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means that our shareholders don’t have to worry about waking up one day to nd our project expropriated or caught up in political instability.
Investors get it. Five years ago, one rarely heard about jurisdictional risk. Now we hear about it everywhere. While NOVAGOLD is fortunate to have signi cant shareholders who appreciate the importance of safe geo-political jurisdictions in their decision-making process, it’s an important aspect for new investors as well. Given Donlin Gold’s singular attribute of being located in Alaska, a jurisdiction known for a well-established time-tested mining culture, with six major operating mines, we believe we enjoy an enormous competitive advantage – and that investors will accord a greater premium to shares of NOVAGOLD as we advance Donlin Gold up the value chain.
Simply put, Donlin Gold has it all: category-killer size, industry- beating grade, superb exploration potential, decades of mine life, and a production pro le that may render it the largest single pure gold mine in the world. On top of all that you have the safety of being in the second largest gold-producing state in the world’s safest jurisdiction, where stakeholders can enjoy a welcoming environment of proper consultation, the rule of law, and an independent judiciary. Imagine that: the biggest gold mine in the world, in the safest place in the world. Or as we like to say, “The greatest leverage to gold in a place that will allow you to keep the fruits of that leverage.”
How many +30Moz gold deposits do you know about – and how many are in stable locations like Alaska?
Note the joint press release issued last November by Donlin Gold’s partners, in which the incoming general manager, Andy Cole, referred to the project as a “unique asset.” That’s a big endorsement from the former operator of Goldstrike, Barrick’s fabled company-maker, and most recently the executive director of Barrick USA.
In fairness, though, some projects are similar. For example, there are a few development projects in the world with gold resources on the same scale as Donlin Gold, but they are either located in unfavorable jurisdictions or have substantially lower gold grades.
Other than Donlin Gold, however, we are not aware of
any development project in an investor-friendly place with approximately 39 million ounces of measured and indicated resources at a grade of 2.2 grams of gold per tonne. And while the size speaks for itself, it doesn’t fully re ect what we believe is the true extent of the resource potential of what we suspect could become a much larger district.
Meanwhile, from a qualitative standpoint, Donlin Gold’s
grade is where the industry was a decade ago – and is now about double the average. As we say in this business, grade is king. That’s because operations with higher gold content can move and process the same amount of material as lower-grade projects, yet produce more gold for less. In the age of capital discipline, this is a huge quality and cost di erentiator.
But having a world-class asset is no longer about size and grade. It’s about where in the world you are. The mantra used to be to go where the gold is. That’s when exotic locales became fashionable. The more freewheeling jurisdictions were also perceived as places in which one could fast-track projects, so premium valuations were no longer accorded to projects in stodgy North America. Investors and miners now see that it’s better to have to take longer to permit something in a safe place than to go faster in a dodgy one. Security is worth the extra time on the front end – and will nearly always yield a higher return.
As jurisdictional risk is now considered the single greatest threat to mining companies, Donlin Gold’s location in Alaska
Leverage in a place where you can keep the rewards.
Canada
United States
Low risk Moderate to high risk Extreme risk No data Source: Fraser Institute Survey of Mining Companies, 2015
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