Novagold Resources Inc.

Thank you for standing by. This is the conference operator. Welcome to the NOVA Gold Third Quarter 2022 Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. Webcast viewers may submit questions through the text box in the lower right corner of the webcast frame. I would now like to turn the conference over to Melanie Hennessey, Vice President, Corporate Communications. Please go ahead.

Thank you, Gary. Good morning, everyone. We are pleased that you have joined us for NOVA Gold's 2022 third quarter financial results and also for an update on the Darwin Gold Project. On today's call, we have Greg Lang, Novogold's President and CEO, and David Ottowell, Novogold's Vice President and CFO. At the end of the webcast, we will take questions on the phone and respond to questions received during the webcast and also via email. I would like to remind participants that as stated on slide three, any statements made today may contain forward-looking information such as projections and goals, which are likely to involve risks detailed in our various EDGAR and CDAR filings, and forward-looking disclaimers included in this presentation. I now have the pleasure of turning the presentation over to our President and CEO, Greg Klein. Greg?

Thank you, Melanie. We continue to be encouraged by the outstanding drill results in the ACMA and Lewis deposits. that have returned significant high-grade intercepts and demonstrated good grade continuity. These results further support the global resource estimate, recent modeling concepts, and strategic mine planning work. We have included some examples of high-grade intercepts on slide four, which include hole 2020 with over 52 meters grading almost 15 grams per ton. Another segment in that same hole intersected over 18 meters at almost 11 grams per ton, and drill hole 2056 with 74 meters at over 4 grams per ton. For a more extensive description of recent drill results, please refer to the joint release from Novigold, Barrick, and Donlan Gold dated July 28, 2022. Additionally, the Donlon Gold Board approved an increase from 34,000 meters to 42,000 meters in the third quarter. The drilling at site recently wrapped up with a total of 141 holes. To date, the Donlon Gold Project reported assay results for approximately 9,870 meters with additional assays expected to be released in the coming weeks, and the final results will be available in early 2023. Donlon Gold's 2022 expenditures are estimated to be about $64 million, of which Novel Gold's share is 50%. As shown on slide five, The drill program included tight spaced grid drilling in structural domains in pit and below pit exploration in sparsely drilled areas. Platform mapping to confirm mineralization continuity and key geologic controls in several areas of the deposit. Waste rock facility condemnation drilling. and 13 geotechnical drill holes for the Alaska dam safety certificates. The expenditures also support the advancement of project planning and field work, as well as numerous environmental community and external affairs initiatives. After decades of engagement, We continue with our proactive bipartisan outreach in Alaska and Washington, D.C., with our partner, Chalista, to highlight the thoroughness of the project's environmental review and the permitting processes, as shown on slide six. Alaska's U.S. Senators Lisa Murkowski and Senator Dan Sullivan have consistently expressed their long-term support for the Donlon Gold Project. Donlon Gold provides support to the state of Alaska as various agencies advance permits and certifications required for the project. Permitting in Alaska has represented a substantial undertaking over many years, and in fact, a tremendous achievement to ensure a diligent, thorough, transparent, an all-inclusive process for everyone involved. The inherent value of having a federally permitted project on private land designated by law for mining should not be overlooked. Slide seven lists all the federal and state permits and certificates received to date. As with all mining projects in the developed world, we have always prepared and organized ourselves for challenges. Our management team is intimately familiar with these processes that need to be followed. Donal & Gold and its owners, alongside the steadfast advocacy of CHLISTA and TKC, continue to support the state in its defense of what constitutes an exceptionally thorough and diligent permitting process. Ongoing Donland Gold permit activities are included in slide eight. We continue to support the Department of Environmental Quality in its efforts on the state's Clean Water Act 401 certification. On July 14th, the commissioner granted the request for an auditory hearing related to potential water temperature effects in Crooked Creek. The briefing is underway and should be completed in the next six months. The right-of-way lease for portions of the natural gas pipeline on state land was separately appealed in Alaska Superior Court by two parties. Legal briefings are being prepared by the parties, and we anticipate a decision in 2023. The state of Alaska's issuance of water rights for the mine and transportation facilities was also appealed. The administrative record was filed on September 12, 2022, with both parties preferring their initial briefs. A decision is expected next year. It should be noted that all of the appeals challenging Donlon Gold permits to date have been unsuccessful, often multiple times, and we have confidence in the process. Nonetheless, objecting to mining is part of the business in itself. With respect to the reissuance or granting of new permits, we are working on the following. A new air quality permit which is expected to be in place in mid 2023. This is required in order to ascertain that the emission controls reflect best available technology and that air quality standards will be met. An updated Alaska Pollutant Discharge Elimination System application for a regularly scheduled renewal is coming up and we anticipate a decision by mid 2023. Relocating easements and public right-of-ways in the project area, the agency issued the proposed relocation plan for public comment in the summer of 2022, and a final decision is expected by year-end. Lastly, the fieldwork related to the issuance of the Alaska Dam Safety Certificates resumed during the third quarter. Nova Gold and Donlon Gold continue to work with Jalista and TKC in all aspects of outreach and engagement throughout the YK region. We're involved in the areas of education, health and safety, cultural traditions, and environmental initiatives, including creating a substance committee comprised of independent regional stakeholders, reflecting diverse views on development initiatives, among other activities. The success of our drill program and project activities in the third quarter and for the first nine months of the year is due to the exceptional dedication of the Donlon Gold team in Alaska, at the site, and in the Anchorage office. The majority of our employees were local hires from 24 different communities in the YK region, as shown on slide 10. They all share the goal of protecting the health and safety of their colleagues. Don and Gold has not had a lost time incident in over a decade with millions of man hours worked safely. that goal both at nova gold and donlon gold is indeed our top priority as shown on slide 11 sustained efforts were also underway in the third quarter to promote youth education and healthy activities in the yk region through programs such as alaska excel which provides life-changing educational and professional opportunities for rural Alaskan students and young adults. Other important initiatives included sponsoring the Alaska Native Heritage Center, which encourages cultural awareness across Alaska and our partnership with the Bethel Community Services Foundation, which is dedicated to development, growth, the continuance and enhancement of community-based programs and services. Two additional shared value statements were signed in the third quarter with villages in the YK region for a total now of 11. These agreements formalize current engagement with local communities, expand upon the long-term relationships already established with them, and address their specific community needs. Donland Gold and Nova Gold contributed to and partnered in the fifth In It for the Long Haul Back Haul project over the summer months to collect, remove, and safely dispose of household hazards and electronic wastes from 30 remote villages throughout the region. Several photos of this project are shown on slide 11. Over the past five years, nearly 400,000 pounds of waste was removed that otherwise would have ended up in landfills and waterways. David Otterwell, Novigold's Vice President and Chief Financial Officer, We'll now give an update on our third quarter financials. Dave?

Thanks, Greg. Slide 14 highlights our third quarter operating performance. We reported a net loss of $16.1 million in the third quarter, an increase of $4.2 million from the prior year quarter, of which $2.7 million was due to the expanded Donlon Gold Work Program, and $1.6 million from an increase in other expenses including increased interest expense on the Barrick note, a decrease in the fair value of marketable securities, foreign exchange movements, and lowering accretion income due to the maturity of the $75 million Newmont note last year. Third quarter cash flows are highlighted on slide 16. Cash and term deposits decreased by $10.4 million primarily to fund our share of Donlon Gold and for corporate administrative expenses. Compared to the prior year quarter, the increase in spending was due to the expanded work program at Donlon, partially offset by higher interest income. On slide 16, we note our strong treasury. Our financial position includes cash and cash equivalents of $62 million, term deposits of $70 million, and $25 million due from Newmont in July 2023. For the full year, we expect to spend $48 million, including $42 million at Donlon, $13 million for corporate G&A, and $3 million for withholding taxes on share-based compensation and working capital. I will now turn the presentation back over to Greg.

Thank you, Dave. Donlon Gold merits all of the attention it receives because of its unique principal attributes. As shown on slide 17, the reason for such a status beyond providing investors with pure leverage to gold lies in the project's key attributes. Starting with its size of almost 40 million ounces in M&I, It's scale as it is expected to be a million ounce a year producer. High grade at two and a quarter grams per ton and as a result is anticipated to be among the lowest cost producers. There's excellent exploration potential beyond the already planned almost three decades of production. Located in Alaska, the second largest gold producing state in the U.S. with a well-established tradition of responsible mining that provides sustainable longevity for an operation like Donley. We're also on private land designated for mining with Chalista and TKC as our partners who are dedicated to responsibly advancing this project. As shown on the bar chart on slide 18, with almost 40 million ounces of resources, Donlon Gold is by far the largest among the development projects. No other gold mine has started with this size. Anticipated to be a million ounce producer per year, the size not only provides scale, but longevity over a period of 27 years of production. As shown on slide 19, when looking at the select group of gold development projects in North and South America, Donlan is by far the largest. With exceptional grade at two and a quarter grams, or twice the industry average for an open pit project as shown on slide 20, this advantage enables Donlin to be predicted to be one of the lowest cost producers in the gold space. The expiration potential is another exceptionally attractive attribute. whereby the open pit resource encompasses only three kilometers of an eight-kilometer mineralized belt, which is less than 5% of the total land package at Donlin. As highlighted on slide 21, incredible upside exists to increase ounces and extend the mine life beyond three decades at Donlin Gold. Location is truly key and having great leverage in a place where you can keep the fruits of your leverage is worth the investment in time and resources. On the map included on slide 22, we feature top three gold producing operations in the world and the five largest gold development projects. defines what we consider to be the hallmark of a great natural resource investment. As stated on many occasions by our chairman and largest shareholder, Dr. Thomas Kaplan, a seasoned investor with over three decades of experience in the space. His investment thesis centers on establishing a stake in great assets that provide enormous leverage to an underlying theme. and that are located in a safe jurisdiction that will allow one to keep the fruits of that leverage. In light of its many outstanding and differentiated attributes, Donilon Gold is tailor-made to fill a real vacuum of high-quality projects in the gold industry's pipeline. Donland Gold is fortunate to enjoy time-tested partnerships with Chalista and TKC, owners of the mineral and surface rights. Donland Gold's location on private land, specifically dedicated for mining activities following the 1971 Alaska Native Claims Settlement Act, represents a differentiating factor for most other mining assets in Alaska. as per slide 23. We deeply appreciate the critical value of having engaged Native corporation partners and meaningful tribal input that provides valuable insight about their land and supports efforts for responsible and sustainable economic development through every phase of the Donilon Gold Project. For all these reasons and many more, we believe that Donlon Gold stands in a league of its own as a premier gold deposit. Once developed, the project has the potential to form a major source of responsible economic development in the YK region for many decades to come. Our efforts simply would not be successful without the unwavering support of our esteemed shareholders, some of which are included on slide 24. We remain gratified to those who chose to invest in our company as well as for their continued interest and engagement. As a shareholder myself, I take that responsibility very seriously and with the support of our management team, we'll continue to work diligently to advance the company and the Donlon Gold project. Nova Gold's management team's commitment to Donlon Gold project has been unwavering for more than 10 years because we and all of our stakeholders recognize the unique potential of this future operation, as shown by the attributes on slide 25. The extensive and cumulative work invested in the Donlon Gold Project has substantially enhanced its value to Alaskans as well as our shareholders. It has also been consistently validated the attractiveness of continuing to responsibly advance this excellent asset up the value chain. This year alone, the combination of an ambitious drill program with our geologic modeling and interpretation work for the updated resource model, advancing and updating engineering studies, environmental activities, and vast community relations and government affairs efforts with our Native partners have all contributed to multiple achievements to date. With that, operator, we will now open the line for questions.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging a request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question is from Lucas Pipes with B Reilly Securities. Please go ahead. Hey, good morning, everyone.

Uh, thanks. Thanks for taking my question. Uh, my, my first question is around the 2022 drill program. And if I saw it right, that was a modest, modest increase. Um, and I wondered, is this, uh, inflationary driven or is it an expanded scope of the drill program? Thank you very much.

Oh, Lucas, thank you for your question. Uh, the increase in, uh, The drilling was strictly an expanded scope of the project. We added about 8,000 meters to the approved program. And even with the additional meters, we expect to come in underneath our drill budget. And that's because we achieved great productivity. Up in Alaska, one of the biggest costs of drilling is the fixed component of opening the camp. So the increased drilling had a very positive effect on our unit cost to drill. We were able to increase the meters without incurring significantly greater cost.

I like to hear that. That's very helpful. Thank you. And then you have a comment in the press release about your treasury today and then the additional funds expected, I think, next year, $25 million from Newmont. and how this is sufficient to carry you through a construction decision. So I wondered if you could maybe provide just a little bit more granularity on those comments. When would you expect a construction decision? And what are some of the big-ticket items in terms of cost between now and that point? Really appreciate your call. Thank you.

Sure, Lucas. Thank you for the question. You know, this year's budget at Donlon was – you know, the largest in well over 10 years. As I look to the future, you know, a lot of the significant expenditures of the last few years have been drilling related. You know, I think as our knowledge of the ore body increases and we're getting more satisfied with our understanding of the structural controls, I see the expenditures for drilling tapering off, And those will be replaced by the various engineering related studies that will ultimately support a new feasibility study decision. So I think when I look at the company's burn rate, this year is probably a high watermark. And we'll finish the year with still a substantial treasury. And as you noted, we've got 25 million more coming in from Newmont next year. So I still think we're in great shape to continue to move the project up the value chain.

And in terms of order of magnitude, as you move into updated feasibility study and engineering work, what's the order of magnitude we should think about on a 12-month basis or so as you complete those studies?

We typically provide that level of detail with our 2023 budgets, which would occur later in the year. But in a general sense, I would think that this year is the expenditures going forward. I do not expect them to exceed what we spent this year.

All right. Greg, really appreciate the call. Thank you and best of luck.

Thank you, Lucas.

Once again, if you have a question, please press star then one. We will pause once again for a moment as two callers join the queue. Showing no further questions, this concludes the question and answer session. I would like to turn the conference back over to Greg for any closing remarks.

Again, thank you, everybody, for taking the time this morning to get an update on the Donlon Gold Project. and on NOVA Gold. Take care.

Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.