NovaGold Resources Inc (NG) 2011 Q4 法說會逐字稿

Welcome to the NovaGold 2011 year-end financial and project update conference call. At this time all lines are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As reminder this conference is being recorded on Thursday, February 23, 2012. I will turn the call over to your host Ariadna Peretz, to begin.

Good morning to welcome to NovaGold's year-end financials and project update webcast. On today's call we have Greg Lang, President and Chief Executive Officer of NovaGold; Rick van Nieuwenhuyse, President and Chief Executive Officer of NovaCopper; Elaine Sanders, Vice President and Chief Financial Officer of NovaGold and NovaCopper; and Dr. Thomas Kaplan, Chairman of NovaGold and NovaCopper.

At the end of the formal part of the presentation we will take questions, both by phone and by e-mail. (Operator Instructions) We will try to answer all questions on the air, but if we do not get to your question we will contact you later this morning.

I would like to remind our listeners that our comments, as well as the answers to your questions, may contain forward-looking information. This is information by it's nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. Please refer to the bottom of our latest news release for more information. You can also visit our website, CEDAR or EDGAR. With that, I will now turn the call over to our President and CEO, Greg Lang.

By many measures, 2011 was a momentous year for NovaGold. The Company successfully achieved major milestones on all of its key projects. Nova and Barrick, the co-owners of Donlin Gold, delivered a positive usability study on the project, with robust economics and strong leverage to gold prices. We are now on a path to advance Donlin Gold towards permitting and ultimately a construction decision.

NovaGold also delivered a positive pre-feasibility study on Galore Creek. This world-class project, if put into production, would be counted as largest copper mine. At Ambler, we completed a preliminary economic assessment of the Arctic deposit, which yielded values ranging from $500 million to $1.5 billion at various commodity prices.

But possibly of greater importance, we also drilled some of the best copper exploration holes anywhere on the separate Bornite Deposit. This has turned the Ambler project into one of the most significant copper-focused exploration projects in the world.

On the strength that these three positive events, Management and the Board of NovaGold decided to unlock the value of its world-class assets and create a pure gold vehicle on the strength of the Donlin project. Galore Creek is an amazing project, but it is best for us to monetize this and channel the proceeds toward the development of Donlin Gold. As a result, in the future, we will only need to finance one major development project.

Ambler is one of the most prospective copper-dominant projects in the world, and we believe its true value is not reflected in the share price of NovaGold. So we decided to spread it out directly to shareholders in the form of a separate Company called NovaCopper. Rick van Nieuwenhuyse will lead this Company, and he has a proven track record of creating value with undervalued projects. He is the best person to take this project forward.

We are focusing our energy and resources on Donlin, and I'd like to take a few minutes to highlight some of the attributes that make Donlin truly unique. It's a big deposit, it's among the top 1% of all known gold deposits. Not only is it big, it is in Alaska, one of the safest locations for political stability. When you look at the other prominent gold development projects around the industry, many are controlled by the major companies or they are in challenging parts of the world. Our 50% interest in Donlin is still a substantial ore body on its own merits.

Similar to the last slide, but with a focus on grade, Donlin is still near the top of the list. Grade is the key to any successful gold mine and 2-plus grams is great grade for an open pit mine, and places Donlin above most undeveloped gold deposits. Once it's in operation, were looking at a very high production rate. The mine's annual production will be 1.5 million ounces for the first five years, followed by decades of over 1 million ounces per year. Mines of this size and life are very rare in the industry.

The reserves and resources at Donlin have grown steadily over the years. The only reason it stopped growing was because the owner stopped drilling. As drilling progressed over the years, over 90% of the resources were converted to reserves. With 40 million ounces defined, it was time to complete the work necessary to support a feasibility study. That work has been done by some of the best technical talent in the industry.

We have all known a few gold deposits that ultimately grew to 40 million ounces. I can't think of many that started this big. You can clearly see there is room for continued growth, only 3 kilometers of an 8-kilometer strike have been drilled on close spacing. Once in production, drilling will resume and we have great expectations to add to reserves in the future. But with 40 million ounces defined, the resource is already of sufficient size to justify the capital investment. In the next few years, our focus is to advance the permitting and further derisk the project.

The completion of a positive feasibility study was a significant milestone for Donlin. It confirmed years of in-depth technical work that refined the capital costs and confirmed the mine will have very competitive cash costs, well below the industry average.

The switch to natural gas means greater flexibility for the project. The change lowered the operating costs while improving environmental management and social infrastructure. The gas pipeline also has the potential to provide lower-cost energy to communities in the region. With a positive feasibility study behind us, we are preparing to commence permitting in the first half of this year.

While we are permitting the project, we will explore opportunities for third-party participation in the infrastructure, including the gas pipeline and the oxygen plant. Mining fleets are routinely financed by manufacturers, and this is a common industry practice that we will explore. These opportunities could reduce the capital by $1 billion.

We are already going forward with a very healthy contingency and we have tangible opportunities for reducing the upfront capital. We are going to start the permitting process soon, and we have high expectations that it will go smoothly for many reasons. When you travel to the site, you get a sense of how isolated it is. The closest town is about 20 kilometers away. This isolation helps us, as it minimizes any potential impacts on our neighbors.

The site is also removed from environmentally-sensitive areas such as fisheries or recreational spots. This is a large project. It will be highly scrutinized through the permitting process, but this project is on private land that has been designated for mining. The land is owned by two native Alaska corporations. They will participate in the project's success.

Alaska has a strong mining industry and a government that understands and appreciates the value of the resource industry. The project and its owners have a long record of community engagement and they recognize the importance of stakeholder involvement. A year ago, when flooding inundated the community of Crooked Creek, the mine provided support and shelter to the residents during their time of crisis. We are not simply neighbors, but we intend to be partners and friends with the local communities.

My last slide illustrates the tremendous leverage that Donlin gives to our shareholders. Even in a low-priced environment, the project has a positive rate of return. This return jumps to double-digits in today's price environment.

But NPB is only part of the appeal of Donlin. With such a long mine life, measured in decades, this mine could be a core asset for any company and gives Nova a great foundation on which to build a business. At this point, I'd like to introduce the CEO of NovaCopper, Rick Van Nieuwenhuyse.

As Greg mentioned, NovaCopper will be focused 100% on our Ambler project, which is located in northwestern Alaska. This is a map of the Northwest Arctic borough, and also home of the Northwest Arctic Native Association, or NANA. NANA is one of the 12 regional native corporations in Alaska, and it happens to be the one that is the most familiar with and probably the most sophisticated when it comes to mining.

They are the owners of the Red Dog mine, which is operated by Teck and the largest zinc mine in the world. Over the past 25 years, they have created a huge amount of wealth for their shareholders based on the Red Dog mine. They have developed businesses that support the mining and they have trained their people to work at the mine.

In short, mining works for NANA. And much like NANA chose Cominco, which is now Teck, to develop the Red Dog mine 30 years ago, they have partnered with NovaCopper to develop the Ambler mining district, located in the eastern part of their region.

The Ambler mining district is made up of two main mineralized zones, what we refer to as the Ambler VMS belt, highlighted here in pink. And the Bornite area, which is hosted by a series of carbonate rocks that host copper mineralization just south of the Ambler belt. In the partnership with NANA, we've combined their private lands in and around the Bornite Deposit with our estate mining claims along the VMS belt.

I'd like to first describe the Arctic deposit located in the middle of the VMS belt. It is the most advanced in a series of similar but less-well-known deposits along about a 100-kilometer-long trend of the Ambler belt. The Arctic deposit itself contains the 42101 reserves estimate of 30 million tons of over 7% copper equivalent. That's made up of 4% copper, 6% zinc, plus significant precious metal credits.

Last year we completed a preliminary economic assessment based upon a 4000-ton-per-day underground cut and fill mining operation. Capital costs were modest at around $287 million, while operating costs to produce a pound of copper were low, under $1 per pound due to the very high unit value of the ore. Again we're talking about greater-than-7% copper equivalent grade.

The study demonstrated the robust economics with after-tax net present value at 8% discount of over $0.5 billion using long-term metal prices of $250 copper. And at today's metal prices, we would be well in excess of $1 billion using those same metrics.

Average annual metal production was on the order of 75 million pounds of copper and about 100 million pounds of zinc over a lifespan of 25 years. This is a great starting point for creating shareholder value. In our business, we say grade is king, and this slide certainly demonstrates why we are excited about the Arctic deposit itself. It is really just head and shoulders above all of the other deposits that are being considered for production. Again, well over 7% copper equivalent grade.

If you look back at the Ambler mining district map, you can see again that Arctic is just one in a series of volcanogenic massive sulfide deposits along this 100-kilometer belt. I'll often refer to this belt as a string of pearls. We certainly expect to explore the potential of the belt, but in addition we have 20 kilometers to the south, the Bornite Deposit, which again is carbonate-hosted, the area outlined in blue there.

Bornite, I'd like to describe it in more detail. Bornite was actually the original discovery in the area. It was discovered back in the 1950s and Kennecott actually was the company that did most of the work here. They were focused on defining a high-grade underground mineable deposit.

Earlier last year, NovaCopper,conducted verification drilling on the historically drilled area, these are outlined by the holes in gray here. You can see that outlined in blue, our verification drilling, confirmed the presence of a significant recourse. A number of the holes you can see here have significant grades, 150 meters of over 1.3% copper, 26 meters of over 6% copper, 93 meters over 2%. So clearly there is a significant resource identified here, and we believe it is potentially an open pittable deposit.

Bornite certainly has exploration upside beyond what is outlined here. Because the Kennecott information was so well put together and well-documented, they had excellent historical records of their core logging, the asset certificates. We were able to use that information to identify some additional areas to drill, and based on that work, we identified a target we refer to as the South Reef, over on the east side of the area.

At South Reef, we completed holes to target depth that intersected some of the best drilling -- it's actually the best drilling that has ever been done on the properly, and frankly probably some of the best drilling that's been done in the copper space in the last 10 years.

You can see here, hole 187 intersected 178 meters of 4% copper, including a high-grade zone of 35 meters of 12% copper. We offset hole 187 500 meters to the north and intersected 111 meters of 2.64% copper again including a high-grade zone of nearly 12 meters of 7.5% copper. I refer to this as Congo grades and Mongolian width. We are certainly truly excited about the exploration potential of this targets.

The exploration team that has been working on this is the same exploration team that discovered Donlin and created the value that we see there, and then moved on to define the current resource and reserves we have at the Galore Creek, which totaled 13 billion pounds of copper and 10 million ounces of silver. I think we are onto something here. We are all very excited to get underway with the exploration program later this summer.

This cross-section shows the relationship between the historically-drilled Bornite Deposit, which shows some of our verification zoning here, and then across the Iron Mountain Fault, the South Reef deposit, where there had been some drilling but not enough deep drilling to really intersect the target we identified late last year. We plan to complete a 43-101 resource on Bornite by midyear and then continue to expand that resource. We think there is certainly potential for that to expand to the west there.

In terms of next steps, NovaGold will have set its record date for the spin-out of NovaCopper. The shareholders' meeting will be held on March 28 to approve the spin-out based on a 6 to 1 ratio, with NovaCopper to receive proceeds of $40 million in cash, and we will have no debt. So we will have a very well-structured Company. We expect NovaCopper to be listed both on the Toronto Stock Exchange and the New York Stock Exchange, and we expect trading to begin by the end of the first half of the year, sometime around May.

As I mentioned, we'll have the Bornite 43-101 resource test shortly after that and drilling should be underway by May/June. We plan to have drilled between 15,000 meters and 20,000 meters. We have got four rigs on the way, and we expect to have drill results by late August.

We will continue to advance our engineering and environmental studies, and continue to work cooperatively with the state, and the upper Kobuk River villages, NANA and the region on developing an access road into the project area. It will be a busy year ahead, with a number of significant milestones, and we certainly look forward to updating our shareholders on our results. With that, I will turn it over to Elaine Sanders to review the 2011 financials.

Good morning, everyone. 2011 was a really busy year for NovaGold, achieving all of our project milestones, and 2012 is shaping up to be the same. Project-related activities is where most of our cash was spent during the year. To remind everyone, our Company's fiscal year ended on November 30. Cash balance at November 30, 2011 was just under $67 million, compared with the same time in 2010, which was $152 million. Net working capital at year-end was $37 million and total assets were just below $726 million.

We saw a decrease in total assets from the previous year due mainly from the results of three items. A write-off of our 138-kilovolt transmission rights at Galore Creek when BC Hydro began construction of the Northwest Transmission Line. A write-down of inventory values at Rock Creek. And a write-down of certain equipment at Galore.

Subsequent to the year end, we completed a 35 million common share financing, of which we received net proceeds of approximately $318 million. Our current cash position is now sitting at approximately $350 million.

This next slide shows some highlights from our income and cash flow statements. Net loss attributable to shareholders for fiscal 2011 was $153 million, compared with a loss from the prior year of $203 million. In 2010 we recorded a one-time impairment charge to write off our investment in Rock Creek.

Major expenses for 2011 were expenditures in our projects, including care and maintenance costs, the accrual of closure costs, G&A, and non-cash asset impairment charges. All of these one-time impairment charges simplifies our balance sheet, so that going forward our focus will be on Donlin.

Incoming cash in 2011 was $17.6 million, which came mainly from the exercise of warrants. In 2010, incoming cash of just under $196 million came from private placement financings in March of 2010 with Paulson and Soros funds, and from warrant exercises.

Outgoing cash was mainly on project expenditures. $44 million was spent at Donlin Gold, of which $22 million was the Company's 50% share. The monies were mostly spent by the Donlin Gold team on the updated feasibility study, which we announced the results of in December.

At Galore Creek, $38.8 million was spent on the project. Teck funded 100% of the project expenses until it finished its earn-in back in June of 2011. Starting in July, Teck and NovaGold funded Galore on a 50/50 basis. The Company contributed $12.7 million of cash to Galore from July to November.

The monies were used by the operator, the Galore Creek Mining Corporation, to fund a pre-feasibility study. And subsequent to the study being released in July, funds were used for engineering and exploration drilling to verify what we call an enhanced plan that is anticipated to improve the project's economics.

At our 100%-owned projects, we spent US $10 million on Ambler, producing a preliminary economic assessment report that showed positive economics, and in the US $13 million was spent at Rock Creek for site care and maintenance activities.

Moving to our 2012 budgets, at Donlin Gold the Board, which is comprised equally with Barrick and NovaGold senior personnel, has conditionally approved a budget of $37.3 million, of which NovaGold's share is approximately $18.7 million. The budget includes funds for permitting activities, community development and planning for future development.

At Ambler, the Company has approved an interim budget of the US $4 million to support activities in advance of the spinout. The Company plans to contribute to the NovaCopper spin-out our 100% ownership of the Ambler project and US $40 million of cash from the recently-completed financing. We anticipate that the $40 million will be sufficient to cover NovaCopper expenditures for up to the next two years.

The details of the spin-out will be included in our management proxy circular expected to be filed on March 1. The proxy circular will also be available on our website.

At Galore Creek, our 50/50 partnership with Teck, GCMC has an approved budget for 2012 of approximately $35.4 million, of which NovaGold's share is $17.7 million. The budget will be used for continued engineering and exploration drilling, targeted to add confidence to the enhanced plan. At Rock Creek, we have a budget of approximately $30 million for closure-related activities. Earlier in the month of February, we placed an additional $13.4 million into a reclamation bond with the State of Alaska, making the total bond $20.3 million.

These funds secure our closure obligations and are recoverable after certain phases of closure are completed. We do not anticipate a significant amount of these funds to be returned though during this year.

For my last slide, I would like to introduce what the Company is expecting under IFRS. 2012 is the first year the Company is required to adopt IFRS accounting, whereas most of our peers have already transitioned to the new reporting standards during 2011.

Our first quarter, which ends on February 29, is the first time the Company's financial statements will be IFRS-compliant. The balance sheet is expected to change. Instead of recording 100% of the Galore assets and booking a 50% non-controlling interest for Teck's ownership, our total assets will be reduced by the 50% portion that we do not own.

The accounting for the convertible notes are also very different. Under IFRS, the entire value of the convertible notes are recorded 100% as a liability, similar to what we do under US GAAP accounting. Currently under Canadian GAAP, we bifurcate the notes between liabilities and equities is using a Black-Scholes value. Once the notes are converted to common shares at maturity, all of the liability will move to equity under IFRS.

Significant income statement changes include the recognition of foreign currency translations of our US subsidiaries directly to the income statement, whereas under Canadian GAAP we are currently recording a translation gain or loss for non-self-sustaining operations, which reverses in each period until realized.

Our warrants have a US dollar exercise price and because our Company's functional currency is the Canadian dollar, this is considered an embedded derivative in IFRS. The derivative is far-valued at the end of each period using mark-to-market accounting with movements recorded directly to the income statement. What does this really mean? Well, when there is volatilities in NovaGold's stock price we will also see swings coming through the income statement.

Increases in the Company's stock price creates losses and decreases in the Company's stock price creates gains. We could have a situation where the Company has accounting net income while we are still a non-producing entity. That being said I look forward to presenting our Q1 IFRS statements to you in April. Now that I have everyone excited about our Q1 financial statements, I have to pass the presentation to our Chairman, Dr. Thomas Kaplan, who will provide you with an update on our reorganization plans.

When we look back upon 2011, we will see that the Company managed to hit all of its milestones and then some. Its accomplishments in the aggregate represented one of the most substantial deriskings of a development-stage Company that we have seen in our sector.

The derisking that was entailed with the successful feasibility study at Donlin, the successful pre-feasability study at Galore Creek, and the two very important data points at Ambler. Those being the positive preliminary economic assessment on Arctic and the extraordinary drill results at Bornite. Allowed the Board and Management to be able to contemplate a derisking of the entire portfolio for the benefit of all shareholders.

This was announced in November and was immediately met with an enthusiastic and positive response by all stakeholders who saw that this was a Company committed to maximizing shareholder value without any reference to sacred cows or any other baggage from the past.

This reorganization of NovaGold into various units reflects our belief as shareholders with all of you that there is more value in the sum of the parts then there is in the assets which we see before us, and that, indeed, by unlocking that value we're going to be able to offer our shareholders the opportunity to be investors in two go-to names.

It is our belief that the NovaGold story in itself as a pure-play on Donlin will become one of the very few institutional quality go-to names in the development space. Similarly, the results at the Ambler deposit indicate that we have the potential here to be able to see a company which is the most exciting name in the copper exploration space.

So what we have after the reorganization is very simply this. We started with three assets, all of which are excellent. The Donlin project in which we are partners with Barrick, the Galore project in which we are partners with Teck, and the 100%-owned Ambler district. After the reorganization, we will see NovaGold holding its 50% interest in Donlin and Galore, but having spun off of Ambler 100% pro rata to shareholders.

In the course of time, Galore, our stake in it, will be sold and those proceeds will add to the balance sheet of NovaGold. As we have announced, the ratio of NovaCopper to NovaGold will be 6 to 1. The Company will begin its life with $40 million in cash and no debt and it will be under the stewardship of one of the finest exploration geologists in our space.

Donlin of course will be managed by Greg Lang, who in addition to being the person who is most intimately familiar with the project, has an excellent track record of being able to build projects on time and under budget, most recently at Cortez Hills for Barrick.

Clearly someone who has managed Barrick's multiple mines in North America and been very much involved with their projects is clearly in a position to be able to understand the merits of Donlin and the fact that we are dealing here with one of the most important development-stage assets in the world today.

Now when we talk about in the world, the truth is that in our industry, we are often dealing with something that is an overused expression. We've all heard the expression of world-class. From my vantage point, I'd like to really discuss for a moment what it means to be world-class. As a Company, when we think of unlocking value, we not only think in terms of the assets.

You have heard from one of the finest engineers in the business that he believes that when you look at Donlin in terms of its size, its exploration potential, its grade, its production profile, you are really looking at something that potentially could be considered to be unique in the world today.

But that's only part of the story. Because these are not attributes for an asset that is found anywhere in the world. These are attributes of an asset that is found in a tier one jurisdiction, namely the United States.

Similarly, you've heard from one of the world's great exploration geologists the merits of Ambler. We are talking about something that in its own space has one of the largest assets of its kind at Arctic, 30 million tons of 7% copper equivalent. This is extraordinary. In fact, it is literally off the charts.

Then when you wed that to Bornite, which is one of a number of other, as we put it pearls son the strong, you really are dealing with an extraordinary asset in terms of size, grade, exploration potential, and the possibility to have multiple mines operating within a wholly owned district.

But again, these are only some of the attributes. These are not found in difficult jurisdictions. These are found in the United States, where our partner is the owner of the largest zinc producer in the world today. These attributes cannot be understated.

Every week that goes by, we see that a new country is being added to the list of those who want to make life more difficult, or at the very least, more costly for mining companies. I happen to be in London right now, and one of the big expressions here when it comes to resource nationalism, is that the mining countries, the host countries, view the mining industry as a big dripping roast to be carved up at will.

The truth is, there is a lot of merit to that story. Unlike a textile company, which can up and leave if it finds a lower-wage jurisdiction, or a semiconductor plant which can go to a better tax regime, when you're in the mining industry, what you own is where you own it and vice versa, and you'd better learn to live with it.

I can tell you as somebody who has a lot of leverage to this story, and is a huge believer in both Donlin as well as Ambler, that it gives me great comfort to know that not only are the assets in the top of their class. But also that I believe that the leverage these assets give me is not going to be something that I'm going to have to give away. When I look to make money, I not only look to be able to see where there's going to be profit, but where I am going to keep it.

Now the problem is this. I'm not talking my own books, some of you know me and you know that I'm a very intrepid explorer. I have been in and made money in Africa, in Asia, in South America, and I can tell you, it is getting harder and harder every day. The chances that one will find that they wake up in the morning and have given away ownership, either de facto or overtly, is a specter that hangs over every investor, not just professionals such as ourselves but also institutional investors.

It is my considered opinion that when stockbrokers call up their clients and say, we have a company with world-class assets to talk to you about, in the not-too-distant future we are going to find that there's going to be a single question which those clients pose to their friendly brokers, and it's going to be, glad to know it's world-class, but where is it? Because I really don't want to risk my career on something where I'm going to have to defend to my investment committee why I owned it and why we just lost it.

So I can tell you from my vantage point, when we look around the world, the fact that we can see assets such as Donlin and Ambler in jurisdictions where we are comfortable that we're going to be able to keep the fruits of our labors, I get a tremendous amount of comfort from that.

Similarly, when I look at the Management team of both companies, I have to say to myself, who would I have rather had unlocking the value of these assets more than the two gentlemen who are running their respective companies? Could we have asked for anyone with greater skill sets and more appropriate skill sets to be the CEO of NovaGold? I think all of us would agree that if there is a central casting for mining companies, Greg Lang came from it.

Similarly, I would say the position of Rick being in charge of unlocking the geological potential of Ambler in the same way that he won the Thayer Lindsley Award at PDAC for being among the first to recognize the true geological potential of the monster that is Donlin. I think that when we look at where he is placed, we can only say to ourselves, exactly the right people are managing the Company at the right time in their development.

The derisking culminated in the financing which we completed a couple of weeks ago. Our cash position has now gone to over $350 million, there will be an additional approximately $40 million to $50 million or so in warrant exercises over the course of this year, and of course we're looking forward to being able to have proceeds from Galore. Galore is a wonderful asset, but it's an asset that is best with a Company that has the balance sheet to be able to unlock its value more than a Company such as ours.

If our shareholders want exposure to copper, they're going to be receiving it in the next few months. And they can either choose to keep it, add to it, or sell it. But when it comes to a wonderful copper asset, it is very clear to us there should be substantial interest in the process we have now begun with JPMorgan and with RBC, and you can imagine why. The issues I was just discussing with regards to resource nationalism and jurisdiction in the copper industry are just as pronounced if not more so than they were in gold.

So what you are really looking at here is a project that, when it is in production as envisioned, will be the largest single copper producer in one of the world's great and safest mining countries. We fully expect there to be substantial interest in Galore, which will also add to our balance sheet.

So when we look at the Company on a going-forward basis for 2012 and beyond, we can clearly see the 2011 and January of 2012 with the derisking that took place across the portfolio. As well as the apportionment of the right Management in the right places and the strengthening of our balance sheet such that we do not anticipate needing more money until we have a production decision at Donlin, really represents an opportunity for investors to be able to see value unlocked in this year.

And that's going to happen across a very broad front. The restructuring of NovaGold will be completed in the second quarter, Ambler will be spun-off. We believe that will give our shareholders one of the most significant exposures they can have to one of the most exciting copper districts in the world, and one which will be producing significant and continuous news flow for months and years to come.

We will see that our project team is going to be focusing on optimizing with our partners at Barrick, the Donlin feasibility study. Such that we can entertain the prospect of being able to optimize the capital in areas where they are prospects for third-party financing, as well as to be able to take the project into permitting. A process which we are very happy to be doing in conjunction with our partners, be they mining company or native corporation.

With the capital raising that we have completed, we see that we have a balance sheet that is one of the most robust in the development space. And gives us the opportunity when we go out to visit with our shareholders as we fully intend to do in the not-too-distant future to thank them for them supporting us.

They will be able to see that we are in a position not to need more capital for a long time to come, allowing the Company to be able to see the traditional uplift to the valuation of its reserves that comes from projects that are being derisked. And I'm not even mentioning jurisdictional derisking that is already embedded with our core assets being in the United States as well as Canada.

We saw a very interesting phenomenon when we went out on the road. For all of you who saw us then, I'd like to take the opportunity on behalf of Management and the Board to thank you for seeing us, and in many cases, for participating in our offering. The level of interest that we saw in the Company was extraordinary. We believe that as we go back out on the road, that we are going to see that level of interest is even greater as people will have seen we have derisked the balance sheet so substantially.

I think it's very fair to say that these are truly exciting times at NovaGold. I would like to end by quoting from our president Greg Lang's President's message. The assets are excellent and the management is enthusiastic. With the substantial derisking of our asset base over the past year, a healthy balance sheet, and a new focus on becoming a pure gold Company with our pure gold flagship property at Donlin. We believe we are exceptionally well-positioned to continue to build great value for all of our stakeholders.

This is a sentiment that is shared across the entire arc of our Management team and Board of Directors. It is something that we are very happy to share with all of you as stakeholders in the Company, and we are very grateful for your support. With that, we would be very pleased to take any questions at this time. Thank you very much.

(Operator Instructions) John Bridges, JPMorgan.

Good morning, everybody, or wherever you are, Tom. Congratulations on the results and the listing. I was just wondering, the question is really for Greg, you have come over from a very hectic operational role over at Barrick and now you've got a permitting process ahead of you. I was just wondering if you can give us some sort of idea as to what we can expect to see in terms of news flow during the permitting process.

You're right, I did leave a great job at Barrick. It was really a great company and it was really a privilege to be here. But in Nova, I see a good opportunity from the ground up to build a great North America gold producer. It's just a great opportunity and I'm pleased to be a part of it.

Permitting, you are right, John, the news flow in permitting itself is not that exciting. But while we are permitting, we will be working on ways of reducing the capital. Perhaps some of the news coming out of this might be a partnership on the gas pipeline or some shared infrastructure on the oxygen plant. There is a lot of means out there to reduce the capital, and I think that is really going to be our focus when the dust settles from the restructuring this year.

I know you can't advance the project itself during the permitting process, is it possible to do anything away from the project area within that large lease area that you have got?

John, generally speaking, no. When construction starts, some of the first areas that we'll need to do is upgrading ports and other infrastructure, but it really all is pretty much interconnected. So you wouldn't really see a lot of activity there.

I think the main thing we do is get another year or so into the process and see exactly what the timeline is going to be. We think it's going to be between three and four years, but we've just got to get underway and take it one step at a time.

So you can watch your tax dollars at work as the federal officials work on your permit.

Indeed.

A question for Rick, just briefly, are you going to be at PDAC, do you have a booth?

We actually don't have a booth, we will hang out at the NovaGold booth. There is a waiting list for booths at PDAC, I understand, so we will be at the back of the cube.

I look forward to seeing you there anyway. Congratulations, guys. Thank you.

We will take a couple questions via the webcast. The first one is, how would you spend the money that you recently raised? Greg, would you like to take that?

Sure, I speak to that. I think as we've mentioned, our clear focus is on Donlin. The money we just raised combined with the warrants and the Galore sale will take us through to a construction decision. After this year, we will see dramatically lower expenses going forward. Permitting in itself is fairly inexpensive, and without the expenditures on Ambler and Galore Creek, and soon Rock Creek, our cash outflow is going to drop dramatically in the coming years.

How long do you reckon the capital will last?

I think we are in great shape until we reach a production decision on Donlin.

The next one is, Greg, why did you leave Barrick?

As I said, Barrick was a great company, but when I look at Donlin, it really is an extraordinary deposit. It has got great attributes, as we described earlier in the call, and it's in a part of the world where I feel very comfortable operating. When you bring all of that together, Donlin is in a league of its own, it's a Company-maker and certainly I love the leverage that it brings to everyone involved with NovaGold.

The next one is for Rick, what do you expect to spend the $40 million on and how long will it last?

It will be spent on drilling. We are certainly focused on expanding the resources at Bornite and identifying other VMS deposits along the Ambler trend. We will continue to advance the engineering studies, but for the next couple of years, I would say, we would be pretty much 100% focused on the drill bit. And as Elaine mentioned, the money should be in good shape for a couple of years. The Company is well-structured, so I think we're in a very, very great position.

Thank you. The next one is, how much did John Paulson put into NovaGold and when? Tom, would you like to take this one?

Yes, that's fine. Approximately two years ago, it was the spring of 2010, having built up a position in the open market, Paulson & Company invested approximately $100 million in a placement which we undertook with them and with Soros, which invested $75 million at the same time. We noticed with great delight that Paulson & Company added to their position in the fourth quarter in NovaGold, and that they have been as supportive and as fine a shareholder as one could ever have hoped for.

Thank you. The next one, for Elaine, what is the final date of record for holding NovaGold shares in order to receive the spin-out copper shares?

That's a good question. That date isn't set at this point in time, our shareholders' meeting is set for March 28. We have a bunch of final approvals to receive through the exchanges, the courts, et cetera, but we anticipate that process will last no more than about four weeks. We are targeting a final record date of distribution around April 30. We will definitely make public announcements as we get close to that date so everyone knows when they need to hold those shares to get the NovaCopper spin-out.

The next one is, I apologize if I missed this, but is there a timeline for the Galore Creek disposal? Greg, would you like to speak to this?

I'll take that, Ariadna. We are seeing a lot of interest in Galore. It's got the potential to be Canada's largest copper mine, so that's certainly understandable. But we are very early on in the sale process, we are just really getting underway in the last couple of weeks. We really don't know what the value is and we haven't ascribed anything to it, but we anticipate completing the sale by the end of the year.

Thank you. With that, I think we will conclude our conference call and webcast.

Ladies and gentlemen, thank you for joining. You may now disconnect your lines.