Executive Summary / Key Takeaways

• NovaGold Resources is singularly focused on advancing the Donlin Gold project in Alaska, a Tier 1 asset characterized by its exceptional scale (39 million ounces M&I) and high grade (2.25 g/t, more than double the industry average for open pits).
• A recent transformative transaction saw NovaGold and Paulson Advisers acquire Barrick Gold's 50% interest in Donlin Gold, increasing NovaGold's economic stake to 60% and establishing a new partnership with equal governance rights, removing a significant historical "headwind."
• The new partnership is accelerating project advancement, immediately prioritizing an updated feasibility study (expected to take ~2 years, cost ~$80 million 100%) and pivoting the 2025 drill program towards resource conversion and expansion, alongside initiating regional exploration.
• A significant equity financing concurrent with the transaction has bolstered NovaGold's treasury to a pro-forma $136.3 million (cash and term deposits as of May 31, 2025, adjusted for subsequent events), providing sufficient liquidity for anticipated funding needs, including the feasibility study, for at least the next three years.
• While facing ongoing legal challenges to existing permits and the inherent risks of a large-scale development project, the company believes the combination of a world-class asset, a supportive jurisdiction, an experienced team, and a fully aligned partner positions it for significant value creation and potential revaluation in a favorable gold market.

NovaGold Resources Inc. (NYSEAMERICAN: NG) stands at a pivotal juncture, singularly focused on unlocking the immense potential of the Donlin Gold project in Alaska. In an industry grappling with declining global gold production and a scarcity of high-quality development assets in stable jurisdictions, Donlin Gold represents a rare opportunity: one of the world's largest and highest-grade known open-pit gold deposits. The company's strategy is fundamentally tied to advancing this cornerstone asset through the development pipeline, a path recently cleared by a transformative strategic realignment.

The gold mining landscape is dominated by established producers like Newmont Corporation (NEM), Barrick Gold Corporation (GOLD), and Agnico Eagle Mines Limited (AEM), which boast diversified portfolios, significant operational scale, and robust cash flow generation. In contrast, NovaGold operates as a development-stage company with no current revenue, dedicating its resources to the substantial upfront investment required to bring Donlin Gold into production. This positions NovaGold as a high-risk, high-reward proposition, offering investors direct leverage to a single, potentially world-class asset rather than the diversified exposure of major producers. While peers like Newmont and Barrick reported significant revenues and positive net margins in 2024 (Newmont: 12% revenue growth, ~20% net margin; Barrick: 8% revenue growth, ~25% net margin), NovaGold reported a net loss of $45.6 million in fiscal 2024, reflecting its pre-production status and ongoing development expenditures.

At the heart of NovaGold's investment thesis is the Donlin Gold project itself. Located on private land in Alaska, a jurisdiction consistently ranked among the top globally for mining investment (ranked 13th or 3rd in recent reports), the project boasts Measured and Indicated resources of 39 million ounces of gold at an impressive average grade of 2.25 grams per tonne. This grade is more than double the industry average for open-pit projects, a critical factor that is expected to translate into exceptionally low cash costs once operational, positioning Donlin Gold in the lower half of the industry's cost curve. The project is envisioned as a large-scale operation with a projected average annual production exceeding 1 million ounces over an initial mine life of nearly three decades, including an estimated 1.4 million ounces per year on average for the first 10 years. This production profile is significantly larger than the average output of other gold development projects currently advancing globally.

The Donlin ore body is characterized as refractory, meaning the gold is locked within sulfide minerals and requires specialized processing. The planned metallurgical flow sheet involves flotation to produce a concentrate, followed by pressure oxidation in autoclaves, and then conventional leaching to recover the gold. While not a unique, proprietary technology, the successful application of this proven process to a deposit of Donlin's scale and grade is critical. NovaGold's management team, including individuals with extensive experience operating large-scale mines utilizing autoclave technology, brings essential operational expertise to this aspect of the project. Furthermore, the company has been conducting metallurgical test work and pilot plant studies to confirm proposed optimizations to the flow sheet, aiming to validate these improvements for the upcoming feasibility study. While specific quantitative metrics on expected recovery rates or cost efficiencies from these optimizations were not publicly detailed, the strategic intent is to refine the process for maximum effectiveness and economic benefit.

Historically, the advancement of Donlin Gold faced headwinds due to a perceived misalignment with the former 50% partner, Barrick Gold. This dynamic contributed to a period of slower progress towards key development milestones, impacting NovaGold's valuation. However, a significant strategic shift occurred in April and June 2025. NovaGold, in partnership with Paulson Advisers, completed the acquisition of Barrick's 50% interest in Donlin Gold for $1 billion. This transaction increased NovaGold's economic interest to 60%, with Paulson holding the remaining 40%. Crucially, the new partnership structure grants NovaGold and Paulson equal governance rights (50/50) despite the 60/40 economic split, a structure designed to ensure complete philosophical and financial alignment in advancing the project. Management views this as a "game changer" that removes the previous impasse and provides access to Paulson's capital and expertise in taking development assets up the value chain.

With the new partnership in place, the strategic focus has immediately shifted to accelerating project advancement. A top priority is commencing an updated feasibility study, a critical step towards a potential construction decision. This study is expected to take approximately two years to complete and is estimated to cost around $80 million on a 100% basis. Contracts for this work are anticipated to be awarded by the end of 2025, with the study expected to begin late in the third or fourth quarter of the year. Operational activities are also ramping up. The 2025 drill program, planned for 15,000 meters, has pivoted its focus towards resource conversion and expansion in and around the ACMA and Lewis deposits, aiming to upgrade inferred resources and refine mine planning assumptions. By May 31, 2025, 8,401 meters had been completed. Beyond the current resource area, which covers only 3 kilometers of an 8-kilometer mineralized belt and represents just 5% of the total land package, the new partnership intends to implement a regional exploration program to test the significant exploration potential along strike and at depth, with the explicit goal of discovering additional ounces and potentially adding decades to the mine life.

Financially, NovaGold has significantly bolstered its position to support this accelerated path. Concurrent with the Donlin Gold transaction announcement, the company undertook a public equity offering and concurrent private placement in May 2025, raising aggregate gross proceeds of approximately $243.8 million (net of $9.7 million in costs). Following the closing of the Donlin Gold transaction ($200 million payment for the additional 10% interest) and the exercise of the underwriters' overallotment option in early June 2025 ($26.9 million gross proceeds), NovaGold's pro-forma cash and cash equivalents stood at $111.3 million, with total cash and term deposits at $136.3 million as of May 31, 2025. Management asserts that this robust treasury provides sufficient working capital to cover anticipated Donlin Gold funding (now at a 60% share) and corporate general and administrative costs for at least the next three years at current spending levels, including funding its share of the updated feasibility study. While the company expects its 2025 expenditures for Donlin Gold and corporate G&A to be higher than previously guided due to the increased ownership stake and transaction-related costs, updated guidance is expected with the third quarter results.

The company also carries a promissory note payable to Barrick, totaling $158.8 million (principal and accrued interest) as of May 31, 2025, payable from future mine revenue or proceeds from a reduction in interest. A new option allows NovaGold to prepay this note for $100 million on or before December 3, 2026.

Despite the positive momentum, risks remain. The equal governance structure with Paulson, despite NovaGold's 60% economic interest, means continued dependence on a third party for project decisions, potentially leading to disagreements or differing priorities. The project also faces ongoing legal challenges to its federal and state permits. While courts have largely upheld the permits, a Federal District Court recently remanded the case to agencies to supplement the environmental analysis on a specific, narrow issue related to a theoretical tailings facility release. Management views this as manageable and not on the critical path, but the outcome of litigation always carries uncertainty. Furthermore, as a development-stage company, NovaGold's ability to fund future construction, if a positive decision is made, will depend on obtaining significant additional financing through debt, equity, or other means, with no guarantee of availability on favorable terms. Commodity price fluctuations also pose a risk, although the current high gold price environment is a significant tailwind.

Conclusion

NovaGold's narrative is one of transformation, moving from a period of strategic constraint to one of aggressive pursuit of Donlin Gold's potential. The acquisition of Barrick's stake and the formation of a new, aligned partnership with Paulson Advisers represent a fundamental shift, removing the primary impediment to advancing what management believes is a unique, world-class gold asset. With a significantly strengthened balance sheet, an experienced team, and a clear plan to complete an updated feasibility study and expand the resource base through targeted exploration, NovaGold is now positioned to accelerate progress towards a construction decision. While the path forward involves inherent development risks, including permitting challenges and the need for substantial future financing, the combination of Donlin Gold's exceptional scale and grade, its location in a stable jurisdiction, and the strategic alignment of its owners provides a compelling investment thesis centered on leveraging these attributes in a favorable gold market. The coming years, particularly the progress on the feasibility study and exploration results, will be critical in demonstrating the project's full value and validating the potential for significant revaluation.