NOVAGOLD Reports First Quarter Results with Donlin Gold Permitting and Optimization Advancing as Planned The final Environmental Impact Statement (EIS) for the Donlin Gold project is complete and expected to be published shortly by the U.S. Army Corps of Engineers (the “Corps”)
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NOVAGOLD Reports First Quarter Results with Donlin Gold Permitting and Optimization
Advancing as Planned
The final Environmental Impact Statement (EIS) for the Donlin Gold project is complete and expected to be
published shortly by the U.S. Army Corps of Engineers (the “Corps”)
With $77 million in cash and term deposits as of February 28, 2018, NOVAGOLD has sufficient funding to complete
permitting and planned project optimization work at Donlin Gold, as well as meet its other financial obligations
April 4 , 201 8 - Vancouver, British Columbia – NOVAGOLD RESOURCES INC. (TSX, NYSE American: NG) today
released its 2018 first quarter financial results and updates for its flagship Donlin Gold project in Alaska , which
NOVAGOLD owns equally with Barrick Gold Corporation ( “Barrick”), and its Galore Creek copper-gold-silver project in
British Columbia, which NOVAGOLD owns equally with Teck Resources Limited (“Teck”).
Details of the financial results for the first quarter ended February 28, 2018 are presented in the consolidated financial
statements and quarterly report filed on Form 10-Q with the SEC that is available on the Company's website at
www.novagold.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov. All amounts are in U.S. dollars
unless otherwise stated and all resource and reserve estimates are shown on a 100% project basis.
In the first quarter 2018, NOVAGOLD achieved the following milestones:
Donlin Gold permitting progressed on all fronts with the following activities:
The Corps has completed the final EIS and anticipates publishing the document shortly, along with a
Notice of Availability in the Federal Register. The final EIS will be made available on the Donlin Gold EIS
website: www.donlingoldeis.com. A Record of Decision (ROD) is expected to follow in the second half of
the year.
The public comment period for the State of Alaska’s draft water discharge and integrated waste
management permits closed on February 13.
Other key state and federal permits and approvals are scheduled to be finalized concurrent ly with or
shortly after the Corps’ ROD in 2018.
In collaboration with Barrick, NOVAGOLD advanced the optimization work intended to improve capital
efficiencies and enhance the project’s execution plan while maintaining project upside potential
Released 2017 Donlin Gold drill program results:
A total of 16 core holes were completed (7,040 m) and core samples assayed
Mineralized intercepts encountered higher grades than predicted by previous mod eling
Distinct significant high-grade zones were intercepted in multiple areas
High-grade mineralization was intercepted at depth in the ACMA deposit in an area of sparse drilling
Data from the drill program will be incorporated into the resource model and ongoing optimization work
The optimization efforts and results from the 2017 drill program are expected to provide a solid foundation to
update the Donlin Gold project’s 2011 feasibility study
Community outreach efforts continued in both Alaska and Northern British Columbia:
NOVAGOLD and Donlin Gold staff visited several villages with representatives of the Calista Corporation
and The Kuskokwim Corporation (TKC) across the Yukon-Kuskokwim (Y-K) region to meet with
traditional village councils, residents and students
Donlin Gold sponsored the Kuskokwim 300 race in Alaska and musher Peter Kaiser who won the race
Donlin Gold received a recognition award from Excel Alaska for its sponsorship and involvement in
education for youth in the Y-K region
Galore Creek sponsored the Junior Tahltan Selects and Tahltan Selects Jamboree hockey teams in British
Columbia who won gold in Whitehorse
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President’s Message
Donlin Gold Project
During the first quarter of 2018, we focused our efforts on supporting the Corps’ activities to complete the Donlin Gold
final EIS. The Corps anticipates issuing the document and publishing a Notice of Availability in the Federal Register
shortly. The Corps’ ROD is expected to follow in the second half of this year. The final EIS presents a comprehensive
environmental impact analysis that the Corps will use in making its decision on whether to issue the Clean Water Act
Section 404 and Rivers and Harbors Act Section 10 permits – the key Federal authorizations for the project. The ROD
will describe both the legal and technical basis for the Corps’ permitting decision. The permit s that authorize project
construction should be issued shortly after the ROD. We have worked diligently to reach this major milestone while
taking this project up the value chain and it’s encouraging to see that permitting is nearly complete. Between
publishing the final EIS and the issuance of the ROD, the Corps must complete several activities, including preparation
of both the ROD and Section 404 permit which would then be sent to the State to ensure that the decision complies
with Alaska’s water quality standards. The Corps will also document its compliance with Section 404(b)(1) of the Clean
Water Act; the detailed evaluation showing why the permitted project represents the least environmentally damaging
practicable alternative compared to other project options reviewed. In addition, other consultations that had been
commenced earlier in the EIS process would be finalized, including compliance with the National Historic Preservation
Act, Endangered Species Act, and Magnuson-Stevens Fishery Conservation and Management Act which protects
essential fish habitat.
Significant progress has been achieved toward securing other major state permits, including completion of the public
comment period for the draft water discharge and integrated waste management permits. Other key state and federal
permits and approvals are scheduled to be finalized concurrent ly with or shortly after the Corps’ ROD.
Earlier in the year, we released results of the Donlin Gold 2017 drill program, which included drilling and assaying of 16
core holes (7,040 m)1. We were pleased to report that mineralized intercepts encountered higher grades than
predicted by previous modeling and drilling intercepted distinct and significant high -grade zones in multiple areas,
including high-grade mineralization at depth in the ACMA deposit in an area of previously sparse drilling. These results
will be incorporated in the upcoming optimization work designed to evaluate the prospect of reducing upfront capital
costs and enhancing the overall execution plan. We also plan to explore the viability of using more selective mining
practices to increase mined grade. All of this work should form a solid foundation for updating the 2011 feasibility
study.
We are particularly gratified to continue working with Calista and TKC, our Native Corporation partners and owners of
the mineral and surface rights respectively, to make sure that Donlin Gold is built to the highest standards of safety,
environmental stewardship, engineering excellence and community engagement. We all believe that the native
communities of Alaska should realize the vision inherent in the Alaska Native Claims Settlement Act by developing
Donlin Gold into a model mine that has the potential to operate for decades to come.
Donlin Gold is expected to be one of the largest pure gold producing mines in the world while also being in one of the
safest jurisdictions in the world. Alaska is America’s second largest gold-producing state, offering jurisdictional
stability and a time-honored tradition of, and respect for, the rule of law and responsible mining. With approximately
39 million ounces of measured and indicated gold resources grad ing 2.24 grams per tonne2, Donlin Gold is more than
four times the size of the peer group average and nearly double the world average grade 3. Its exploration potential, as
evidenced by the planned pits occupying only three kilometers of an eight -kilometer mineralized belt, is exceptional.
1 NOVAGOLD press release dated February 20, 2018 titled “NOVAGOLD’s Donlin Gold Project Reports Excellent Results from 2017 Drill Program.”
2 Donlin Gold data as per the second updated feasibility study effective November 18, 2011, as amended January 20, 2012. Donlin Gold measured
resources of 8 Mt grading 2.52 g/t and indicated resources of 534 Mt grading 2.24 g/t, inclusive of proven reserves of 8 Mt grading 2.32 g/t and probable
reserves of 497 Mt grading 2.08 g/t.
3 Comparison peer group of 18 projects based on large (2Moz P&P cut off), North/South American gold-focused development projects.
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All of these project attributes converge in Donlin Gold at a time when no large discoveries have been made in years,
average grades continue to fall, and resource nationalism is reaching levels that make mine development unworkable
in many resource-based countries of Africa, Asia and South America.
Galore Creek Project
In 2017, surface reconnaissance exploration was conducted at Galore Creek and the results were presented by the
Galore Creek Management Corporation at the 2018 Prospectors & Developers Association of Canada Convention. The
project hosts approximately nine billion pounds of copper, eight million ounces of gold and 136 million ounces of silver
in measured and indicated resources4. When developed, Galore is expected to be one of Canada’s largest copper
producers. We recognize, however, that our focus should be directed towards the advancement of Donlin Gold. Thus ,
we will continue to explore productive ways for monetizing our position in Galore Creek. A sale would further
strengthen our balance sheet and provide us with additional financial resources to invest in the development of the
Donlin Gold project.
Stakeholder Engagement
NOVAGOLD strongly believes that transparent and open communication with local communities is an essential part of
our day-to-day life. Our social license must be based on trust and a deep understanding of the values, culture,
challenges and goals of the communities where we operate. We pride ourselves on the level of engagement with our
Native Corporation partners, the residents, and organizations of the Y-K region. To that end, with our partners Calista
and TKC, we visited several villages to meet with traditional village councils, residents and students across the Y-K
region near the Donlin Gold project. Donlin Gold sponsored Alaska’s Kuskokwim 300 race and dog musher Peter
Kaiser, who is from the region and in 2018 won his third consecutive race. Pete and fellow Y-K mushers Richie Diehl
and Michael Williams, Jr., also excelled in the 46th Iditarod Sled Dog race, finishing 5 th, 6th, and 25th, respectively. Our
team participated with Donlin Gold in the Bethel Regional High School Career Fair and the Y-K Delta Workforce
Development meeting in Bethel. Donlin Gold was also the proud recipient of a recognition award from Excel Alaska for
its sponsorship and involvement in education for youth in the Y-K region. At Galore Creek, we continued to support
various initiatives with our partner the Tahltan First Nation and its people located in communities in Northern British
Columbia. We congratulate the youth hockey teams we sponsor, the Junior Tahltan Selects and Tahltan Selects
Jamboree, who won gold in Whitehorse this March.
Another important part of our engagement effort includes the frequent outreach with our shareholders and potenti al
investors through various conferences, one-on-one meetings, calls and proxy/post-proxy meetings. Although the
Company has not needed financing in more than six years and has an excellent balance sheet that is ample for its
present needs, it is our view that ongoing investor engagement is critical to continue to communicate our story to
existing shareholders as well as attract new investors who, we believe, should benefit from the progress we expect to
achieve in advancing our assets up the value chain.
Balance Sheet
Our healthy treasury has allowed us to carefully and consistently deliver on our strategy over the last six years of de-
risking the Company by successfully permitting our flagship property, Donlin Gold , and further enhancing the value of
our projects. With $77 million in cash and term deposits as of February 28, 2018, we have sufficient funds to complete
permitting and planned project optimization work at Donlin Gold, as well as meet our other financial obligations.
NOVAGOLD offers a truly unique investment opportunity in two incredibl e, high quality, large-scale undeveloped
precious and base metals deposits in safe jurisdictions. After having substantially de-risked both projects, we believe
that when the broader market realizes the escalating scarcity value of these great assets, our shareholders and
4 Galore Creek project estimates as per the pre-feasibility study effective September 12, 2011. Measured resources total 108M tonnes grading 0.48%
Cu, 0.48 g/t Au, and 4.1 g/t Ag; and indicated resources total 706M tonnes grading 0.50% Cu, 0.28 g/t Au, and 5.4 g/t Ag. Pr oven reserves total 69M
tonnes grading 0.61% Cu, 0.52 g/t Au, and 4.9 g/t Ag; and probable reserves total 459M tonnes grading 0.58% Cu, 0.29 g/t Au, and 6.2 g/t Ag. Measured
and indicated resources are inclusive of proven and probable reserves.
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stakeholders will be rewarded for their patience. We are appreciative of the engagement and support from all the
parties that are involved and committed to responsible development from Calista, TKC and the Tahltan First Nation, to
the government agencies at the State, Provincial and Federal levels. It takes teamwork to execute the activities
needed to advance our projects. Our Board and I thank our partners and stakeholders at Donlin Gold, Barrick,
NOVAGOLD, Galore Creek and Teck, for their dedication to our joint ventures.
Gregory A. Lang
President & CEO
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Financial Results
in thousands of U.S. dollars, except for per share amounts
Three months ended
February 28, 2018
$
Three months ended
February 28, 2017
$
General and administrative expense (1) 4,685 6,731
Share of losses – Donlin Gold 1,841 2,082
Share of losses – Galore Creek 253 150
Total operating expenses 6,779 8,963
Loss from operations (6,779) (8,963)
Other expense (1,370) (1,127)
Income tax expense (66) (53)
Loss for the period (8,215) (10,143)
Loss per share, basic and diluted (0.03) (0.03)
At
February 28, 2018
$
At
November 30, 2017
$
Cash and term deposits 76,931 83,954
Total assets 393,961 398,869
Total liabilities 114,424 114,840
(1) Includes share-based compensation expense of $1,949 and $3,925 for the first quarter-ended February 28, 2018 and 2017, respectively.
For the first quarter ended February 28, 2018, loss from operations decreased from $9.0 million in 2017 to $6.8 million
in 2018 due to lower general and administrative expense and lower costs at Donlin Gold. General and administrative
expense decreased by $2.0 million due to lower share-based compensation costs for stock options and PSUs compared
to the prior year. NOVAGOLD extended the vesting period for new stock option grants and for half of the PSU grants
issued in the first quarter of 2018 to three years and eliminated the indivi dual performance multiplier in the formula for
long-term equity compensation, which had the potential to increase long -term equity incentive grants above the
target amount.
Net loss decreased from $10.1 million in the first quarter of 2017 to $8.2 million ($0.03 per share, respectively) in the first
quarter of 2018, primarily due to lower share-based compensation. Lower operating costs in the current period were
partially offset by a $0.3 million increase in interest expense on the promissory note payable to Barrick.
Liquidity and Capital Resources
Spending for the Donlin Gold project decreased in the first quarter of 2018 when compared to the same quarter of the
prior year due to lower permitting costs at Donlin Gold, partially offset by higher optimization costs. Spending
increased at the Galore Creek project due to the timing of care and maintenance costs. Cash used in operating
activities increased by $0.4 million in the first quarter of 2018 over 2017, due to higher annual employee incentive
payments. In the first quarter of 2017, an additional $5.0 million was invested in term deposits and $0.2 million of
withholding taxes were paid on performance share units vested. No cash was used in financing activities in the first
quarter of 2018.
As previously acknowledged, we believe that our cash and term deposits are sufficient to cover the anticipated funding
at the Donlin Gold and Galore Creek projects in addition to general and administrative costs through completion of
permitting at the Donlin Gold project. The term deposits are denominated in U.S. dollars and held at Canadian
chartered banks.
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2018 Outlook
The Company continues to anticipate a total budget for the year of approximately $28 million, $14 million to fund our
share of expenditures at the Donlin Gold project, including permitting costs of $9 million and project optimization work
of $5 million, $3 million at the Galore Creek project, and $11 million for general and administrative costs.
NOVAGOLD remains focused on four primary goals in 2018: advance the Donlin Gold project toward a construction/
production decision; maintain a favorable reputation of the Company and its projects among shareholders, Native
entities and other stakeholders; promote a strong safety culture maintaining a zero lost-time accident record at all
project and office locations; and safeguard the treasury.
Conference Call & Webcast Details
NOVAGOLD’s conference call and webcast to discuss these results will take place on April 5, 2018 at 8:00 am PT (11:00
am ET). The webcast and conference call-in details are provided below.
Webcast: www.novagold.com/investors/events/
North American callers: 1-855-475-2134
International callers: 1-661-378-9964
Conference ID: 8579205
The webcast will be archived on NOVAGOLD’s website for one year. To request a transcript of the call, please email us
at: [email protected].
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on the permitting and 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 resource categories (541 million tonnes at an average grade of
approximately 2.2 grams per tonne) 5, inclusive of proven and probable reserves, Donlin Gold is regarded to be one of
the largest, highest grade, and most prospective known gold deposits in the world. According to the Second 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 potential beyond the designed footprint which currently covers only three kilometers of an approximately
eight-kilometer long gold-bearing trend. Current activities at Donlin Gold are focused on per mitting, optimization
work, community outreach and workforce development in preparation for the construction and op eration of this top
tier asset. NOVAGOLD also owns 50% of the Galore Creek copper-gold-silver project located in northern British
Columbia. According to the 2011 Pre-Feasibility Study (as defined below), once in production, Galore Creek is expected
to be the largest copper mine in Canada, a tier-one mining jurisdiction. NOVAGOLD anticipates selling all or a portion
of its interest in Galore Creek and would apply the proceeds toward the development of Donlin Gold. With a strong
balance sheet, NOVAGOLD is well positioned to stay the course and take Donlin Gold through permitting.
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”). Kirk Hanson, P.E., Technical Director, Open Pit Mining, North America, (AMEC, Reno), and Gordon Seibel, R.M.
5 Donlin Gold data as per the second updated feasibility study effective November 18, 2 011, as amended January 20, 2012. Donlin Gold measured
resources of 8 Mt grading 2.52 g/t and indicated resources of 534 Mt grading 2.24 g/t, inclusive of proven reserves of 8 Mt grading 2.32 g/t and probable
reserves of 497 Mt grading 2.08 g/t.
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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.
Certain scientific and technical information contained herein with respect to Galore Creek is derived from the technical
report entitled "Galore Creek Project British Columbia NI 43 -101 Technical Report on Pre-Feasibility Study" dated
effective July 27, 2011 (the "2011 Pre-Feasibility Study"). The Qualified Persons responsible for the preparation of the
independent technical report are Greg Kulla, P. Geo., Principal Geologist (AMEC Americas Limited), and Jay Melnyk, P.
Eng. (AMEC Americas Limited), 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 press release.
NOVAGOLD Contacts:
Mélanie Hennessey
Vice President, Corporate Communications
Allison Pettit
Manager, Investor Relations
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding Forward-Looking Statements
This press 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. All statements, other than
statements of historical fact, included herein including, without limitation, the timing of permitting and potential development of Donlin Gold, statements
relating to NOVAGOLD’s future operating and financial performance, production estimates and 2018 outlook are forward-looking statements. 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. These
forward-looking statements may include statements regarding; exploration potential of Donlin Gold; mine life and production estimates at Donlin Gold;
perceived merit of properties; anticipated permitting timeframes; exploration results and budgets; mineral reserve and resource estimates; work programs;
capital expenditures; timelines; strategic plans; benefits of the project; completion of transactions; market prices for precious and base metals; or other
statements that are not statements of fact. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such
statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from NOVAGOLD’s expectations include the uncertainties involving the interpretation of the drill
results, the need to obtain permits and governmental approvals; the need for additional financing to explore and develop properties and availability of
financing in the debt and capital markets; uncertainties involved in the interpretation of drilling results and geological tests and the estimation of reserves
and resources; the need for continued cooperation with Barrick Gold Corporation for the continued exploration and development 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, 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; and other risk and uncertainties disclosed in NOVAGOLD’s Annual Report filed on
Form 10-K for the year-ended November 30, 2017 with the United States Securities and Exchange Commission, Canadian securities regulators, and in other
NOVAGOLD reports and documents filed with applicable securities regulatory authorities from time to time. NOVAGOLD’s forward-looking statements
reflect the beliefs, opinions and projections 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 press 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 press 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), and resource and reserve information contained herein may not be comparable to similar
information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term "resource” does not equate to the
term "reserves”. Under U.S. standards, 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. The SEC's disclosure standards
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normally do 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” by U.S. standards in documents filed
with the SEC. Investors are cautioned not to assume that all or any part of “measured” or “indicated resources” will ever be converted into “reserves”.
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” by SEC standards 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 the SEC, and reserves reported
by NOVAGOLD in compliance with NI 43-101 may not qualify as "reserves” under SEC standards. 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 U.S. standards.