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VALUE-ENHANCING STRATEGY: A THREE-PART Q&A
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Donlin Gold: A Pacesetter for the Gold Industry
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What makes the Donlin Gold project so unique among other large undeveloped projects?
Donlin Gold is one of the world’s largest known undeveloped gold deposits. What really sets it apart from similar projects is its endowment of 39 million ounces of gold resources in the measured and indicated category, inclusive of proven and probable reserves, with an average grade of 2.2 grams per tonne. These are signi cant numbers, which place Donlin Gold well within the top 1% of known global gold deposits in terms of size – and, at double the industry average grade, it is one of the highest-grade open-pit gold deposits in the world. In today’s mining industry, this kind of quality counts.
The second updated feasibility study led in 2011 demonstrated that, as envisioned, Donlin Gold should emerge as one of the largest gold-producing mines in the world, averaging approximately
1,100,000 ounces per year over its 27-year life. And that’s assuming no more higher-grade resources are found – or any additional discoveries at all, for that matter.
This is a resource that’s four times the size of its peer group average,* at a time when large gold deposits are critical for the sustainability of the gold industry – and when a scarcity of quality assets is further intensi ed by long development timelines. In fact, the average time from discovery to production can be more than 20 years due to increasingly complex regulations and more remote mineral deposits, both of which make for more complicated projects.
Over its anticipated 27-year life, Donlin Gold’s cost of sales, excluding depreciation and reclamation costs, are estimated to be $634 per ounce.† All-in sustaining costs, which add sustaining capital expenditures, corporate administration, and reclamation, are expected to be $735 per ounce.** This is very favorable in today’s world, and, as these numbers are a function of Donlin Gold having such enormous reserves with excellent grade, is yet another example of why size and quality matter.
* Peer group data based on company documents, public filings and websites. Comparison group of 15 projects based on large (2Moz P&P cut off ), North/South American gold-focused development projects.
† Costs are unescalated and based on the 2011 Donlin Gold Second Updated Feasibility Study.
** All-in sustaining costs were calculated with figures from the 2011 Donlin Gold Second Updated Feasibility
Study and projected NOVAGOLD corporate administrative costs.
What’s more, the project enjoys broad support, including from Calista and TKC, our Alaska Native Corporation stakeholders who own Donlin Gold’s mineral and surface rights. Our well-established track record of social engagement and environmental stewardship in the community is a huge plus. That’s not something you see every day, and we’re proud of it.
To recap: Donlin Gold has size and extraordinary grade, industry- leading projected output, a low-cost structure, a company-making mine life, excellent exploration upside, strong local partnerships, jurisdictional safety, and leverage to rising gold prices in a strong gold environment. It’s a truly unique and attractive gold deposit in an era de ned by asset scarcity. Finally, Donlin Gold is well-advanced in the permitting process, and is positioning itself to be ready to construct when market sentiment supports the building of a new major
gold mine.
How should we think about upside potential for the gold prospects in the district: additional reserves or longer life?
Donlin Gold’s resource was de ned with almost 1,400 drill holes totaling more than 339,000 meters. During the years of more active exploration from 2006 to 2011, the measured and indicated resources grew by 135%. In addition to its already large mineral endowment, Donlin Gold has excellent exploration potential along an 8-kilometer gold mineralized belt, with the opportunity to expand the current open-pit resource both along strike and at depth. The current pit occupies only a 3-kilometer portion of this mineralized belt, leaving good prospects for future discoveries.
Once in operation, NOVAGOLD anticipates partners will conduct more extensive exploration of the prospects outside of the current mine footprint, such as Snow, Quartz, Dome, and Ophir. In our view, it is likely that Donlin Gold’s mine life, already measured in decades, or ultimate production pro le – or both – easily could be greater than currently anticipated. The next major gold discovery may just be at Donlin Gold.
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