NovaGold Resources
Annual Report 2021

Plain-text annual report

A CLEAR PATH FORWARD 2021 ANNUAL REPORT TABLE OF CONTENTS PRESIDENT & CEO’S MESSAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 NOVAGOLD AT A GLANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SUSTAINABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 CHAIRMAN’S INTERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 MINERAL RESERVES & MINERAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . 35 CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 FINANCIAL REPORT (SEPARATE DOCUMENT) COVER PHOTO: Donlin Gold employee and Stony River resident Christopher Gregory. PAGE ONE: One of the drill rigs from Donlin Gold’s 2021 drill program. Our employees and neighbors take pride in the work and activities depicted in the photographs throughout this report, most of which were taken at the Donlin Gold site or in the surrounding communities. All scientific and technical information in the body of this annual report is qualified by – and is to be read in conjunction with – the Mineral Reserves & Mineral Resources table and associated notes found on page 35. All dollar amounts quoted in this report are in U.S. currency unless otherwise noted. This annual report contains forward-looking statements or information concerning anticipated results and developments in our operations in future periods, planned exploration activities, the adequacy of our financial resources, and other events or conditions that may occur in the future. It may include statements regarding perceived merit of properties, exploration results and budgets, mineral reserves and resource estimates, work programs, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, timelines, strategic plans, including our plans and expectations relating to the Donlin Gold project, market prices for precious metals, or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable, and the beliefs, expectations, and opinions of management as of the date of this report. We do not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations, or opinions should change, except as required by law. Investors should therefore not place undue reliance on forward-looking statements. See complete disclaimer on page 35.  THIS IS AN EXCITING TIME FOR NOVAGOLD, ITS PARTNERS, AND ITS STAKEHOLDERS. Key Donlin Gold permits received. Continued stakeholder support. Some of the best drill results in the gold mining industry. A progression plan in place — with more resources than ever committed to advancing the unrivaled Donlin Gold project further up the value chain. 1 (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:30)(cid:24)(cid:24) (cid:14)(cid:13)(cid:12)(cid:11)(cid:10)(cid:12)(cid:26)(cid:20)(cid:13)(cid:11)(cid:14) (cid:14)(cid:20)(cid:18)(cid:13)(cid:16)(cid:27)(cid:15)(cid:20)(cid:25)(cid:28)(cid:12)(cid:24) (cid:10)(cid:18)(cid:29)(cid:30)(cid:16)(cid:27)(cid:14)(cid:16)(cid:20)(cid:16)(cid:18)(cid:30)(cid:13) (cid:15)(cid:20)(cid:25)(cid:24)(cid:22)(cid:20)(cid:29)(cid:29) (cid:11)(cid:17)(cid:24)(cid:24)(cid:18)(cid:20)(cid:13)(cid:27)(cid:15)(cid:18)(cid:24)(cid:24)(cid:18)(cid:30)(cid:13) (cid:7)(cid:21)(cid:29)(cid:29)(cid:6)(cid:22)(cid:5)(cid:26)(cid:7)(cid:21)(cid:22)(cid:22)(cid:6) (cid:129)(cid:8)(cid:8)(cid:22)(cid:21)(cid:26)(cid:1)(cid:9)(cid:17)(cid:127)(cid:6)(cid:9)(cid:19) (cid:7)(cid:3)(cid:15)(cid:9)(cid:30)(cid:3)(cid:2)(cid:9)(cid:17)(cid:15)(cid:6) (cid:20)(cid:22)(cid:29)(cid:21)(cid:19)(cid:22)(cid:30)(cid:29)(cid:18)(cid:28) (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:24)(cid:23)(cid:22)(cid:21) (cid:25)(cid:22)(cid:5)(cid:26)(cid:14)(cid:22)(cid:23)(cid:24)(cid:17) (cid:31)(cid:17)(cid:22)(cid:22)(cid:30)(cid:16)(cid:15)(cid:30)(cid:22) (cid:23)(cid:22)(cid:30)(cid:21)(cid:20)(cid:19)(cid:18)(cid:17)(cid:16) (cid:11)(cid:29)(cid:18)(cid:22)(cid:21)(cid:26)(cid:1)(cid:9)(cid:17)(cid:127)(cid:6)(cid:9)(cid:19) (cid:4)(cid:28)(cid:24)(cid:9)(cid:6) (cid:12)(cid:9)(cid:8)(cid:9)(cid:24)(cid:16)(cid:15)(cid:30)(cid:22) (cid:2)(cid:17)(cid:13)(cid:20)(cid:1)(cid:18)(cid:16)(cid:127)(cid:22)(cid:17)(cid:8) (cid:9)(cid:20)(cid:24)(cid:18)(cid:21)(cid:29)(cid:17)(cid:8) (cid:141)(cid:8)(cid:18)(cid:20)(cid:127)(cid:22)(cid:20)(cid:8) (cid:141)(cid:16)(cid:19)(cid:20)(cid:17)(cid:16)(cid:29)(cid:17)(cid:20)(cid:8) (cid:143)(cid:4)(cid:16)(cid:22)(cid:4)(cid:29) (cid:2)(cid:20)(cid:1)(cid:20)(cid:8)(cid:18)(cid:20)(cid:8) (cid:23)(cid:24)(cid:127)(cid:20)(cid:25)(cid:129)(cid:18)(cid:29)(cid:29)(cid:4) (cid:2)(cid:20)(cid:1)(cid:20)(cid:24)(cid:8)(cid:18)(cid:20)(cid:8) (cid:6)(cid:17)(cid:29)(cid:17)(cid:8)(cid:24)(cid:20)(cid:8) (cid:141)(cid:8)(cid:18)(cid:20)(cid:8) (cid:9)(cid:7)(cid:4)(cid:16)(cid:22)(cid:29)(cid:17)(cid:8) (cid:4)(cid:17)(cid:9)(cid:127)(cid:6)(cid:9) The Kuskokwim Corporation (TKC) was formed by a merger of 10 Native village corporations in the Yukon-Kuskokwim region. Located 10 miles north of the village of Crooked Creek, the Donlin Gold project enjoys strong support from Alaska Native partners TKC and the Calista Corporation, the private landowners of the project’s mineral and surface rights. Neighboring villages in the Yukon-Kuskokwim region, an area that covers over 75,000 square miles of southwestern Alaska. (cid:6)(cid:17)(cid:13)(cid:16)(cid:17)(cid:16)(cid:17)(cid:29)(cid:18)(cid:20)(cid:8) (cid:5)(cid:4)(cid:8) (cid:9)(cid:30)(cid:13)(cid:21)(cid:18)(cid:21)(cid:20)(cid:13)(cid:20)(cid:8) (cid:9)(cid:7)(cid:18)(cid:21)(cid:18)(cid:29)(cid:29)(cid:18)(cid:13)(cid:21)(cid:30)(cid:8) (cid:3)(cid:17)(cid:18)(cid:13)(cid:22)(cid:20)(cid:21)(cid:20)(cid:8) 2 PRESIDENT & CEO’S MESSAGE Gregory A. Lang As we enter 2022, it is important to reflect on many milestones that were reached in 2021, a year in which we advanced our Donlin Gold project up the value chain against the backdrop of the global COVID-19 pandemic. And while the pandemic continues to affect us all, NOVAGOLD remains laser-focused on its top priority of ensuring the safety and well-being of employees, contractors, and the diverse community of stakeholders in its 50 percent- owned Donlin Gold project in Alaska. Our unwavering commitment to responsible mine development in the Yukon-Kuskokwim (Y-K) region remains strong. HEALTH & SAFETY NOVAGOLD is committed to the health, safety, and well-being of its personnel, visitors, and members of the multiple communities in which the company operates. We are proud of the fact that we have created a corporate culture that encourages safe practices for our workforce. Our safety achievement awards and performance recognition, both in the workplace and in our local communities, are highly sought after and hard-earned. Since the start of the pandemic, the majority of NOVAGOLD employees have been working remotely. Despite less in-person engagement, we have managed to stay more connected than ever before. We continued to hold regular internal P R E S I D E N T & C E O ’ S M E S S A G E 3 meetings and conferences, mainly in a virtual environment, SUSTAINABILITY REPORT and we maintained regular communications with our key stakeholders, shareholders, and investors. As we enter the third NOVAGOLD developed a methodical process of reporting year of the pandemic, we reflect on the challenges that have information related to environmental, social, and governance affected our families, our communities, and our organizations. (ESG) matters for fiscal year 2020. We launched our inaugural I am proud of the Sustainability Summary in the Integrated Annual Report, which accomplishments is now available on NOVAGOLD’s website. For 2021, NOVAGOLD of the teams at NOVAGOLD, our partner Barrick will be issuing a stand-alone Sustainability Summary Report to offer more information and detail regarding our ESG initiatives. These initiatives have always been an important part of our Gold, and Donlin business, and we are excited to be building upon our track Gold, who executed record of sharing our comprehensive ESG framework with the 2021 work program with our stakeholders. We are invested in achieving the highest possible standards through our workforce development, minimal COVID-19 performance, actions, and conduct as we continue to make cases at the project improvements to this increasingly important sphere of our site and no Lost- Time Incidents. During our 2021 field season, out operations while advancing Donlin Gold up the value chain. NOVAGOLD is committed to responsible mining, stewardship of the environment, and community support in the areas where we operate. of approximately 171,310 hours worked, we recorded four If you haven’t already done so, please subscribe to cases of COVID-19 at the Donlin Gold project site. The affected NOVAGOLD’s email list and follow us on social media to ensure individuals fully recovered and ultimately returned to work. you don’t miss our Sustainability Summary Report. Our operating protocols call for individuals to undergo mandatory COVID-19 testing prior to traveling to the Donlin Gold project camp and again before leaving the site to COMMUNITY PARTNERSHIPS & COMMITMENTS return home. Our procedures were especially important at the time when cases began to rise in Alaska throughout the Donlin Gold is fortunate to have long-term partnerships summer. Our enhanced COVID-19 Community and Workforce with Calista and TKC, owners of the project’s mineral and Protection Plan was particularly effective in making sure that surface rights, respectively. These partnerships date back safe operations could continue and the workforce would decades. The project’s location on private land specially remain safe and healthy. Careful collaboration with our Native designated for mining activities, enshrined through the 1971 Corporation partners Calista Corporation and The Kuskokwim Alaska Native Claims Settlement Act (ANCSA), distinguishes it Corporation (TKC), as well as with other Tribal groups in the from many other mining projects in Alaska. In fact. 2021 marked Y-K region, remain key to our success. the 50th anniversary of this landmark act, which has served as In the third quarter, Donlin Gold put further restrictions a pillar of support for the well-being of the Indigenous people on its Anchorage office following two positive COVID-19 cases of Alaska. We are proud to share that in September 2021, the there. All Donlin Gold employees in Anchorage who may have board of directors of the ANCSA Regional Association of the 12 been exposed were tested and quarantined while continuing regional Native Corporations unanimously passed a resolution to work remotely in accordance with the protocols. in support of the Donlin Gold project. As representatives of key NOVAGOLD president & CEO Gregory Lang with U.S. Senator Lisa Murkowski at a Donlin Gold dinner in Anchorage in September 2021. Donlin Gold’s 2021 “In It for the Long Haul” backhaul project removed and consolidated approximately 180,000 pounds of hazardous and electronic waste from 26 villages throughout the Y-K region, including Bethel, where these photos were taken. 4 stakeholders in the state, the support of the ANCSA Regional in formalizing these relationships and finding common ground Association is greatly appreciated. with Shared Value Statements that build upon the long-term As landowners, Calista and TKC are committed to agreements with Calista and TKC that are already in place. developing a mining operation consistent with the Elders’ At the end of 2021, Donlin Gold had entered into Shared Value vision of responsible development that creates jobs and Statements with eight villages from the Y-K region (Akiak, economic benefits for the community while protecting the Sleetmute, Napaimute, Crooked Creek, Napaskiak, Nikolai, environment and local culture. This commitment is at the core Tuluksak, and Upper Kalskag). These agreements include of both Barrick’s and NOVAGOLD’s philosophy on how the educational, environmental, and social initiatives which help project should be developed. During the 2021 field season, provide support for these villages. 70 percent of Donlin Gold direct hires were Alaska Natives In the first quarter of 2021, Donlin Gold, in partnership from 20 Y-K communities. In a region marked by high with TKC, the village of Crooked Creek, and the Napaimute unemployment and fewer job options than in urban areas, Tribe, was the lead sponsor of a program to construct and the work experience and skills gained at Donlin Gold are maintain the upper portions of the ice road on the Kuskokwim particularly valuable to the local community members. River. The ice road greatly improved safety and access to Donlin Gold is committed to supporting the needs of nearby communities for residents in remote locations. At its its community partners. As part of Donlin Gold’s ongoing completion in February 2021, the Kuskokwim ice road was community engagement efforts, we continue to make progress approximately 200 miles long. P R E S I D E N T & C E O ’ S M E S S A G E 5 In mid-January 2021, the water supply plant in the scrub brushes for cleaning, 50 more cases of water, and other Middle Kuskokwim village of Tuluksak (population 370) was supplies. destroyed by fire, creating a health and safety crisis for the In March 2021, following the Tuluksak fire, the Thomas entire community. Donlin Gold worked with the Tuluksak Lodge in Crooked Creek – the only lodging facility in the village Tribal administrator and Tribal council to assess how they that is closest to the project site – also suffered substantial fire could best help coordinate support for immediate needs and damage. Donlin Gold aided with labor and materials to get the sustainable long-term solutions. In the days following, Donlin building back in order and operating by May, prior to the busy Gold, together with several other community organizations, summer season. companies, and individuals, stepped in to provide drinking In August, Donlin Gold held the fourth annual “In It for water, buckets for carrying and storing water, sanitary wipes, the Long Haul” backhaul project, removing and consolidating diapers, and other health supplies. Team members traveled to approximately 180,000 pounds of hazardous and electronic Tuluksak via the ice road and delivered 100 five-gallon reusable waste from 26 villages throughout the Y-K region. The waste containers of water to be distributed to each household in the was then packed into containers and shipped to Anchorage community. Shortly after the fire, Donlin Gold worked with and Seattle for recycling and safe, proper disposal. In terms of Alaska Commercial Company and Fox Air in Bethel to deliver scale and reach, this was the most successful backhaul yet. Over 120 cases of water, along with basic needs items like paper the past five years this program has removed almost 400,000 towels, baby wipes, hand sanitizer, and bar soap to the village pounds of hazardous and electronic waste from Y-K villages. as quickly as possible. Donlin Gold also arranged for Desert Air Access to training and education are two important areas to donate a DC-3 flight directly from Anchorage to Tuluksak in which we collaborate with our Native Corporation partners. to bring a second delivery of water tanks, containers, pumps The Lower Kuskokwim School District’s annual college and (including hose assemblies), totes for washing and bathing, career fair was held virtually in April, with a record number SIGNIFICANT HIGH-GRADE INTERCEPTS FROM THE 2021 DRILL PROGRAM 1 6 (cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:29)(cid:25)(cid:26)(cid:24)(cid:23)(cid:27)(cid:22)(cid:27)(cid:21)(cid:24)(cid:26)(cid:20)(cid:19)(cid:18)(cid:17)(cid:17)(cid:26)(cid:19)(cid:27)(cid:21)(cid:16)(cid:17)(cid:24)(cid:21)(cid:26)(cid:18)(cid:15)(cid:26)(cid:24)(cid:23)(cid:27)(cid:26)(cid:14)(cid:29)(cid:17)(cid:20)(cid:26)(cid:28)(cid:18)(cid:15)(cid:18)(cid:15)(cid:14)(cid:26)(cid:18)(cid:15)(cid:20)(cid:16)(cid:21)(cid:24)(cid:19)(cid:13)(cid:12)(cid:11)Gregory A. LangDecember 1, 2021DC21-197092.02 m at 7.75 g/t Au, including four sub-intervals*ACMA PitDC21-1963A40.97 m at 10.54 g/t Au, including one sub-interval*ACMA PitDC21-196947.78 m at 9.00 g/t Au, including three sub-intervals*ACMA PitDC21-197657.25 m at 6.87 g/t Au, including one sub-interval*ACMA PitDC21-195924.44 m at 14.65 g/t Au, including one sub-interval*Lewis Pit*greater than 10 g/t AuPROJECTED LIFE CYCLE updated technical studies, engineering & construction operation 1.1Moz/year life of mine (27+ years)2 exploration & environmental studies permitting current status of vendors and high student participation. Donlin Gold also sponsored the annual Best in the West competition at the Kuskokwim campus of the University of Alaska to encourage 2021 DRILL PROGRAM — CONTINUING & CONSISTENT SUCCESS and support the leaders of tomorrow. Following completion of a strong 2020 drill program, our In January 2022, NOVAGOLD established the Mining and plan for 2021 was to complete the work necessary to validate Geological Engineering Scholarship at the University of Alaska mineralization continuity and structural control, as well as test (Fairbanks & Anchorage) to help support students seeking extensions of high-grade zones within different rock types. This bachelor’s degrees in mining or geological engineering, with a information was important to increase confidence in geologic focus on underrepresented students as a commitment to foster modeling concepts ahead of an updated feasibility study. diversity in the industry. We re-opened the Donlin Gold camp in May 2021 with Along with supporting initiatives in Alaska, NOVAGOLD numerous improvements completed ahead of the ambitious recognizes the importance of sponsoring events in the field season. Specifically, heavy equipment was purchased, areas where we operate. In May of 2021, we sponsored and kitchen facilities expanded, a new recreation area furnished, participated in the Mining for Miracles Pie Throw, a fundraising sleeper capacity expanded, camp facilities remodeled, a large event in support of the BC Children’s Hospital in Vancouver. new warehouse added, core logging, and cutting facilities Each year, senior leaders from across the industry are paired upgraded. With the crews operating efficiently – and without up in a friendly fundraising competition, with the one raising increasing the budget – the drill program was expanded to the most money earning the right to toss a pie at the other. I include 13 additional holes to gather more closely spaced was happy to participate in this event and help raise funds for data to assess the dominant controls and orientations of gold the Cellular and Regenerative Medicine Centre. In a healthy mineralization. I am delighted to report that the 2021 drill competition with Red Conger from Teck, I was on the receiving program was completed in September, on time and on budget, end of the pie. with 79 holes drilled for a total of 24,264 meters. The program These various community partnerships, activities, and yielded some of what I view as the best results in the gold programs form just one dimension of NOVAGOLD’s multi- mining industry for an open-pit project, and we are grateful to dimensional commitment to sustainable and responsible our local and Alaska partners who have worked with us to reach development. these important milestones. P R E S I D E N T & C E O ’ S M E S S A G E 7 Greater attention was paid to the eastern side of the ACMA to advance studies and increase staffing in preparation for an pit area that transitions into the Lewis pit area and has had less updated feasibility study. drilling than the main areas of the deposit. Final results from the 2021 drill program are expected to As with the 2020 drill results, we have gained a better be released in early 2022. The camp was closed at the end of understanding of the definition of controls on mineralization October 2021 and re-opened in January 2022 for a winter drill in the deposits. The last core was logged in mid-October program that will continue into the summer and fall of 2022. with final samples sent offsite to laboratories for further Part of the objective of the 2022 exploration and drill program processing. The core logging and assay laboratory results data will be to confirm mineralization continuity and key geologic will be incorporated into a geologic model update, with the controls in other representative areas of the deposit. subsequent shift to feasibility study update work, subject to a The owners of this large, multi-generational, high-grade formal decision by the Donlin Gold LLC Board. project, located on private land specially designated for mining As the 2021 drilling was coming to a close, Barrick and activities in a Tier-One3 jurisdiction, have a unique opportunity NOVAGOLD held senior executive management workshops to generate wealth in the area. The fact that it is being and a site visit aimed at jointly assessing results and mapping advanced in partnership with Alaska Native Corporations – who out future plans. Barrick CEO Mark Bristow and I met with local are committed to developing a mining operation consistent stakeholders as well as with senior Alaska federal and state with the Elders’ vision of responsible development that representatives who expressed their continued support for creates social and economic benefits while safeguarding the the project. Following these meetings, the Donlin Gold LLC environment and culture – makes Donlin Gold unique. board approved an additional $3 million expenditure for 2021 Barrick Gold president & CEO Mark Bristow and NOVAGOLD president & CEO Gregory Lang at the Donlin Gold site in September 2021. 8 BALANCE SHEET $46M forecast full year 2022 spending4 The most significant outstanding Alaska permits are the dam safety certifications. Securing these permits requires a multi-year effort to gather geotechnical data and prepare various engineering studies. It is anticipated that the 2022 work plan will incorporate important milestones to advance the work in this area. treasury $169M $25M BALANCE SHEET $169.1M cash and term deposit balance on November 30, 2021 due from Newmont in July 20235 NOVAGOLD’s strong balance sheet allows us to continue taking the company up the value chain without the need for $0 US$ (millions) PERMITTING $200 raising more capital and, by extension, diluting shareholder value. We now have approximately $169 million in cash and term deposits as of November 30, 2021, which we believe is sufficient to advance Donlin Gold to a point when a construction decision would be made. Our treasury includes a payment of $75 million the company received from Newmont With federal permitting complete, Donlin Gold, together Corporation in July 2021 related to the sale of NOVAGOLD’s with Calista and TKC, continued to focus its 2021 permitting 50 percent interest in the Galore Creek project in British efforts on advancing the remaining Alaska permits and Columbia6. Another payment of $25 million from Newmont approvals for the project. A lot of effort went into supporting comes due in July 2023. There’s an additional payment of $75 the Alaska agencies with various permit applications. million contingent upon a Galore Creek construction approval. In late 2021, the Donlin Gold project was issued a third extension of the air quality permit by the State of Alaska. This is a rare achievement and speaks to the dedicated effort by 2022 GOALS & BUDGET all on the permitting team, including our native partners and Alaska agencies. Three permits held by Donlin Gold came By all measures, Donlin Gold is an exceptional project. under appeal in 2021, specifically the Clean Water Act Section With approximately 39 million ounces7 of gold in measured 401 certification, the 12 water rights permits, and the Right-of- and indicated mineral resources, it is one of the largest in the Way (ROW) agreement for the buried natural gas pipeline. The world. Its grade of 2.248 grams per tonne is approximately twice permits remain in effect while these appeals are pending. the industry average9. The 2021 drill program has been very Unfortunately, litigation led by environmental non- successful in reinforcing the robust integrity of this massive governmental organizations (ENGOs) that oppose resource endowment. development of any kind has become a regular part of business Donlin Gold is in the rare position of having a sufficient in the U.S. and, as such, is something that must be anticipated foundation to advance toward construction once the owners in the planning process from the start of permitting. We are make that decision. As currently envisioned, the project would not surprised by these legal challenges. As a consequence, we produce an average of about 1.1 million ounces per year over have built and sustained, in partnership with the Alaska Native its 27-year mine life10, a very important factor given a frequently landowners and our partner Barrick Gold, a comprehensive, held view that global gold production is expected to decline science-based record that we believe will withstand any legal in the absence of major new discoveries. Furthermore, the fact challenge to our permits. that it is located in Alaska, where there is long-standing support P R E S I D E N T & C E O ’ S M E S S A G E 9 for socially and environmentally responsible mine development CONCLUSION and respect for the rule of law, gives Donlin Gold a special status among the very few of the world’s development projects, I wish to thank the experienced team of professionals at particularly in light of the fact that the project already has all the NOVAGOLD, Donlin Gold, and Barrick, along with our drill crews major federal and most key Alaska permits. and contractors at the project site, for their expert navigation Any discussion about Donlin Gold would not be complete of the project. Our success would not have been possible without reference to its exploration potential. The project’s without their dedication and hard work. There’s tremendous current resources and reserves are contained within only three commitment by each of these groups to maintain the highest kilometers of an eight-kilometer mineralized belt which, in standards of safety and environmental protection. My gratitude itself, represents only five percent of the total mineral land also extends to the various State of Alaska agencies for their package. It is not surprising that the consistency of grade and thorough and professional work in advancing permitting high-grade intercepts from the current and past drill programs for the project. A big thank-you also goes to Calista and are further reinforcing its exploration potential. TKC, our Native Corporation partners who have been strong Looking ahead to 2022, NOVAGOLD and Barrick expect to supporters in ensuring that Donlin Gold is developed to the finalize geologic modeling and interpretation work with results highest standards of environmental stewardship and social from the 2021 drill program for an updated resource model, responsibility. I would also like to express my sincere thanks to which would then lead into an updated feasibility study. We the entire NOVAGOLD board and team for their commitment are particularly intrigued by the 2022 work plan, which includes and devotion to the company. I enjoy working alongside each some exploration drilling under the ACMA and Lewis pit areas and every one of you. that are open along strike and at depth. Lastly, I’d like to thank our shareholders for your NOVAGOLD anticipates spending approximately $46 unwavering support, engagement, knowledge, and million in 2022. About $30 million will be allocated to fund our encouragement. Each of these strong relationships has been share of expenditures at the Donlin Gold project, representing strengthened over the past two years during the pandemic, the largest project budget in more than a decade. It includes and I look forward to continuing our engagement and sharing $17 million for the 2022 drill program; $9 million for external many more achievements in 2022. affairs, permitting, environmental, land, and legal activities; and $4 million for project planning and fieldwork. A total of $13 million is allocated for NOVAGOLD general corporate and administrative costs and an additional $3 million for withholding taxes on share-based compensation and other working capital. Gregory A. Lang President and CEO February 28, 2022 10 Donlin Gold employees from the Y-K region (left to right): Daryl Petruska, Christopher Gregory, Scott Fitka, Jordan Shriner. 11 THE UNRIVALED DONLIN GOLD 39Moz 5% There are 39 million gold ounces7 contained in Donlin Gold’s measured Only five percent of Donlin Gold’s total land package has been and indicated resources – five times explored. the peer group average. TOP 5 2.24g/t According to the Fraser Institute10, Alaska is ranked fifth in the world for investment attractiveness. Donlin Gold’s grade – 2.24 grams of gold per tonne8 – is more than double the world’s average among known open-pit deposits. $169M 2+2 NOVAGOLD has a strong balance A true partnership between sheet, including $169.1 million in cash and term deposits as of NOVAGOLD and Barrick, project owners, and Calista and TKC, November 30, 2021, plus $25 million mineral and surface rights owners. in notes receivable in 2023. 12 N O V A G O L D A T A G L A N C E The Donlin Gold 2021 drill program was completed with 79 holes drilled for a total of 24,264 meters. 13 NOVAGOLD is committed to delivering long-term value to all our stakeholders through responsible mining. Our sustainability approach involves setting and meeting high standards in environmental, social, and governance matters in all that we do – while contributing to the social and economic development of the communities in the regions where we operate. We believe that mines can be responsibly developed in partnership with our local stakeholders who have the knowledge to help us manage and minimize environmental impacts. NOVAGOLD is committed to building trust and transparency, continuous improvement, and stage-appropriate enhancements to its sustainability initiatives and policies. The 2021 Sustainability Summary is our first stand-alone report that integrates sustainability data and gives stakeholders a tangible overview of our non-financial performance in fiscal year 2021. This report demonstrates how policy and practice are bringing about real and positive benefits at the Donlin Gold project and for the Yukon- Kuskokwim region, both today and in the years to come. The ACMA and Lewis deposits at the Donlin Gold project site in the Yukon-Kuskokwim region in Alaska. 14 SUSTAINNOVAGOLD’S 2021 SUSTAINABILITY SUMMARY LAUNCHES SPRING 2022. Sign up for email alerts and follow us on social media for more details. S U S T A I N A B I L I T Y 15 ABILITYCHAIRMAN’S INTERVIEW John Hathaway (left) and Dr. Thomas S. Kaplan (right) This interview should be read in conjunction with the cautionary statements and the “Mineral Reserves & Mineral Resources” information on page 35. All figures are in USD unless otherwise stated. 16 On Friday, December 3, 2021, John Hathaway, CFA — portfolio manager of Sprott Hathaway Special Situations Strategy and co-portfolio manager of the Sprott Gold Equity Fund — sat down with Dr. Thomas S. Kaplan, chairman of the board of directors at NOVAGOLD and chairman and CEO of The Electrum Group. The two discussed gold’s market trajectory, jurisdictional safety, and cryptocurrencies — and why Tom thinks NOVAGOLD has the potential to significantly outperform its peer group. The interview has been edited both for length and for clarity; to watch a video of the conversation, please visit novagold.com/media-gallery. John Hathaway: Tom, it’s so nice to see you. Thank you for NOVAGOLD, in many respects, embodies my arc in the inviting me. mining world. When I began my career in the nineties with Apex Silver and through our own engagement in African Dr. Thomas S. Kaplan: The pleasure is mine. And so is Platinum, which was taken over by Impala – and indeed in the honor. I’ve known you forever, it seems. You have. NOVAGOLD itself – what my career has shown is two very distinct features. The first has been the constant in my career: this gravitational pull toward category-killer assets. Assets which any larger company would want to own at a price if given the opportunity. I’ve come to believe that no matter how sophisticated a piece of paper is when you’re doing a Through many iterations. What led you to NOVAGOLD transaction and making an investment, at the end of the day after Apex, African Platinum – or, as then known, South it’s all about the assets. African Resources – and a few other things along the way, If you don’t have a high-quality asset, but you’ve got the not to mention your other interests that are not remotely best kind of piece of paper, you’re still going to lose money and gold-oriented? But maybe they all fit together. it’s only going to be heartache. It’s all about the assets. And if you superimpose onto those assets great management teams, It may simply be because I’m shallow and superficial, but I then you can deliver outstanding returns. In silver we had a am clearly drawn to the iconic. I’m drawn to beauty. I’m drawn 200X return and that got me started. And then we went into to great assets – those things which really give me a sense of platinum, in which we had a 100X return, and hydrocarbons a joy when I’m engaged with them. And that runs the gamut. 100X return. We then sold everything in 2007 in order to pivot So, in my business career, I’ve had the great luck of being able into gold and silver. It was the only thing that I really believed to either discover – in the case of silver, platinum, natural gas in. And I was lucky. We were able to make exits in hydrocarbons – or to take control of assets that are really category-killers in to Encana, in platinum to Impala. And so when we entered their space, and which have almost always ended up being in the financial crisis, I had capital and conviction, and whenever the portfolios of much larger companies who needed these I have capital and conviction in something, it proves to be a kinds of assets to move the needle in their own reserves or lethal combination. production. There is something of a correlation when you look at my You say that’s dangerous. other interests too. In art, for example, I’m drawn to Rembrandt. There isn’t any list of the greatest painters of all time which It is, it really is. Now, I had coveted NOVAGOLD for years, doesn’t include Rembrandt and several other artists that I love. and I had watched it go from a 60 cent stock to $14, $15 when It’s that combination of intensity and beauty – similarly with a Barrick made a hostile takeover attempt in 2006. I didn’t own passion that, for me, is even something that burns brighter than it. So I’m not taking any credit for having owned it. I fell into art: wildlife conservation. I’ve always been drawn to the big that trap that investors sometimes face and thought I missed it cats – actually all cats, big and small. There’s something about instead of realizing you do not make money looking in the rear- the grace and the beauty and the power of cats that has a view mirror. I watched the company and shareholders reject certain charisma. They are iconic, they’re at the top of the food the Barrick bid and the stock went to $19.74 CAD. Again, I didn’t chain, and they’re the umbrella species under which if you save own it, but I did watch as it made a round trip and at different them, you’ve also saved all the flora and fauna in these critical intervals, I would look and say, maybe now is the time to strike. ecosystems. So, whether it’s assets or whether it’s other What was it that attracted me to NOVAGOLD? Donlin Gold. beautiful subjects, there is that commonality of the I really felt that Donlin Gold was the ultimate category-killer. iconic nature. I had that sense that the Donlin Gold trend could be something C H A I R M A N ’ S I N T E R V I E W 17 akin to the Carlin trend – not necessarily the same kind of Mauritania all the way through to Pakistan, and it was one of system, but in terms of how the next big discovery at Carlin the things that got me to open up doors and ultimately would lead to another discovery. And when we realized that become partners with sovereign wealth funds from the Arabian the 30, 40 million ounces that we could see in 2008 were on a Gulf. But around the time that we made the investment in small percentage of the entire land package – concentrated on NOVAGOLD, I’d come to believe that the era of “Go where the a three-kilometer area that had been heavily drilled, as well as gold is” mentality was coming to an end. And that ultimately being open at depth – I sent my chief geologist to assess it. This investors such as myself would gravitate toward jurisdictions geologist, Dr. Larry Buchanan, is one of the great exploration where the rule of law wasn’t a novelty, where when you go to geologists in the world. The Buchanan model is a textbook sleep at night you feel completely confident that when you analysis of epithermal deposits that’s still unrivaled to this day. wake up in the morning, what you thought you own the And I sent Larry out and I said, “What do you think?” (This evening before, you still own. Therefore, I changed my mantra. was after we’d already made the deal, which gave us effective So the mantra went from being “seek out great assets that give control.) I asked, “Are the you extraordinary leverage to an underlying theme,” to “seek 40 million ounces there?” out great assets that give you extraordinary leverage to an And he said, “Oh no.” For underlying theme in a jurisdiction that will allow you to keep a moment my heart sank. the fruits of that leverage when the time comes to ring the We’re already in it. And he cash register.” said, “I think there’s at least double, maybe more. In fact, Ultimately, we have in the picture a big partner who owns I think that the next Donlin 50 percent. So some of it would be the dynamics between Gold is at Donlin Gold.” If the two partners. Do you think that can be monetized? you’re in the mining industry, A lot of this is unknown at this stage, but we know that you know, it’s an old adage: you have a scarce asset. Gold is in itself scarce. Maybe you If you’re going out in search could just talk about the various things that would come of elephants, go to elephant into play in advancing NOVAGOLD. Why, in your opinion, country. And what he was will this particular asset outperform its peer group? basically saying was in terms of the geological potential NOVAGOLD is the flagship asset of The Electrum Group. at Donlin Gold, we were We have interests in multiple gold and silver assets – hence the perhaps just scratching the name Electrum, which is a naturally occurring alloy of gold and surface. Now this got me silver – in North America as well as some exposure to Australia. extremely excited despite the fact that everything that I know For us, Donlin Gold is the holy grail. And the reason I say that is about mining development and operations would fit very because we believe that Donlin Gold, as a vehicle for investors generously into a thimble. to be able to get true octane in the development space in gold, So when I got this conviction that NOVAGOLD was going is unique. What does it mean to be unique? What it means to give me all the leverage I could possibly want to the is that when you look at Donlin Gold’s attributes…Its size: underlying gold thesis, I realized we had a tiger by the tail. Now, There’s never been a gold mine that began production with 40 up until that time – when we came into NOVAGOLD in 2008 – million ounces plus. The scale: We’re talking about something Electrum had perhaps the most widespread and diversified that could be a million-ounce-a-year producer. The mine life: exploration portfolio in the world. I was the largest holder of It is projected to start with 27 years of production. The cost mineral rights in mining, so I was told, in the Islamic world from structure: Because it is projected to be a high-grade mine for a 18 JURISDICTIONAL SAFETY 11 large-scale open pit, between two and three grams, it could be constraints on permitting and environmental considerations one of the lowest-cost producers in the world. would mean longer lead times. Then you have to take into account the fact that it’s in So you were getting higher valuations for assets in Africa the safest part of the world, for which a premium should be than you were in North America. When we pivoted away from attached. Before we entered into the “Go where the gold is” the developing world into what we called the safe jurisdictions mentality in the early 1990s, particularly led by Newmont’s – now what would be known as the Tier-One jurisdictions – at move into Yanacocha with Buenaventura, gold assets were least in my case people couldn’t say, “Well Tom, you’re talking pretty much valued as follows: U.S. assets were valued using your own book. You’ve taken a stake in NOVAGOLD.” It’s not a 0 percent discount rate because they were considered to be exactly true. I’d become the largest holder of Moto Goldmines the safe jurisdictions. And if you had exploration potential, all at the same time. And we engineered the sale of Moto to Mark the better. These were arbitraged against the risky jurisdictions: Bristow and Randgold and AngloGold. So we were still willing Australia, Canada, and South Africa. That just shows you how to take opportunistic bets in the developing world, but we far we came because once Newmont went into Peru and then viewed that as being a warrant, as opposed to being a stock. into Uzbekistan – and you had Barrick following suit into Chile The true stocks were U.S., Canada, Mexico, and Australia. Now, and ultimately looking for gold in Russia and Freeport into when you look at NOVAGOLD, what you see is this combination Irian Jaya – everything changed. And at a certain point, it came of Donlin Gold’s size, grade, exploration potential, production around to the assets in North America being valued lower than profile, and cost structure. And superimposed upon all that is in these other jurisdictions because it was assumed that the jurisdictional safety. Alaska is a state that welcomes mining. C H A I R M A N ’ S I N T E R V I E W 19 46MozSukhoi Log1.2MozOlimpiada2.7MozMuruntau11.5MozLivengood11.7MozBlackwater1.7MozCarlin11.3MozGoldrush39.0Moz12Donlin Gold2020 annual production of gold operations14M&I resources of development-stage gold projects13low riskmoderate to high riskextreme riskno dataIt is already the second largest gold-producing state after combination of attributes of this asset, you realize that there Nevada. We are very blessed to have our Native Corporation is no other in the world like it. No mining project has ever partners at the local level, the Calista Corporation and The begun production with over 40 million ounces. NOVAGOLD’s Kuskokwim Corporation, and to have as our strategic partner resources are only on three kilometers of a mineral belt that is Barrick Gold. As a consequence, the level of professionalism eight kilometers. And those eight kilometers represent only 5 that came from the NOVAGOLD team and the support that we percent of the total land package. We’re just simply following had at the local level and at the government level in Alaska an old adage that if you’re going to look for elephants, go to and, ultimately, the federal government allowed us to be able elephant country. There are only a few mines in the world that to do something that a lot of people thought would be too can have that kind of production because the grade is already hard to do. We got a Record of Decision. In fact, it was the first double if not triple what’s coming online in the gold industry. time that the Bureau of Land Management and the U.S. Army Now you take all of that and the fact that it’s located in a “We have, like the tortoise and the hare, taken [Donlin Gold] up the value chain while other projects that people thought would go into production have, like the hare, fallen by the wayside. Donlin Gold is on the path. I believe that Donlin Gold will be a producer for decades to come.” jurisdiction that is already the second largest gold-producing state in the union – on land that is private and already designated by law for mining – what you see is an asset that, if we are right, could be the next Nevada. And already is poised to be the greatest gold story in the development space. The only other asset that compares to it is Sukhoi Log in Russia, and we wish them the best of success. But we would argue, I think, that we’re on the right side of the Bering Strait. Your partner has, to my way of thinking, been tone-deaf on the issue of jurisdictional safety. You can observe that simply by where their assets are located. I don’t have to go through the litany of where they are. So I guess maybe something changed recently with your joint announcement with Barrick in terms of their way of viewing the world and their evaluation of political safety as being relevant in terms of where they spend their Corps of Engineers combined to provide a joint Record of capital. Decision – something that so moved them to have their own ceremony to celebrate the occasion. One of the great things I think it’s fair to say that Mark Bristow is without a doubt about Donlin Gold is that anyone who goes to Alaska – and one of the greatest CEOs of his generation in the gold mining Mark Bristow has now been there a couple of times and seen industry. Mark’s experience is primarily in Africa. I also have it firsthand – realizes the depth of support that we have from African experience in gold. I sold him the Kibali mine as Calista and TKC, the owners of the mineral and surface rights, well as a platinum asset in Zimbabwe. So, I’m not Pollyanna but all the way through to the governors and to the senators when it comes to my experiences in Africa. I also got my first themselves. Donlin Gold is now viewed as the flagship for gold lucky break in Bolivia. So I do have an understanding of the development in Alaska. opportunities that are present in the developing world. When you combine all of these factors, what you have Mark’s focus has always been Tier-One assets that is a situation where I’m often asked, “Why do you say that will make a certain kind of return; that are of a significant Donlin Gold is unique?” The reasons are when you look at the production profile and all of the other attributes which Barrick 20 discusses. I also believe in Tier-One assets. In fact, I’m even There’s a shortage of names that are in safe jurisdictions. more stringent, certainly when it comes to what I’m looking And it’s hard to imagine capital is going to flow to Sukhoi for in an asset that can really move the needle in terms of Log before it flows to Donlin Gold. production and reserves for a company. An asset like Donlin Gold, for example. In fact, our mantra over the last 30 years has I would agree with you. We’ve seen analysts attach been great assets. Now it’s great assets in safe jurisdictions. valuations of 10 billion to 15 billion dollars on Sukhoi Log. Mark’s attitude, I believe, is that it’s all about the assets. Even if Now that Barrick is starting those jurisdictions are challenging, he has the skillset to be able to talk about Donlin Gold, I to navigate those challenges. And if anyone can do it, I think it’s think that the bell is going to Mark. So when we look at Donlin Gold, I’m not sure that that start ringing. Remember, for indicates that he sees it from a jurisdictional standpoint. I think 12 years we’ve been in the what I can say is that he understands this can easily evolve into story, and we have framed a Tier-One producer. the narrative on Donlin I would say that being a Tier-One producer is absolutely Gold and we have, like the critical in terms of being able to explain to investors why the tortoise and the hare, taken long-term prospects of Donlin Gold, and hence NOVAGOLD, are this thing up the value chain so good. But I would say that for me as an investor, and I think while other projects that I speak for our shareholder base, we want not only Tier-One people thought would go assets, we want Tier-One assets in Tier-One jurisdictions. We into production have, like the want to be able to sleep well at night, knowing that when we hare, fallen by the wayside. wake up in the morning, whatever we thought we owned the Donlin Gold is on the path. I night before, we still own. believe that Donlin Gold will I think that what we’re seeing with Barrick, as evidenced be a producer for decades by the joint press release that we issued in December, is a to come and that it will pay recognition that Donlin Gold is now very much part of their dividends. project pipeline profile in a way that it wasn’t before. They are getting comfortable with it. Mark is a geologist. He is absolutely I’m not sure how patient I am on that sort of thing. punctilious when it comes to geology. There was never a doubt that the gold is there, but Mark wants to be able to quantify Look, we are now at the point where we have something how every ounce is going to come out over a 10-year period. that is pretty much permitted in a safe jurisdiction with great And I’m the last person to gainsay such a dedication to one’s partners. We’re in great shape. Mark sees this – and Barrick craft, but for me, this press release, I think, was a game-changer. knows even from experience in North America that a Record of And I think that in the not-too-distant future, when gold Decision is a big deal. Barrick knows that being able to have a reaffirms its bull market trajectory, we will be the go-to stock in property that is on private land designated for mining, in an era the development space. NOVAGOLD’s got all the attributes that when people are starting to talk about royalties on government investors will be looking for and they will want octane in their land, is a big asset on top of what is demonstrably a very, very portfolio. We’ve seen M&A in the gold space take out name big asset. So my belief is that what we will see over the coming after name after name. year is quite a bit of very positive news. The more we drill, the more we find. We say that Donlin Gold is a gift that keeps on giving. C H A I R M A N ’ S I N T E R V I E W 21 We’ve had some astonishing results – some of the You’re going from almost none to potentially… most promising in the gold mining industry – but there’s also another factor here. For investors in NOVAGOLD stock Right now, we have two analysts following us. God bless and those who have relied upon me, Greg Lang, Mélanie them, we love them dearly. But even they, I would imagine, Hennessey, Igor Levental, and other members of the would love to see six or eight analysts following us. Now, NOVAGOLD management team to tell that story, we’re going to just look at the psychology of it. If you are already following see a sea change. Because as exuberant and passionate as we Donlin Gold because you have to follow Barrick, because it’s are about Donlin Gold, anyone who knows Mark Bristow knows the 800-pound gorilla, then why not look at having a pure play that when he loves, he loves very deeply. And I believe that he on a great asset in a great jurisdiction? Why not? Some won’t will be falling in love with Donlin Gold. He’s already said that bother. Others will jump all over it. Now, that’s number one, he’s catching up with the Kaplan narrative. Now, I think after but number two is that as the Donlin Gold story gets rippled anyone that’s been listening to me, that must be a terrifying through the market because of Barrick, some of that offtake prospect because the fact that two of us will be doing that is going to spill out onto us. And we’re a stock with very, very simultaneously is very good. loyal shareholders who’ve been in it for a long time – some of So here’s what I think will happen, which I believe is so them almost as long as I have, and I’ve been in it for 12 years. wonderful for NOVAGOLD shareholders: Number one, anyone I am more passionate about the story than ever before. They from the sell side who follows the gold industry follows Barrick. are watching this unfold. They’re now going to have to look more deeply into Donlin In fact we’ve had multiple calls from people saying Gold. Some of them will be doing so in the context of following congratulations with regard to the December joint press “When you look at NOVAGOLD, what you see is this combination of Donlin Gold’s size, grade, exploration potential, production profile, and cost structure. And superimposed upon all that is jurisdictional safety.” release because they understand that as Donlin Gold gets some more coverage, more investors will be looking for a pure play on the story. And you start to get a few shareholders taking positions like the Public Investment Fund of Saudi Arabia did over the last year or so, and it’s a game-changer. My agenda and Greg’s agenda is that we are aiming to be the go-to stock in the gold development space. I believe that we’re already there. But more than that, we want to be viewed as being the premier value and growth story in a sector in which the defining attribute is scarcity. Where do you think – because this is an unusual, unique situation – NOVAGOLD should trade? I understand that more analysts following it will certainly help, but theoretically, hypothetically, we have a long-dated call Barrick, which I really hope they will. This is great news for on the gold price. That’s how I see it anyway. How in Barrick shareholders because I don’t believe that the value of your mind, and I’m strictly asking this from an academic Donlin Gold is reflected at all in the Barrick share price. And point of view, because I know you and I think the stock analysts following Donlin Gold already will start to follow should trade higher, but how would one analytically get NOVAGOLD as a pure play on this emerging gold district. to a higher price, when I guess production will not occur So we’ll have more analytical coverage. I feel pretty confident until six, seven, eight years down the road? What are your about that. It’s almost the law of averages. thoughts on that? 22 I’ve always been a believer that at the end of the day, the money is made on having great assets. I’ve never believed that production in and of itself should be the metric on taking a position to the contrary. TOP 10 SHAREHOLDERS That’s radical in the world of sell-side research. 35.2% all other Completely. But you know, that’s how I’ve made my living. If everybody adhered to the same opinion, I would’ve had far more competition in the space. So if you’ve got someone whose foremost credential to be in the mining industry is a PhD in counterinsurgency, then there must be something else going for him. In my case I am probably the luckiest person I’ve ever met – personally and professionally. I’ve been blessed with surrounding myself with the best in breed: geologists like Larry Buchanan, specialists like Igor Levental and Ken Rye. And then being able to create an ecosystem in which we have this coterie of superior managements. For example, Greg Lang. Before he $2.2B market cap15 64.8% top 10 25.4% Electrum Strategic Resources LP & affiliates 7.5% Fidelity Management & Research Company 6.7% Paulson & Co. Inc. 6.0% BlackRock Institutional Trust & affiliates 4.9% Saudi Public Investment Fund 3.6% EXOR Investments (UK) LLP 3.5% First Eagle Investment Management 3.2% Van Eck Associates Corporation 2.6% The Vanguard Group, Inc. 1.4% Kopernik Global Investors LLC joined NOVAGOLD, Greg was the president of Barrick North Williams and Ron Rimelman and Dave Ottewell. A great cast of America for eight years. He was producing more gold than people, all of whom have this huge company experience but Goldcorp, but he was also someone who had been with Barrick have come together to help build out what they all believe to and its predecessor companies for nearly 30 years. Why did he be the greatest gold story in the space. When Richard Williams leave Barrick to join NOVAGOLD? The reason was because, as joined from Barrick, he had just taken into production Pueblo he said, “I wanted to go into the company that had access to Viejo. That was the biggest gold investment Barrick had ever being a pure play on what I felt was the greatest development made. And when Victor Flores, who came to visit Donlin Gold story in the gold industry.” And he knew it. Donlin Gold came for John Paulson, asked him why he made that move, Richard under his purview at Barrick. He was part of the team that conveyed that he wanted to be part of the greatest gold story made the takeover attempt in 2006. So he was an educated in the world. That’s a statement. And that is part of our DNA. consumer – which of course as we know is the best customer. We’ve all been together as a team for many, many years, and I When he came in, he said, “I will join as CEO if you join as enjoy it. I enjoy their company. Otherwise, I simply wouldn’t do chairman.” And that’s how I took the position. I very rarely it. I wouldn’t need to do it, that’s for sure. join the boards of companies even if I own 70 or 80 percent of them. My shareholders, those who follow us, know that I follow You certainly don’t need to. One of the questions I think these stories extremely carefully. As they say at Fidelity, the that crosses investors’ minds, and certainly my mind from owner lives above the store. I don’t have to be on the board of time to time, is this is a large capital commitment. The last NOVAGOLD, but I do it because I enjoy it. I do it because I am a count was I think seven billion. I know it can be staged huge believer in Donlin Gold. I nearly named my third child, our and maybe wouldn’t be that large, but, from NOVAGOLD’s youngest son, Donlin Gold. So that’s got to be indicative of the point of view, whatever is decided would still be a major passion which we have for this story. financial commitment. So I would be interested in your I do it because it’s one of the most enjoyable gigs in the thoughts on how you will negotiate that particular issue. gold mining industry. I get to work with Greg Lang. I get to And I know there are many different ways to do it, but I work with Mélanie Hennessey. I get to work with Richard kind of think it would be interesting to hear your thoughts on that. C H A I R M A N ’ S I N T E R V I E W 23 Well, I can tell you that, when the time is right to go into shareholder, what I want to see is that when gold prices are production, I think this will be the easiest gold mine to finance. where they should be, when the mine is ready to be built, our In Alaska, with Barrick as a partner, it will be something where share price I believe will be multiples where it is today. I think it can be done in several phone calls. Now, let’s break this down. I’m only using hypotheticals here. These are purely One of the rationales for investing in NOVAGOLD is a belief forward-looking statements; disavow all of them. I’m just using in a substantially higher gold price, which is hard to come round numbers. Let’s assume that phase one of the project by these days outside of this room. Of the few believers in is four billion dollars, split two ways. That’s two billion each. gold, my friends are well chosen. You did toss out $3,000 Obviously for Barrick, not difficult – but not difficult for us to $5,000 earlier; what are some of the things that come to either. Electrum financed a very prosperous silver project in mind as to how we’ll get there? Mexico, which we operate ourselves (not with the benefit of a major like Barrick), and we got 70 percent financing. Now, $2,000 gold – if you’re a bull on gold – isn’t really a AVERAGE GRADE 2.24 g/t 1.12 g/t Donlin Gold average grade16 global average grade17 number. It’s nothing. And when I pivoted from energy to gold in 2007, oil was heading to $120-140 per barrel. We sold our energy company when oil was $120. Gold had a 600 handle, and I gave all the reasons why I felt that one should be in a currency that can’t be produced at will. And I think that gold and silver provided me with exactly the kind of exposure that I needed. When we sold our energy company, we didn’t go back in because I told people I could no longer really comfort myself with conviction as to whether oil was worth $20 or $120. Little did I know that last year it would be worth briefly minus $20. But the one thing that I did know is that gold would multiply, and my long-term target for gold in 2007 was between $3,000 and $5,000 when it was at $600. So we’re on our way. I mean we’ve tripled since then. And something that I really want to mention because you’ve brought this out in your own writings. The idea that you need to be a dollar bear to be a gold bull; Let’s say that happens for us. What are we really talking it’s not true. The idea that you need to be a bull on oil to be about? $600 million, $700 million, $800 million? Now let’s a gold bull; it’s not true. You’ve pointed these out, and here’s do something that investors very rarely do, but they should, the proof: In 2007, we got a wire transfer for $2.55 billion from which is to take themselves out of where they are today Encana for the sale of our stake in Leor Energy… and their present mindset and understand what will be the conditions that will pertain when we’re talking about going You remember the date? into production. I believe that gold will have embarked on the next leg of its bull market. I think that it will take us well beyond Oh yeah, and if for no other reason than that I have no idea $2,000. I think ultimately it’d be $3,000 to $5,000, but once what would have become of us if we had made that sale six you see that gold has embarked upon that next wave, I think months later. One thing I did was I looked around at where we Barrick will be extremely excited to go into production. And I’ve were going to park the money. Well, dollar-euro was 1.47. Today always said that when Barrick is ready, we’ll be ready. We have it’s 1.13. Gold was $600-ish and it’s three times higher with three sovereign wealth funds as our partners in Electrum, and the dollar having strengthened by 30 percent. The concept we’re very, very close to them and we’ve always had a number that you have to be a dollar bear is not true. Oil was $120 with of major players in the financial space in mining who’ve always gold at $600-ish. Oil is now half – and was even much lower said when you’re ready, just let us know. For me as the largest – and gold is a multiple of that, which tells you this: First of 24 all, gold has been the best performing currency in the world, that long-term in our thinking to understand that crypto is and second, as a commodity, which is the way some people a phenomenon. Crypto currencies are here to stay, just as look at it, it’s also outperformed. So when I look at gold, I see automobiles were a phenomenon, just as airplanes were a something that is an accident waiting to happen. And I love phenomenon. Railroads were a phenomenon. Most of those being long on accidents. that were early movers ended up going broke. We don’t yet know who the winner is. I personally think Seems to be asymmetric in terms of risk/reward. that it’s likely to have a Chinese name attached to it. They’re Completely. So when I look at the gold space, I see no States. They have of course phenomenal opportunity just reason to adjust my $3,000 to $5,000 target. And by the way, I domestically to be able to develop that market. And through think that there will be days when gold trades peak to trough the Belt and Road Initiative, they have a lot of other countries the absolute price that it’s trading today. It would not surprise who may very well be open to that idea. What that means for me to see $1,700-$1,800 days where gold will trade up and things like Bitcoin or Ethereum, I don’t really know. a larger trading partner with more countries than the United down. I think that we’re going to see that kind of volatility by I am, I suppose, a true definition. That means that gold is a great buy here, if I can say conservative. There was a that with that level of conviction. I did that once before when professor at The London I made that forecast in silver, which was trading at around School of Economics named $6 per ounce at the time and people thought that I was nuts Michael Oakeshott who once and you had much greater intraday volatility a couple of defined a true conservative years later – the implication being that silver was much, much as one who prefers present higher. So for gold bulls, I would say what we’re seeing now is a happiness to future utopia. correction within a long-term bull market, but $2,000 won’t be There are many different the number. And if $2,000 per ounce gives me a $10 billion NPV forms of crypto. I don’t know for Donlin Gold without adding any reserves, you know what? which of them will emerge That’s a very good investment. victorious, whether we even know its name yet. I do This is probably a good time to bring up crypto, because know that there’s only one I think crypto has sucked the oxygen out of the room for gold, there’s only one silver. gold in many ways. It’s been a headwind, and certainly They have their chemical has a generational aspect to it in that guys at my stage of definitions. They’re called the game believe in gold. What are your thoughts on the AU and AG, and that’s it. competitive aspects of gold and crypto? So, what we’ve seen in the crypto market to me is extremely bullish. In the same way that It reminds me of that famous exchange between Henry I view the scarcity value of Donlin Gold to be one of its greatest Kissinger and Premier Zhou Enlai when Kissinger was secretly attributes, I view the scarcity value of precious metals to be negotiating Nixon’s visit to China and the U.S.’s recognition of amongst those greatest attributes. the People’s Republic. Kissinger, being a historian, asked Zhou Let’s understand what the crypto phenomenon really Enlai what he thought the long-term implications were of the means in its essence. It means that your narrative, the John French revolution of 1789. Zhou Enlai famously responded, Hathaway narrative, the Tom Kaplan narrative, has won. “It’s too soon to tell.” Now I don’t think that we need to be That is, we have seen gold – and the reasons why people buy C H A I R M A N ’ S I N T E R V I E W 25 gold – be adopted by the crypto crowd, to the extent that in Now, I don’t need people to have as much exposure to order to be able to induce people to look at crypto in the first gold as to crypto. If we even had a fraction of the market cap of place, people refer to it as gold 2.0. Now for some people, that Bitcoin, going into gold, gold would be at $20,000 per ounce. may be enough to be able to have exposure to crypto as being But do I think that there’s going to be some spillover effect a currency that has limited ability to be reproduced. But there onto gold, as people say? Well, maybe gold is undervalued. will always be enough people who are interested in gold, and I think personally that the acceptance of that “gold 2.0” Relative to… “If you don’t have great relationships with the communities, if you don’t have great relationships at the provincial level so that people...see that what you are doing is going to have a direct impact on their lives and, most important, the prospects for their children, then you’re going to go nowhere fast — or even worse, you’re going to build something and find that you have challenges. We don’t have those issues.” Yeah, we’ve bought the argument for gold, but maybe it is actually undervalued. And it does cost something to produce – that we can quantify – so we just need some of that to rub off on a scarce asset and gold will be like a bat out of hell. And one of the things that we’ve seen is that in today’s world, when something’s going up, that’s when people really want it the most. So, if gold goes through $2,000, it can also go to $2,100, $2,200, $2,500…. People will start saying I’ll buy it on a pullback and then it will pull back and then they’ll be afraid to buy it because they don’t want to be the sucker who bought it at all- time highs. And then it can go to $3,000, $4,000, $5,000. We see that, by the way, in cryptocurrencies. We see that in assets when they’re in a bull market and they have momentum, and especially now where there’s so much capital. So, I think when you do see that $2,000 breakthrough, it’s going to be enduring and the uptrend will be violent, which is just wonderful for us and it’s especially wonderful if you’ve got assets with great leverage to that in places that are not going to nationalize you because now you’re viewed as a strategic asset that should be in their portfolio. You want to be in a place where private property is enshrined constitutionally – and narrative is going to create a lot of arbitrage between gold there aren’t that many. 2.0 and gold 1.0. You know the Chinese, the Indians, many countries around the world are still buying a lot of gold. Central Right. It’s a short list. banks are buying a lot of gold. Singapore, which is a bellwether central bank, bought gold for the first time in decades. That And getting shorter by the day. You know, they say that was made public in December. Now to me, central banks are they don’t ring a bell, but as we were discussing earlier, the like insiders. They know the value of the assets that they hold. “Go where the gold is” mentality really began in the early 1990s Most of which are dollars. when Newmont went to Yanacocha. I think that they rang the bell when Newmont and its partner Buenaventura weren’t able to continue with Mina Conga in Peru. There was almost Most of which are dollars, are now subpar financial assets an unfortunate but poetic symmetry to the entire arc of the that they’ve had to hoover up in order to sustain the global scramble for gold, regardless of jurisdictional risk. But we see economy since 2008, 2009. So when they’re buying gold, it’s it now across the board. In fact, in Peru, you know, they just like when a museum buys a work of art. They’re voting with devastated a silver miner stock on the London stock exchange. their feet to be able to have some exposure to it. 26 True. This is happening now all over. And who needs it? UPSIDE VALUE 18 And it’s kind of monkey see, monkey do. I mean, if one Net Present Value (NPV) (US$ in billions) NPV at 0% NPV at 5% country decides to get more of the economics, they’re all going to follow in. If your neighbor has just changed the rules, whether it’s windfall profit taxes or local ownership or outright nationalization, and you’re on the other side of the fence, you have to follow suit, politically. It’s suicide not to. If you’re a dictatorship, people will be saying, “He must be on the take of the mining company.” If you’re a democracy, your constituents aren’t going to allow your national endowment to be plundered by foreigners. When on the other side, they’ve shown you can get away with getting more. So politically, regardless of your form of government, it’s unsustainable for $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 31.6B 22.5B 17.5B 13.1B 8.8B $1,300 Gold Price US$/oz $1,500 $1,700 $2,000 $2,500 other governments not to join in. I often say it’s like popcorn: First of all, as you said, we have the luxury of time, and it Nobody ever eats one piece of popcorn. I think that that’s really is a luxury. My own experience in the space shows how already begun. So if I’m right about that from an investor being developers can give you such a long runway to have standpoint, it means that the premium multiples are going to opportunities to make money. But we are quite a while away be seen in those assets in safe places, which are immune from from being in a situation where cost pressures today are going that kind of confiscatory trend. to have an impact on our valuation. The most important aspect that goes into determining what your cost of production Well, Tom, one of the things that we spent a lot of time is going to be is grade. So therefore, all things being equal, obsessing about are costs. In fact, we’ve interviewed many ceteris paribus, if you have a company that is extracting one different managements and one of the first questions is, gram of gold per tonne, rather than two grams – or in our What do you expect your all-in sustaining costs to be and case, two-plus grams per tonne – their cost of production is where are the cost pressures coming from? And we’re going to be double what Donlin Gold’s would be. The grade finding that in many cases we’re talking about 6-7 percent. profile of Donlin Gold as a large-scale open-pit mine gives Of course, there’s no inflation. Of course, it’s transitory. us tremendous advantages. It will place us at the low end of But in my mind, it’s not. And, obviously that’s one of the the cost curve. But let’s again enter into the exercise of what arguments for gold as inflation has become embedded does it mean if we have five or six percent cost inflation in and there’s no way out, but when it comes to NOVAGOLD, gold mining by the time we’re in production? What does that we’re a long way away from producing. How do you think mean for the price of gold? Do you really think that gold will investors will look at the profile of costs and the structure be at $1,700 or $1,800? One of the challenges that investors of the costs in Donlin Gold when it starts producing? have – you don’t suffer from this issue – is that they make the C H A I R M A N ’ S I N T E R V I E W 27 assumption in valuing something that the conditions upon 2008 when the deal was signed. But one of the most important exit are going to be the same as they are today. In other words, things is that he said, “Look, you’re in a position to buy the they don’t game things out. What we always try to do is we say company for $2 a share. You have the cash. Barrick tried to buy to ourselves, okay, hopefully we’re buying when you have, as it at $16 a share. You don’t think that they’re going to walk you John Templeton put it, maximum pessimism. That was certainly up dollar for dollar until they get to where they want?” And it the case when we came into NOVAGOLD. It was on the verge of turns out that Barrick wasn’t the only company that was hoping bankruptcy, and we hadn’t owned one share when we came in to buy NOVAGOLD on the cheap. There were others, including as a white knight and saved the company. And because of the Newmont and even the Russians. And so we realized we have exigent circumstances, we were able to go to 40 percent rather an opportunity to take control of one of the greatest gold than having to take a takeover bid. I wanted to buy the whole stories in the development space: NOVAGOLD. But we would company, but fortunately, I have around me people whose job have to settle for less than a hundred percent. And we ended in life…. Calmer heads prevail. It’s not just calmer heads, it’s wiser heads. So, in this up going 40 percent fully diluted. That was the right move. The attributes of Donlin Gold are that we are in a situation where the grade gives us plenty of leeway. Grades have collapsed over the decade-plus that I’ve been in the NOVAGOLD story. We’re now approaching one gram per tonne for projects and going sub-one gram per tonne. At a certain point, particularly if you’re not in stable jurisdictions, this is a real challenge. When we look at Donlin Gold, which has multiples more than those projects, we know that we have a cushion. And if anything, the results of the drill programs over the last couple of years have given us, with great input from Mark Bristow as a geologist – and the Barrick team – a much greater definition on the controls on the mineralization. The Bristow of Barrick, or the Barrick of Bristow, is absolutely committed to wanting to know every single ounce that will come out over a 10-year period. And I think that’s a great discipline. I think you, as an investor – I, as an investor – in the space have come to understand that when people cut corners, the back end can be pretty brutal. The more work you do on the front end, the more the back will take care of itself. instance, comrade Igor Levental was whispering into my Now we know that once Donlin Gold is built, it will have ears as he was supposed to: “Thou art mortal, Caesar.” So, been pretty well-engineered. Costs will be known. Cash flow whereas I sold my energy company and was flush with cash year X will be pretty much known other than the gold price. and brimming with conviction on gold, particularly on the holy grail, in my mind, which was Donlin Gold, then hence Look, we have an A team: You have the Barrick side, of NOVAGOLD, he was saying, “You know, you might think twice course, led by Mark; you have the NOVAGOLD side led by Greg. or three times about making a bid for the entire company Richard Williams built Pueblo Viejo for Barrick and at the time because everyone may be asleep,” as it was December 31st, Goldcorp, now Newmont, and is one of the world leaders 28 in autoclave technology. So, when we look at Donlin Gold, the amount of work that’s gone into it, combined with the robustness of the asset and the grade, we’re very comfortable in where the cost structure will be. But once again, people tell me, “Well, you know, you could have significant cost inflation years down the road.” And I say, like General David Petraeus said as Commander in Iraq, “Tell me, where does this end?” If you say that, then please tell me, where do you think gold is? “Oh no, we make the assumption gold is the same.” Really? Then why are we even talking? Yeah, the average expectation on the sell side is $1,600 gold per ounce. It’s a flat price deck. Well, you know, we are bullish on gold and we want to be able to provide the premier vehicle for those who want it, on a risk-adjusted basis, the most octane and the lowest risk in the development space for a Tier-One asset in a Tier-One 1.20 1.00 0.80 0.60 0.40 0.20 0.00 PRODUCTION Projected Annual Gold Production (millions of ounces) 1.10 0.5 0.39 0.37 0.36 0.32 Donlin Gold USA19 Goldrush USA20 Courageous Lake Canada20 Côté Gold Canada20 Salares Norte Chile20 Blackwater Canada20 jurisdiction. That’s our mantra. We are gold bulls. And for those Well, fortunately, we haven’t had to make any who aren’t gold bulls… Go somewhere else. philosophical adjustments in the company for the last decade. Greg Lang, the entire management team of NOVAGOLD, and I have always been extremely committed to ESG on every level. And even before ESG became a popular initialism, my One thing I’ve learned over the last 30 years is bears don’t own affinity, indeed passion, for wildlife conservation and buy shares. And I will spend time talking to someone if they particularly for species which require entire landscapes in have a thousand shares or they have 10 million shares. I enjoy which to be able to thrive, like big cats, means that for me, the it, clearly, and it’s not because I have to do it. It’s because I like environment is not just second nature, it’s actually first nature. to do it. Being associated with Donlin Gold to me is like being So the first thing that my kids will associate with me is passion associated with Rembrandt or being associated with tigers. for wildlife. And I’ve managed to inculcate that in all of them. You’re literally talking the best in breed in their space. That’s So I would never ever be around anything that countenanced not a hardship, that’s a privilege. cutting any corners when it comes to the environment or sustainability. Maybe this would be a good time to talk about Social license, the environmental license, is existential in sustainability. It’s something that we frankly have become the mining industry. If you don’t have great relationships with more and more involved in, and, of course, it has become the communities, if you don’t have great relationships at the one of the screens by which large capital will invest in the provincial level so that people buy in so that they see that what mining space. So I’d be interested in hearing how you look you are doing is going to have a direct impact on their lives at that and what you’re doing – and what you still need to and, most important, the prospects for their children, then do in terms of the ESG side of the equation. you’re going to go nowhere fast – or even worse, you’re going C H A I R M A N ’ S I N T E R V I E W 29 to build something and find that you have challenges. We don’t that we’ve made to shareholders, we’ve kept. Soon after we have those issues. We’ve been very blessed in that our local came on board, we did a capital raise at the beginning of 2012. partners, Calista and TKC, are our most vocal supporters. And of We raised over $330 million dollars because of the enthusiasm course the Native Corporations will all share in the benefits of of the combination of both of us and our relative skillsets. Donlin Gold. All of the Native Corporations in Alaska – that’s the What endeared the investors to us was that we laid out very way the system works. So, a certain percentage goes to those specifically what our plans were. who are most immediately related to the project, and the rest is We were going to spin off the company’s copper assets. spread around the state. We have that kind of buy-in. We did. The company is now called Trilogy Metals. It’s a very As far as governance is concerned, we are a paradigm of successful developer in partnership with South 32 in Alaska. an independent board. I’ve always believed that shareholders We would sell our share of Galore Creek, not for the $40 or should have a significant say even at the board level. I think $50 million that people assumed, but for $200-275 million. RESOURCE SIZE 39.0 Moz 7.7Moz Donlin Gold7 peer group average21 We would therefore position Donlin Gold as a pure play on the next Nevada through our vehicle, NOVAGOLD. So we felt we didn’t have headwinds. And in fact we moved right through permitting all the way through to a Record of Decision. So, essentially what you have is a company that articulates its strategy. It’s not trying to be all things to all people. We’ve never gone out of our way to say when we’re going to go into production, for the simple reason that we’ve always said that the whole idea is to make money and that required higher gold prices because our job is not to be producing high-grade, open-pit gold to subsidize Chinese and Indian consumption. When share prices are higher, we minimize dilution. And to our mind, certainly now, the shares are more valuable than the metal itself. So, for all of these reasons, I think that we have an exceptionally educated shareholder base, which is one of the reasons why they’ve been very loyal to us. Obviously, as they say in Russia, a fish rots from the head down. So they at least see that in our case, the owners that the transparency with which NOVAGOLD has conveyed live above the store and are completely investor-friendly its message in the media, in our annual reports, to our because we’re in fact the largest shareholders. We’ve got skin shareholders, is at least as good if not actually the best of any in the game. company that I’ve encountered. I remember in my first mining story, when we went public, I waived rights to be able to have Now that you’re positioned, you’ve sold Galore, you’ve more board seats because I felt having more independent spun out Trilogy, you’re permitted, and you’ve got the directors means that you’re going to get more independent Record of Decision, what would you say are the next key points of view. events from an investor’s point of view in 2022 – and The more independent points of view you get, especially if maybe beyond? you’re just coming into the space and you’re in your thirties, the less likelihood you have of problems. That certainly pertains to Well, I think that we just had a press release, which was the NOVAGOLD board, but more than that, we have gone out issued in December, that lays out the joint strategy by Barrick of our way strenuously to leave no room in terms of explaining and NOVAGOLD for taking Donlin Gold up the value chain. to our shareholders what our strategy is. And I’m very proud of We have a drill program coming up. It’s very exciting for us, the fact that since the 10 years that Greg Lang and I have been especially for me, because my fortunes have been made functioning as CEO and chairman, respectively, every promise through the drill bit and I’ve always been a very strong believer 30 in the exploration potential at Donlin Gold. And in a bull market one day NOVAGOLD be the object of a takeover attempt, one in gold, when you deliver exploration results that are positive, of the most attractive attributes for an acquirer is that when it’s a very, very wonderful thing. So, I’m looking forward to that they enter into the story, they are not subordinate to the and I believe that the next step will therefore be a review of existing partner. It’s a true 50/50. They will both jointly be the the feasibility study, which was last done nearly a decade ago. operator. That is a huge selling point in this industry. Sure, a lot has changed, not the least of which is the potential strategy itself of developing Donlin Gold in stages. Ultimately that will be determined jointly by the board of Donlin Gold, which is 50 percent Barrick, 50 percent NOVAGOLD. One of the things that I really have to stress – because it’s one of our most attractive attributes – is that Donlin Gold, the joint venture, is a true 50/50, which means that no partner has one iota greater rights than the other. In practical terms, we’ve never had any dissonance between the shareholders, certainly not since the time that I’ve been involved in the story. We get along extremely well with Barrick and the relationship between the management teams of Barrick and NOVAGOLD has never been better. And Mark Bristow and I have a relationship that goes back over 20 years and has been marked by successes in African Platinum, where he was a director and I was the largest shareholder. I was the largest shareholder of Moto Gold and was able to deliver that to him when he decided that he wanted the Kibali Not that you’re for sale… project in Congo, and we’ve enjoyed really great relations. But very importantly, what you also see is that we’re in sync on the Not that we’re for sale, but our job is to ensure that under work plan which has been laid out, something that is using any eventuality we get the premium valuation for our asset. very much Randgold kind of influences. In terms of news flow, And if that means being the beneficiary of things that took we’re hopeful about the next drill program and we believe place before we came onto the scene, great. I think everything that it should lead to a decision by Donlin Gold to proceed that we have done on our watch has positioned the company with a review of the feasibility study. When we talk about the so that we are in a position to take this project, with our partner Donlin Gold joint venture, investors have to understand that Barrick, up the value chain; to be able to finance the project, the way that it was constructed was brilliant. It had nothing to our aim being with minimal equity dilution; and if someone do with me so I’m not claiming any credit for it, but before we else is going to pay shareholders for the future – in a way that came into the NOVAGOLD story, they had devised two 50/50 is accretive and attractive – our job is to maximize that value joint ventures on Donlin Gold Creek, as it was then called, and and hence to maximize the valuation. I think that everything Galore Creek. These are genuine 50/50s, which is why when that we’ve done – but most importantly, everything about the Newmont came into Galore Creek, they were able to join Teck Donlin Gold asset – has given us the attributes that, whether Resources as a completely equal partner. In this business, unlike we take this into production or someone else does, it’s going in hydrocarbons, for example, that extra 0.1 of a percent and to prove to be one of the industry’s really, really great and operatorship makes a big difference. Because we don’t have epic successes. any deficiency in that respect with regard to Barrick, should C H A I R M A N ’ S I N T E R V I E W 31 Delivery of supplies for the 2021 Donlin Gold drill program. 32 33 NOTES 1) See media releases titled “Donlin Gold Initial 6) See July 26, 2018 media release titled “NOVAGOLD Enters Agreement to Sell Its 50% Stake in Galore Creek to Newmont for up to $275 Million.” 7) Donlin Gold data as per the 2021 Technical Report and the S-K 1300 Technical Report Summary (as defined herein). Donlin Gold proven and probable reserves of approximately 16.925Moz grading 2.09 g/t attributable to NOVAGOLD (33.849Moz on 100% basis) and measured and indicated resources, exclusive of reserves, of approximately 2.749Moz grading 2.43 g/t attributable to NOVAGOLD (5.497 Moz on 100% basis). 39Moz refers to mineral resources inclusive of reserves on a 100% basis. 8) Donlin Gold data as per the 2021 Technical Report and the S-K 1300 Technical Report Summary (as defined herein). Donlin Gold measured resources of approximately 8 Mt grading 2.52 g/t and indicated resources of approximately 534Mt grading 2.24 g/t, each on a 100% basis and inclusive of mineral reserves, of which 50% are attributable to NOVAGOLD through their 50% ownership interest in Donlin Gold LLC. Exclusive of mineral reserves, Donlin Gold possesses measured resources of approximately 1Mt grading 2.23 g/t and indicated resources of approximately 69Mt grading 2.44 g/t, each of which 50% are attributable to NOVAGOLD. Mineral resources have been estimated in accordance with NI 43- 101 and S-K 1300. 9) 2020 average grade of open-pit and underground deposits with gold as primary commodity and over 1Moz in measured and indicated resources is 1.12 g/t, sourced from S&P Global Market Intelligence. 10) Annual Survey of Mining Companies, 2020 11) The jurisdictional risk map is derived from the top 10 (lower risk) and bottom 10 (extreme risk) of 77 jurisdictions reviewed in the Fraser Institute Annual Survey of Mining Companies, 2020. 12) Represents 100% of M&I resources, inclusive of mineral reserves, of which 50% is NOVAGOLD’s share. Donlin Gold is not in production and a construction decision has not been made. See “Cautionary Note Concerning Reserve and Resource Estimates” and “Mineral Reserves & Mineral Resources” table on page 35. 13) Gold development stage projects defined as the top 5 globally by contained gold in measured and indicated resources, >75% projected revenues from gold, and with stated proven and probable reserves, as per latest company documents, public filings and websites as of November 2021. 2021 Drill Program Results Continue to Deliver for Project Advancement”, September 2, 2021 and “Barrick and NOVAGOLD Agree on Next Steps Toward Advancement of Donlin Gold; Drill Assay Results Continue to Yield High-Grade Intercepts and Demonstrate Important Grade Continuity; With Clear Improvement in Definition of Controls of Mineralization, the Project is Advancing Towards Feasibility Study Update”, December 2021. 2) Anticipated annual gold production during full life of mine if put into production as per the NI 43-101 Technical Report on the Donlin Gold Project, Alaska, USA with an effective date of June 1, 2021 (the “2021 Technical Report”) and the S-K 1300 Technical Report Summary on the Donlin Gold Project, Alaska, USA, November 30, 2021 (the “S-K 1300 Technical Report Summary”). See “Cautionary Note Concerning Reserve & Resource Estimates” and “Mineral Reserves & Mineral Resources” table on page 35. 3) NOVAGOLD defines a Tier-One gold development project as one with a projected production life of at least 10 years, annual projected production of at least 500,000 ounces of gold, and average projected cash costs over the production life that are in the lower half of the industry cost curve. 4) Forecast includes $30 million to Donlin Gold, $13 million to NOVAGOLD G&A and $3 million for withholding taxes on PSUs and other working capital. This report may also contain future- oriented financial information (“FOFI”) and information which could be considered to be in the nature of a “financial outlook”. Such FOFI or financial outlook was approved by NOVAGOLD’s management as of the date of this report for the purpose of providing management’s reasonable estimate based on the assumptions set forth in such estimates and the information may not be appropriate for other purposes. Management cautions that such FOFI or financial outlook reflects NOVAGOLD’s current beliefs and are based on information currently available to NOVAGOLD and on assumptions NOVAGOLD believes are reasonable. Actual results and developments may differ materially from results and developments discussed in the FOFI or financial outlook as they are subject to a number of significant risks and uncertainties. Certain of these risks and uncertainties are beyond NOVAGOLD’s control. Consequently, all of the FOFI or financial outlook are qualified by these cautionary statements, and there can be no assurances. 5) NOVAGOLD sold its 50% ownership of the Galore Creek project to Newmont in 2018. Deferred compensation on the sale of Galore Creek includes $25M on the earlier of completion of a Feasibility Study or July 27, 2023. An additional $75M is due upon construction approval. For additional detail, see the media release dated July 28, 2021: “NOVAGOLD Receives $75 Million from Newmont Corporation”. 34 N O T E S 14) Only three mines produced greater than 1 million ounces in 2020: Muruntau (2,652koz), Carlin (1,665koz), and Olimpiada (1,229koz), as per SNL Metals & Mining, an offering of S&P Global Market Intelligence. 15) Market Capitalization based on 332.9 million shares issued and outstanding and NOVAGOLD share price of $6.82 as of January 25, 2022. Stock options outstanding as of January 19, 2022. 16) Represents average grade of measured and indicated mineral resources, inclusive of mineral reserves. See “Cautionary Note Concerning Reserve and Resource Estimates” and “Mineral Reserves & Mineral Resources” table on page 35. 17) 2020 average grade of open-pit and underground deposits with gold as primary commodity and over 1Moz in measured and indicated resources, sourced from S&P Global Market Intelligence. 18) Donlin Gold data as per the 2021 Technical Report and the S-K 1300 Technical Report Summary (as defined herein). All dollar figures are in USD, represent 100% of the project of which NOVAGOLD’s share is 50%, and reflect after-tax net present value (at 0% and 5% discount rates) of the Donlin Gold project using the reference date of start of Year -06 as the first year of discounting. Estimated owner’s initial capital project development costs of approximately $348M to be spent prior to the reference date are treated as sunk costs. At a 5% discount rate, the net present value is: $1,161M at $1,300 gold; $3,040M at $1,500 gold; $4,887M at $1,700 gold; $7,229M at $2,000 gold; and $11,199M at $2,500 gold. The project requires a gold price of approximately $930 per ounce to break even on an undiscounted cash flow basis and a gold price of approximately $1,180 per ounce to break even on a 5% discounted basis. 19) Anticipated annual gold production during full life of mine if put into production as contemplated in the 2021 Technical Report and the S-K 1300 Technical Report Summary (as defined herein). See “Cautionary Note Concerning Reserve & Resource Estimates” and “Mineral Reserves & Mineral Resources” table on page 35. 20) Peer group data based on company documents, public filings and websites as of November 2021. Comparison group of 14 projects based on large (2Moz P&P cut off), North/South American gold-focused development projects with >75% projected revenues from gold. 21) Average of comparison group data of 14 projects based on large (2Moz P&P cut off), North/South American gold-focused development projects with >75% projected revenues from gold, as per latest company documents, public filings, and websites as of November 2021. MINERAL RESERVES & MINERAL RESOURCES Donlin Gold GOLD Reserves1 Proven Probable P&P Resources,2 exclusive of Reserves Measured Indicated M&I Inferred Resources,2 inclusive of Reserves Measured Indicated M&I Inferred Tonnage kt 7,683 497,128 504,811 869 69,402 70,271 92,216 7,731 533,607 541,337 92,216 Grade g/t Au 2.32 2.08 2.09 2.23 2.44 2.43 2.02 2.52 2.24 2.24 2.02 Metal content 100% basis Attributable to NOVAGOLD 50% koz Au koz Au 573 33,276 33,849 62 5,435 5,497 5,993 626 38,380 39,007 5,993 287 16,638 16,925 31 2,718 2,749 2,997 313 19,190 19,503 2,997 Donlin Gold approximate cut-off grades (see Mineral Resources and Reserves Footnotes): Reserves:1 0.57 g/t gold Resources:2 0.47 g/t gold Notes: a) Mineral Reserves & Mineral Resources are reported on a 100% basis and on a 50% ownership basis, and are current as of November 30, 2021. The 50% basis is attributable to NOVAGOLD through its 50% ownership interest in Donlin Gold LLC which owns the Donlin Gold project. b) These Mineral Reserve and Resource estimates have been prepared in accordance with NI 43-101, the 2014 CIM Definition Standard, and S-K 1300. c) Rounding may result in apparent summation differences between tonnes, grade and contained metal content d) Tonnage and grade measurements are in metric units. Contained gold is reported as troy ounces. Currency is reported as U.S. dollars. t = metric tonne g/t = grams/tonne oz = troy ounce k = thousand M = million Mineral Resources and Reserves Footnotes: 1) Mineral Reserves are reported within the pre-feasibility pit designs, and supported by a mine schedule, featuring variable throughput rates, stockpiling and cut-off optimization. The point of reference for Mineral Reserves estimates is where the reserves are delivered to the mill. The pit designs are contained within an optimized pit shell based on the following economic and technical parameters: Metal price for gold of $1,200/ oz; reference mining cost of $2.16/t incremented $0.0033/t/m with depth from the 220 m elevation (equates to an average mining cost of $2.64/t), fixed processing cost $13.78/t processed; sustaining capital of $1.54/t processed; general and administrative cost of S$3.66/t processed; stockpile rehandle costs of $0.24/t processed assuming that 45% of mill feed is rehandled; variable metallurgical recoveries by rock type, ranging from 86.7% in shale to 94.2% in intrusive rocks in the Akivik domain; refining and freight charges of $1.21/oz gold; royalty considerations of 4.5% NSR and $0.50/t processed; and variable pit slope angles, ranging from 23° to 43°. Mineral Reserves are reported using an optimized block value (BV) based on the following equation: BV = Au grade * Recovery * $1,200/oz – royalties & refining costs – process operating costs – G&A cost reported in $/t. Assuming an average gold recovery of 89.5% the marginal gold cut-off grade would be approximately 0.57 g/t, or the gold grade that would equate to a $0.001 BV cut-off at these same values. The life-of-mine (LOM) strip ratio is 5.48:1. The assumed LOM throughput rate is 53,500 t/d. 2) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Inferred Resources are in addition to Measured and Indicated Resources. Inferred Resources have great uncertainty as to their existence and whether they can be mined legally or economically. The cut-off date for the sample database used in the Mineral Resource estimate is 1 November 2009. However, more recent drilling data were used to validate the resource model as remaining current. Mineral resources are reported in-place (point of reference) and contained within a conceptual measured, indicated and inferred optimized pit shell using the following assumptions: gold price of $1,200/oz; variable process cost based on 2.1874 * (sulphur grade) + 10.6485; administration cost of $2.29/t; refining, freight & marketing (selling costs) of $1.85/oz recovered; stockpile rehandle costs of $0.20/t processed assuming that 45% of mill feed is rehandled; variable royalty rate, based on royalty of 4.5% * (Au price – selling cost); and a variable metallurgical recovery depending on the host rock type ranging from 86 to 94%. Assuming an average recovery of 89.5% and average S% grade of 1.07, the marginal gold cut-off grade is 0.47 g/t. These technical and economic parameters are those that were used in the Donlin 2011 Technical Report to establish reasonable prospects of eventual economic extraction (effective 11 July 2011). Based on the QP review of the estimate, there would be no material change to the Mineral Resources if the gold price were updated to $1,500/oz and other economic parameters were updated to the 2020 parameters used in the Mineral Reserve estimate. As a result, the Mineral Reserve and Mineral Resource estimates shown above remain unchanged from the 2011 estimates contained in the prior technical report. S-K 1300 requires that Mineral Resources be reported exclusive of Mineral Reserves. We have supplementally reported Mineral Resources inclusive of Mineral Reserves. Regarding Forward-Looking Statements This report 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, statements regarding the permitting, potential development, exploration, construction and operation of Donlin Gold and statements relating to NOVAGOLD’s future operating and financial performance and production estimates are forward-looking statements. Forward-looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible”, “poised”, and similar expressions, or statements that events, conditions, or results “will”, “may”, “could”, “would” or “should” occur or be achieved. These forward-looking statements may also include statements regarding the exploration potential of Donlin Gold; anticipated mine life; perceived merit of properties; anticipated permitting timeframes; exploration and drilling results and budgets; mineral reserve and resource estimates; work programs; capital expenditures; timelines; market prices for precious metals, including the potential performance of the price of gold 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 unexpected cost increases, which could include significant increases in estimated capital and operating costs; the need for additional financing to explore and develop properties and availability of financing in the debt and capital markets; risks related to the outbreak of the coronavirus global pandemic (COVID-19); 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 for the continued exploration and development of the Donlin Gold property; the need for cooperation of government agencies and native groups in the development and operation of properties; 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; the need to obtain permits and governmental approvals; fluctuations in metal prices and currency exchange rates; whether a positive construction decision will be made regarding Donlin Gold and other risks and uncertainties disclosed in NOVAGOLD’s annual report filed on Form 10-K for the year-ended November 30, 2021, and subsequently in NOVAGOLD’s quarterly reports filed on Form 10-Q, with the United States Securities and Exchange Commission (SEC), Canadian securities regulators, and in other NOVAGOLD reports and documents filed with applicable securities regulatory authorities from time to time. Copies of these filings may be obtained at no charge by visiting our Investor Relations website at www.novagold.com or the SEC’s website at www.sec.gov or at www.sedar.com. NOVAGOLD’s forward-looking statements reflect the beliefs, opinions and projections of management 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. Forward-looking statements are based on a number of material assumptions, including but not limited to the following, which could prove to be significantly incorrect: our ability to achieve production at any of our mineral exploration and development properties; estimated capital costs, operating costs, production and economic returns; estimated metal pricing, metallurgy, mineability, marketability and operating and capital costs, together with other assumptions underlying our resource and reserve estimates; our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable; assumptions that all necessary permits and governmental approvals will be obtained and the timing of such approvals; assumptions made in the interpretation of drill results, the geology, grade and continuity of our mineral deposits; our expectations regarding demand for equipment, skilled labor and services needed for exploration and development of mineral properties; and that our activities will not be adversely disrupted or impeded by development, operating or regulatory risks. Cautionary Note Concerning Reserve & Resource Estimates This report uses the terms “mineral resources”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”. Mineral resources that are not mineral reserves do not have demonstrated economic viability. You should not assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. Further, inferred mineral resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. On October 31, 2018, the SEC adopted new mining disclosure rules (“S-K 1300”) that are more closely aligned with current industry and global regulatory practices and standards, including National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI-43-101”). NOVAGOLD has elected to comply with S-K 1300 for its fiscal year ended November 30, 2021. While S-K 1300 is more closely aligned with NI 43-101 than the prior SEC mining disclosure rules, there are some differences. Notably, unlike NI 43-101, S-K 1300 requires that resources be disclosed exclusive of mineral reserves, and that mineral resources and reserves be disclosed on the basis of our interest in them. NI 43-101 is a rule developed by the Canadian Securities Administrators, which established standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. All reserve and resource estimates contained in the tables about have been prepared in accordance with NI 43-101 and the CIM Definition Standards, as well as S-K 1300. Technical Reports and Qualified Persons The documents referenced below provide supporting technical information for the Donlin Gold project. Project Donlin Gold Qualified Person(s) Kirk Hanson, MBA, PE. Michael Woloschuk, P.Eng. Henry Kim, P.Geo. Wood Canada Limited Most Recent Disclosures “NI 43-101 Technical Report on the Donlin Gold Project, Alaska, USA” prepared by Wood Canada Limited (“Wood”), effective June 1, 2021. “S-K 1300 Technical Report Summary on the Donlin Gold Project, Alaska, USA” prepared by Wood Canada Limited (“Wood”), November 30, 2021. M I N E R A L R E S E R V E S & M I N E R A L R E S O U R C E S 35 CORPORATE INFORMATION MANAGEMENT TEAM TRANSFER AGENT GREGORY LANG . . . . . . . . . . . . . . . President & Chief Executive Officer DAVID OTTEWELL . . . . . . . . . Vice President & Chief Financial Officer MÉLANIE HENNESSEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vice President, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Corporate Communications RON RIMELMAN . . . . . . . . . . . . Vice President, Environment, Health, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Safety, & Sustainability RICHARD WILLIAMS . . .Vice President, Engineering & Development FOR INFORMATION ON SHARE TRANSFERS, LOST CERTIFICATES, OR A CHANGE OF ADDRESS, CONTACT: Computershare 1.800.564.6253 (toll-free in Canada and the U.S.) 1.514.982.7555 (international direct dial) computershare.com AUDITORS PRICEWATERHOUSECOOPERS LLP SHARE LISTINGS TSX, NYSE AMERICAN: NG ISSUED AND OUTSTANDING AT JANUARY 19, 2022, 332.9 MILLION BOARD OF DIRECTORS DR. THOMAS KAPLAN . . . . . Chairman, NOVAGOLD RESOURCES INC.; . . . . . . . . . . . . . . . . . . . . . . . . . . . Chairman & CEO, The Electrum Group ELAINE DORWARD-KING (2, 3) . . . . . . . . . . . . . . . . . . . . Corporate Director SHARON DOWDALL (2, 4) . . . . . . . . . . . . . . . . . . . . . . . . Corporate Director DIANE GARRETT (3, 4) . . . . . . . . . . . . . . . . . President, CEO, & Director of . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hycroft Mining Holding Corporation GREGORY LANG (3, 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . President & CEO, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .NOVAGOLD RESOURCES INC. IGOR LEVENTAL (4, 5) . . . . . . . . . . . . . . . . President, The Electrum Group KALIDAS MADHAVPEDDI (2, 3) . . . . . . . . . . . . . . . . . . . . Corporate Director CLYNTON NAUMAN (1, 3) . . . . . . . . . . . . . .CEO, Alexco Resource Corp., & CEO, Asset Liability Management Group ULC ETHAN SCHUTT (1, 4, 5) . . . . . . . . . . . . . . . . . . . Executive Vice President & . . . . . . . . . . . . . . . . General Counsel, Bristol Bay Native Corporation ANTHONY WALSH (1, 2) . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Director Independent Lead Director, NOVAGOLD RESOURCES INC. Members of: 1. Audit Committee 2. Compensation Committee 3. Environment, Health, Safety, Sustainability, and Technical Committee 4. Corporate Governance and Nominations Committee 5. Corporate Communications Committee 36 C O R P O R A T E I N F O R M A T I O N 2021 FINANCIAL REPORT From NOVAGOLD’s Annual Report on Form 10-K for the fiscal year ended November 30, 2021 For full Annual Report on Form 10-K, please visit www.novagold.com, www.sec.gov, or www.sedar.com Or call Investor Relations at 1.866.669.6227 ANNUAL MEETING OF SHAREHOLDERS Wednesday, May 18, 2022 – 1pm PT Live Webcast at: virtualshareholdermeeting.com/NG2022 INVESTOR INQUIRIES T: 604.669.6227 Toll free: 1.866.669.6227 info@novagold.com novagold.com linkedin.com/company/novagold twitter.com/novagold facebook.com/novagold CORPORATE OFFICE 400 Burrard Street, Suite 1860 Vancouver, BC, Canada V6C 3A6 T: 604.669.6227 Toll free: 1.866.669.6227 F: 604.669.6272 info@novagold.com SALT LAKE CITY EXECUTIVE OFFICE 201 South Main Street, Suite 400 Salt Lake City, UT, USA 84111 T: 801.639.0511 F: 801.649.0509 This annual report was printed carbon neutral, investing in renewable energy and clean technology projects. 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