Novagold Resources Inc (NG) Q2 2020 Earnings Call Transcript

Thank you for waiting. This is the conference operator. Welcome to NovaGold's Second Quarter Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. I would now like to turn the conference over to Melanie Hennessey, Vice President and Corporate Communications. Please proceed.

Thank you, Galine, and good morning, everyone. We are pleased that you have joined us for NovaGold's 2020 second quarter financial results and 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 both by phone and by text. I would like to remind our webcast and call participants that, as stated on Slide 3, 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 disclaimers included in this presentation. With that, I have the pleasure of introducing Greg Lang. Greg?

Thank you, Melanie, and good morning, everyone. Before I provide an overview of the second quarter results, I wanted to address the ongoing pandemic. In order to minimize the risk posed by COVID-19, NovaGold is maintaining a wide-ranging set of policies at its offices in Salt Lake City, Vancouver, and in conjunction with Barrick at the Donlin Gold office in Anchorage, as well as implementing an enhanced safety plan at the project site. All of these measures are designed to ensure the safety and wellbeing of all personnel. NovaGold's most important objective right now is the health and safety of its employees, partners, and contractors. To that end, as shown on slide 4, the company has put in place measures to protect its personnel both in an office setting and in the field. Donlin Gold is regularly conducting safety meetings to address hygiene and sanitation practices, and we request all employees to monitor their health and consult with health professionals if they exhibit any symptoms. We are committed to providing an environment in which all of our people make it home safe and healthy every day. Slide 5 highlights the steady progress in the first half of the year for NovaGold's operational activities, even with the temporary pause in the drill program during the first quarter. The year started strong with the receipt of state permits, followed by preparation of the drill program and mobilization of drill rigs to the site in early March, all before temporarily pausing activities as a precautionary measure due to COVID-19. The drill program remobilized in late May, and we currently have four rigs operating. The multi-year site investigation that commenced in mid-2019 as part of the project's Dam Safety Certification has been paused due to the prioritization of the ongoing drilling. It's not on the critical path and is focused on completing the drilling right now. I will elaborate further on external affairs activities and community engagements later in the presentation. Donlin has made nice progress on its optimization efforts and established a solid plan for 2020 that would allow the owners to have a greater understanding of the recent geologic model and high-grade mineralization controls, all of which have the potential to benefit the project and will ultimately serve as the basis for an updated study. Looking at this year's drill program in more detail on slide 6, we have completed about 20 holes so far this year. Assuming no further interruptions, it is anticipated that the majority of the 2020 drill program, which consists of about 80 holes totaling over 20,000 meters, will be completed. The objective of this drill campaign, which is the largest in 12 years, is to validate the recent geologic and resource modeling concepts developed by Barrick and NovaGold and to test potential extensions of high-grade zones, which would be expected to be mined early in the life of Donlin. The results of the 2020 program will provide the necessary data for NovaGold and Barrick to consider the next steps for the project. The pandemic has created significant concern in the YK region due to the elders' memory of the toll taken by the Spanish flu early in the century, when Alaskan Native Americans suffered some of the highest casualty rates in North America. Donlin Gold and our native corporation partners immediately engaged with the community to assist the needs of the small villages in the region. As shown on Slide 7, Donlin partnered with TKC and tribal council to coordinate food collection and delivery of supplies to the eight middle Kuskokwim River villages. Donlin also coordinated with tribal administrators to identify community members to make face masks for elders and people susceptible to COVID. In addition to the work focused on lending a hand during the COVID pandemic, Donlin also supported the cleanup initiatives, a program we have participated in for many years. As can be seen on Slide 8, with the temporary closure of the Donlin Gold camp, we donated thousands of pounds of food to homeless shelters and various food banks. Compounding the urgency of the COVID response, many communities have been cut off from winter transportation when the regional airline declared bankruptcy. Donlin Gold continues to coordinate deliveries of food and supplies to communities that do not have regular air service, which, along with river travel, is the primary means of transportation in western Alaska. I'll now turn the call over to David Ottewell, our Chief Financial Officer. Dave?

Thank you, Greg. Slide 9 highlights our operating performance. For the second quarter, we reported a $7.2 million net loss, which is $1.7 million higher than the prior year quarter. The net loss increased primarily due to the 2020 drilling program at Donlin Gold. Additionally, lower interest income and higher share-based compensation costs partially offset by lower interest expense on promissory notes payable to Barrick and foreign exchange movements. Second quarter 2020 cash flows are highlighted on Slide 10. In the second quarter, we spent $6.4 million, which is $1.6 million higher than the prior year quarter. Total spending increased primarily due to the 2020 drilling program at Donlin Gold, and interest income decreased due to lower interest rates. We ended the quarter with cash and term deposits of $134.3 million. Greg, back to you.

Thank you, Dave. The Donlin Gold project is in the western part of Alaska, as shown on Slide 11, and is a 50:50 joint venture partnership with Barrick Gold. Mining is an important part of the Alaskan economy and is becoming even more important to the state as revenues and employment decline in other sectors. There are six producing mines in the state and numerous exploration and development projects that are advancing, as shown on the map. Other industries there have been experiencing low or no growth in Alaska, and the impact of the COVID-19 crisis on the cruise ship and tourism industries may take many years to recover. With a long history of mining and a skilled workforce in the state, Donlin Gold offers the opportunity of a future with good paying, year-round careers and training for young people to live close to home and maintain a subsistence way of life. Donlin Gold is the largest gold development project in its category, as you can see by looking at comparable development stage projects. It's truly unique in that it's federally permitted and starts with an endowment of almost 40 million ounces, as shown on Slide 12. It's in a jurisdiction where the rule of law is not a novelty and has strong long-term partnerships with the native corporation Calista and TKC. If you look at the peer group average, Donlin's resource is over five times that of other projects. People in mining will tell you that the greatest thing is the grade, and as shown on Slide 13, at 2.25 grams, Donlin Gold has twice the global average grade for large open-pit deposits. As we will see, not only is the global production of gold decreasing, but the average grades continue to decline. Last year, they decreased by 0.5 grams per ton, and this trend is irreversible. Why is that important? Compare two projects, one with 2 grams per ton and the other with 1 gram per ton. With all other factors being equal, the 1 gram mine would need the resources, plant capacity, and energy consumption to be twice that of a project like Donlin. Given its scale and grade, if Donlin Gold was built today, it would be one of the largest gold producing mines in the industry. For the long-term investor, there's additional value that comes with a mine that has a multi-decade lifespan from its start, with almost thirty years of production with just the current resource. As currently envisioned, Donlin would average 1.1 million ounces a year over its entire life. There are few mines in the world, existing or proposed, with that level of production. In fact, only three mines globally produced over a million ounces of gold last year. Looking at comparable scale mining operations around the globe, Donlin would rank among the top operations if it was producing today. Slide 15 shows the top ten largest producing operations globally. You will notice the gold color on the map indicating the world's most desirable mining jurisdictions as ranked in the Annual Fraser Institute Survey published earlier this year. Of the three operations producing more than 1 million ounces per year, one of them is a joint venture in Nevada between Barrick and Newmont. Nevada is ranked third, and Alaska is ranked fourth as the best mining jurisdictions in the world. Two other mines that produced more than a million ounces last year are in Uzbekistan and Russia. They were not even ranked due to the lack of industry response. A report from Wood Mackenzie released last week and based on a study of 260 gold projects found that to maintain current production levels, the gold industry must invest $37 billion on Greenfield expansion projects over the next five years. They estimate the industry will need to commission 8 million ounces from projects by 2025. This equates to roughly 44 new mines. This report emphasizes that jurisdictional risk is tied to production declines. The authors note that social and governance considerations are dissuading the exploration of certain jurisdictions and the progression of identified deposits. As well, organic growth is waning. Miners are looking to buy gold through mergers and acquisitions to secure their future. This has failed to significantly increase production. To avoid a perpetual decline in gold supply, the industry must see a rise in project development. Prior to the COVID pandemic, big gold supply was already becoming a real possibility. Now it seems almost certain. Donlin Gold is in the right place at the right time. Another differentiating factor for the Donlin Gold project is its location on private land designated for mining. It's rare in mining projects today that both the mineral and the surface rights in the project are privately held, in our case by our long-term partners Calista and TKC, who identified the mineral potential of the property and invited mining companies to explore. The ACMA and Lewis deposits can be seen on Slide 17. Topography of Donlin is clearly very favorable for development. As shown on Slide 18, the ACMA and Lewis deposits contain the 39 million ounce resource but occupy only three kilometers of an eight-kilometer gold-bearing trend. We have done extensive drilling over 1,400 holes totaling 340,000 meters, and our focus is on continuing to optimize the project. Based on previous work done in the area, there are future opportunities for substantial exploration and the expansion of the known resource. When the time is right, we will resume drilling. Calista and TKC have been partners in the Donlin Gold project since 1995. Donlin has life-of-mine agreements with both partners who have been deeply involved and supportive from the start. We are thankful for their long-term support and commitment to the project. We support their mandates through the Alaska Native Claims Settlement Act, as highlighted on Slide 19, to help them develop their land for the economic benefit of the region and all stakeholders involved. They have an ownership interest in seeing the project go forward. While we are all experiencing or responding to COVID and its impact on the health of our communities, we also gain comfort from the long-standing relationships that unite us in the common goal of bringing Donlin Gold up the value chain. We focus on a culture of safety, social responsibility, and corporate governance practices. We do this by engaging our stakeholders through regular contact, interacting with our investors, and engaging in meaningful ways to promote the health and safety of our people on-site. Especially now, Donlin Gold brings much-needed support to the local communities. We are better together. On Slide 21, we note our healthy treasury. We continue to anticipate spending about $31 million this year, which includes $20 million to fund our share of expenditures for the Donlin Gold project. At Donlin Gold, $11 million is planned for the drill program and the remaining $9 million for permitting and community engagement. In addition, as a result of the sale of our Galore Creek project to Newmont, the receipt of $75 million is due in 2021 and a further $25 million in 2023, with a contingency payment of $75 million when the owners make a construction decision. With that, I will now turn the call over to Dr. Kaplan, who will give us his insights into gold. Tom?

Thank you, Greg. Today, I'd like to take this opportunity to reconnect with our existing shareholders and welcome the many new prospective shareholders who are considering our stock. I want to emphasize why we believe that Donlin represents the most compelling gold development story in the world right now and why NovaGold, as a focused investment on Donlin—which we liken to the next Carlin—is an excellent choice. For Barrick shareholders, this also presents a chance to discuss the value embedded in Barrick shares that arises from the developments at Donlin, which Mark Bristow has referred to as its emerging global brand. Looking at the title page of our annual report, it really encapsulates our message; Mark Bristow popularized the term Tier 1 assets, and Donlin is a quintessential example of a Tier 1 asset located in a Tier 1 jurisdiction. The remarkable features associated with Donlin make it not only the best in its category but also a unique offering. It boasts significant reserves, exceptional grade, and is set to become, in one or two phases, the biggest pure gold mine in the safest jurisdiction globally, operating over decades through various gold cycles, and with lower cash costs compared to other mines. But there’s even more to the story. This past year has been significant for our stock's performance. I could have presented other timeframes, but this one tells an important narrative about our trajectory. NovaGold has consistently outperformed, driven by various catalysts that support its status as a go-to stock in the gold development sector. Recently, our stock price has drawn attention from those who were shorting it, particularly as we approached ten-year highs—something that doesn’t bode well for short sellers. Moving to our recent developments, I'm not going to delve into detailed discussions about the J Capital report. My analysis and the information I provided in my press release illustrate that we view the report as a character assassination rather than a legitimate critique. We identified numerous errors and distortions, and we will leave any disputes to legal proceedings. It's important to note that this report lacks credibility and is not rooted in sound analysis. The team at NovaGold, led by Greg Lang, has a strong record of integrity and commitment to all our stakeholders, including shareholders and our partner, Barrick. When I assess our stock's potential, I believe we offer a unique opportunity to invest in Donlin at a significant discount. I encourage you to examine both NovaGold and Donlin closely to see if you agree with my perspective. In my discussions with investors about Donlin, I often pose a question: Given my extensive experience and belief in the gold sector, I want to know what other gold development projects offer such a combination of enormous size and high quality. Donlin stands out with its 40 to 50 million ounces of measured and indicated resources and its high-grade operation in a market where average grades have significantly decreased over the last decade. This matters tremendously when considering production costs, with our higher-grade resource meaning lower costs compared to others. Further, Donlin's exploration potential is compelling. Notably, when Barrick attempted a hostile takeover about 17 years ago, I was among those who rejected it; I believed that if Barrick had succeeded, it could have altered the gold mining landscape significantly. With the current exploration planned for just 5% of our total land package, I am optimistic about the potential results, signaling the capability for substantial resource expansion. Our production projection indicates that Donlin could emerge as the largest pure gold producer in the world, and we possess strong partnerships, particularly with Barrick. My long-standing relationship with Mark Bristow has been built on mutual respect and trust, and our shared vision for Donlin is promising. I have analyzed the mining industry landscape, and I strongly believe the key to profitability lies in having exceptional assets located in stable jurisdictions. Donlin is set to become the leading pure gold producer globally, situated in one of the best jurisdictions for mining. Alaska ranks as the second-largest gold-producing state in the U.S., with a culture that understands mining and supports sustainable practices. The critical takeaway is this: if you are considering where to invest, it's essential to evaluate the jurisdiction of the asset. I frequently find that institutional investors prioritize location. They want assurance that their investment is secure within a context that supports both profitable operations and community integration. As an investor, you should recognize the unique advantages that NovaGold offers. We have consistently delivered on our promises, and our management team is dedicated to advancing Donlin into the next stages of development without needing to raise additional capital until we reach the construction phase. In conclusion, we see Donlin as a Tier 1 asset with unparalleled potential. The performance of our stock reflects our dedication to transparency and accountability to our stakeholders. If you believe that this market capitalization misalignment presents an opportunity, I encourage you to explore this investment further. Thank you, and I'm happy to take any questions.

Our first question is from David Levinsky, a Private Investor. Mr. Levinsky, your line is open.

Thank you. I appreciate it. Hello, everyone. A key point is that if someone like Mark Bristow from Barrick were to announce that they will fast track the Donlin project and prioritize it, we would see immediate action, and sellers would quickly exit the market. I don’t believe shareholders or the public fully understand that a $100 increase in gold prices correlates closely with the total market cap of NovaGold. Considering the proven and probable resources, I strongly believe that by January we will see gold prices reach $2,000, and by the end of 2021, we may hit $2,500 to $3,000. With ongoing deficits of $2 trillion every year, this is bound to happen. Looking at China, they internally mine 400 tons of gold annually, which is all sold and owned by the government. In the last 10 years, that totals 4,000 tons. Yet, China publicly claims their inventories are between 1,900 to 2,000 tons, despite having mined 4,000 tons, not to mention the gold they’ve purchased globally. I believe there will come a time when China discloses their gold reserves, and this will align with a dollar crisis. If that day arrives and China announces they hold 20,000 tons of gold, it will have significant implications for Bretton Woods II. I apologize, I’m walking while speaking. Another question has come up, which is: Can Barrick increase their ownership percentage in the project? Are they allowed to buy more shares, or are they limited to just 50%? Anyone can respond to that.

Greg, shall I go ahead?

I'll take it. Go ahead, Tom.

No. You go ahead.

All right. So Donlin Gold LLC, which holds the Donlin Gold project, is 50% owned by Barrick and 50% owned by NovaGold. The Donlin Gold Board has two representatives from each company. The chairmanship alternates every year. This year, Katherine Raw, Barrick's Senior Executive for North America, is the Chairman of Donlin Gold. Next year, I will be the Chairman. But it's a true 50:50 ownership structure in every sense of the word. Neither party has rights to purchase from the other.

Okay. Thank you, fellas. Appreciate your hard work.

Thank you very much, and by the way, your comment about China one day announcing their real gold reserves. You hit the nail on the head, and it’s going to be a very, very important moment, probably done during a dollar crisis or some other inflection point. And it's only going to enhance their financial standing when they do it. But they're waiting; they're waiting for the right time. And that's not a conspiracy theory; it’s just smart. You don't telegraph what you are doing until you're ready to expose your position.

And who owns the gold makes the rules. Period. Thank you, Thomas.

Absolutely. Thank you.

The next question is from Lucas Pipes of B. Riley FBR. Lucas Pipes, your line is open.

Thank you so much and good afternoon, everybody. Hope you're all doing well and staying safe, and thank you for the detail in the prepared remarks. Greg, I wanted to follow up a little bit on the drilling program for this year. In your base case, what are you looking for? What would constitute a positive surprise? Thank you very much.

All right, Lucas. To answer your question on the drill program, I want to go back a little bit in time. As we've been working our way through the permitting process, we've challenged the overall project as it was conceived and challenged ourselves to take a fresh look. And one of the things we came up with was, well, let's build it in phases, and if so, could you use smaller equipment, minimize the dilution, and enhance the grade to the mill, particularly in the early years? A couple of years ago, we had a fairly small program, about 16 holes to test the hypothesis if the high-grade intrusive structures were contiguous enough to be mined discreetly. Those results are on our webpage, and frankly, they were stellar results: good, thick intercepts of five and six grams in the intrusive. So we satisfied ourselves that the hypothesis about higher grade with smaller equipment and less dilution was valid, and then Barrick went through their merger with Rand, which really reinvigorated the company in my view, and Mark was up at the site last summer with us. He and his team went through the new geology concepts that we put forward, and I think, suffice to say, they were intrigued. So the purpose of this program right now is with the Barrick people; we've created a new model, and the purpose of this program is twofold. About half of the 80 holes will validate the new model, which focuses on the intrusive structures. The other half are to test for high-grade mineralized structures that will be mined early in the life; both of these could certainly enhance the rate of return on the project. And we're really excited by the results. We've got about 20 holes drilled. We lost a couple of months because of COVID, but the drilling is going very well right now. We're exceeding our per-day targets in meters, and if we don't get it all done, we'll be pretty close before winter sets in. Yes, whenever we drill at Donlin, we always want to drill more because it keeps getting better with each program and each fresh look. And we've enjoyed the input of Mark and his team of geologists.

Very helpful. Greg, I really appreciate the color. And I believe you said it earlier, but just kind of wanted to circle back up on that kind of from here. What's the timeline? The drilling program this year, then when should we expect these results, and when could they lead to kind of a revised mine plan, etc.?

Well, we're drilling now, and with the two months we lost due to travel restrictions and COVID impacts, that might push the completion date from September into October. We'll get as much done as we safely can this year, and then we'll probably take a couple of months to incorporate the drill results into the model and work to update that. So even with the setback, I would think that somewhere early next year, the owners will be in a position to make a decision on the next steps.

This is great news, much sooner than I expected. I really appreciate the update, and keep up the good work. Thank you.

The next question is from John Tumazos with John Tumazos Very Independent Research, LLC. John Tumazos, your line is open.

Thank you. I was looking at the website and I noticed the feasibility study for the reserve and resources dated November 2011. And frankly, I haven't read the short seller report, and I'm not interested in reading it. I'd like to say something nice about Donlin Creek, but I sort of feel as though there are no facts at hand because the feasibility study hasn't been updated for eight years. When are you going to update the feasibility study? And are there a couple of key points of the changes in parameters that you could call our attention to?

Sure, John. I'll be happy to speak to the feasibility study. The study — it is dated right now, but a couple of things you really need to remember about particularly as it pertains to permitting. Once you start permitting in the United States, you essentially freeze your project. You cannot, if you change the project in any way once you start permitting, you reset the clock and have to start over. So it made, from our point of view, we did want to do that. We permitted a significant project, and if we decide to build it in stages, as long as we stay within the footprint of what has been permitted, which is now approved, any changes would be simple administrative actions. Had we done a feasibility study that was materially different, we would have set back our permitting timelines. The other, I think important aspect about that from my perspective, is a proper feasibility study at Donlin costs tens of millions of dollars to each owner, and I see no reason to do that until the owners believe that they are in a position to go forward with the project. As gold prices move up and our understanding of the geology crystallizes, we're approaching that time, and I think we'll be there early next year. But we've always taken the view to spend no money before we need to. The feasibility study was done by blue chip engineering firms, yes, some things have changed since the study was done, but a lot of things have moved in our favor. Energy being a big part of it; the feasibility study was done at an $85 barrel of oil, and we are at half that. It seems pretty unlikely to me that we're going to see $85 oil again. The other inputs, heavy equipment is certainly more of a buyer's market than the seller's market back then. So there have been pluses and minuses, but we track those indices and don't see any significant movements. So I think the study is, certainly any prudent operator, and that would very clearly describe us in Barrick, would not go forward with a study that’s somewhat dated. We would refresh the study when the time and environment is right.

So you're saying the study is fair and accurate even though it's 8 or 9 years old?

John, I believe the study still provides a reasonable expectation of the costs involved in building and operating this mine. The capital estimate is $6.7 billion. There have been some ups and downs along the way. We've been in discussions with external parties about partnering on the gas pipelines, which could reduce that estimate by $1 billion. Although the study is older, it hasn't been during a particularly inflationary period, and in Alaska, wages are not increasing due to layoffs in the petroleum industry; in fact, they are declining. I wouldn't anticipate any significant changes in fuel costs; it's important not to overlook the effect of $40 oil on an open pit mine, as fuel represents a large portion of operating expenses, and prices have indeed halved. So, when we have the opportunity to update the study, especially if we consider a staged development approach, I don't expect any substantial deviations.

How much more do you think it costs to operate in terms of mining or milling cost per ton? Because you have a remote camp in Alaska as opposed to say Nevada. Do you think the factor is 2x, or 1.5x, or 2.5x?

John, when we did the feasibility study and estimated the operating costs, the biggest issue of operating remote is getting both materials to the mine site. And we've looked at barging; we looked at pipelines, both viable options. If I was sitting on the back of the Kuskokwim River today, I see barges delivering fuel and supplies going all up and down the river. So either one of those is certainly viable options to deliver materials to the site. And that's the biggest difference in the operating cost is just getting materials to the site. In our feasibility study, we envisioned everything would be put on ocean-going barges probably from a port like Seattle or Vancouver on the western seaboard and then barged up the coast, transferring to delivering barges and then transported to the site. So that's one of the principal differences. If you looked at mines in Nevada, mine for $1.50 a ton, so in that side-by-side comparison, we would estimate it would be somewhere around $2.50 a ton just to get the materials there. So the remote nature of the site has been certainly factored into all of our operating costs, and it's a remote site so it's fly-in fly-out; that describes a lot of the workforce up in Alaska and throughout many of the gold and diamond mines in Canada's Northern provinces. So it's all pretty well understood, and operating a mine fly-in fly-out is happening all over the industry. We've certainly benchmarked our costs against other sites that are operating in similar conditions and against many of the Barrick properties that operate in some far-flung places.

We also have some questions coming through the chat in the webcast. The first is could you speak a bit more extensively to the pipeline feasibility and cost?

Sure. The gas pipeline is what we envisioned to be a 14-inch pipeline that runs from the Cook Inlet to the Donlin site. It was envisioned to be 14-inch steel; it was designed and costed by CH2M Hill. They are one of the biggest pipeline design and construction companies operating in Alaska. They've got a proven track record up in the state, and transmitting gas is a whole lot simpler than transporting liquid. The study was done by a company whose bread and butter is building pipelines up in the Arctic. I think the work is particularly as we permitted it and applied for permits such as our FIMSA special use permit for the pipeline. The design and all aspects of it were reviewed in conjunction with that. And I think it still remains a viable means of delivering fuel to the site. The current oil prices will take a hard look at that when we update the feasibility study. But it's certainly; there are five lines like it throughout Alaska in the colder climates.

How long does it take?

How long does it take? It would take about three seasons to build the pipeline, which would be done concurrently with building out the Donlin Gold site.

The next question is around the short seller report and our response.

I don't want to focus too much on the short seller report, but I will address it. I've been in this industry for many years and have seen some analyst reports with errors or lack of thoroughness, but that's not what we are facing here. Other reports presented to us generally required management to review for accuracy; unfortunately, that didn't happen with J Capital. Additionally, it wasn't truly an analyst report. Regarding that report, our capital cost is $6.7 billion. Any credible junior analyst understands the difference between initial capital and sustaining capital. The fact that no one attempted to verify anything in that report speaks volumes about the integrity of its authors. Pipelines and barging are quite common in Alaska. To claim that building in permafrost is impossible is incorrect. Management's ownership in the company has consistently risen, contrary to what the report suggested. Therefore, with a 20-page report filled with hundreds of inaccuracies and misrepresentations, it takes considerable time to respond. I would remind everyone to check the fact matrix on our website, which clarifies the situation. I believe that's sufficient on that topic. If you have any ongoing doubts about the report, I recommend reviewing the fact matrix we provided and reading our Chairman's letter regarding his perspective on the company and these actions.

The next question is looking for our current status update from the Alaska Department of Natural Resources permitting. That is currently underway in any other state permitting-related activities.

The permitting process is definitely nearing completion. The state had issued the pipeline right-of-way permit but then rescinded it due to a request for more information regarding the cumulative impacts of the pipeline. They are currently addressing the raised questions, which we expect will take about six more months before the permit is reissued. The federal permitting process has been completed for a while now, and we are finalizing the remaining state permits.

The last question that I have here is for Dr. Kaplan. What is the dilution risk for existing shareholders with respect to capital raised upon the construction start?

Well, rest assured that the issue of dilution is my top priority. About a year ago, when we had our AGM, I think the stock was with a three handle; maybe a four handle, and I was asked the question about how we were going to deal with financing this project. I said, my guess is that when gold gets a little bit of a tailwind, we will go up to the $9.5 area where we did our last round of financing in 2012. I personally think that anyone who had not sold in the intervening eight or seven years probably is no longer there. But in any event, I said we would move from there to the all-time highs of the last decade, which are $16, and as gold continues to move, we would move into the 20s. I think depending on whether there was a construction decision to be made at that time, that's where we would raise equity for a construction decision. I stand by that with the exception that I believe that time is really much on our side, more now than even a year ago. If I had to guess, once we get to see our shares back on track, we don't need money until we have a construction decision. It's likely our share price in my opinion is completely forward-looking; discounted as you would be higher than in the 20s when we do our next raise. That has always been my long-standing target just simply based on the fact that it's our stocking trade that when we raise money for a company, when we do a round of capital, we not only try to raise enough to be able to take us to a milestone but also to be able to hang around until the market catches up to our point of view. Our point of view is that Donlin is unique. Our point of view is that we have no doubt that it's going to be built. If gold falls to $1,200 or $1,000, personally I don't believe it should be built. But then again, I don't believe any gold mine should be built unless you're in a bull market. The reason for that specifically is that at a certain point in the development of an asset, if it's a truly extraordinary asset at least a category killer, maybe not even unique like Donlin, the shares become more valuable than the metal itself. For me, job one is that this story will become a pure play on the next Carlin. Now, Barrick and Newmont dominate the Nevada story. There isn't a pure play on it. I wish there was. Barrick has a half interest in what we believe can be the next Carlin. Even Mark understands that when he stepped into this story, and the comments and questions he’s getting about Donlin, that it is now a global brand. NovaGold represents as, even Mark said, a unique investment proposition on a global brand. This is characteristic of the relationship that Mark and I have, and our attitude on a rising share price for NovaGold is that that's good for Barrick and he agrees. Our attitude is that if people want to buy Barrick because it's bigger, it’s got the market cap and diversified production, and also a great management team, superb. Whatever's good for Barrick is good for us, and whatever's good for us is good for Barrick. It’s a truly virtuous circle. But if you're thinking about dilution, just imagine this: gold is going up, Barrick is feeling okay; comfortable, whenever that will be, it could be tomorrow, it could be a year from now, it could be six months from now. I mean, you've got the timeline on how we're dealing with things. The megaphone that will be given to Donlin by Barrick is going to be extraordinary; it will be a game-changer. I've been in this for 12 years; I still cannot find a better story than ever before. We do not need to give away our shares. Shareholders do not need to worry about dilution. The last round we did was at $9.5, as all my shareholders, my big shareholders know, I don't do down rounds, period. The last thing I'm going to do is a down round when we have $230 million to $240 million in cash and visible bankable receivables with a $30 million annual spend. We're not worried. And you shouldn't be either because as Fidelity says when they talk about me, the owner lives above the store, and I regard each and every NovaGold share and shareholder as being extremely precious. I don't know of a better way to play gold than NovaGold. I don't know of a better gold development asset than Donlin. If I did, and I've said it many times, I would pivot towards that other thing. I don't know of it. Those unique combinations of attributes are rare. When you have something like that, you don't give it away at a discount.

This concludes the question-and-answer session. I'd now like to turn the conference back over to Greg Lang for closing remarks.

Well, everyone, thank you for joining our call this morning. If you have any further questions, please feel free to reach out to Melanie and myself. And we'll be happy to answer them for you. Everybody stay safe and healthy. Thank you.

This concludes today's conference call. You may disconnect your line. Thank you for participating. And have a pleasant day.