Executive Summary / Key Takeaways

• NOVAGOLD is a development-stage company singularly focused on advancing the Donlin Gold project in Alaska, one of the world's largest and highest-grade known undeveloped open-pit gold deposits, positioning it for exceptional leverage to rising gold prices.
• A recent significant strategic shift involves NOVAGOLD and Paulson Advisers acquiring Barrick's 50% interest in Donlin Gold, resulting in a new partnership (NOVAGOLD 60%, Paulson 40%) focused immediately on updating the project's Feasibility Study.
• The 2025 work program, backed by a $43 million budget ($21.5 million NG share), is critical for refining mine planning and cost estimates through a 15,000-meter drill program and technical studies, laying the foundation for the updated Feasibility Study.
• While holding federal and most state permits, the project faces ongoing legal challenges, though management asserts these are not on the critical path to a development decision and permits remain in place.
• NOVAGOLD maintains a solid treasury of approximately $93 million as of February 28, 2025, deemed sufficient for planned expenditures for at least two years, but significant external financing will be required for future feasibility study completion and potential construction.

Setting the Scene: A Singular Focus on Alaskan Gold

NOVAGOLD RESOURCES INC. (NYSEAMERICAN:NG) presents a unique proposition in the precious metals sector: a development-stage company with its strategic focus narrowed entirely onto a single, potentially world-class asset – the Donlin Gold project in Alaska. This singular focus is the culmination of a strategic reorganization initiated over a decade ago, which saw the company divest other mineral property interests, including Galore Creek and Minas San Roque, to concentrate resources and expertise on Donlin.

Located in a Tier 1 mining jurisdiction renowned for its political and social stability and supportive regulatory framework, Donlin Gold stands out in an industry facing declining global production and a scarcity of high-quality development-stage projects. The project is situated on private land owned by Alaska Native Corporations, Calista Corporation and The Kuskokwim Corporation, whose long-standing partnership with NOVAGOLD is foundational to the project's social license and responsible development approach.

In the competitive landscape of gold mining, where majors like Newmont (NEM), Barrick Gold (GOLD), Agnico Eagle Mines (AEM), and Kinross Gold (KGC) dominate production, NOVAGOLD's positioning is distinct. It is not a producer but a developer aiming to bring online an asset of such scale and grade that it could fundamentally alter the competitive balance. Donlin Gold is consistently highlighted by management as one of the largest and highest-grade undeveloped open-pit gold deposits globally, particularly when compared to other projects in the Americas. This inherent quality is central to the investment thesis, offering potential cost-effectiveness and exceptional leverage to gold price movements, differentiating it from peers focused on maintaining or incrementally growing existing production.

The Donlin Gold Project: Scale, Grade, and Technical Foundation

The heart of NOVAGOLD's value proposition lies in the sheer scale and quality of the Donlin Gold deposit. The project boasts approximately 39 to 40 million ounces of gold resources at an average grade of around 2.25 grams per tonne. This grade is more than double the industry average for open-pit projects, a critical factor underpinning the project's potential economic viability and its ability to thrive across various gold price cycles. Based on current resources, the project is envisioned to support a mine life of nearly three decades with an average annual production profile exceeding one million ounces, a rate twice the industry average and positioning it as potentially the largest producer in the development pipeline.

Developing a deposit of this nature requires specific technical expertise. The Donlin ore body is characterized as refractory, meaning the gold is locked within sulfide minerals and requires specialized processing to achieve high recovery rates. The planned flow sheet for Donlin involves flotation to produce a concentrate, followed by treatment in an autoclave, and then subsequent leaching to recover the gold. This process, while complex, is described by management as a common and reliable technology widely used in the mining industry. The experienced management team, with backgrounds in major mining corporations, is stated to possess the necessary expertise, including extensive experience with autoclaves, to implement this technology effectively. While specific, quantifiable technological advantages of this particular implementation over other refractory processes or specific R&D metrics for new processing technologies are not detailed, the strategic importance lies in applying proven technology to unlock the value of the refractory ore body.

Beyond the defined resource, the project area holds significant exploration potential. The current resource is contained within the ACMA and Lewis pits, covering only about three kilometers of an identified eight-kilometer gold-bearing trend. This suggests substantial opportunity to potentially increase ounces and extend the mine's life through future exploration efforts.

Recent Strategic Shift and Path Forward

A pivotal development occurred recently with NOVAGOLD and Paulson Advisers agreeing to acquire Barrick Gold's 50% interest in Donlin Gold for $1 billion in cash. This transaction, which closed in early June 2025, fundamentally reshapes the partnership, with NOVAGOLD increasing its ownership to 60% and Paulson acquiring a 40% stake.

This new partnership signals an immediate strategic pivot: the primary focus will now be on updating the Donlin Gold Feasibility Study. This is a critical step towards a potential construction decision. The 2025 work program, with a total budget of $43 million (NOVAGOLD's share is $21.5 million), is specifically designed to support this objective. A significant component is a 15,000-meter drilling program, primarily focused on grid drilling to refine modifying factors for mine planning and infill drilling aimed at converting inferred resources. The budget also covers geotechnical and geoscience work, project planning, advancing the Dam Safety Certificate applications, and initiating work to update the project's capital and operating costs.

Management views this work as essential for laying the foundation for a new bankable feasibility study, an undertaking estimated to cost between $80 million and $100 million and take approximately 18 to 24 months to complete. The strategic rationale is clear: to position Donlin Gold optimally for a construction decision when market conditions, particularly the price of gold, are favorable. The current environment of record-high gold prices is acknowledged as a significant motivator, highlighting Donlin's exceptional leverage potential.

Financial Performance and Liquidity

As a development-stage company, NOVAGOLD does not generate revenue from mining operations. Its financial performance is characterized by net losses reflecting expenditures on project advancement and corporate overhead. The net loss for the first quarter of fiscal year 2025 was $9.116 million, a decrease from $10.318 million in the comparable prior-year period. This improvement was primarily attributed to lower stock-based compensation expense and reduced Donlin Gold expenditures early in the quarter, although Donlin expenses are expected to ramp up in subsequent quarters to meet the full-year budget. The net loss for the full fiscal year 2024 was $45.62 million, slightly lower than $46.80 million in 2023, influenced by variations in Donlin field expenses, corporate G&A (which increased due to staffing and professional fees), interest expense on the Barrick note, and interest income.

Liquidity is paramount for a company in this stage. As of February 28, 2025, NOVAGOLD held cash and cash equivalents of $33.969 million and term deposits of $59.0 million, totaling $92.969 million. Management believes this treasury is sufficient to cover anticipated funding for the Donlin Gold project and corporate general and administrative costs for at least the next two years at current spending levels. However, completing an updated feasibility study will require additional capital, and commencing engineering and construction would necessitate considerable further financing, likely through a combination of debt and equity offerings or project-specific debt.

A notable liability is the promissory note payable to Barrick, totaling $155.087 million as of February 28, 2025, including accrued interest at U.S. prime plus 2%. This note is payable from 85% of NOVAGOLD's share of future Donlin Gold revenue or proceeds from a reduction in its interest. The variable interest rate exposes the company to interest rate risk; a 1% change in the U.S. prime rate would impact annual accrued interest by approximately $1.60 million. The recent public offering and private placement in May/June 2025 were specifically undertaken to fund the acquisition of Barrick's interest and provide capital for updating the feasibility study, bolstering the company's financial capacity for the next phase.

Permitting and Risk Landscape

Advancing a large-scale mining project like Donlin Gold involves a complex and rigorous permitting process. NOVAGOLD has successfully secured all necessary federal permits, including the Joint Record of Decision (JROD) and the Section 404 permit, and the majority of required state permits. This is a significant de-risking achievement.

However, the project faces ongoing legal challenges to certain permits. These include appeals in state court concerning the Clean Water Act Section 401 Certification, water rights permits, and the state pipeline right-of-way agreement, with decisions anticipated in 2025 after briefing and arguments. Federal litigation challenges the JROD and 404 permit; while the court upheld the agencies' analysis on most issues, it requested supplemental briefing on the remedy for analyzing a theoretical tailings storage facility release. Remedy briefing was completed in March 2025, with oral argument scheduled for April 14, 2025. Despite these challenges, all permits and approvals granted by federal and state agencies remain issued and in place as the legal processes unfold. Management asserts that these legal proceedings are not on the critical path for a development decision and expresses confidence in the defense of the permits, citing favorable rulings to date.

The last remaining major state permit is the Dam Safety Certification for the tailings dam and related water retention structures. Preliminary design packages have been submitted, and the approval process is expected to take approximately 1 to 1.5 years, a timeline that management indicates is not a constraint on the overall project development schedule.

Beyond permitting and litigation, key risks include the inherent uncertainty of whether the project will ever reach production, the need for substantial future financing on favorable terms, fluctuations in commodity prices, potential opposition from non-governmental organizations or civil society, challenges related to developing necessary infrastructure, and potential changes in governmental regulations. The success of the project hinges on the ability to navigate these risks while executing the technical and financial steps required for development.

Competitive Positioning and Market Dynamics

Donlin Gold's competitive positioning is defined by its potential rather than current production. In a market dominated by large producers like Newmont and Barrick, who benefit from scale, diversified portfolios, and established cash flows, NOVAGOLD offers exposure to a single, exceptionally large and high-grade deposit. While Newmont and Barrick operate numerous mines globally, generating billions in revenue and positive cash flow (Newmont reported robust Q4 2024 operating cash flows and Barrick achieved significant revenue growth), NOVAGOLD is pre-revenue with negative cash flow, reflecting its development stage. This results in starkly different financial ratios; for instance, NOVAGOLD's profitability and return metrics (like ROIC and ROE) are negative due to its capital-intensive development phase, whereas major producers typically show positive, albeit sometimes modest, returns.

Donlin's grade of 2.25 g/t is a significant competitive advantage, more than double the industry average, which could translate into lower operating costs per ounce once in production compared to lower-grade deposits mined by peers. This potential cost-effectiveness is a key differentiator. The project's scale also positions it to be one of the world's largest gold mines, offering a production profile that few new projects can match.

The jurisdictional advantage of Alaska, a stable and supportive Tier 1 region, is another crucial factor, mitigating some of the geopolitical and regulatory risks faced by competitors operating in less predictable jurisdictions. The partnership with Alaska Native Corporations further strengthens its local standing, a critical element for successful project development in the state.

However, NOVAGOLD's pre-production status is its primary vulnerability. It lacks the financial resilience and operational flexibility of producing majors. It is dependent on external financing for significant future milestones, and its single-asset focus means its fortunes are tied solely to Donlin's success. While the refractory nature of the ore requires specific processing technology, this is a known challenge with established solutions, rather than a unique technological moat per se. The competitive edge comes from applying this technology to an exceptionally high-quality deposit in a favorable location. The recent partnership shift and focus on the feasibility study are strategic moves aimed at de-risking the project further and attracting the necessary capital to bridge the gap between its current development stage and potential future production, allowing it to compete more directly for investor capital seeking exposure to large-scale gold development.

Conclusion

NOVAGOLD's investment thesis is a direct bet on the successful development of the Donlin Gold project, a truly massive and high-grade gold deposit located in the stable mining jurisdiction of Alaska. The recent strategic realignment, bringing Paulson Advisers into partnership and increasing NOVAGOLD's ownership stake, underscores a renewed commitment to advancing the project. The immediate focus on updating the Feasibility Study, supported by a targeted 2025 work program, represents the critical next phase in unlocking Donlin's immense potential value.

While the path forward involves significant hurdles, including securing substantial future financing and navigating ongoing legal challenges, the project benefits from a strong technical foundation, largely secured permits, robust community partnerships, and the inherent quality of the deposit itself. In a gold market characterized by record prices and a scarcity of large, high-quality development assets, Donlin Gold offers compelling leverage. The successful execution of the updated Feasibility Study and subsequent financing efforts will be key determinants of whether NOVAGOLD can translate the promise of Donlin Gold into tangible shareholder value.