201 1.
In addition, Barrick provided an update on Donlin Gold, during their first quarter 2020 earnings results webcast
presentation on May 6, 20202, that reinforces these points, as shown in FIGURE 1.
1 Barrick Gold Corp. Q4 2019 Earnings Conference Call February 12, 2020 11:00 AM ET: https://seekingalpha.com/article/4323647-barrick-gold-corp-
gold-ceo-dennis-bristow-on-q4-2019-results-earnings-call-transcript?part=single
2 Slide 20, Barrick Gold “Results for Q1 2020…" webcast presentation, May 6, 2020:
https://barrick.q4cdn.com/788666289/files/presentation/2020/Barrick-Q1-2020-Results-Presentation.pdf
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FIGURE 1
2. MISREPRESENTATION: “A deposit so remote and technologically challenging that the mine will never be
built.”
Objective technical work by NOVAGOLD, Barrick, and a number of the most reputable contractors and engineering
firms in the mining industry over nearly two decades have determined that the deposit is most definitely “not so
remote and technically challenging that it will never be built”. Suggesting the contrary is indeed nonsense. These
experts have determined that Donlin Gold can be built and, in the right market conditions, should be built.
JCAP’s grossly misleading statement about Donlin Gold’s future is particularly groundless given the fact that in
August 2018, Donlin Gold was issued a Record of Decision by the U.S. Army Corps of Engineers and the U.S. Bureau of
Land Management, marking successful completion of the multi-year comprehensive federal environmental review
and permitting process. Furthermore, the project has now received a number of key Alaska State permits that would
be required to advance Donlin Gold towards construction. And last but not least, over the last two decades,
NOVAGOLD and Barrick have carried out extensive environmental, technical, and social studies on various aspects of
the project. These studies were conducted by reputable firms in partnership with our Native Corporation partners
and local stakeholders to secure support from a variety of project stakeholders and to ensure the longevity and viable
development of such an important deposit in the Yukon-Kuskokwim region.
Those are only some of Donlin Gold’s relative advantages. To our knowledge, rarely has a project commenced
operations with a gold deposit3 of approximately 39 million ounces of gold in the measured and indicated mineral
resource categories, inclusive of proven and probable mineral reserves (541 million tonnes at an average grade of
approximately 2.24 grams per tonne in the measured and indicated resource categories on a 100% basis) 4, defined
with approximately 1,400 drill holes totaling over 339,000 meters.
NOVAGOLD and Barrick are fully aligned in carefully monitoring all of the above developments to advance Donlin
Gold towards construction, at a time when both partners conclude that they can achieve maximum benefits for all
stakeholders, including our shareholders. Given the industry’s suffering from both asset scarcity and the ravages of
3 S&P Global Intelligence, research of assets with gold as the primary commodity and level of resources prior to first production, 1990-2020.
4 Donlin Gold data as per the Second Updated Feasibility Study (as defined herein). Donlin Gold measured resources of approximately 8 Mt
grading 2.52 g/t and indicated resources of approximately 534 Mt grading 2.24 g/t, each on a 100% basis and inclusive of mineral reserves. Mineral
resources have been estimated in accordance with NI 43-101.
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rising jurisdictional risk, we believe that having equal ownership in a Tier 1 asset 5 located in one of the safest national
jurisdictions6 suggests that time is clearly on our side.
3. MISREPRESENTATION: “The deposit will require $6.7 bln in capital, [when] the feasibility study clearly
shows this number is $8 bln.”
JCAP’s statement that ‘management [is] deliberately misleading investors’ is false and libelous. Management has not
misled anyone. Initial capital as per FSU2 (as defined below) is $6.7 billion. The amount in FSU2 referenced by JCAP is
included in operating costs as required under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). It is noted
in the FSU2 the need to reconcile the accounting treatment of mine stripping costs incurred in the production
phase of a mine between U.S. GAAP and International Financial Reporting Standards (IFRS). Under IFRS, these costs
can be capitalized and reported as sustaining capital. Capitalization of these costs is not allowed under U.S. GAAP
and are expensed as operating costs. In either case, the expenditures are not initial capital and there is no impact on
the timing of project cash flows or net present value. As a real mining analyst knows, those are the rules .
4. MISREPRESENTATION: “JCAP also contends that “[t]he proposed natural gas pipeline central to powering
the project is dead on arrival.” The report quotes an engineer who worked on costing the pipeline as
saying he “doesn’t know of any engineering company that has the experience to build such a complex
pipeline.”
These are false and misinformed statements. Let us compare those referenced above: On the one side is an unnamed
source quoted in JCAP’s “report” and on the other is CH2M Hill (“CH2M”), one of the sector’s most reputable firms. In
2013, CH2M, which had been serving oil and gas clients in some of the world's harshest conditions for over 40 years,
was the sixth-largest employer in Alaska and the second-largest employer in the oil and gas industry in the state. In
2017, CH2M was ranked #22 on Fortune's 2017 “Top 50 Companies that Change the World” list for making a positive
impact on society. That same year, it was acquired by Dallas-based Jacobs Engineering Group for $3.27 billion,
including CH2M’s net debt. One of the deal drivers, as cited in the media, was CH2M’s infrastructure business.
CH2M’s standing in the industry is reflected by the excellent work that was done in support of the natural gas
pipeline plan for Donlin Gold – as reinforced by support from four highly experienced pipeline construction
contractors, four civil infrastructure contractors, environmental consultants, and a risk analysis by an independent
third party consultant. The result: a thorough business and development plan that was completed and included in
FSU2. Consistent with Donlin Gold’s commitment to excellence and due diligence, Michael Baker International
(“Michael Baker”) was later brought in to build upon CH2M’s strong work and carry the proposed pipeline design and
detailed engineering through issuance of the Donlin Gold Pipeline and Hazardous Materials Safety Administration
(PHMSA) special permit in 2018 as well as ongoing review and authorization by the State of Alaska’s Pipeline
Coordinator’s Office. Michael Baker is a leading provider of engineering and consulting services to the oil and gas
industry, including design, planning, architectural, environmental, construction and program management services,
and with specific Artic pipeline experience. Michael Baker has been working to solve some of the world’s m ost
complex infrastructure challenges for nearly 80 years.
Dr. Thomas S. Kaplan, Chairman of NOVAGOLD, added the following statement:
“That a law firm attempted to solicit NOVAGOLD shareholders based entirely on a fundamentally flawed “report”
issued by JCAP – one that the Company has systematically shown to be rife with flat-out falsehoods and misleading
information – is par for the course in this dirty game. Even with NOVAGOLD’s line-by-line factual rebuttal available to
5 Barrick Gold defines a Tier 1 gold asset as a mine with a stated mine life in excess of 10 years with annual production of at least five hundred
thousand ounces of gold and total cash cost per ounce within the bottom half of Wood Mackenzie’s cost curve tools (excluding state-owned and
privately owned mines); https://www.barrick.com/English/news/news-details/2019/Nevada-Gold-Mines-Launched-Best-Assets-Best-people-Will-
Deliver-Best-
Value/default.aspx#:~:text=A%20Tier%20One%20gold%20asset%20is%20a%20mine%20with%20a,owned%20and%20privately%20owned%20mi
nes.
6 Fraser Institute Annual Survey of Mining Companies 2019, Investment Attractiveness Index, where Alaska ranks #4 in the world (behind Western
Australia, Finland, and Nevada).
https://www.fraserinstitute.org/sites/default/files/annual-survey-of-mining-companies-2019.pdf
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them, the law firm did nothing more than repeat a slapdash mixture of errors of fact, falsehoods, and discredited
assertions. The timing of this solicitation is curious – coming the day after NOVAGOLD’s announcement of the filing
of its lawsuit for defamation against JCAP in connection with its “short and distort” scheme – a suit that we fully
believe NOVAGOLD will win.
We shall not be issuing responses to every dart aimed at us. We seek to highlight Hagens Berman’s press release,
however, because it is emblematic of the amateurishness and abject ignorance of the public statements made
recently about NOVAGOLD by JCAP and now repeated by others. To the extent that any of our shareholders believe
they have been damaged, I encourage them to seek advice about whether any redress is available to th em from the
real perpetrator of wrongs: JCAP. Those who are interested should examine NOVAGOLD’s rebuttal to J CAP’s tapestry
of deceit to understand the truth behind the falsehoods. I am quite sure that any thoughtful examination will
conclude that, contrary to Hagens Berman’s narrative, JCAP is the one peddling the falsehoods and
misrepresentations. I also suggest that the investing public refresh their understanding of the investment case for
NOVAGOLD, for Donlin really is unique in its combination of attributes. There is a reason why NOVAGOLD – a pure
play on what we believe to be the best development-stage asset in gold – so outperformed the averages such that
we were clearly causing pain to short sellers.
The reasons are straightforward. Donlin Gold is a “category killer” that, we are confident, will not only be built if gold
does what we expect it will do but, if anything, likely would be one of the only big mines built during the next bull
market in gold. In an era characterized by asset scarcity and dwindling jurisdictional options for miners, it is
NOVAGOLD’s contention that Donlin Gold may well be – yes – unique. We are not aware of any other development-
stage gold asset in the world that enjoys Donlin Gold’s rare combination of resource size, high grade for an open pit,
attractive operating costs, obvious exploration potential, decades -long mine life, pro forma production profile (it has
the potential to become the largest pure gold producing mine in the world) – and to be so in Alaska, the second-
largest gold producing State in one of the safest national jurisdictions in the world. Between this extraordinary asset
and a management team with an unbroken record of success – led by the former President of Barrick Gold North
America, Greg Lang – it is really no wonder that NOVAGOLD has done so well.
We are confident that informed investors will see the absurdity of J CAP’s so-called analysts whose experience in the
sector is so ridiculous when compared to that of NOVAGOLD’s management and investor base. To our knowledge,
JCAP has no known experience in mining, other than two past recommendations: namely, a short on Fortescue
Metals Group, which subsequently nearly trebled in value, and a bullish stance on Mongolian Mining Corporation.
That stock has since fallen 99% in value.
Ultimately, investors should not be fooled by JCAP and see this exercise for what it is: a scam, a heist if you will, that
now represents an opportunity to new investors at the expense of the existing ones. The investment case, however,
remains stronger than ever. As we have stated multiple times, it is our firm belief that the scarcity of high -quality
assets in safe jurisdictions will render NOVAGOLD a “go-to” stock in the gold development space. As a pure play on
the Donlin Gold brand that we anticipate will soon be seen as Alaska’s “Carlin Trend”, our company’s outperformance
in the marketplace presumably became of great concern to short sellers who had only to look at the price charts to
understand that NOVAGOLD represents an extraordinary vehicle for gold investors. In this at least, they are right.”
JUNE 8, 2020 STATEMENTS IN RESPONSE TO THE SHORT AND DISTORT REPORT
NOVAGOLD provided a comprehensive rebuttal to the JCAP “report” countering each false and misleading
statement. These rebuttal statements were all distributed on June 8, 2020, as follows:
Media Release: “NOVAGOLD Provides Comprehensive Response to Misleading and False Short -Seller
Report”: https://www.novagold.com/_resources/news/2020-06-08.pdf
Chairman’s Letter: “NOVAGOLD Chairman Thomas S. Kaplan Addresses Misleading Short -and-Distort Report
by Short Seller”: https://www.novagold.com/_resources/news/2020-06-08b.pdf
Line-by-Line “Fact Matrix Report Detailing Falsehoods and Intentionally Misleading Statements Contained in
the May 28, 2020 JCAP Report”: https://www.novagold.com/_resources/news/2020-06-08c.pdf
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As announced on July 7, 2020, the Company has served JCAP with a civil action lawsuit for defamation in the United
States District Court for the Eastern District of New York and is aggressively pursuing redress. NOVAGOLD will continue
to vigorously defend itself against baseless attempts to manipulate its share price.
Furthermore, as NOVAGOLD has shown repeatedly, it believes that JCAP is spreading false and misleading information
about the Company and is the perpetrator of wrongs. The Company encourages anyone who is interested to read the
documents referenced above to see the truth.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on the development of its 50% -owned Donlin Gold
project in Alaska, one of the safest mining jurisdictions in the world. With approximately 39 million ounces of gold in
the measured and indicated mineral resource categories, inclusive of proven and probable mineral reserves (541
million tonnes at an average grade of approximately 2.24 grams per tonne in the measured and indicated resource
categories on a 100% basis),7 Donlin Gold is regarded to be one of the largest, highest-grade, and most prospective
known open pit gold deposits in the world. According to the Sec ond Updated Feasibility Study (as defined below),
once in production, Donlin Gold is expected to produce an average of more than one million ounces per year over a
27-year mine life on a 100% basis. The Donlin Gold project has substantial exploration poten tial beyond the designed
footprint which currently covers three kilometers of an approximately eight -kilometer long gold-bearing trend.
Current activities at Donlin Gold are focused on state permitting, optimization work, community outreach and
workforce development in preparation for the construction and operation of this project. With a strong balance
sheet, NOVAGOLD is well-positioned to fund its share of permitting and optimization advancement efforts at the
Donlin Gold project.
Scientific and Technical Information
Some scientific and technical information contained herein with respect to the Donlin Gold project is derived from the
“Donlin Creek Gold Project Alaska, USA NI 43-101 Technical Report on Second Updated Feasibility Study” prepared by
AMEC with an effective date of November 18, 2011, as amended January 20, 2012 (the “Second Updated Feasibility
Study” or FSU2). Kirk Hanson, P.E., Technical Director, Open Pit Mining, North America, (AMEC, Reno), and Gordon
Seibel, R.M. SME, Principal Geologist, (AMEC, Reno) are the Qualified Persons responsible for the preparation of the
independent technical report, each of whom are independent “qualified persons” as defined by NI 43- 101.
Clifford Krall, P.E., who is the Mine Engineering Manager for NOVAGOLD and a “qualified person” under
NI 43-101, has approved and verified the scientific and technical information related to the Donlin Gold project
contained in this media release.
NOVAGOLD Contacts:
Mélanie Hennessey
Vice President, Corporate Communications
Jason Mercier
Manager, Investor Relations
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding Forward-Looking Statements
This media release includes certain “forward-looking information” and “forward-looking statements” (collectively “forward-looking statements”) within
the meaning of applicable securities legislation, including the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements
are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible”, and similar
expressions, or statements that events, conditions, or results “will”, “may”, “could”, “would” or “should” occur or be achieved. Forward-looking statements
are necessarily based on several opinions, estimates and assumptions that management of NOVAGOLD considered appropriate and reasonable as of the
7 Donlin Gold data as per the Second Updated Feasibility Study (as defined herein). Donlin Gold measured resources of approximately 8 Mt
grading 2.52 g/t and indicated resources of approximately 534 Mt grading 2.24 g/t, each on a 100% basis and inclusive of mineral reserves. Mineral
resources have been estimated in accordance with NI 43-101.
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date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results,
activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. All statements,
other than statements of historical fact, included herein are forward-looking statements. These forward-looking statements include statements regarding
the response of the Company to the JCAP report; the potential development and construction of Donlin Gold; the sufficiency of funds to continue to
advance development of Donlin Gold; perceived merit of properties; mineral reserve and resource estimates; and future share price performance of
NOVAGOLD. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are
forward-looking statements. Forward-looking statements are not historical facts but instead represent NOVAGOLD’s management expectations,
estimates and projections regarding future events or circumstances on the date the statements are made.
Important factors that could cause actual results to differ materially from expectations include the need to obtain additional permits and governmental
approvals; the timing and likelihood of permits; the need for additional financing to explore and develop properties and availability of financing in the debt
and capital markets; the outbreak of the coronavirus global pandemic (COVID-19); uncertainties involved in the interpretation of drill results and geological
tests and the estimation of reserves and resources; the need for continued cooperation between NOVAGOLD and Barrick Gold Corp. for the continued
exploration, and development and eventual construction of the Donlin Gold property; the need for cooperation of government agencies and native groups
in the development and operation of properties; risks of construction and mining projects such as accidents, equipment breakdowns, bad weather, disease
pandemics, non-compliance with environmental and permit requirements, unanticipated variation in geological structures, ore grades or recovery rates;
unexpected cost increases, which could include significant increases in estimated capital and operating costs; fluctuations in metal prices and currency
exchange rates; whether a positive construction decision will be made regarding Donlin Gold or Galore Creek; and other risks and uncertainties disclosed in
NOVAGOLD’s most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports and other documents filed by NOVAGOLD
with applicable securities regulatory authorities from time to time. Copies of these filings may be obtained by visiting our Investor Relations website at
www.novagold.com or the SEC's website at www.sec.gov or at www.sedar.com. The forward-looking statements contained herein reflect the beliefs,
opinions and projections of NOVAGOLD on the date the statements are made. NOVAGOLD assumes no obligation to update the forward-looking statements
of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Cautionary Note to United States Investors
This media release has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of
U.S. securities laws. Unless otherwise indicated, all resource and reserve estimates included in this media release have been prepared in accordance with
Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and
Petroleum (CIM)—CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (“CIM Definition
Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the
United States Securities and Exchange Commission (SEC) Industry Guide 7 (“SEC Industry Guide 7”), and resource and reserve information contained herein
may not be comparable to similar information disclosed by U.S. companies. NOVAGOLD’s disclosure concerning Reserve & Resources Estimates remains
consistent with NI 43-101. Under SEC Industry Guide 7, mineralization may not be classified as a "reserve” unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the time the reserve determination is made. SEC Industry Guide 7 normally does
not permit the inclusion of information concerning "measured mineral resources”, "indicated mineral resources” or "inferred mineral resources” or other
descriptions of the amount of mineralization in mineral deposits that do not constitute "reserves” under SEC Industry Guide 7 in documents filed with the SEC.
Investors should also understand that "inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their
economic and legal feasibility. Under Canadian rules, estimated "inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies
except in rare cases. Disclosure of "contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only
permits issuers to report mineralization that does not constitute "reserves” under SEC Industry Guide 7 as in-place tonnage and grade without reference to
unit measures. The requirements of NI 43-101 for identification of "reserves” are also not the same as those of SEC Industry Guide 7, and reserves reported by
NOVAGOLD in compliance with NI 43-101 may not qualify as "reserves” under SEC Industry Guide 7. Donlin Gold does not have known reserves, as defined
under SEC Industry Guide 7. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by
companies that report in accordance with SEC Industry Guide 7.
On October 31, 2018, the SEC adopted a final rule (“New Final Rule”) that will replace SEC Industry Guide 7 with new disclosure requirements that are more
closely aligned with current industry and global regulatory practices and standards, including NI 43-101. Companies must comply with the New Final Rule
for the Company’s first fiscal year beginning on or after January 1, 2021, which for NOVAGOLD would be the fiscal year beginning December 1, 2021. The
New Final Rule provides that SEC Industry Guide 7 will remain effective until all registrants are required to comply with the New Final Rule, at which time
SEC Industry Guide 7 will be rescinded. While early voluntary compliance with the New Final Rule is permitted, NOVAGOLD has not elected to comply with
the New Final Rule at this time.