Release Date: June 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Donlin Gold project boasts almost 40 million ounces of gold with a grade of over 2 grams per tonne, more than double the industry average.
- Projected mine life of almost three decades ensures long-term, stable operation.
- Donlin Gold is set to produce around 1 million ounces a year at a low cost, positioning it as one of the top producers in the industry.
- Secured all federal permits required for development and the majority of state permits, demonstrating readiness for advancement.
- Strong partnerships with Calista and The Kuskokwim Corporation strengthen social license to operate and community support.
Negative Points
- Reported a net loss of $13.7 million in the second quarter, primarily due to increased interest expense and administrative costs.
- Significant state permit for dam safety certification is still pending, with an anticipated approval process of 2 to 2.5 years.
- Future capital expenditures for 2025 remain uncertain, dependent on the decision to initiate a new feasibility study.
- Ongoing litigation and permitting processes add complexity and potential delays to project advancement.
- Dependence on market conditions and gold prices for making a final investment decision, which introduces uncertainty.
Q & A Highlights
Highlights of Novagold Resources Inc (NG, Financial)'s Q2 2024 Earnings Call
Q: Where is the state-level permitting stage now, and when do you expect to receive a decision regarding dam safety certification?
A: (Gregory Lang, President, CEO) The only significant state permit we do not have is the dam safety certificates for the tailings dam and water retention structures. The federal permits authorize Donlin to disturb work at the site, including the tailings dam. We anticipate a roughly 2 to 2.5 year approval process for the state permits, which will be done concurrently with the feasibility study. The tailings dam approval permits are not on a critical path item but are steadily advancing.
Q: What level of capital spending do you expect in 2025?
A: (Gregory Lang, President, CEO) We have not guided on our expenditures plan for the new year yet. A lot will depend on when we decide to initiate the new feasibility study. We typically prepare our budgets later in the third and fourth quarters and will guide the marketplace on future expenditures at that time.
Q: With gold at an all-time high, what are the other key market conditions required to commence operations?
A: (Gregory Lang, President, CEO) Gold prices are a key driver for the investment decision at Donlin. Other factors include market conditions, how equities are viewed, debt markets, and financing the project. We believe gold prices will be significantly higher when we finish our feasibility study, positioning the owners to make a construction decision.
Q: Can you provide an update on the progress made in the Donlin Gold project in the second quarter?
A: (Gregory Lang, President, CEO) Significant progress has been made, including enhancing and updating our resource model, metallurgical test work at a pilot plant in Ontario, updating groundwater and surface water models, and supporting regional infrastructure. These efforts are geared towards positioning Donlin Gold favorably for future development.
Q: What are the key achievements of NOVAGOLD in 2023 across environmental stewardship, health and safety, social engagement, and corporate governance?
A: (Gregory Lang, President, CEO) Our latest sustainability report published in April assesses NOVAGOLD's ESG performance. We have maintained a decade-long record without lost time incidents at the Donlin Gold site, with a significant proportion of local hires. These efforts reinforce our pledge to uphold the highest standards of sustainability and responsibility.
Q: What is the financial position of NOVAGOLD as of the second quarter?
A: (David Ottewell, CFO) We reported a net loss of $13.7 million in the second quarter, primarily due to lower Donlin Gold project costs. Cash and term deposits decreased by $4.9 million, primarily for corporate administrative expenses and our share in Donlin Gold funding. Our financial position includes cash and cash equivalents of nearly $53 million and term deposits of $60 million.
Q: What are the ongoing collaborations with local communities and stakeholders?
A: (Gregory Lang, President, CEO) We continued collaboration with Calista, TKC, and local leaders in education, health, cultural preservation, and environmental stewardship. Donlin Gold signed its 17th shared value statement and held the third Subsistence Community Advisory Committee Meeting. We are also monitoring salmon fisheries and planning a juvenile salmon monitoring initiative.
Q: What are the next steps for the Donlin Gold project?
A: (Gregory Lang, President, CEO) The next critical step is to update the feasibility study to position Donlin favorably for a construction decision when market conditions align. We are committed to advancing this flagship project and enhancing shareholder and stakeholder value.
Q: What is the significance of the Donlin Gold project in the current gold market?
A: (Gregory Lang, President, CEO) Donlin Gold is positioned as one of the world's largest and highest-grade undeveloped open-pit gold reserves. With a grade of almost 2.25 grams per tonne, it is set to become one of the most cost-effective producers in the industry. The project's potential value exceeds $25 billion at today's gold prices.
Q: What are the key factors that differentiate Donlin Gold from other mining ventures in Alaska?
A: (Gregory Lang, President, CEO) Donlin Gold is a federally permitted project situated on private land designated for mining activities under the Alaska Native Claims Settlement Act. This distinct feature, along with strong partnerships with Calista and TKC, positions Donlin Gold as a cornerstone project with robust potential and significant long-term value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
