Novagold 3Q15 Earnings Call Notes

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Everyone is retrenching now, but we’re two years away from a construction decision

” Donlin is one of the largest undeveloped gold deposits in the industry. Right now, everybody is focused on hunkering down and cutting costs and no new investment. We are two years away from a construction decision and when sentiment changes, mines like Donlin will be needed to sustain the gold industry.”

Gold exploration down and no major discovery in four years

On slide 15, we look at what’s been happening in the gold industry. Exploration spending is significantly down and there hasn’t been a major discovery in over four years. Gold production has peaked and it will continue to decline in the coming years. Without major gold deposits like Donlin, the industry cannot sustain itself.”

Pleased with positive comments from agencies. Confident that permitting will be completed

“We have been really pleased with how constructive all the agency comments have been and that gives both owners confidence that we will get the permitting successfully completed in about two years. And while we are working on the permitting, we are also looking at what makes the most sense for the scale of the operation.”

Feasibility study will probably come in 2016

“I think the scenario that’s very likely is that as we are wrapping up the permitting in 2016, the owners will update the feasibility study. By then it will be about five years old and a lots changed since then, both in terms of inputs and energy costs. So little over a year from now we will update that and the owners of the site which path makes the most sense.”

Gold price will determine development speed

“And that could be anywhere from, if prices are strong, building it as big as you can and as fast as you can. If the markets are weak, we will go slowly. So I think there is so much at play with the gold price that both owners want to keep all of their options open.”

We’ve got plenty of cash

“If you move the clock forward two years from now and if our burn rate remain the same, we have a permitted project in somewhere between $90 million and $100 million cash. And that’s assuming we don’t sell Galore. Once we get the permitting completed, the demands on our cash would drop even further. So I think we could sit there and maintain ourselves for seven, eight years without substantially changing the structure of this company.”

We’re not going to raise equity below $9.50. Our shareholders are patient.

“philosophically, we don’t do down rounds. We will not raise equity at a share price less than our last offer in the $9.50. So we are patient people. Our major shareholders look at us as an unexpiring warrant on an ounce of gold and they take a very long-term view.”