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Working in Alaska, Donlin Gold Permitting, and Our 2017 Drill Program
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What bene ts are there to operating in Alaska?
The fact that Donlin Gold is located in America’s second- largest gold-producing state, on private lands already designated for mining and owned by supportive Alaska Native Corporations, is another distinguishing feature of the project. It gives NOVAGOLD a tremendous competitive advantage during a time when heightened resource nationalism and jurisdictional uncertainty are among the most signi cant factors negatively a ecting shareholder value for natural resource companies.
The timing for Alaska is likewise fortuitous. In 2016, the state
lost around 6,800 jobs – and the expectation for 2017 is the loss of another 7,500. The oil and gas sector alone lost 20% of its jobs in 2016 as oil prices dropped below $40 a barrel; the industry is expected to lose another 10% in 2017. As a result, Alaska’s unemployment rate is now the highest in the U.S. at 6.8%;* and in the Y-K region, the rate is even higher. Given the remote nature of the villages in the region and lack of economic development potential, Donlin Gold o ers a unique opportunity to realize the promise of ANCSA.
Because oil drives Alaska’s budget (it’s the only state with neither an income tax nor a general sales tax), state revenues are down more than 80 percent – and the annual de cit is at $2.9 billion. Adjusted for in ation and population, the 2017 budget is the lowest it’s been in 10 years. For the past four years, Alaska nanced its de cit by spending
savings from the state’s Constitutional Budget Reserve – something that may not be possible for the next scal year.
Long-term decline in Alaska oil production and a deep slump
in world oil prices over the last two years continue to create major challenges for Alaska’s economy. Other challenges include the harsh climate, a lack of infrastructure, and geographic cost di erences – all of which have led the state to strongly support the further development of its resource industry. A new oil tax structure was adopted in 2013
to encourage further investment; the Alaska Exploration Incentive Credit Program o ers up to a $20 million deduction over a 15-
year period for new mines; the Roads to Resources Program (R2R) encourages transportation initiatives to support the development of natural resources; and the state is actively working with companies
to facilitate cost-e ective access to various projects and operations across Alaska.
Natural resource projects are integral to the state’s economy. A well-de ned permitting process, strong resource-sector associations, and time-tested community support have enabled the development of four large precious metals mines, one coal mine, and one base metals mine. Production from the numerous small-scale placer mines, typically family-operated, essentially amounts to a fth large precious metal mine. Donlin Gold is poised to be the rst of the next generation of large, long-life mines that will contribute to Alaska’s future.
Where are you with the Donlin Gold permitting process?
The permitting process in the United States is rigorous, and rightly so. As such, the Donlin Gold project permitting has been thorough, transparent, inclusive, and thoughtful. It is the very reasonable price we pay for having security of tenure in one of the world’s safest jurisdictions.
As managers of a valuable piece of real estate with a signi cant mineral endowment, we are the most supportive advocates of the government agencies that are our counterparts in this process. We know that the more comprehensive the work done on the front end, the better the outcome for all stakeholders in Donlin Gold. We are encouraged by our progress in providing all agencies and the public with ample time and opportunity to thoroughly review, as well as
to provide meaningful input into, the permitting process. Donlin Gold has made a focused e ort for the past 20-plus years to collect
* Press release issued July 21, 2017 by the State of Alaska Department of Labor and Workforce, http://labor.alaska.gov/news/2017/news17-32.pdf
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Local hire is a key priority.
During our 2017 drill program, approximately 50 percent of Donlin Gold’s workforce were Alaska Natives.
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