Earnings Call Transcript - NG Q1 2020

Melanie Hennessey, Vice President, Corporate Communications

Thank you, Claudia. Good morning, everyone. We are pleased that you have joined us for NovaGold’s 2020 first 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 tech. Before we get started, I would like to remind our listeners 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, NovaGold’s President and CEO. Greg?

Greg Lang, President and CEO

Thank you, Melanie, and good morning, everyone. These are unprecedented times. Our most important objective right now is to secure the health and safety of our employees, partners, and contractors. In that regard, our employees are working from home, avoiding all nonessential travel. If they must visit the office, they’re engaged in social distancing. NovaGold and our partner through Donlin Gold LLC have implemented a wide-ranging set of policies consistent with the state of Alaska’s health and social service requirements and recommendations. These precautions include screening all employees and contractors visiting the site, evaluating any individual who might be exhibiting symptoms to determine if they need to be isolated, implementing more frequent sanitation practices, and conducting safety meetings to address the current situation. The Donlin Gold drill program commenced as planned in February and continued through March. However, Donlin Gold will temporarily pause the program and go into care and maintenance until travel restrictions and other COVID-19 measures in the region are eased, and it is safe for our employees and contractors to return to the site. Moving to Slide 5, Donlin Gold in Alaska is a 50-50 joint venture with Barrick. Alaska mining is an important part of the Alaskan economy and becoming even more important as the oil industry and tourism are collapsing. There are six producing mines and numerous exploration and development projects that are advancing across the state, as shown on the map. The future of smaller communities is a serious concern for many residents of Western Alaska, and Donlin Gold offers a brighter future with training and opportunities for young people to live closer to home and continue their subsistence way of life. With other resource industries experiencing low or no growth, the opportunities in mining present good-paying jobs closer to home for Alaskans living in the rural part of the state. Slide 6 highlights the first quarter operational activities with the receipt of several state permits early in the year and the preparations for the drill program. We had three rigs on-site in early March. We’ve also continued the advancement of the multi-year site investigation needed for the Alaska Dam Safety certifications and continued our community investment initiatives with our native partners, Calista and TKC. Our record of successful permitting continued with the receipt of Donlin Gold final easements for the access road and fiber optic cables, including the receipt of land use and land use permits and authorizations for the proposed transportation facilities on state land. Additionally, the division of oil and gas finalized the right of way lease for the natural gas pipeline. All of this happened just in January. Permitting takes tremendous leadership and attention to detail and transparency from Donlin Gold, with the support and contributions of Calista and TKC, and the communities closest to the mines. We greatly appreciate the dedicated efforts of the entire team in advancing permits and approvals for the project and their commitment to environmental and governance best practices. Donlin Gold progressed ongoing optimization efforts to establish a plan for 2020 that would allow the owners a greater understanding of the recently prepared geologic model and high-grade mineralization controls, all of which have the potential to benefit the project and will serve as a basis for an updated study. The drill rigs on-site are completing their holes, and then we will pause the program and go into care and maintenance. NovaGold’s most important objective is to secure the health and safety of its employees, and they will not return to the site until it is safe to do so. While the global health crisis has a short-term impact, it is not yet known how long the program timeline will need to be adjusted, and we will keep you posted of any changes. Through these times, we are dedicated to keeping our community partnerships strong and engaged in environmental, safety, educational, and cultural initiatives. In the first quarter, Donlin and NovaGold participated in numerous community activities and projects, as highlighted on Slide 8. Donlin worked with TKC in the state of Alaska to upgrade and improve health and safety standards of water and sewer services in the middle Kuskokwim area. In partnership with TKC, the village of Crooked Creek and the Napaimute Tribe, Donlin funded and provided technical data to extend and maintain the ice road through the winter months. This improved the safety and access to remote communities. We routinely meet with our partners’ boards and we delivered a project update to TKC and the middle Kuskokwim villages. We also supported regional basketball tournaments in Bethel High School. Bethel is approximately 140 miles from Donlin and the closest major town to the project. With the support of its owners, Donlin Gold continued its outreach activities with our native corporation partners via meetings and tribal counsel and stakeholder meetings. More recently, we have shifted to phone calls and conference calls, given the ongoing situation. While the team recognizes the success of the state permits issued in the first quarter, we remind our shareholders that Donlin Gold project is already federally permitted, and numerous state permits are in hand as listed on the table on Slide 9. One of the remaining state permits is the dam safety certification, and this is a multi-year effort which we will continue. And with that, I will turn the call over to our Chief Financial Officer, David Ottewell. Dave?

David Ottewell, Vice President and CFO

Thank you, Greg. First quarter 2020 cash flows are highlighted on Slide 10. Cash used in operations was $2.6 million higher than in 2019. The majority of the increase resulted from higher Donlin Gold funding in advance of the drill program and withholding taxes paid on vested PSUs in addition to lower interest income. The increase in our stock price and its performance in relation to the S&P/TSX Global Gold Index led to a higher vested value of PSUs and resulted in more taxes withheld. We ended the quarter with cash and term deposits of $140.7 million. On Slide 10, highlights of our operating performance for the first quarter of 2020. Our net loss increased by $0.3 million to $6.6 million, primarily due to higher G&A and Donlin costs as well as lower interest income. The G&A increase resulted from higher share-based compensation and regulatory costs. Donlin Gold expenses increased due to preparations for the drill program. On Slide 12, we note our healthy treasury. We continue to anticipate spending of approximately $31 million within 2020, which includes $20 million to fund our share of expenditures of the Donlin Gold project and $11 million for general and administrative costs. At Donlin Gold, $11 million is planned for the drilling program, and with the remaining $9 million for permitting and community engagement. Back to our CEO, Greg Lang.

Greg Lang, President and CEO

Thank you, Dave. The past couple of months have been memorable for the gold markets, and at times like these, we are particularly reassured to be invested in a unique project like Donlin Gold. Federally permitted project in a jurisdiction where the rule of law is not a novelty with strong long-term partnerships with Calista and TKC, which are all rare attributes in today’s world of declining grades and smaller deposits. On Slide 13, we compare Donlin Gold’s 40 million ounces with 13 other development stage projects in the industry. If you look at the peer group, Donlin’s resource is better than twice the size of the nearest competitors and five times the average size. While the scale of the resource is rare, another is the grade, as shown on Slide 14. The average grade of Donlin sets it apart from other large-scale open pit deposits at 2.25 grams per ton; it is more than twice the industry average. It’s also noteworthy that the global average grade continued to decrease year-over-year from 2018 to 2019. With scale and grade, if constructed today, Donlin Gold would be the largest producing gold mine in the industry. For long-term investors, there’s additional value that comes with a mine that has a multi-decade lifespan, almost 30 years of production just from the current resource. Envisioned, Donlin Gold would average 1.5 million ounces over the first five years and over 1 million ounces per year over the life of the mine. There are very few mines in the world, existing or proposed, with that level of gold production. The ACMA and Lewis deposits can be seen on Slide 16; as you can see, the topography at Donlin is favorable for development. It is rare in mining projects today that both the mineral and surface rights to the project land are privately owned, in our case by our long-term partners, Calista and TKC. As shown on Slide 17, the ACMA and Lewis deposits contain the resources but occupy only 3 kilometers of an 8-kilometer gold-bearing trend. We have done extensive drilling, over 1,400 holes totaling 340,000 meters. Our focus is on continuing to optimize the project; there are clearly future opportunities for expansion of the resource along the known mineralized trend. When the time is right, we will resume exploration drilling. There is tremendous value in having a project like Donlin Gold on private land. Calista owns the mineral rights, and locally, TKC owns the surface rights. We have life-of-mine agreements with both partners who have been deeply involved and supportive from the start, as highlighted on Slide 18. We’ve been partners since 1995, and we are thankful for Calista and TKC’s long-term support and commitment to the project’s success. During these times, we are all experiencing or responding to the COVID-19 crisis and its impacts on the health of our communities and our economies. We gain comfort from the long-standing relationships that unite us in a common goal of bringing the Donlin project up the value chain. We continue our engagement with all of our stakeholders. We also continue our interaction with our investors as it improves our governance practices. Engagement helps promote the health and safety of our people throughout the region and on the river during the various seasons. It brings our support of the well-being and well-being of the communities and assistance to youth to the forefront. We’re partnering to improve the environment. We’re always recognizing the importance of preserving traditional lifestyles while bringing tangible long-term benefits to our community partners. We are better together. With that, I will now turn the call over to our Chairman, Dr. Thomas Kaplan, who will give us his insights into gold. Tom?

Thomas Kaplan, Chairman

Thank you very much, Greg. And I certainly hope that all of you who are on the call, and those of our friends and shareholders who aren’t, that our words fall upon you in a state of safety and good health. These are, unfortunately, very interesting times that the Chinese would refer to. All of us have to be even greater cognizant of the challenges that we’ll be facing in the years ahead. With that, let’s remind ourselves what we have in Donlin and what makes it not just a Tier 1 asset, an expression to which I’m indebted to Mark Bristow at Barrick, but also something which Greg himself referred to as unique. As many of you know, Greg came from Barrick, where he was the President of Barrick North America for many years, running an operation that was producing more gold than Goldcorp at the time. When he came into NovaGold, I came into NovaGold. I had already been an investor since the end of 2008. But when Greg became CEO, I became Chairman. We celebrated 8 years together, and during that time, I’m very confident that every statement that we’ve made, every promise that we have expressed has been met with success. The primary reason for that is because of not just the management team, but the fact that Donlin is not just a world-class asset; it really is unique. There is no other development stage asset in the world which combines the reserve grade, production capability, the exploration potential, the mine life, the leverage to gold, and superimposed onto all of that in a jurisdiction that will allow you to keep the fruits of the leverage when the time comes for you to ring the cash register. But, in fact, it really is even better than that. Donlin is the right asset for this moment in the gold market. If we could move to the next slide, gold is in a secular bull market. But we went through a cyclical downturn from around 2011 until last year. I was not immune to the nuclear winter psychology in a certain sense of the gold industry. When David Rubenstein wanted to interview me about gold for his Bloomberg peer-to-peer series, I said, do we really have to talk about it? I want to wait until gold pops. By a stroke of luck, when we did the interview, gold had its last real pullback, and the price was $1,280. From then on, it started to move up and never went down below that. So, we got lucky, and yet luck is really only a part of it. The reasons to own gold are multifaceted. I’ll get to those in a moment. Suffice to say that when David asked me what my target was for gold, I told him that based on the industry fundamentals themselves and the challenges faced by the gold industry, I believe that a normative supply-demand equilibrium would come somewhere between $3,000 and $5,000 an ounce. That is still my initial target, but I also alluded to some other dimly perceived variables that could make that just a first target. I do believe that when we look back upon where gold is today and we see where it will be years hence, the chart pattern will not be dissimilar to that, which has characterized the Dow Jones from the early 1980s to recent years. The implication is that we’re going to see gold at much, much higher levels. If you look back, and obviously, history doesn’t repeat itself, but on occasion, it rhymes, you can see that gold is playing out the bull market in a manner similar to that which we saw in the 1970s. I believe that the chart patterns, to me, are just brain waves. I’m a historian by background. I don’t believe that technicals rule. But I have learned that if the fundamentals are right and the technicals corroborate them, you know you’re going to get the wind in your sails. That’s what’s happening in gold. The saucer bottom, as it were, that we’re seeing is a very powerful chart pattern, and I believe that we are witnessing the beginning of the next leg in the secular bull market, leg 1, having taken us from 250 to 1900, leg 2, a pullback to almost 1000; the third leg will take us into new highs and far beyond that. All of my predictions in this instance are not predicated by what I call the fear factors—things such as pandemics, crises, wars, and pestilence. I have always believed that if you can’t persuade a sentient being on the case for something based on Economics 101—supply and demand—and you have to resort to what I call the fear factors, the last refuge of the scoundrel, then you shouldn’t be in that business, either for yourself or for anyone else. Suffice to say that I do believe that irrespective of the incredibly trying circumstances that we see now, gold will multiply. Unfortunately, as a consequence of some of the macroeconomic measures that are going to be taken to get the world through this, it’s possible that we will see prices much higher than I had been forecasting in the longer term. The reason for that is not so much a consequence of the pandemic itself. I have always believed that the business cycle will not repeat itself, and that we could one day get an economic downturn. That downturn would lead to measures from a macro standpoint, very bullish for gold. That’s happening; it was going to happen anyway. Those who are bullish on gold are not profiteers; they are simply people who believe in a currency that cannot be printed regardless of circumstances. We can move to the next slide. Again, Economics 101: what we’ve seen in the gold industry is that gold production has effectively peaked. We have seen peak gold. For those of you who can remember what peak oil looked like, the reality is that unlike hydrocarbons, when gold peaks, you just can’t turn it on. Unlike hydrocarbons, we don’t have large reservoirs of trapped reserves that a new technology such as fracking or horizontal drilling can unlock. It simply doesn’t exist. We don’t even have technologies like 3D seismic to explore in more efficient ways. As a consequence, the majors are depleting their reserves faster than they can replenish them in most instances. That will be accentuated dramatically by what I predict will be a falloff in production from the developing world for reasons that we will get to in a moment. Exploration success is never easy in the best of circumstances. When I got into the business, it was calculated that the odds of making a discovery that would take a prospect to production were somewhere between 1,000 to 10,000 to 1 against you. Those odds still pertain, and this is the longest period in which we have seen really no new great discoveries in the gold market. What’s worse is that even if you do make the discovery, the timeline from discovery to production is now calculated to be, on average, in excess of 20 years, which means that as we embark upon the next leg of the bull market, because the trapped reservoirs, the resources are not there to be unlocked and because of the lack of exploration efforts, it’s already a case where the horse is out of the barn and locked. If you do not gain exposure to high-quality gold assets in excellent jurisdictions, you will end up buying them. I believe that those who have great assets in safe places will experience bubbles for their equities. I believe that you will see North American assets valued using the 0% discount rates that were prevalent before the early 1990s when Newmont went to Yanacocha and set off the animal spirits, the gold where the gold is philosophy that took people through Africa, South America, and Asia. As somebody who was one of the few who made my fortune in Bolivia, Zimbabwe, South Africa, and Congo, I’m not speaking as a Pollyanna; I’m not promoting my own book. I was, in fact, the largest holder of mineral rights in the Islamic world. At a certain point, I realized not because it was the Islamic world, but the developing world in general, that the areas that had been so good to me were over. I think that what we’re seeing, by the combination of mine supply falling at the same time as grades have fallen over the last decade, means that operating costs have risen. When you superimpose the other jurisdictional factors onto that, you really see that peak gold is exactly that. Ian Telfer made that comment several years ago; he was spot on. The truth is we’re seeing it in the market. You can move on. A question about central banks: central banks are what I call the ultimate insider buyers. Some people say central banks are not smart money. My point is this: it doesn’t matter whether they’re smart or incompetent. One thing they do know is that what they consider reserves are ephemeral. The last month has proven that. There is almost nothing they own that cannot be duplicated and multiplied by the press of a button; the only asset they have in their portfolios that does not represent either their liabilities because they’re putting a lot of their own stuff on their balance sheet or someone else’s liabilities is gold. Not surprisingly, central banks have been buyers of gold. What does that mean for the gold investor? So long as central banks are not net sellers—which I don’t see happening at all—it means that one of those areas that pushed the price of gold down through the ‘90s is now gone. The fact that they are now buyers is a reflection that they understand everything else they own is a challenge. This is going to continue. There will be times when they will pause when the price of gold goes higher or because they need to sell some gold for liquidity, but it doesn’t matter. They are going to keep their gold. Any thought that central banks will be large sellers of gold is over. They understand they shouldn’t sell it. What you have seen in the market is that these countries are repatriating their gold. They don’t even want to leave it with traditional custodians in London and New York. They want to have it back where they can look at it. That’s a statement. You can move on. Meanwhile, we have several demand pressures that are going to be squeezing the already dire supply issues that I have cited. One of the great factors for gold investors, especially those who are used to being called gold bugs, is that over the last year, being bullish on gold has become a legitimate question for the broader investment market. We’ve seen it in the diversity of the individuals advocating gold ownership and the multiplicity of reasons for which they advocate. These individuals have often very different reasons for being gold bulls. Whether it’s Ray Dalio, Mark Mobius, Sam Zell, Jeff Gundlach, Ken Rogoff—I could go on. The point is, if someone speaks about gold now, yes, an eyebrow may be arched, but you won’t have the knee-jerk reaction of “gold? You’ve got to be kidding.” That’s extremely important. Gold is not a crowded trade. The contrarians among you should not make the mistake of thinking that because gold is now something you can talk about, it means it’s a crowded trade—far from it. It’s the most under-owned trade in the financial world. That will change. I believe that every fiduciary will ultimately have an allocation to precious metals one way or another. They will do it for diversification; they will do it because their clients will see that gold is going up, which will drive them to take a position because they won’t want to answer questions on why they don’t own gold. Reasons include asset diversification, a safe haven, a currency that can’t be debased, central banks purchasing it, inflation protection, and deflation protection. When you see the different reasons, you will be shocked at how many there are. For us, that means that when the gold bull market resumes and we see new highs, instead of people mocking gold, they will scratch their heads. They will do what investors usually do: look at something after the price has risen, starting to ask if we should have an allocation to it. They will see the different boldface names who have advocated buying gold for various reasons; they will choose whose reasons they want to hang their hats on and will buy gold. It will be easier for them psychologically to buy gold at $2,600 than at $1,600. Mark my words. Last year, I gave an interview during which I spoke about my other passions. During that interview, Dan Tapiero, a brilliant gold investor, told me about a certain mantra I have coined the Kaplan Doctrine. It appealed to my vanity. From the time I articulated this doctrine in 2012 at a conference by John Paulson on gold, it has worked for me. I used to be 50% North America, 50% other areas. I’m now 90%, 95% North America and Australia. It is my opinion that after visiting 109 countries and making a lot of money in the developing world, that era of gold exploration abroad is over. My mantra used to be to acquire category-killer assets that give the greatest leverage to the underlying investment thesis you’re investing in; it worked for me in silver, platinum, and hydrocarbons. I added a corollary: do so in jurisdictions that allow one to keep the fruits of the leverage. I truly believe that institutional investors will respond to a management team with a world-class asset by asking where in the world they are. If it’s in a place where the rule of law is a novelty, if it’s a place where they wouldn’t take their family, where they will have to defend their investment because there could be confiscation, it’s just not going to work. People will first pay the highest multiples and use the lowest discount rates on those assets that are in places where they know they still own whatever they held in the morning. Next, there is no doubt in my mind that Donlin, which uniquely combines attributes, will be in one or two stages the largest pure gold-producing mine in the world located in the second-largest gold-producing state in the premier jurisdiction in the world. That is for us, as investors in this space, the Holy Grail. If I did not believe that were true, I would pursue something else. Because I believe it, I am convinced that as people scramble for investment in gold equities, one of the only true go-to stocks, and perhaps the highest valued development stage equity will be NovaGold because of its half interest in Donlin. The 39 million ounces would be the largest gold mine to enter production. The exploration potential at Donlin is unmatched. That’s just along the 8 kilometers we’ve drilled in the past. The 39 million ounces are only drawn from 3 kilometers of that. We believe that there is a lot more gold at Donlin and when those exploration results reveal themselves in months or years, and if gold is in a bull market, companies that can add high-quality, high-grade reserves in safe jurisdictions will see significant rewards in their share prices. In a bear market, no one cares. In a bull market, great drill results are like catnip. Donlin is a perfect play. There are two ways to play it. We are a pure-play at NovaGold, and for those who want exposure to a big cap with diversified production, there’s Barrick. Some may own both. One thing I can tell you: in our view, Donlin is, in terms of potential, the next Nevada. The reserves are not altogether dissimilar to the joint venture. There are no pure plays on the Barrick/Newmont joint venture; I wish there were. That is a great story. I believe that Donlin will be the next great story in North America, and NovaGold provides a pure play on the next Nevada. Next, the leverage to gold at Donlin: we have all known. These numbers are based on the feasibility study concluded in 2011. A lot of input costs have fallen since then. Unfortunately, they have fallen even further in some respects over the course of the last couple of months when you look at the price of oil and other inputs. The bars you see here show NPV at 5% and NPVs at 0. I have no doubt that Donlin will be valued using the 0% discount rate, as American assets were valued before the gold-to-gold mantra took hold. At $2,000 gold, I believe the potential for NovaGold to multiply manyfold. $2,000 for me is not just a number; it is a target that gold will exceed on its way to its next equilibrium level. Next, we have a very strong shareholder base, been with us for years. We hope to be one of their best performers, not in absolute terms, but in relative terms. Our shareholders get comfort in knowing our owners live above the store. The relationship between Greg and his team and myself, representing the largest shareholder, is impeccable. I can also say that the relationship we enjoy with our shareholders, Fidelity, Paulson, BlackRock, Van Eck, First Eagle, Tocqueville, Exor, JNE, and Empyrean, is wonderful. Everyone knows that if they want to talk to me, they can send me an email, and I’m responsive. I’m the opposite of reclusive. The important point to stress is if you want to know everything we’ve done or will do in the future, read our annual reports from the past and present. We pride ourselves on our comprehensive and transparent reports that when we visit our shareholders, they want to discuss other topics because they already know our stance on every issue. Our Q&A is meant to be comprehensive; read it. A lot of work goes into it with tremendous effort to make your jobs easier. Next, we have stakeholders who recognize we have a Tier 1 asset, unique in qualities and jurisdictional safety. Our balance sheet means we don’t have to raise money under duress; we are one of the few companies that could buy back shares without impairing our future. Our production profile will be the largest pure gold mine in the safest jurisdiction. The leadership team could run a major mining company. We could not enjoy better support from our local partners and stakeholders, TKC and Calista; they are absolutely wonderful partners. The state and the federal government could not be more supportive of what we are doing. Next, the appendix is accessible to anyone, and I now hand the baton back to our CEO, Greg.

Greg Lang, President and CEO

Thank you, Mr. Chairman. We would now open the line for questions.

Lucas Pipes, Analyst

Hey, good morning, everyone. I hope everybody is safe and healthy. I do have a good, safe place here to get through this unprecedented time. Tom and Greg, I wanted to ask first about kind of a question I get fairly frequently these days, and that’s in terms of the potential to develop the mine here, obviously not right now with the health concerns out there. But with gold prices generally stronger, what are your thoughts at this point? What would you have to see from here to go into development? Appreciate your thoughts. Thank you.

Thomas Kaplan, Chairman

Greg, should I begin from a macro standpoint?

Greg Lang, President and CEO

Sure. And I’ll fill in the blanks.

Thomas Kaplan, Chairman

Super. Thank you very much, Lucas. Very good to hear your voice. I hope you and your loved ones are doing fine. To answer your question, we have always said that the time to build Donlin, extrinsic of the studies that are being done and optimizations and drilling and the partner is all being ready to go, extrinsic of that, our view being that we are very bullish on the price of gold is that the time is on our side. We don’t have 'use it or lose it' provisions. My sense is that the moment will come in a manner similar to the way Justice Potter Stewart once answered the question, how do you define pornography? I can’t define it, but I know it when I see it. I sense that we will see that with NovaGold stock in the 20s and in the 30s with gold approaching new highs. When Barrick shareholders are clamoring for growth and in safe places, I think we are attuned, perhaps due to keeping in close contact with some superb mines as shareholders, and we realize that it’s the kind of thing you will know when you see it. The truth is that with each passing month, another jurisdiction becomes more challenging and uninvestable, and unfortunately, I strongly believe that trend is not going to abate. Our view is that as NovaGold becomes a go-to stock because of its pure-play status with Donlin, different scenarios will open up. But I want to see the stock price with multiples of where it is. I think that’s exactly the scenario we are going to see. So far, this scenario is playing out as if scripted. The best answer I can give is we have smart people who are shareholders. We keep in close touch with them. As they say, the owner lives above the store; we know how to crystallize the value. The play is proceeding as it was written—watch this space. Greg, do you want to answer on some of the things that we are doing, in the meantime?

Greg Lang, President and CEO

Sure. The best thing to do is go back in time two years ago, as we’ve been conducting our ongoing optimization studies. One of the concepts was to build it in stages with a smaller, higher-grade starter project. About two years ago, we drilled 16 holes and obtained tremendous thicknesses of high-grade intercepts. We took that data and updated our geologic model. The program we just paused was intended for 80 holes, which would be the biggest program at Donlin in many years, aimed at validating the new model with high-grade structural controls and looking for extensions of high-grade mineralization that could be mined early in the life of the project—both of which would enhance the value. Events have overtaken us, but I’m optimistic that by midsummer, maybe later, we’ll resume drilling and answer the questions we have posed to ourselves that could enhance the project’s value. So, at least, this year's focus will be on the drilling and geology of the project. I think everybody knows our partners’ CEO, Dr. Bristow, is a geologist with a keen interest in geology. So we’re all anxious to return to drilling safely when the time is right. That will really take us through probably to the end of the year, if not early into next year, and then we will be in a position to make a decision on updating the feasibility study. Meanwhile, we will continue to wrap up the remaining state permits.

Lucas Pipes, Analyst

That’s very helpful. I appreciate all of that color. And just a quick follow-up on the gold market more broadly, Tom, you mentioned gold is still under-owned, under-allocated. Could you expand on that a little bit? I think that’s a point many of us that are a little bit closer to the gold investment space often overlook and forget. And then just in terms of the pathway from here, obviously the markets broadly have been super choppy, and gold miners got a little mixed up in that as well. So when you think through what you may have in store, I know it’s difficult since the markets are turbulent, but how do you think gold will navigate its way through that? I would appreciate your perspective on these questions. Thank you.

Thomas Kaplan, Chairman

Sure. First of all, gold getting hit at the outset of a financial crisis is not unusual. In fact, it happened during the financial crisis in '08, '09. At that time gold was nearly $700 an ounce; it went down to $600. Many people asked me how that could happen—it's not working. I said, wait, it is working. When individuals are forced to sell assets, gold always has buyers; wait and watch what comes next. It will cross $700—mark my words. That’s exactly what happened. When I was interviewed, it was even harder for silver. But just to convey sentiment on silver: it gets severely impacted in a financial crisis and, when it’s hit hard, people will jump to gold as a monetary metal along with silver, propelling silver to outperform gold. There is a rhythm to these markets. Gold getting hit initially is a normal response. Once it crosses $1700, we’ll see much greater institutional interest in gold. When it then surpasses $1900, $2000, and $2100, there will be massive interest in ETFs and mining companies. I would not be surprised to see NovaGold in the 20s or 30s in those scenarios. People will call their brokers and say they want a safe asset they won’t get fired for owning, and there aren’t many optimal options available. The last thing I want to highlight is that people in finance are often happier to buy things after they’ve doubled, tripled, or quadrupled. They don’t like to buy an asset down, which implies others know something they don’t. So, rising prices breed a sentiment that this is now big enough to be an asset class. Look at Bitcoin. It was mock-worthy, until people started seeing price increases, leading to ETFs and allocation. The difference there is that gold is a brand that transcends all others, bigger than Apple or Coca-Cola. When gold appreciates, people clamor for it, whether they’re in the Andes or Papua New Guinea. The effects will follow; fundamentals will unfold, and as markets recognize gold’s lack of supply and its jurisdictional issues, the trend we will see will be one of astronomical moves in pricing.

Lucas Pipes, Analyst

Tom, this is very helpful. I really appreciate all your color. I may add that gold can also not be devalued with quantum computing like Bitcoin, which will be interesting to see unfold in the years to come. I hope everyone stays safe and healthy, and best of luck during this time. Thank you very much.

Greg Lang, President and CEO

I anticipate there are no further questions this morning. I want to thank everybody for taking the time to join us. I hope you and your loved ones stay safe and healthy. This too shall pass. Thank you, everyone.

Thomas Kaplan, Chairman

Amen. Thank you all.

Operator, Operator

This concludes today’s conference call. You may disconnect your lines. Thank you.

Thomas Kaplan, Chairman

Thank you very much.

Operator, Operator

Have a pleasant day.

Thomas Kaplan, Chairman

Thank you, operator.