NovaGold Highlights the Value
and Potential of its Copper Assets
July 28, 2011 - Vancouver, British Columbia – Following the completion of the Prefeasibility Study for
its 50%-owned Galore Creek copper-gold-silver project in northern British
Columbia, and recently completed Preliminary Economic Assessment ("PEA���) of its 100%-owned Ambler high-grade copper-zinc-lead-gold-silver
project in northwest Alaska, NovaGold
Resources Inc. ("NovaGold��� or the "Company���) (NYSE-AMEX: NG, TSX:NG) today highlighted the value and development
potential of its copper assets and announced definitive steps to bring their
valuation more in line with current metals prices. All amounts are in Canadian
dollars unless otherwise indicated.
The recently completed Galore Creek PFS estimated pre-
and after-tax Net Present Values ("NPVs���) of NovaGold's share of the Project using
current commodity prices at approximately $2.4 billion and $1.4 billion,
respectively. These figures do not include substantial inferred mineral
resources, a portion of which the partners intend to upgrade and incorporate
into future studies. There is also significant exploration potential on the
property.
With the improved scale of the project and
substantially increased commodity prices over the last several years, NovaGold believes the potential value of Galore Creek has
markedly increased. If in production as contemplated in the PFS, the Galore
Creek mine is projected to be the fourth largest copper mine in North America and
the largest in Canada, based on current production figures from industry
sources.
The summary of NPVs of the Galore Creek Project, of
which NovaGold owns 50%, at Base Price Case and
Current Price Case is shown below:
Parameter
|
Units
|
Base
Price Case[1]
|
Current Price Case[2]
|
Before Tax NPV7%
|
Millions
of Dollars
|
837
|
4,707
|
After Tax NPV7%
|
Millions
of Dollars
|
137
|
2,753
|
The Ambler property hosts a number of deposits,
including the high-grade copper-zinc-lead-gold-silver Arctic deposit, which was
the focus of the PEA. Based on the PEA, mining of the Ambler deposit is
envisioned as an underground operation processing up to 4,000 tonnes of material per day. The current resource base of
16.8 million tonnes of indicated mineral resources
grading 4.1% copper and 6.0% zinc and 12.1 million tonnes
of inferred mineral resources grading 3.5% copper and 4.9% zinc support a
25-year mine life. Mineral resources that are not mineral reserves do not have
demonstrated economic viability. The PEA yielded the
following NPVs:
Parameter
|
Units (US$)
|
Base
Case Prices[3]
|
Recent Metal Prices[4]
|
Before Tax NPV8%
|
Millions
of Dollars
|
718
|
2,200
|
After Tax NPV8%
|
Millions
of Dollars
|
505
|
1,600
|
As a stand-alone entity, NovaGold
could emerge as a significant low-cost North American producer of copper with a
total projected annual production of 228 million pounds of copper produced at a
weighted average cash cost of US$0.83 per pound[5], assuming development of the
projects based on the Galore Creek PFS and the Ambler PEA.
"NovaGold has
substantial and very valuable copper assets,��� said Rick Van Nieuwenhuyse, Company's President and CEO. "In the
current supply-demand and commodity price environment, these copper assets,
comprised of the Company's 50% share of Galore Creek and the wholly-owned
Ambler project are not in my view fully reflected in NovaGold's
current market capitalization of approximately US$2.2 billion. This dichotomy
becomes even more pronounced considering the value of NovaGold's
50%-owned flagship Donlin Gold project in Alaska
which hosts over 33 million ounces[6] of gold reserves. Management believes the
recently completed economic analyses of Galore Creek and Ambler clearly demonstrate
that NovaGold's copper assets are considerably
undervalued having regard to their size, favorable geopolitical location,
projected long life and low operating cost.���
In light of that, the Company is working with J.P.
Morgan Securities LLC and RBC Capital Markets to identify and explore various
alternatives that could bridge this valuation gap. The management and the Board
of Directors of NovaGold are committed to unlocking
the value of the Company's copper assets and will work with its advisors to
develop strategies to achieve proper valuation of its projects in the present
macro-economic environment.
The technical information contained in this press
release was reviewed by Kevin Francis, P.Geo., VP, Resources for NovaGold and
a Qualified Person as defined by NI 43-101.
Additional Information
Additional information concerning the Galore Creek PFS
is contained in NovaGold's news release entitled
"NovaGold Announces Prefeasibility Studies
Results for Galore Creek Project��� issued on July 27, 2011. Additional information concerning the Ambler
PEA is contained in NovaGold's news release entitled
"NovaGold Files Preliminary Economic Assessment
for Ambler Project��� issued on May 26, 2011 and in the PEA which is available for download
on NovaGold's website at www.novagold.net, on SEDAR at www.sedar.com and on EDGAR at www.scc.gov. Readers are
cautioned that the conclusions, projections and estimates set out in this press
release are subject to important qualifications, assumptions and exclusions
contained in the PEA and in the technical report to be filed in connection with
the Galore Creek PFS. To fully understand the summary information set out
above, such documents should be read in their entirety.
About NovaGold
NovaGold is a precious metals company engaged in the exploration and development
of mineral properties located principally in Alaska, U.S.A. and British
Columbia, Canada. The Company is focused on advancing its two core properties, Donlin Gold and Galore Creek, with the objective of
becoming a low-cost million-ounce-a-year gold producer, and offers superior
leverage to gold and copper with one of the largest reserve/resource bases of
any junior or mid-tier gold company. NovaGold has a
strong track record of expanding deposits through exploration success and
forging collaborative partnerships, both with local communities and with major
mining companies. The Donlin Gold project in Alaska,
one of the world's largest undeveloped gold deposits, is held by a limited
liability company owned equally by wholly-owned subsidiaries of NovaGold and Barrick Gold
Corporation. The Galore Creek project in British Columbia, a large
copper-gold-silver deposit, is held by a partnership owned equally by
wholly-owned subsidiaries of NovaGold and Teck Resources Limited. NovaGold
also owns a 100% interest in the high-grade Ambler copper-zinc-lead-gold-silver
deposit in northern Alaska and has other earlier-stage exploration properties. NovaGold trades on the TSX and NYSE-AMEX under the symbol
NG. More information is available at http://www.novagold.net/ or by emailing info@novagold.net.
# # #
NovaGold Contact
Greg Martin
Vice President Business Development & Treasurer
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain
"forward-looking statements��� within the meaning of the United States Private Securities Litigation
Reform Act of 1995. All statements, other than statements of historical fact,
included herein including, without limitation, statements related to NovaGold's future operating or financial performance, are
forward-looking statements. Forward-looking statements are frequently, but not
always, identified by words such as "expects���, "anticipates���, "believes���, "intends���, "estimates���, "potential���, "possible���, and similar expressions, or statements that events, conditions, or results
"will���, "may���, "could���, or "should��� occur or be achieved. These forward-looking statements may include
statements regarding perceived merit of properties; exploration results and
budgets; mineral reserves and resource estimates; work programs; capital
expenditures; timelines; strategic plans; completion of transactions; market
prices for precious and base metals; or other statements that are not
statements of fact. Forward-looking statements involve various risks and
uncertainties. There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ materially from
those anticipated in such statements. Important factors that could cause actual
results to differ materially from NovaGold's expectations
include the uncertainties involving the need for additional financing to
explore and develop properties and availability of financing in the debt and
capital markets; uncertainties involved in the interpretation of drilling
results and geological tests and the estimation of reserves and resources; the
need for continued cooperation with Teck Resources
and the Tahltan Nation for development of the Galore
Creek property; the need for cooperation of government and native groups in the
development and operation of properties; the need to obtain permits and
governmental approvals; the need for cooperation with State agencies to build
an access road; risks of construction and mining projects such as accidents,
equipment breakdowns, bad weather, non-compliance with environmental and permit
requirements, unanticipated variation in geological structures, ore grades or
recovery rates; unexpected cost increases; fluctuations in metal prices and
currency exchange rates; uncertainties and risks regarding the cost estimates
and completion schedule for the proposed access tunnel; and other risk and
uncertainties disclosed in NovaGold's Annual
Information Form for the year ended November 30, 2010, filed with the Canadian
securities regulatory authorities, and NovaGold's
annual report on Form 40-F filed with the United States Securities and Exchange
Commission and in other NovaGold reports and
documents filed with applicable securities regulatory authorities from time to
time. NovaGold's forward-looking statements reflect
the beliefs, opinions and projections on the date the statements are made. NovaGold assumes no obligation to update the
forward-looking statements of beliefs, opinions, projections, or other factors,
should they change.
Cautionary Note Regarding Reserve and Resource
Estimates
This press release has been prepared in accordance
with the requirements of the securities laws in effect in Canada, which differ
from the requirements of U.S. securities laws. Unless otherwise indicated, all
resource and reserve estimates included in this press release have been
prepared in accordance with National Instrument 43-101 Standards of Disclosure
for Mineral Projects ("NI 43-101��) and the Canadian Institute of Mining, Metallurgy, and Petroleum
Definition Standards on Mineral Resources and Mineral Reserves. NI 43-101 is a
rule developed by the Canadian Securities Administrators which establishes
standards for all public disclosure an issuer makes of scientific and technical
information concerning mineral projects. Canadian standards, including NI
43-101, differ significantly from the requirements of the United States
Securities and Exchange Commission ("SEC���), and resource and reserve information contained herein may not be
comparable to similar information disclosed by U.S. companies. In particular,
and without limiting the generality of the foregoing, the term "resource��� does not equate to the term "reserves���. Under U.S. standards, mineralization may not be classified as a "reserve��� unless the determination has been made that the mineralization could be
economically and legally produced or extracted at the time the reserve
determination is made. The SEC's disclosure standards normally do not permit
the inclusion of information concerning "measured mineral resources���, "indicated mineral resources��� or "inferred mineral resources��� or other descriptions of the amount of mineralization in mineral
deposits that do not constitute "reserves��� by U.S. standards in documents filed with the SEC. U.S. investors
should also understand that "inferred mineral resources��� have a great amount of uncertainty as to their existence and great
uncertainty as to their economic and legal feasibility. It cannot be assumed
that all or any part of an "inferred mineral resource��� will ever be upgraded to a higher category. Under Canadian rules,
estimated "inferred mineral resources��� may not form the basis of feasibility or prefeasibility studies except
in rare cases. Investors are cautioned not to assume that all or any part of an
"inferred mineral resource��� exists or is economically or legally mineable. Disclosure of
"contained ounces��� in a resource is permitted disclosure under Canadian regulations;
however, the SEC normally only permits issuers to report mineralization that
does not constitute "reserves��� by SEC standards as in-place tonnage and grade without reference to
unit measures. The requirements of NI 43-101 for identification of "reserves��� are also not the same as those of the SEC, and reserves reported by the
Company in compliance with NI 43-101 may not qualify as "reserves��� under SEC standards. Accordingly, information concerning mineral
deposits set forth herein may not be comparable with information made public by
companies that report in accordance with U.S. standards.
[1] Using metal prices for copper, gold and silver of
US$2.65/lb, US$1,100/oz,
and US$18.50/oz, respectively and foreign exchange
rate of 1.11 CAD/USD.
[2] Using metal prices for copper, gold and silver of US$4.44/lb, US$1,613/oz, and US$40.34/oz, respectively and foreign exchange rate of 0.949
CAD/USD.
[3] Using metal prices for copper, zinc, lead, gold and silver of US$2.50/lb, US$1.05/lb, US$1.00/lb, US$1,100/oz, and US$20/oz, respectively.
[4] Using metal prices for copper, zinc, lead, gold and silver of US$4.31/lb, US$1.20/lb, US$1.20/lb, US$1,425/oz, US$36/oz, respectively.
[5] Using life-of-mine average annual payable copper production, life-of-mine
average cash costs net of by-product credits and foreign exchange rate of 1.00
CAD/USD as determined by the Galore Creek PFS and Ambler PEA.
[6] Represents 100%, NovaGold's share is 50% of that amount.