NovaGold Resources: Objective is to Become a Low Cost, Million Ounce a Year Gold Producer
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By Dr. Allen Alper and Jeff Senior
on 12/11/2010
Director of Communications and Investor Relations Rhylin Bailie at the New Orleans Investment Conference
A development stage company, NovaGold has interest in two of the world’s largest gold and copper-gold projects. Director of Communications and Investor Relations Rhylin Bailie says: “We’re not in production yet but our objective is to become a low cost, million ounce a year gold producer. And we’ll get there by putting our two core projects into production. We own 50% of the big Donlin Creek deposit up in Alaska. It’s got 40 million ounces of gold all told, so it’s really one of the largest undeveloped gold deposits in the world. And we’ve also got a 50% interest at the big Galore Creek copper-gold-silver deposit in British Columbia, Canada.”
Current Plan
The plan at Donlin Creek is to wrap up a feasibility revision by the middle of next year and then file permit applications for the project by year end. Rhylin remarks: “It’s moving ahead nicely and, when it’s in production, it should have more than a million ounces of gold coming out of there every year for 25 years at least. It’s really quite an exceptional property. And with Barrick Gold as our partner, we’ve got the experience behind us to advance that project to production.”
The second of the big projects is Galore Creek, a large copper-gold-silver project in British Columbia. Here, NovaGold has a 50% partnership with Teck Resources, a major Canadian mining company. This project also has some big milestones coming up. “We’ll have a pre-feasibility for Galore Creek in Q2 next year. I think that could be really important for the company, to have the pre-feasibility done, put more reserves on the table and move the project ahead toward permitting and production.”
The company’s main focus is to get these two properties into production and become a mid-tier gold producer. However, it also has two non-core properties that will support it along the way. One of these is Ambler, a very high grade copper-zinc-gold-silver project in Alaska, which is 100% owned by NovaGold. Rhylin comments: “It’s early stage, we’re still looking at doing some more exploration and completing a pre-feasibility up there. But it can certainly add a lot of value to the company over the next few years.”
Early Stage ProjectsAt an even earlier stage is an exploration property in Argentina where NovaGold has an option with another company. As yet, no drilling has been done but it is another project that’s in the pipeline for the future.
NovaGold is headed by Rick Van Nieuwenhuyse, who has been President and CEO since 1998 and has been a major factor in turning the company into a nearly $3 billion market cap business. Backing him up is a very experienced board that includes Marc Faber, who is well-known in the gold sector, plus Tony Giardini, Chief Financial Officer of Ivanhoe Mines Ltd., and Igor Levental who is President of Electrum Strategic Resources.
Rhylin herself has been part of NovaGold’s investor relations team for the last 4.5 years after spending 10 years in the Treasury department at Placer Dome. “After fifteen years in mining, I guess I can call it a career,” she remarks. “I have a bit of a varied background, with a degree in Environmental Studies and Biology, so I came into mining through the back door. But investor relations is a pretty exciting field to be in and it really does draw on all of my skills.”
At the time we spoke, NovaGold’s share price was at $10.60 US, a 52-week high, and has climbed further since then. And although the company has experienced a rocky ride over the last two years, like most of the junior mining companies, it is now climbing back strongly. Rhylin says: “We’ve recovered nicely and part of this is because we are well financed right now. We did a big financing in March 2010 where John Paulson and his company came in for $100 million and George Soros and his fund came in for $75 million. They’re obviously well respected investors in the gold sector, very sophisticated, and they are very bullish on the gold price. And the reason they bought into NovaGold is because of the exceptional leverage that we offer to the gold market.
“We do have one of the largest reserve and resource bases of any of the junior companies out there, with 17 million ounces of gold reserves and 13 million ounces in other categories plus all the silver and copper from Galore Creek and Ambler. So, it’s quite an exceptional portfolio of projects and with the $175 million that we raised in March, we’re in a good shape financially for the next couple of years. We shouldn’t have to go back to the market for a significant equity raise until we’re ready to finance our big projects.”
Reasons to Invest
There are, she believes, some very good reasons why investors should be interested in NovaGold. The first of these, as Rhylin points out, is the quality of its projects: “Donlin Creek and Galore Creek are in the top 3% of global gold deposits. Donlin’s at the peak of the top 1% with 40 million ounces of gold. And even Galore Creek, the copper-gold project, has about 10 million ounces of gold there. So they really are exceptional projects.”
The company’s main projects are all located in North America, which means there is very low geo-political risk when compared to some of its peers. “You know exactly what you need to do to get your permits and the government and communities are very supportive of mining,” remarks Rhylin. “We’ve got a very strong track record with community engagement and getting public support for the project, and that makes a big difference to how the project proceeds.”
Another reason is that the company is moving ahead well, with a pre-feasibility at Galore and a feasibility revision at Donlin coming in the first half of 2011, and permitting applications to follow. Rhylin concludes: “These are really life-changing events for a company. And when you’ve got investors like Kaplan, Paulson and Soros, I think that’s a pretty strong vote of confidence in the projects.”
For more information:
http://www.novagold.com
Head Office
PO Box 24
Suite 2300 - 200 Granville Street
Vancouver, British Columbia
Canada V6C 1S4
Telephone: 604-669-6227
Fax: 604-669-6272
Toll free: 1-866-669-6227
Email: info@novagold.net
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