NovaGold Resources Inc.: Exhibit 99.1 - Filed by newsfilecorp.com
 |
News
Release |
NYSE-AMEX,
TSX Symbol: NG |
New Milestone Achieved as Permitting Commenced on Donlin Gold
Project
- With Permitting Underway, Donlin Gold is Advancing Up the
Value Chain
- Calista Leadership and NovaGold Affirm Views on Donlin Gold
All figures are in US dollars except where noted and shown on a
100% Project basis, of which NovaGold holds a 50% interest.
August 7, 2012 - Vancouver, British Columbia - NovaGold
Resources Inc. (TSX, NYSE-MKT: NG) (“NovaGold” or “the Company”) is pleased
to announce that Donlin Gold LLC, owned equally by wholly-owned subsidiaries of
NovaGold and Barrick Gold Corporation (“Barrick Gold”), has commenced permitting
of the Donlin Gold Project (“Donlin Gold” or the “Project”) located in Alaska.
This announcement follows the Donlin Gold LLC Board of Directors recent approval
of the Project’s Updated Feasibility Study. Barrick Gold and NovaGold have expressed
that they are committed to advance the project through permitting.
Donlin Gold submitted a Plan of Operations and the Wetlands
Permit Application under Section 404 of the U.S. Clean Water Act to the federal
and state regulators, formally initiating the permitting process. This permit
application is the driver for the start of the environmental review process
under the National Environmental Policy Act (“NEPA”) leading to the development
of an Environmental Impact Statement (“EIS”). Over the next few months, the
notice of intent for the EIS is expected to be prepared and published by the
U.S. Army Corps of Engineers and followed by public scoping for the NEPA
process.
“This is a major milestone towards moving the world’s most
significant undeveloped gold project up the value chain,” said Gregory Lang,
NovaGold’s President and Chief Executive Officer. “Permitting is expected to
take about three to four years, a very small percentage in comparison to the
Project’s life cycle of approximately 27 years planned under the Updated
Feasibility Study. The permitting costs are modest, with our share of
expenditures expected to be approximately $20 million per year. During
permitting, we will have opportunities to optimize costs and, by extension, the
Project’s economics to further increase Donlin Gold’s value. We believe we can
do so. With $300 million in cash, we have sufficient financial resources to
advance Donlin Gold through permitting.”
“We also believe we will enjoy the benefits of a rising gold
price. NovaGold and its shareholders strongly believe that the secular bull
market in gold will continue for many years and appreciate the enormous leverage
to gold that this project brings."
That leverage is indeed very significant. Donlin Gold’s
after-tax Net Present Value ("NPV"), using the three-year trailing average of
approximately $1,200 per ounce-gold and a 5% discount rate, was estimated at
$547 million, as per the NovaGold news release announcing the results of the
Donlin Gold updated feasibility study. This number rises to $6.2 billion if
undiscounted. Importantly, the resultant NPV sensitivity analysis showed a more
than eight-fold increase in value to $4.6 billion at $1,700 per ounce of gold
($14.6 billion if undiscounted), and then nearly a 50% further increase in NPV
to $6.7 billion at $2,000 per ounce of gold. At the zero discount rate at which
we believe North American assets may once again be rated, as they were not so
long ago, that number rises to more than $19 billion.
Mr. Lang added: “Donlin Gold is well-positioned to evolve into
a model next-generation gold mine which will deliver significant benefits to all
its stakeholders, including the State of Alaska and our Alaska Native
Corporation partners. This exceptionally large, long-life and geo-politically
safe gold deposit provides its stakeholders with a unique opportunity for
substantial wealth generation which should be accomplished in a socially and environmentally responsible
fashion. Furthermore, with its strong and time-honored relationship with Calista
Corporation and The Kuskokwim Corporation, who own the mineral and surface
rights to Donlin Gold, our Project team can continue strengthening its
well-established track record of social engagement and environmental stewardship
in the community.”
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June MacAtee, Calista Corporation’s Vice President, Land and
Natural Resources commented on this important milestone: “Calista Corporation
owns the subsurface lands that make up the Donlin Gold project. Calista
identified the presence of lode gold mineralization at Donlin Creek more than
twenty years ago. After more than 16 years of geologic exploration and
environmental baseline studies, the Donlin Gold project has submitted its permit
application to the Army Corps of Engineers and Alaska Department of Natural
Resources to construct a mine. The permit application is a significant first
step for the project in the permit process and Calista is encouraged by the
progress that has been achieved thus far.”
“Calista supports responsible resource development projects.
Approximately 100 state and federal permits will be required before construction
can begin. The federal National Environmental Policy Act requires that there be
opportunities for the public to give input on a proposed project during the
permitting process. This process will take several years. Calista supports this
process and encourages our Shareholders, Descendants and people living in our
Region to educate themselves about the proposed project, and then, make their
voices heard so that all issues are addressed.”
“The Alaska Native Claims Settlement Act of 1971 mandated the
establishment and operation of Calista as a for-profit business, but also with
very unique responsibilities. Calista was empowered to select and receive lands
for subsistence and natural resource use; as well as, the obligation to create
and build economic assets for its Shareholders. The corporation operates as a
business generating profits for its owners--today and long into the future. But
Calista must also protect the lands and resources, because our owners depend
upon this land for subsistence foods, materials and year-round sustenance.”
“Calista Corporation will meet its duties and responsibilities
through responsible and safe development of its lands. The Donlin Gold project
presents us with an opportunity for tremendous economic potential right in our
Region. As shown by the long pre-permitting stage, this large-scale project will
be undertaken with careful consideration and research. Calista is committed to
analyzing and monitoring each step of the process, because we understand what is
at stake. Resource development can only proceed if it meets high standards of
environmental protection, minimal impact on subsistence resources and promotion
of economic opportunities for our people.”
Thomas Kaplan, NovaGold's Chairman, commented: “Commencement of
permitting is a material and tangible milestone along the value chain for any
major mining project and its stakeholders. Donlin Gold, however, is not just
‘any’ project. We firmly believe that Donlin Gold is poised to be seen by the
investment community as the most important pure gold project in the world for
all the right reasons: its extraordinary size, grade, production profile, mine
life, exploration upside, strong local partnerships...and last, but by no means
least, jurisdictional safety. It is unique in our industry.”
“It is for these reasons that we believe NovaGold represents
one of the best value propositions in the gold space today. Putting aside our
strong cash position and a half interest in Galore Creek, which is projected to
be Canada’s largest copper mine, our share of Donlin Gold is a truly
extraordinary asset. Notwithstanding the misinterpretation of Barrick Gold’s
quarterly report last week, as it relates to Donlin Gold, the simple fact remains that nothing - literally
nothing - has changed with regard to the Project itself. As Barrick Gold
affirmed, and as we are reaffirming today, permitting is going ahead, and at a
very reasonable cost to the co-owners. Once Donlin Gold is permitted several
years from now, the co-owners of this project will have the first real
opportunity to make a construction decision.”
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“We all wish we could know exactly how the investment climate
will appear in four years’ time. Thinking back on just how much the world has
changed since 2008 is proof enough that we live in unpredictable times. For reasons ranging from this same unpredictability to
more fundamental reasons of simple supply and demand, we are, however, confident
of one long-term theme, and one theme alone: that the case for gold is strong,
and getting stronger all the time. This unambiguously bullish commitment to
gold, and only gold, underpins our corporate strategy...and the firm belief that
Donlin Gold is on the path to being built into one of the world's biggest and
best gold mines. Experienced observers will note that sentiment is like the
seasons, and many who are presently espousing ‘hunker down’ in the gold industry
will be clamoring, when the next leg in the bull market unfolds, to seek out
projects with ‘leverage and growth’. In an era defined by asset scarcity,
NovaGold provides one of the few institutional-quality ways to gain exposure to
both.”
"Donlin Gold's exponential leverage to gold is clear. Yet, at
its initial projected production of 1,500,000 ounces a year, as a growth story
the Project is in a league of its own. In addition to its size, grade,
exploration potential, and mine life, Donlin Gold will be only one of three
million-plus ounce gold producers to be located in North America, one of the
world's safest geopolitical jurisdictions.”
“It's hard to overstate the importance of this last point, for
we believe that investors are beginning to grasp the increasingly ‘existential’
nature of jurisdictional safety and will soon recognize what a jewel Donlin Gold
represents. Resource nationalism and an accelerating unreliability in the
political landscape in many of the world's most prolific mining districts are
evolving aggressively, and will likely continue to develop very unpleasantly,
into the single greatest challenge for mining companies and their investors. We
believe even topical subjects such as capital expenditures will pale into
relative insignificance when compared with the apprehension created by
investments being held hostage to the whims and uncertainties of difficult
jurisdictions. Thus, while great assets in the gold industry are very rare and,
as seen by declining grades in the large-scale projects and a lack of new
discoveries, getting rarer still... the truly great assets like Donlin Gold,
which resides in a safe country which adheres to the rule of law and enjoys
political stability in a world characterized by disturbing trends away from both
of these virtues, is rarer still. The permitting procedure in the United States
may take a bit longer than it does in some of the more exotic mining
jurisdictions, but the flip side of this process is that when it is finalized
and if ultimately the mine goes into production, the investors have peace of
mind knowing that when they wake up in the morning, they will still own the mine
and its profits. Seeing the world through this prism, we believe that Donlin
Gold is uniquely attractive, and that, despite recent market turbulence, a pure
play on the Donlin Gold asset should be seen to be a ‘must own’ value and growth
stock for those who want to have the leverage of a safe, pure gold developer in
their portfolio. To put it simply, the value proposition for NovaGold is about
having all the leverage to gold one could want...but also, of equal importance,
to have it located in a jurisdiction that will allow one to keep the dividends
of that leverage for decades and decades to come."
"That we are embarking upon the permitting process with Greg
Lang on our side of the table can give us confidence in what the future will
bring. He has an impeccable track record of building major mines on-budget and
on-time and operating them cost-efficiently with a great attention to safety and
social responsibility. While Greg's move to NovaGold was statement enough as to
his belief in Donlin Gold, it is indeed hard to find people more qualified than
Greg Lang to represent NovaGold's share of the project as we take it along the
value chain. With today's announcement, a new chapter in this exceptional story
has just begun."
About NovaGold
NovaGold is a well-financed precious metals company engaged in
the exploration and development of mineral properties in North America. The
Company’s flagship asset is its 50%-owned Donlin Gold project in Alaska, one of
the safest 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), Donlin Gold is regarded to
be one of the largest, and most prospective known gold deposits in the world.
According to the Updated Feasibility Study, once in production, Donlin Gold
should average approximately 1.5 million ounces of gold per year for the first
five years, followed by decades of more than one million ounces
per year. Donlin Gold has substantial exploration potential beyond the designed
footprint which currently covers only three kilometers of an approximately
eight-kilometer strike length of the property. A significant milestone was
recently achieved with the commencement of permitting at Donlin Gold, which is
expected to take between three to four years. NovaGold also owns 50% of the
Galore Creek copper-gold-silver project located in northern British Columbia.
According to the 2011 Pre-Feasibility Study, Galore Creek is expected to be the
largest copper mine in Canada, a tier-one jurisdiction, when it is put into
production. NovaGold is currently evaluating opportunities to sell all or a
portion of its interest in Galore Creek and will apply the proceeds toward the
development of Donlin Gold. NovaGold has a strong track record of forging
collaborative partnerships, both with local communities and with major mining
companies.
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Scientific and Technical Information
Scientific and technical information contained herein with
respect to Donlin Gold is derived from the “Donlin Gold Project NI 43-101
Technical Report” compiled by AMEC, Kirk Hanson, P.E., Technical Director, Open
Pit Mining, North America, (AMEC, Reno), Gordon Seibel, R.M. SME, Principal
Geologist, (AMEC, Reno), Tony Lipiec, P.Eng. Manager Process Engineering (AMEC,
Vancouver) 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.
| NovaGold Contact: |
| |
| Mélanie Hennessey |
| Vice President, Corporate Communications |
| |
| Erin O’Toole |
| Analyst, 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 the
Project, statements relating to NovaGold’s future operating and financial
performance, outlook, and the potential sale of all or part of NovaGold’s
interest in Galore Creek 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”, or “should” occur or be achieved.
These forward-looking statements may include statements regarding
perceived merit of properties; exploration results and budgets; mineral reserves
and resource estimates; work programs; capital expenditures; timelines;
strategic plans; completion of transactions; market prices for precious and base
metals; intended use of proceeds; 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 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 and Teck Resources Limited for the continued
exploration and development of the Donlin Gold and Galore Creek properties; the
need for cooperation of government agencies and native groups in the development
and operation of properties; the need to obtain permits and governmental
approvals; 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 Information Form for the year-ended November 30,
2011, filed with the Canadian securities regulatory authorities, and
NovaGold’s annual report on Form 40-F filed with the United States
Securities and Exchange Commission 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.
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