Thank you for standing-by. This is the conference operator. Welcome to the NOVAGOLD 2023 First Quarter Financial Results Conference Call and Webcast. [Operator Instructions] After the presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to Melanie Hennessey, Vice-President, Corporate Communications. Please go ahead.

Melanie Hennessey - Vice President, Corporate Communications

Thank you, Oshea. Good morning, everyone. We are pleased that you've joined us for NOVAGOLD's 2023 first quarter financial results and also for an update on the Donlin Gold project. On today's call we have Dr. Thomas Kaplan, NOVAGOLD's Chairman; Greg Lang, NOVAGOLD's President and CEO; and David Ottewell, NOVAGOLD's Vice President and CFO. At the end of the webcast, we will take questions by phone and by email. Additionally, we will respond to other questions received subsequent to the call by email.

I would like to remind our webcast and call participants that as stated on slide three, any statements made today may contain forward-looking information such as projections and goals, which are likely to involve risks detailed in our various EDGAR and SEDAR filings and forward-looking disclaimer included in this presentation.

I now have the pleasure of turning the presentation over to our President and CEO, Greg Lang. Greg?

Gregory A. Lang - President and Chief Executive Officer

Thank you, Melanie, and good morning, everyone. All of us at NOVAGOLD take great pride in the fact that we have been laser focused and very successful on executing the strategy set forth by our Chairman and myself over a decade ago. Namely, to unlock NOVAGOLD's high quality assets for our shareholders and dedicate our energy to creating a maximum leverage from a pure gold play and the unique endowment that is the Donlin Gold project. This has been a foundation of our investment thesis.

As shown on slide five, we have been steadily advancing Donlin Gold up the value chain on various areas over the past decade. These areas include a completion of the 43-101 Technical Report and the update in second feasibility study, a receipt of a joint Record of Decision from the Army Corps of Engineers and the Bureau of Land Management, as well as other major federal permits. And most recently, we completed the largest drill program at Donlin in over 15 years.

We believe that the Donlin Gold project is truly best-in-class in its combination of attributes, which I've shown on slide six. Possessing the unique combination of industry-leading size, grade, and excellent exploration potential which to move the needle in our gold industry and all of this in a safe and time-tested jurisdiction. Alaska is a great location to develop, build and operate a mine for many generations to come. In my view, it really is the ultimate company-maker.

As currently envisioned, Donlin would average over a million ounces per year of production over 27 years. When looking at the other developer groups as shown on slide seven, Donlin is by far away the largest and global gold production continuing to decline for most of the top producers. It is clear the industry needs projects with scale, grade and longevity to sustain its process.

As shown on slide eight with price the industry average grade for open-pit once in production, Donlin will be one of the lowest cost producers in a gold industry.

Turning to slide nine. The leverage to a higher gold price is exceptional at Donlin. The after-tax NPV at today's gold price is over $7 billion at a 5% discount rate or $22 million [Phonetic] on discount. The great exploration potential is another remarkable attribute.

ACMA and Lewis deposits as shown on slide 10, occupy less than half of 8 kilometer mineralized gold belt, which itself is located on less than 5% of Donlin's land position. A testament to the excellent exploration potential with the results from last year's program.

As shown on slide 11, the top 20 intercepts return some of the best assay results seen to date and at Donlin and among the best reported in the entire industry last year. For example, Hole 2068 in the Divide grid returned 42 meters and over 30 grams, including the sub-interval of 23 meters at 54 grams. As highlighted on slide 11, incredible upside exists to increase ounces and extend the mine life. Location is truly key, having great leverage in a place where you can keep the fruits of your leverage is worth the investment in time and in resources.

On the map included on slide 12, we feature some of the top three gold-producing operations in the world and the five largest gold development projects. As private landowners, both Calista and TKC are dedicated to developing Donlin Gold in a way that remains consistent with the elders' vision and responsible development, while creating jobs and economic benefits for the surrounding communities, as well as protecting the local culture.

A few of the quotes are provided on slide 13 from the leaders of both Alaska Native Corporations. Their knowledge, guidance and engagement are extremely valuable in ensuring responsible and sustainable economic development throughout all phases of Donlin Gold project.

I will now touch on some of the milestones that we achieved and the key activities of the first quarter. The Donlin Gold 2023 field program commenced early in the year to complete the necessary fieldwork and geotechnical drilling required to the Alaska Dam Safety certificates applications. Additional work included on site hydrological drilling to further define and flow of groundwater in the areas of the planned Donlin pit and surrounding infrastructure to support mine planning and design.

Donlin Gold prioritizes local hiring and invest in supporting the communities throughout the Y-K region. During the first quarter of our 2023 field program, we had a total workforce of 44 direct hire employees, most of which are from the target region. This is a continuation of the success at Donlin's local hiring program, which was initiated very early on during the exploration phase.

Our focus off-site is four key areas, as shown on slide 16. First, mine optimization. We are finalizing the updated geologic and resource models with the drill results during the last two years. We are incorporating those into the key project assumptions, inputs and designed components for optimization. Ultimately, this supports the decision to proceed with an updated feasibility study. Community engagement is also very active area of ours working alongside with our Alaska Native Corporation partners. Permitting, we continue to advance our permits through the regulatory process and supporting the state and maintaining the existing permits.

We also very active with the bipartisan outreach to the Biden administration, Members of the US Congress and the State administration helping on us. Assisting and partnering with local communities in the region has been a constant focus at Donlin. Working in concert with Calista and TKC to provide critical support.

As shown on slide 17, Donlin was premier sponsor of the Iron Dog Race and it's part the Alaska Safe Riders program. Also, in collaboration with Covenant House and Bethel Community Services, Donlin is developing an action plan to help address the chronic and ongoing youth insecurity, housing and other issues just to name a few.

In partnership with the Alaska Native Tribal Health Consortium, Donlin is advancing efforts to improve the overall health and safety standards of water and sewer services in the Middle Kuskokwim areas. In collaboration with TKC, the village of Crooked Creek, Donlin provided financial support for the construction and maintenance of ice roads that allow winter travel between the remote communities. On average, a total of 300 miles of ice road is constructed and maintained, thanks to this program.

Advancing educational opportunities in Alaska is another priority for the company. We recently awarded the first NOVAGOLD scholarship at the University of Alaska to an undergraduate student studying geological engineering. We also support the Alaska EXCEL program, a non-profit providing educational support for rural youth across the region.

In March of this year, we released our 2022 Annual Report, which features a special conversation between to Dr. Kaplan and Daniela Cambone, Editor-at-Large and host of The Daniela Cambone Show on Stansberry Research. As shown on slide 18, a discussion covers a broad range of topics including geopolitics, history, markets and opportunities in the gold space and Central Banks one of the largest buyers of gold in presently and historically, and the corresponding upside from [Indecipherable]. The interview was recorded at the New York Stock Exchange and a full transcript is available in our Annual Report. Those interested watching the video can access the interview on our website, novagold.com.

With that, I will now turn the call over to our CFO, David Ottewell. Dave?

David Ottewell - Vice President and Chief Financial Officer

Thank you, Greg. Slide 20 highlights our first quarter operating performance. We reported a net loss of $10.7 million in the quarter, a $0.7 million increase due to increased interest expense on the promissory note, higher Donlin permitting cost, higher corporate legal expenses partially offset by increased interest income and income from the 2021 sale of our interest in the San Roque mineral property.

First quarter cash flows are highlighted on slide 21. Cash decreased by $9.7 million, primarily to fund our share of the Donlin and for corporate administrative expenses. The decrease in cash used in the first quarter of 2023 compared to 2022 was due to the timing of corporate liability insurance payments in 2022, withholding tax paid on share based compensation in 2022 and proceeds received in 2023 for the sale of San Roque. No shares were issued in the first quarter of 2023 for the PSUs granted in December 2019, as the company's share performance over the three year period was below the minimum performance criteria relative to the global gold index.

On slide 22, we note our strong treasury. Our financial position includes cash of $54 million, term deposits of $62 million and $25 million due from Newmont in July 2023. For the full year, we continue to expect to spend $31 million, including $17 million at Donlin, $13 million for corporate G&A and $1 million for working capital.

I will now turn the presentation back over to Greg. Greg?

Gregory A. Lang - President and Chief Executive Officer

Thank you, Dave. Turning to slide 23, the focus of our activities this year will be: one, updating the geologic and resource models, continuing fieldwork, collecting geotechnical and hydrological information to support the Dam Safety certificate applications, reviewing key project assumptions and inputs and design components for optimization in mine engineering, metallurgy and infrastructure. We will continue to advance current permits through regulatory process and support the state in defending the existing permits. Lastly, we will continue to engage, maintain and grow support for the project in the region.

NOVAGOLD has been blessed with long-term and supportive shareholders comprising many of the most respected names in the investment world, whose presence and counsel have been invaluable. Some of these are listed on slide 24. We are grateful for their decision to invest in our company and for their continued interest and engagement. We reaffirm to all of them, and as stewards of the company, we continue to be focused on delivering on our strategy and enhancing the value of the Donlin Gold project, increasing both shareholder and stakeholder wealth in a safe and socially responsible manner.

And we position the company to enjoy the fruits of this unique leverage on what we believe is one of the best positioned gold development stories in the market place. I look forward to continuing to deliver on our promises and keeping an open line of communication between us as we reach even more milestones in 2023.

I'll now turn the call over to the operator and open it up for questions.

Question & Answers

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Mike Parkin from National Bank. Please go ahead.

Mike Parkin - National Bank Financial - Analyst

Hi guys, thanks for taking my questions. It might be a bit early to speak upon this. But I'm just wondering, what some of the higher level trade-off studies you might be considering, if you're - as you move forward in 2023? Just looking for some sense of some of the bigger kind of delta items that you are looking at for the project? Thank you.

Gregory A. Lang - President and Chief Executive Officer

All right. Well, Mike, yeah, I will take that question. Thank you for your interest, Mike. The trade-off studies have been primarily focused on infrastructure. But we've also focused on the gas pipeline and these are the big chief cash components of the capital. But in addition to the infrastructure, we've done some fine tuning work, looking at options on quotation and a lot of validation work on the floor shoot [Phonetic] and other parameters of the project.

But we are also looking at optimizing the mine based on the grid drill results we've had this year, specifically what opportunities are out there to enhance the grid by more selective smaller mine impairment. Clearly, we've demonstrated the - with the high grids really do exist in Donlin Gold mine. And we look forward to updating everybody on the study since they reach that conclusion.

Mike Parkin - National Bank Financial - Analyst

Great. Thanks Greg for that.

Melanie Hennessey - Vice President, Corporate Communications

I have some questions that have come in by email. The first one will be for you Greg. When would you expect the investment decision will be made on the Donlin Gold project?

Gregory A. Lang - President and Chief Executive Officer

Let me tell you the timeline on the study. As you know, we are wrapping up the various trade-off studies now as volumes comparing to new geologic model. All of these studies and the new model will be presented to the Donlin Gold Board or the - certainly into the next couple of months, I think that's - we'll be in a position then to a little bit more specifically on the pass over.

Melanie Hennessey - Vice President, Corporate Communications

Great. Thank you. The other question was what's the all-in cost per ounce for the Donlin Gold project. That one is goes directly towards you, Greg.

Gregory A. Lang - President and Chief Executive Officer

All right. Well the question was on the all-in costs and firmed our most recent refresh in the 43 mile line. Life of mine would average about $630 an ounce. We would expect them to be a little bit more competitive and lower in the first two years of mine life, or to higher grade would be mined early. [Indecipherable]

Melanie Hennessey - Vice President, Corporate Communications

Yeah. Thank you. Before we proceed to the final question, we have Lucas Pipes on the line this morning to ask a question. Operator?

Operator

The next question comes from Lucas Pipes from B. Riley Securities. Please go ahead.

Lucas Pipes - B. Riley Securities - Analyst

Thank you very much, operator, and thank you, Melanie. Good morning, everyone. I started to ask my question, and Melanie, I appreciate you opening up the queue there. So, I wanted to ask about reserves and resources in the context of the updated feasibility study. What do you expect changes to those measures? And then would you anticipate any changes in the cut-off grade? Thank you very much for your perspective, Greg.

Gregory A. Lang - President and Chief Executive Officer

All right. We operate there in a couple of cases. The drilling has really delivered some very nice rates. I think if anything, they will slightly enhance the grade of the overall value in gold deposit. Most of this really - is really dealing our partners due diligence. Donlin has been the company to NOVAGOLD for many years. One of the asset very intimately and the drawing and trade-off studies that we've been conducting and they've really been part of our partner's due diligence. And I think, the trade-off studies and the drilling have been insightful, I would say, it's more validated and changed our view of the project. And I think, certainly from the NOVAGOLD point of view, we've been a supportive partner. We've answered their geologic and due diligence curiosity. And I think, certainly in my perspective and that's a logical step for the owners is to now proceed with the new feasibility study. That would hopefully be, yeah, getting underway later this year.

Lucas Pipes - B. Riley Securities - Analyst

Thank you very much, Greg, and to you and the team continued best of luck.

Gregory A. Lang - President and Chief Executive Officer

Thank you, Lucas.

Melanie Hennessey - Vice President, Corporate Communications

So we have two more questions from the line of [Indecipherable] for Greg, you mentioned some outreach to government in your comments. Do you detect any changes to the attitude of Washington to the resource sector as the world has changed since Biden became President?

Gregory A. Lang - President and Chief Executive Officer

Well, I think I'll speak - I'll answer that mainly from a Donlin perspective. Donlin has always maintained and nurtured bipartisan support both in the state of Alaska and in our nation's capital. Competitors were casting [Phonetic], some of them are US centered, it's a very, very spot and could support the project. And the Biden administration has not always been supportive of mining projects, they certainly had been supportive for Donlin. And I think certainly with the massive penetration is very supportive. And the Biden administration recently approved the nature - natural development [Indecipherable]. So I think they're cautious, but I think they support responsible mine development and responsible resource development. So we're not saying it has really had no impact on our activities with change in administration.

Melanie Hennessey - Vice President, Corporate Communications

Great. Thank you. The final question is for Dr. Kaplan. What is your view on the direction of the gold price over the next 12 months to 24 months?

Thomas Kaplan - Chairman

Hello, everyone. I hope that you can see me and hear me. Melanie, can I assume that everyone can?

Melanie Hennessey - Vice President, Corporate Communications

You can.

Thomas Kaplan - Chairman

Okay, great. Well, I think it's fair to say that I have been a long-standing goldbug for over 20 years. I've seen gold go from $250 an ounce to $1,900 an ounce in what I call wave 1. We saw who want to have a better word, wave 2 as a correction that took gold from $1,900 back to $1,100. And now we're seeing wave 3, which I believe is going to be a long wave. I'm not saying that we're not going to have knuckle whitening corrections along the way, that's the nature of the market.

But I do believe that we're headed for a trajectory that will be marked by two aspects: First, a multiplication of the gold price; second, a long, long duration. In other words wave 1 in gold for 12 years took gold to higher closes every year, regardless of the circumstances that we normally think are so determinative to gold. There were times of interest rate fears, dollar fears, commodities fears, geopolitical stories, regardless of which way you were leaning in terms of the macros, gold was up every year, year-on-year for 12 years. That's a bull market.

If you see a stock go from $2.5 to $19 and it corrects down to $11, you're not really shocked. But both of those waves characterized by more than a decade in the duration. The next wave in gold, maybe we are seeing it, maybe we need one more head fake, I don't know. But the next wave in gold I think takes it to my long-term target of $3,000 to $5,000. And I say long-term because I said that when gold was at $250. The truth is that if gold were to go much higher, I would not be at all surprised.

One thing is very clear to me and this pertains to the investment thesis for NOVAGOLD. Gold is going to go up for the next 10 years to 20 years. That's what the charts are telling us and the charts for a historian are like looking at human brain waves. You don't have to be a technician. I'm a fundamentalist obviously by definition. But being a historian, it's all about cycles, reversals and the way that markets will carry on from the depths of despair to the hikes of irrational exuberance. We could see gold with five digits easily. But in order to do that we still have to get through $3,000 to $5,000. So I'll update my estimates when we get there.

But the point that I would want to mention to our shareholders is as follows: I came into this story, the beginning the first week in January, actually December 31, 2008, when Electrum effectively took control as the dominant shareholder of NOVAGOLD. NOVAGOLD has been company that had gone from $0.50 a share to $20, and we have not participated in it, nor did we participate in shorting the stock. It's not something that we do when it went from $20 back to $1, [Phonetic] $0.50, actually. The asset or that the company had multiple issues, class-action lawsuits, environmental issues on assets not relating to Donlin. It had several different assets. So there was a - as it were diversified aspect to the story. The management was discredited. There was no following. The balance sheet was terrible. Institutions couldn't fund it.

Electrum was able to do that because we are a family business in essence. Our family plus several large Arab sovereign wealth funds and employee capital. And so we could catch the falling knife and we turned that story around. We dealt with the environmental issues with the EPA by selling off a project. We spun-off Galore to Newmont realizing great value for the shareholders, making NOVAGOLD a pure play on what we call the New Carlin or the new Nevada.

We settled the class-action lawsuits. We changed the entire management team, culminating in being able to get the President of Barrick North America, who knew the asset better than anyone else who have been on the other side of the table and Barrick made a failed hostile takeover here. We brought in Richard Williams, who had built the Pueblo Viejo mine, the largest investment ever made by Barrick and something which Barrick talks about even expanding now in the Dominican Republic. And the stock went back to $15 within the space of couple of years.

Obviously, the last decade has been very, very tough for the gold mining shares. We haven't been immune to that. We are not unusual in that respect. The ratio of gold to gold mining equities is pretty much as low it's ever been. So, what I would say is this. Several things: number one, we're in a bull market in gold; number two, it's going to last for a very long time, well over a decade; number three, we will see a revaluation of gold assets; number four, I've been in the story for 14 years and contrary to suffering from any form of deal fatigue, I'm more excited about Donlin than ever before. And I'd like to explain why because it ties into above some of the other four aspects, which I just mentioned.

We're in a very, very different world. My friends, shareholders and my colleagues, those who follow NOVAGOLD, let me be very, very blunt. The era of the frontier mentality, the era where geology trumps geopolitics is over, the assets that will achieve the premium valuations, which will be valued like they were before the frontier spirits took hold when Newmont went to Yanacocha and the go where the gold is mentality became prevalent. At that time, people forget, US assets were valued using the 0% discount rate, because they were the height of political safety. They were arbitraged with the less politically safe jurisdictions, Canada, Australia and South Africa. The world is very, very different now.

I happen to believe that in almost everywhere, other than in North America, Australia and a few jurisdictions the gold mines would be nationalized. Gold is money, you don't have to be a goldbug to believe that. It's money because the central banks say it's money and they are the ultimate insider traders. The fact that central banks no longer sell gold but are massive net buyers. And I'm talking smart money, the Chinese, Singapore, not to mention other countries that fear being part of the US dollar system only and they've seen that that has its own hazards.

The era when people could go all over the world and think that they're going to mine gold and not have it done put to their head to change those agreements, they're over. I made my bonds in Bolivia, I made my bonds in Zimbabwe, South Africa, I sold Kibali to Mark Bristow. I know what it's like operating in these areas and I admire those who still do it. But there is no way that one can go to sleep at night feeling comfortable when you wake up in the morning. You're going to open the same thing that you owned the night before.

Gold is money, Gold will be nationalized and jurisdiction will be everything. So that brings us back to Donlin. Let's understand what Donlin is. Let's understand why it's the best buy in the gold [Technical Issues]. Lets understand why when people really got known to the fact that gold has embarked on another long wave. They're going to be asking their brokers, hey, can you give me a company which has an excellent management team and a fantastic asset and it's located in the part of the world where I would be willing to take a vacation.

There aren't that many places left. There is Nevada. There is Alaska. There is Australia. There are few other places. You might want to go to Finland. But the reality is that the rule of law is going to be [Indecipherable]. Institutional investments are going to gravitate towards those very few go to stocks, which are in places where the rule of law is not a novelty and where they don't eat you literally or figuratively. By that standard in addition to the fact that in terms of the size, the grade, the mine life, the exploration potential, the low operating costs, which come from higher grade. The safety of Alaska is determinative. If you believe you're a bull in gold, you want to be in safe place. If you want octane in your portfolio, you want to have a development stage story. We believe we are the go-to stock in that space. We believe that we are on the cusp of being able to go to the next level. We've got a project, which has got all the right attributes. We positioned it as a pure play on a district that is a gift that keeps on giving. Those exploration results were amongst the very best in the entire gold industry.

I don't believe that there is any major mining company in the world that wouldn't want to own the Donlin. And in fact I'm pretty sure that in the gold space everyone understands that it is the best in breed project. We will be advancing this up the value chain, but there is something that you also have to remember. The real money is made in this space and have now been doing it for 30 years by the quality of asset that you own. We will one day be in production, there's no question about that. This is going to be built. But that doesn't mean that we can't also be the highest rated stock in this space, every month that goes by, more and more countries are asking the companies that are invested there to give more money, to rework their sovereign agreements.

The jurisdictional aspect combined with a gold market in gold means that for us as investors, Donlin is truly the holy grail. I have no doubt that we can see 10x on this stock as every day, every week the story gets better and better and better, partly because we are moving the project forward and partly because as I started by saying we live in an entirely different world, and it's all about being able to have the greatest leverage to gold in a jurisdiction that will allow you to keep the fruits of the leverage. If you can't combine those two attributes, you're a dead man walking. If you can combine those attributes, you're going to make a killing in the market. And for me, if I didn't think that that was the case with NOVAGOLD and Donlin, I put it in play and we'd sell it to pivot to something better, but I genuinely don't believe that there is anything better out there in this space. Thank you.

Gregory A. Lang - President and Chief Executive Officer

Thank you.

Melanie Hennessey - Vice President, Corporate Communications

Thank you, Tom. We have a few more questions that have come on - via the webcast. And I will ask, the first one is directive to Greg. What are the goals of the next feasibility study and will there be another future feasibility study before breaking ground?

Gregory A. Lang - President and Chief Executive Officer

I think the goals of the feasibility study are pretty intuitive to update our geological standing of the ore body, update the current trade-off studies we're doing and move that knowledge to find the most optimal project to take forward to a feasibility study. Yes, I think the question on, will there be a new feasibility study? Yes, absolutely. The existing study is scale and are thinking on the project, primarily building it in stages is crystallizing. And all the learnings over the last couple of years in drilling will be incorporated into the new study to the sensible project to the shareholders.

Melanie Hennessey - Vice President, Corporate Communications

Great. Thank you. And the final question and also came via the webcast is given our current cash burn rate, do you we have sufficient funds to last for the next 24 months?

Gregory A. Lang - President and Chief Executive Officer

Yeah, the question [Indecipherable] Yeah, absolutely, we - the feasibility work actually will be less dollars to emerge through the drilling. Yeah drilling is a fairly costly activity in our budget last year, Donlin was the highest in many years, and that was $60 million in total and $30 million [Phonetic] to each partner. Going forward, our budget this year is less demand, but when we embark on a new feasibility study, we will of course update the budget. But in total, the feasibility study in engineering would be less than the burn rate we have on our drilling programs the last two years. So, yes, currently we've got less burn rates. We have sufficient cash to see us through the completion of the new feasibility study on to a construction. So no need to raise equity until then.

Melanie Hennessey - Vice President, Corporate Communications

Thank you, Greg. That wraps up the Q&A session. Back to you.

Gregory A. Lang - President and Chief Executive Officer

All right. Thank you for taking the time to get an update on NOVAGOLD.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Greg for any closing remarks.

Gregory A. Lang - President and Chief Executive Officer

Thank you, everybody, for taking the time to join our call this morning and look forward to updating you in the coming months as our work progresses. Thank you.

Operator

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Q1 2023

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