Novagold Resources Inc.

Thank you for standing by. This is the conference operator. Welcome to the NOAA Gold 2023 Second Quarter 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 1 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, Ashia. Good morning, everyone. We are pleased that you've joined us for Novogold's second quarter financial results and for an update on the Dalman Gold project. On today's call, we have Greg Lang, Novigold's president and CEO, and David Odwell, Novigold's vice president and CFO. At the end of the webcast, we will take questions by phone. Additionally, we will respond to questions received by email. I would like to remind you, 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 CEDAR 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 Line. Greg?

Thank you, Melanie. Before we go into the second quarter results, I wanted to start today's call by giving you a quick look at the reasons why we and our shareholders are invested in the company. Over time, and by keeping our promises to stakeholders, our management team has diligently protected our resources, both the mineral endowment and our treasury. We've substantially de-risked on gold. With a commitment to responsible mining, we have dedicated both time and effort to build trust and transparency and continuously found ways to improve and enhance the project while building a legacy. It is our belief that Donilon Gold is among the rarest of gold development assets, a tier one asset in a tier one jurisdiction. To touch on Donilon's attributes, as currently envisioned, With approximately 39 million ounces, it hosts one of the largest and highest grade undeveloped gold endowments in the world that would average over a million ounces per year of gold production for 27 years. While looking at the other gold development projects in the Americas as shown on slide six, it's by far the largest And with global production continuing to decline, it's clear that the industry needs projects with scale, grade, and longevity to ride out multiple gold cycles. With a grade of more than twice the industry average for an open pit project at two and a quarter grams, as shown on slide seven, this advantage is expected to put Donilon Gold as one of the lowest cost producers in the space. This in turn enables Donilon Gold to potentially become one of the lowest gold producers. Excellent exploration potential exists beyond the defined resources located in the ACMA and Lewis deposits as shown on the diagram. This area occupies only three kilometers of an eight kilometer mineralized belt. It represents less than 5% of the total land package. As highlighted on slide eight, incredible upside exists to potentially increases ounces and extend the mine life given that the majority of the land is not yet thoroughly explored. As the premier gold development project in Alaska, itself the second largest gold producing state in one of the world's safest jurisdictions, our project benefits from a well-established tradition of responsible mining. On the map included on slide nine, we feature the top three gold producing operations in the world and the sixth largest gold development projects. Turning to slide 10, Donlon offers unique leverage to gold in a place where one can keep the fruits of that leverage. The after-tax NPV at $1,700 per ounce and a 5% discount rate was estimated at almost $5 billion, raising substantially if undiscounted and then another 50% increase at $2,000 per ounce. Clearly, we have tremendous leverage to rising gold prices. As private landowners, both Chalista and TKC are dedicated to developing Donlon Gold in a way that remains consistent with the elders' vision of responsible development while creating jobs and economic benefits for the surrounding communities, as well as protecting the local culture. A few quotes are provided from the leaders of both Alaska Native corporations on slide 11. Charista and TK's knowledge and guidance have been critical over the years of permitting, sustainability, and community engagement initiatives. We immensely appreciate their meaningful input regarding their land and the significant economic needs required to sustain healthy living for their communities. Our partners' continued and time-tested collaboration, project support, and full engagement are extremely valuable in ensuring responsible and sustainable economic development throughout all phases of the Donlon project. With the combination of these attributes, Donlon Gold has the potential to form a cornerstone of genuine and sustainable economic development in the YK region for many decades to come. I will now touch on some of the milestones that were achieved in the second quarter and the ongoing activities at Donovan Gold. Turning to slide 13, activities advanced in five key areas during the second quarter. First, we updated the geologic and resource models with the data from the drilling we've done over the last few years. Secondly, we have reviewed all key project assumptions, inputs, and design components for optimization, including engineering, metallurgy, hydrology, and infrastructure. Thirdly, we advanced the fieldwork and geotechnical drilling collect the data for the Alaska dam safety certificates required for construction and hydrologic drilling to define the depth and flow of groundwater in areas of the planned open pit. Fourth, on the project's permits, we maintained existing federal and state permits in good standing, provided support to the agencies in the defense of these permits, And to date, all appeals have been unsuccessful, often on multiple occasions, and we have full confidence in the process. But we never take this for granted. Our project leadership and litigation teams have always prepared and organized themselves for potential challenges that inevitably come. And fifth, we have built long-term value through ongoing engagement with our partners and stakeholders while expanding project support. For example, visits were made to Washington, D.C. to pursue bipartisan outreach to the Biden administration and the U.S. Congress. In early May, traditional tribal council from Crooked Creek accompanied Chalista and Donlan on a visit with the administration and congressional staff to highlight the thoroughness of the project and the partnerships that exist with Native Alaskans that own the land. The successful execution of these activities would not have been possible without a dedicated team in Anchorage and a committed workforce at our camp, of which 63% are local hires. They have safely advanced site work, and maintained open and transparent communications with all stakeholders. Thanks to their hard work, the 2023 field program at Donlon Gold is anticipated to be completed in July. The comprehensive work will provide valuable information for the Donlon Gold Board and its owners to consider with respect to an updated feasibility study decision. For Nova Gold, community and social responsibility represents a wide-ranging essential activity that is core to all we do at Donlon and in the communities of the region. It has been our consistent practicing philosophy for over 20 years. Donlon continues to work with Chalista and TKC in all aspects of outreach, and engagement in the areas education, health and safety, cultural traditions, environmental initiatives. We are committed to meaningful tribal inclusion throughout all project stages. This in-region investments and partnerships continue to expand, which further demonstrate the commitment to advancing this exceptional project up the value chain. As shown on slide 14, numerous activities and initiatives were funded in the second quarter. For example, Donlon was recognized for their support to the village of Crooked Creek following a major flood in the spring. The Donlon staff were on site to provide support, supplies, and transportation to those affected. In addition, the project's team has partnered with Covenant House in Alaska and the Bethel community for services to address chronic youth shelter and food security issues in the Waikea region. Education is a key component of Donlon Gold's community engagement efforts, where Chalista shareholders and descendant scholarships were funded through the Chalista Education and culture initiative. In the second quarter, Donnellan signed additional shared value statements with two villages in the region, bringing the total to 14. These documents formalize current engagement with the local communities and expand upon the long-term relationships already established with them and address specific COMMUNITY NEEDS. LASTLY, DONLON GOLD HELD THE FIRST INFORMAL SUBSISTANCE COMMUNICATIONS ADVISORY COMMITTEE MEETING IN ANNIAC. ALL MEMBERS WHO COMPLETED AN APPLICATION TO JOIN THE COMMITTEE HAVING VARIOUS PERSPECTIVES ON THE PROJECT. AS PART OF THE COMMITMENT BETWEEN DONLON GOLD, CHALISTA AND TKC, THE COMMITTEE WAS ESTABLISHED to maintain a well-defined process for communications, dialogue, problem solving, and seeking the input of the broader community regarding substance matters. In May, we launched our 2022 Sustainability Report, NOVAGOLD's third annual standalone sustainability report which features a comprehensive review of the company's performance in areas of environmental stewardship, health, safety, and social community engagements and corporate governance. During 2022, our achievements, pictured on the right of slide 15, included an excellent health and safety record with zero lost time accidents spanning over 10 years, a project site workforce comprised of more than 80% Alaska Native employees, and an increase in engagements and investment throughout the region. Formal corporate climate change and biodiversity policies were developed in 2022. Throughout 2023, we will continue to monitor reflect on and refine our environmental, social, and governance performance, including maintaining strong records of environmental and health and safety data at the Donlon Gold Project site, partnering with the people and communities of the region, and working to enhance our governance practices, including the implementation of our updated human rights and new diversity, equity, and inclusion policies. With that, I will now turn the call over to David Attawell to review the 2023 second quarter financial results. Dave.

Thank you, Greg. Slide 17 highlights our operating performance We reported a net loss of $14.6 million in the second quarter, a slight decrease from the prior year quarter due to lower field expenses at Donal & Gold and increased interest income on cash and term deposits, offset by increased interest expense on the promissory note and higher corporate travel and legal expenses. Second quarter cash flows are highlighted on slide 18. Cash and cash equivalents decreased by $7.2 million, primarily to fund our share of downland gold and for corporate administrative expenses. The decrease in cash used in the second quarter of 2023 compared to 2022 was due to a reduction in downland gold funding and higher interest received on cash and term deposits due to the increase in interest rates. On slide 19, we note our treasury position, which includes cash and cash equivalents of $47 million, term deposits of $62 million, and $25 million due from Newmont next month. For the full year, we continue to expect to spend $31 million, including $17 million in Donlon, $13 million for corporate GNA, and $1 million for working capital. I will now turn the presentation back to Greg. Greg.

Thank you, Dave. As shown on slide 20, activities this year are focused on updating the geologic and resource models, field work to collect geotechnical and hydrologic information to complete the design requirements, for the Alaska Dam Safety Certificates. An ongoing review of key project assumptions and inputs for optimization in engineering, metallurgy and hydrology. We'll continue to advance our permits through the regulatory processes and support the agencies in defending the existing permits. We will also continue to engage, maintain and grow support for our project in the YTA region and with government entities. Ultimately, the comprehensive work being completed will provide valuable information for the Donlon Gold Board and its owners to consider with respect to an updated feasibility study decision. I wish to thank each and every one of our shareholders for choosing to invest with NOVA Gold. as well as for their engagement, patience, and valuable insight over the years. We look forward to continuing to deliver on our promises and to keeping an open line of communications between us while we strive to reach further milestones together in 2023. With that, operator, We will open the lines 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 your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. The first question comes from Lucas Pipes with B Reilly Securities. Please go ahead.

Thank you, operator. Good morning, everyone. This is Nick Giles asking a question on behalf of Lucas. Of the components you outlined for optimization, what areas would you say you've seen the most improvement or maybe expect to see the most improvement? Thank you so much for your perspective.

All right. Well, the optimization has been really touched on every discipline throughout the project, whether it be mining engineering or metallurgy. And I think we've seen a lot of very constructive fine-tuning on the metallurgical side. And this is no step changes, but optimizing the grind size, controlling the pH to get a few percent additional recoveries. So I think the optimizations have all added value to the project as well as, you know, particularly for our partner, you know, increased the depth of their understanding of the project and the work that has been done today.

Thank you, Greg. I appreciate that color. And just one more on my end. in the Fiscal Responsibility Act of 2023, I believe there were some favorable permitting reforms. And I was hoping to maybe get your view on these and if they may benefit Donlan in any way, despite having federal permitting completed. Thank you very much.

All right. Well, it's a very astute observation. There have been, I would say, positive developments on trying to streamline the permitting process for, you know, not just mining projects, but, uh, uh, any natural resource projects in the U S, uh, and it, you know, it's good to see those initiatives, you know, as far as the impact on Donovan, I would describe it as, as pretty minor or insignificant. And that's, you know, largely because our permits are, are already in place. So there's nothing, uh, you know, nothing to be streamlined from, from our point of view. Now that, uh, You know, we've gotten our federal permits have been in hand for several years, and we're, you know, continuing to advance the remaining state permit, which is the tailings dam and dam safety certificate. So, you know, minimal impact on us at this stage.

Makes sense. Well, Greg, thank you so much for the color, and to you and the team, continued best of luck.

Thank you. We have a question that was submitted by email from David White, who is a long-time shareholder and thanks you for the review of the second quarter results. He wanted to know, why do you think Barrick will deviate from its 15% IRR at 1300 gold price mandate to develop Donlin, given that it won't meet the criteria with the updated FS?

Well, thank you. Thank you for the question. You know, clearly I, I, don't speak for Barrick on their economic criteria regarding gold price. But yeah, I do know that we, as we looked at, you know, investments for generational assets, such as Donovan, you know, the IRR is only one aspect that both owners would consider when we, you know, get to that stage where we're in a position to make an investment decision. And I think that, uh, Yeah, that's a ways out for us. I mean, the immediate issues in front of the owners are wrapping up all of the trade-off studies and making the decision on when is the appropriate time to advance a new feasibility study.

That's all the questions, operator. Well, everybody, I would.

Thank you for your time. Sorry, Greg, go ahead.

Okay. Everybody, thank you for joining our call this morning and getting an update on NOAA 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.