SEC Form 10-Q filed by Novagold Resources Inc.

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements or information within the meaning of Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995 concerning anticipated results and developments in our operations in future periods, planned exploration activities, the adequacy of our financial resources and other events or conditions that may occur in the future. These forward-looking statements may include statements regarding perceived merit of properties, exploration results and budgets, mineral reserves and resource estimates, work programs, anticipated timing of updated reports and/or studies, capital expenditures, operating costs, cash flow estimates, production estimates and similar statements relating to the economic viability of a project, anticipated timing and impact of certain judicial and/or administrative decisions, continued support of the state and federal permitting process, future capital raising activities and their related dilutive effects, sufficiency of working capital, timelines, strategic plans, including our plans and expectations relating to the Donlin Gold (as defined below) project, permitting and the timing thereof, the Company’s market price, market prices for precious metals, or other statements that are not statements of fact. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral resource estimates may also be deemed to constitute “forward-looking statements” to the extent that they involve estimates of the mineralization that will be encountered if the property is developed.

 

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible” or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

 

Forward-looking statements are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:

 

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our ability to achieve production at the Donlin Gold project;

 

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dependence on cooperation of co-owner in exploration and development of the Donlin Gold project;

 

●

expectations regarding future gold prices and demand;

 

●

estimated capital costs, operating costs, production and economic returns;

 

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estimated metal pricing, metallurgy, mineability, marketability and operating and capital costs, together with other assumptions underlying our resource and reserve estimates;

 

●

our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable;

 

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assumptions that all necessary permits and governmental approvals will be obtained and retained, and the timing of such approvals;

 

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assumptions made in the interpretation of drill results, the geology, grade and continuity of our mineral deposits;

 

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our expectations regarding demand for equipment, skilled labor and services needed for the Donlin Gold project;

 

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our activities not being adversely disrupted or impeded by development, operating or regulatory risks; and

 

●

our expectations regarding the timing and outcome of certain judicial and/or administrative decisions, including but not limited to the appeals of: (i) the federal Joint Record of Decision (“JROD”) and permits issued by the U.S. Army Corps of Engineers (“Corps”) and U.S. Bureau of Land Management, (ii) the State Clean Water Act Section 401 Certification (as defined below), (iii) the state pipeline right-of-way (“ROW”) agreement and lease, and (iv) the application for water rights.

 

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation:

 

●

uncertainty of whether there will ever be production at the Donlin Gold project;

 

●

risks related to cooperation with our co-owner on which we depend for Donlin Gold project activities;

 

●

risks related to proceeding with a feasibility study for the Donlin Gold project without the participation of the co-owner;

 

●

our history of losses and expectation of future losses;

 

●

our concentrated property portfolio;

 

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risks related to our ability to finance the development of the Donlin Gold project through external financing, strategic alliances, the sale of property interests or otherwise;

 

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uncertainty of estimates of capital costs, operating costs, production and economic returns, including the impact of inflation thereon;

 

●

commodity price fluctuations;

 

●

risks related to market events and general economic conditions;

 

 

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risks related to opposition to operations at our mineral exploration and development properties from non-governmental organizations or civil society;

 

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the risk that permits and governmental approvals necessary to develop and operate the Donlin Gold project will not be available on a timely basis, subject to reasonable conditions, or at all;

 

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uncertainties relating to the assumptions underlying our reserve and resource estimates, such as metal pricing, metallurgy, mineability, marketability and operating and capital costs;

 

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risks related to the inability to develop or access the infrastructure required to construct and operate the Donlin Gold project;

 

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uncertainty related to title to the Donlin Gold project;

 

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risks related to our largest shareholder;

 

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risks related to conflicts of interests of some of the directors and officers of the Company;

 

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risks related to the need for reclamation activities on our properties and uncertainty of cost estimates related thereto;

 

●

credit, liquidity, interest rate and currency risks;

 

●

mining and development risks, including risks related to infrastructure, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with, or interruptions in, development, construction or production;

 

●

risks related to changes in governmental regulation and uncertainties resulting from changes being implemented by the current U.S. federal administration including, but not limited to, the stability of pre-existing tax regimes and the potential introduction of tariffs;

 

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risks related to environmental laws and regulations;

 

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risks related to our insurance;

 

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risks related to title and other rights to our mineral properties;

 

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risks related to increases in demand for equipment, skilled labor and services needed for exploration and development of the Donlin Gold project, and related cost increases;

 

●

our need to attract and retain qualified management and technical personnel;

 

●

uncertainty as to the outcome of potential litigation;

 

●

risks related to the effects of global climate change on the Donlin Gold project;

 

●

risks related to information technology systems;

 

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risks related to cybersecurity attacks and breaches; and

 

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risks related to the Company’s status as a “passive foreign investment company” in the United States.

 

This list is not exhaustive of the factors that may affect any of our forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and our actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in our Annual Report on Form 10-K for the year ended November 30, 2024 and this Quarterly Report on Form 10-Q under the heading “Risk Factors” and elsewhere.

 

Our forward-looking statements contained in this Quarterly Report on Form 10-Q are based on the beliefs, expectations, and opinions of management as of the date of this report. We do not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions should change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

 

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

NOVAGOLD RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(Unaudited, US dollars in thousands)

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on April 1, 2025. They are signed on the Company’s behalf by:
/s/ Gregory A. Lang	/s/ Hume Kyle

 

 

 

NOVAGOLD RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited, US dollars in thousands except per share amounts)

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 

NOVAGOLD RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited, US dollars in thousands)

 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 

NOVAGOLD RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EQUITY (DEFICIT)

(Unaudited, US dollars and shares in thousands)

 

 

* Accumulated other comprehensive loss

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

NOVAGOLD RESOURCES INC. and its affiliates and subsidiaries (collectively, “NOVAGOLD” or the “Company”) operate in the mining industry, focused on the exploration for and development of gold mineral properties. On December 1, 2024, NOVAGOLD (Bermuda) Alaska Limited, NOVAGOLD Resources (Bermuda) Limited and NOVAGOLD Argentina Inc. were amalgamated with NOVAGOLD.

 

The Company’s principal asset is a 50% interest in the Donlin Gold project in Alaska, USA. The Company has no realized revenues from its principal asset. The Donlin Gold project is owned and operated by Donlin Gold LLC (“Donlin Gold”), a limited liability company that is owned equally by wholly-owned subsidiaries of NOVAGOLD and Barrick Gold Corporation (“Barrick”).

 

The Condensed Consolidated Interim Financial Statements (“interim statements”) of NOVAGOLD are unaudited. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with NOVAGOLD’s Consolidated Financial Statements for the year ended November 30, 2024. The year-end balance sheet data was derived from the audited financial statements and certain information and footnote disclosures required by United States generally accepted accounting principles (US GAAP) have been condensed or omitted.

 

The functional currency for the Company’s Canadian operations is the Canadian dollar and the functional currency for the Company’s U.S. operations is the United States dollar. References in these Condensed Consolidated Interim Financial Statements and Notes to $ refer to United States dollars and C$ to Canadian dollars. Dollar amounts are in thousands, except for per share amounts.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Contingent note receivable

 

A portion of the proceeds related to the sale of Galore Creek to a subsidiary of Newmont Corporation (“Newmont”) includes a $75,000 note receivable, contingent upon the approval of a Galore Creek project construction plan by the owner(s). The Company has not assigned a value to the contingent note receivable as management determined that the approval of the Galore Creek project construction was not probable as of the closing of the Galore Creek sale or in subsequent periods. The contingent note will be recognized when, in management’s judgement, it is probable that the payment will occur, and that the amount recorded will not reverse in subsequent periods.

 

Investment in affiliates

 

Investments in unconsolidated ventures over which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method and include the Company’s investment in the Donlin Gold project. The Company identified Donlin Gold as a Variable Interest Entity (“VIE”) as the entity is dependent on funding from its owners. All funding, ownership, voting rights, and power to exercise control is shared equally on a 50/50 basis between the owners of the VIE. Therefore, the Company has determined that it is not the primary beneficiary of the VIE. The Company’s maximum exposure to loss is its equity investment in Donlin Gold.

 

The equity method is a basis of accounting for investments whereby the investment is initially recorded at cost and the carrying value is adjusted thereafter to include the investor’s pro rata share of post-acquisition earnings or losses of the investee, as computed by the consolidation method. Cash funding increases the carrying value of the investment. Profit distributions received or receivable from an investee reduce the carrying value of the investment.

 

Donlin Gold is a non-publicly traded equity investee owning an exploration and development project. Therefore, the Company assesses whether there has been a potential triggering event for other-than-temporary impairment by assessing the underlying assets of the equity investee for recoverability and assessing whether there has been a change in the development plan or strategy for the project. If the underlying assets are not recoverable, the Company will record an impairment charge equal to the difference between the carrying amount of the investee and its fair value.

 

5

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

Share-based payments

 

The Company records share-based compensation awards exchanged for employee services at fair value on the date of the grant and expenses the awards in the Consolidated Statements of Loss over the requisite employee service period. The fair values of stock options are determined using a Black-Scholes option pricing model. The fair values of PSUs are determined using a Monte Carlo valuation model. The Company’s estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, estimates of forfeitures, the Company’s performance, and the Company’s performance in relation to its peers.

 

Recently Issued Accounting Pronouncements and Securities and Exchange Commission Rules

 

Updates to Reportable Segment Disclosures

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss and interim disclosures of a reportable segment’s profit or loss and assets. The standard is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2025, and subsequent interim periods, with early adoption permitted. The Company does not expect the adoption to have a material impact on the consolidated financial statements or disclosures.

 

Updates to Income Tax Disclosure

 

In December 2023, FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. The standard is effective beginning with the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2025, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of the guidance on the consolidated financial statements.

 

NOTE 3 – SEGMENTED INFORMATION

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. The Chief Executive Officer considers the business from a geographic perspective considering the performance of our investment in the Donlin Gold project in Alaska, USA (Note 5).

 

NOTE 4 – NOTES RECEIVABLE

 

Galore Creek

 

On July 27, 2018, the Company sold its interest in the Galore Creek project to a subsidiary of Newmont for cash proceeds of $100,000 upon closing, a $75,000 note due upon the earlier of the completion of a Galore Creek pre-feasibility study or July 27, 2021, a $25,000 note due upon the earlier of the completion of a Galore Creek feasibility study or July 27, 2023, and a contingent note for $75,000 due upon approval of a Galore Creek project construction plan by the owner(s). The Company received from Newmont $75,000 on July 27, 2021, and $25,000 on July 27, 2023.

 

No value was assigned to the final $75,000 contingent note. The Company determined that Galore Creek project construction approval was not probable as of the closing of the Galore Creek sale. The Company’s assessment did not change as of February 28, 2025. The contingent note will be recognized when, in management’s judgement, it is probable that the payment will occur, and that the amount recorded will not reverse in subsequent periods.

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

Minas San Roque

 

On November 3, 2021, the Company sold its 49% interest in the Minas San Roque project in Argentina to Marifil S.A., a subsidiary of International Iconic Gold Mines Ltd. (“Iconic”) for cash proceeds of C$250 upon closing, a C$750 note receivable due on November 1, 2022, and a C$1,000 note receivable due on November 1, 2023. On closing, the Company determined the fair value of the notes was nil. Iconic completed the C$750 note repayment due on November 1, 2022 in December 2022, and the C$1,000 ($743) note repayment due on November 1, 2023 was made in January 2024.

 

NOTE 5 – INVESTMENT IN DONLIN GOLD

 

The Donlin Gold project is owned and operated by Donlin Gold, a limited liability company in which wholly-owned subsidiaries of NOVAGOLD and Barrick each own a 50% interest. Donlin Gold has a board of four representatives, with two representatives selected by Barrick and two representatives selected by the Company. All significant decisions related to Donlin Gold require the approval of at least a majority of the Donlin Gold board.

 

Changes in the Company’s Investment in Donlin Gold are summarized as follows:

 

		Three months ended
		February 28,				February 29,
		2025				2024
Balance – beginning of period		$	2,597			$	3,071
Share of losses
Mineral property expenditures			(2,170	)			(2,812	)
Depreciation			(119	)			(140	)
Accretion			(10	)			(9	)
			(2,299	)			(2,961	)
Funding			3,614				3,623
Balance – end of period		$	3,912			$	3,733

 

The following amounts represent the Company’s 50% share of the assets and liabilities of Donlin Gold. Donlin Gold capitalized the initial contribution of the Donlin Gold property as Non-current assets: Mineral property with a carrying value of $64,000, resulting in a higher carrying value of the mineral property for Donlin Gold LLC than that of the Company.

 

		As of February 28,				As of November 30,
		2025				2024
Current assets: Cash, prepaid expenses, and other receivables		$	4,632			$	3,745
Non-current assets: Right-of-use assets, property and equipment			846				965
Non-current assets: Mineral property			32,654				32,654
Current liabilities: Accounts payable, accrued liabilities and lease obligations			(1,390	)			(1,947	)
Non-current liabilities: Reclamation and lease obligations			(830	)			(820	)
Net assets		$	35,912			$	34,597

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

NOTE 6 – OTHER ASSETS

 

		As of February 28, 2025				As of November 30, 2024
Other current assets:
Accounts receivable		$	25			$	22
Interest receivable			367				89
Receivable from Donlin Gold			349				212
Prepaid expenses			928				1,207
		$	1,669			$	1,530
Other long-term assets:
Marketable equity securities		$	2,520			$	3,387
Right-of-use assets			844				896
Office equipment			113				119
		$	3,477			$	4,402

  

NOTE 7 – PROMISSORY NOTE

 

The Company has a promissory note payable to Barrick of $155,087, comprised of $51,576 in principal, and $103,512 in accrued interest at U.S. prime plus 2%, compounded semi-annually. The promissory note resulted from the agreement that led to the formation of Donlin Gold, where the Company agreed to reimburse Barrick for a portion of their expenditures incurred from April 1, 2006 to November 30, 2007. The promissory note and accrued interest are payable from 85% of the Company’s share of revenue from future mine production or from any net proceeds resulting from a reduction of the Company’s interest in Donlin Gold. The carrying value of the promissory note approximates fair value.

 

NOTE 8 – OTHER LIABILITIES

 

		As of February 28, 2025				As of November 30, 2024
Other current liabilities:
Remediation liabilities		$	161			$	244
Lease obligations			170				169
Income taxes payable			—				—
		$	331			$	413
Other long-term liabilities:
Remediation liabilities		$	375			$	400
Lease obligations			712				761
		$	1,087			$	1,161

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

NOTE 9 – FAIR VALUE ACCOUNTING

 

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the significance of the inputs used in making the measurement. The three levels of the fair value hierarchy are as follows:

 

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The Company’s financial instruments consist of cash and cash equivalents, term deposits, accounts receivable, including from Donlin Gold, marketable equity securities, accounts payable and accrued liabilities, and a promissory note. The fair value of the promissory note approximates its carrying value based on accrued interest at U.S. prime plus 2% and the terms for repayment from future mine production or from any net proceeds resulting from a reduction of the Company’s interest in Donlin Gold. The fair values of the Company’s other financial instruments approximate their carrying value due to the short‐term nature of their maturity. The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, term deposits, accounts receivable, including from Donlin Gold, accounts payable and accrued liabilities, and a promissory note. The Company’s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities was $2,520 as of February 28, 2025 ($3,387 as of November 30, 2024), calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

 

NOTE 10 – GENERAL AND ADMINISTRATIVE EXPENSE

 

		Three months ended
		February 28,				February 29,
		2025				2024
Share-based compensation (Note 12)		$	983			$	2,409
Salaries and benefits			2,006				2,086
Office expense			688				735
Corporate communications and regulatory			256				358
Professional fees			863				665
Depreciation			6				6
		$	4,802			$	6,259

  

NOTE 11 – OTHER INCOME (EXPENSE), NET

 

		Three months ended
		February 28,				February 29,
		2025				2024
Gain on sale of mineral property (Note 4)		$	—			$	743
Foreign exchange gain (loss)			330				(6	)
Change in fair market value of marketable equity securities			186				311
		$	516			$	1,048

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

NOTE 12 – SHARE-BASED COMPENSATION

 

The following table shows the recognized share-based compensation expense by award type:

 

		Three months ended
		February 28,				February 29,
		2025				2024
Stock options		$	459			$	1,322
Performance share unit plan			454				1,027
Deferred share unit plan			70				60
		$	983			$	2,409

 

Stock options

 

A summary of stock options outstanding and activity during the three months ended February 28, 2025 are as follows:

 

		Number of stock options				Weighted- average exercise price per share				Weighted- average remaining contractual term (years)				Aggregate intrinsic value
November 30, 2024			8,849,535			$	6.12
Expired			(590,835	)			7.48
February 28, 2025			8,258,700			$	6.00				2.20			$	6.00
Vested and exercisable as of February 28, 2025			5,750,648			$	6.65				1.64			$	2.00

 

The following table summarizes key stock option valuation inputs:

 

		Three months ended
		February 28,				February 29,
		2025				2024
Weighted-average assumptions used to value stock option awards:
Expected volatility			—				48.7	%
Expected term of options (years)			—				4
Expected dividend rate			—				—
Risk-free interest rate			—				4.29	%
Expected forfeiture rate			—				3.0	%
Weighted-average grant-date fair value		$	—			$	1.76
Intrinsic value of options exercised		$	—			$	471
Cash received from options exercised		$	—			$	—

 

As of February 28, 2025, the Company had $1,812 of unrecognized compensation cost related to 2,508,052 non-vested stock options expected to be recognized and vest over a period of approximately 1.75 years.

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

Performance share units

 

A summary of PSU awards outstanding and activity during the three months ended February 28, 2025 are as follows:

 

		Number of PSU awards				Weighted- average grant day fair value per award				Aggregate intrinsic value
November 30, 2024			1,633,500			$	5.32
Vested and paid out/released			(102,100	)		$	6.67
Performance adjustment			(306,300	)		$	6.67
February 28, 2025			1,225,100			$	4.87			$	0.00

 

The following table summarizes key PSU valuation inputs:

 

		Three months ended
		February 28,				February 29,
		2025				2024
Weighted-average assumptions used to value PSU awards:
Expected volatility of Company shares			—				42.5	%
Expected volatility of TSX index			—				29.2	%
Expected correlation between Company shares and TSX			—				78.3	%
Expected term of PSUs (years)			—				3
Risk-free interest rate			—				4.22	%
Number of PSUs granted			—				886,800
Weighted-average grant-date fair value			—			$	4.20

 

As of February 28, 2025, the Company had $2,318 of unrecognized compensation cost related to 1,225,100 non-vested PSU awards expected to be recognized and vest over a period of approximately 1.75 years.

 

NOTE 13 – RELATED PARTY TRANSACTIONS

 

The Company provided management and administrative services to Donlin Gold for $176 in the three months ended February 28, 2025 ($158 in the three months ended February 29, 2024). As of February 28, 2025, the Company has accounts receivable from Donlin Gold of $349 (November 30, 2024: $212) included in Other current assets.

 

NOTE 14 – NET CHANGE IN OPERATING ASSETS AND LIABILITIES

 

		Three months ended
		February 28,				February 29,
		2025				2024
Changes in operating assets and liabilities:
Other assets		$	(201	)		$	(925	)
Accounts payable and accrued liabilities			(401	)			(137	)
Accrued payroll and related benefits			(1,762	)			(1,881	)
Income taxes payable			(214	)			—
Remediation liability			(107	)			(48	)
		$	(2,685	)		$	(2,991	)

 

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NOVAGOLD RESOURCES INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Unaudited, US dollars in thousands except per share amounts)

 

  

NOTE 15 – SUPPLEMENTAL CASH FLOW INFORMATION

 

		Three months ended
		February 28,				February 29,
		2025				2024
Interest and dividends received		$	757			$	429
Income taxes paid		$	223			$	100

 

During the first quarter of 2025, the Company received $952 in cash proceeds and 19,688 shares of Lundin Mining Corporation as consideration for the acquisition of one of the Company’s previously held marketable security investments.

 

 

 

 

 

 

 

 

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

In Management’s Discussion and Analysis of Financial Condition and Results of Operations, “NOVAGOLD”, the “Company”, “we,” “us” and “our” refer to NOVAGOLD RESOURCES INC. and its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations constitutes management’s review of the factors that affected our financial and operating performance for the three-month period ended February 28, 2025 and February 29, 2024. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained elsewhere in this report and our Annual Report on Form 10-K for the year ended November 30, 2024, as well as other information we file with the Securities and Exchange Commission on EDGAR at www.sec.gov and with Canadian Securities Administrators on SEDAR+ at www.sedarplus.ca. References herein to $ refer to United States dollars and C$ to Canadian dollars, in thousands, except for per share amounts.

 

Overview

 

We operate in the gold mining industry, primarily focused on advancing the Donlin Gold project in Alaska. The Donlin Gold project is held by Donlin Gold, a limited liability company owned equally by wholly-owned subsidiaries of NOVAGOLD and Barrick.

 

Our corporate goals include continuing to advance Donlin Gold toward a feasibility study and a subsequent construction decision; maintain a favorable reputation of NOVAGOLD and its Donlin Gold project among shareholders; promote strong community outreach and sustainability culture; maintain strong safety and environmental performance; and manage the Company treasury effectively and efficiently. Our operations primarily relate to the delivery of project milestones, including the achievement of various technical, environmental, sustainable development, economic and legal objectives, obtaining necessary permits and maintaining those received in good standing, advancement to a feasibility study, preparation of engineering designs and the financing to fund these objectives.

 

Donlin Gold project

 

In the first quarter of 2025, Donlin Gold achieved a number of milestones. The 2025 field program commenced with camp opening in February, followed by the start of drilling in March after quarter end. A total of 15,000 meters of drilling is planned, primarily focused on grid drilling to further develop the modifying factors (which are considerations used to convert mineral resources to mineral reserves) and mine planning input parameters.

 

Also during the first quarter of 2025, the Company collaborated with Donlin Gold, Calista Corporation (“Calista”), and The Kuskokwim Corporation on key ecological, educational and cultural awareness initiatives – including continued government affairs engagement with state representatives, information sharing about the project, and emphasis on its importance to Alaska and the Yukon-Kuskokwim (“Y-K”) region. 

 

Our share of funding for the Donlin Gold project in the first quarter of 2025 was $3,614. In 2025, we continue to expect our annual share of Donlin Gold funding to be $21,500.

 

Strengthening partnerships and supporting the Y-K region’s environmental and social initiatives

 

In the first quarter of 2025, NOVAGOLD and Donlin Gold staff travelled to Juneau to meet with members of the Alaska State Legislature and to Washington, D.C., joined by Barrick staff, to meet with Alaska’s congressional delegations to share information about Donlin Gold and to reinforce the project’s importance to Alaska and the Y-K region. Donlin Gold also presented to the Alaska House of Representatives’ Energy Committee, as well as to the Resources committees of both the House and Senate, to describe the Donlin Gold project’s energy requirements and to discuss Alaska’s environmental standards. 

 

In January, meaningful collaboration was deepened with the Native Village of Napaimute, with Donlin Gold extending financial assistance to maintain the Kuskokwim River Ice Road – a critical winter infrastructure that ensures the safe transport of residents to community events and serves as a conduit of economic activity for the Kuskokwim River communities. Additionally, Donlin Gold continued its support of and participation in the Alaska Safe Riders initiative, which promotes the secure use of snowmachines, all-terrain vehicles, and recreational off-road vehicles. 

 

 

Financial assistance was also provided to Camp Fire Alaska, an organization dedicated to offering summer camps and programs to youth in rural communities across Alaska. Activities included music, sports, science, field trips, and numerous outdoor recreation opportunities. 

 

Throughout the first quarter, Donlin Gold maintained its dedication to backing local community sports initiatives, exemplified by its sponsorship of the Donlin Gold Basketball Tournament held at the Bethel Regional High School, and Y-K mushers Isaac Underwood, Mike Williams Jr., and Pete Kaiser, the 2019 Iditarod champion and a Donlin Gold employee. Mr. Kaiser, who hails from Bethel, is the first Yup’ik musher and fifth Alaska Native to win an Iditarod championship. Additionally, he recently won his ninth Kuskokwim 300 – a point of tremendous pride for NOVAGOLD. 

 

Upholding current permits and working to secure key state approvals

 

Donlin Gold continued to support the state and federal agencies defending their permits in litigation. The 401 Water Quality Certification, water rights permits and state pipeline ROW in state court have been fully briefed and argued, and decisions are anticipated in 2025. 

 

On June 28, 2021, Earthjustice representing Orutsararmiut Native Council (“ONC”) filed an appeal of the Alaska Department of Environmental Conservation (“ADEC”) Commissioner’s decision upholding the ADEC’s Clean Water Act Section 401 water quality certification in Alaska Superior Court. In December 2021, at the request of the State of Alaska and Donlin Gold, the Alaska Superior Court suspended the case and remanded it to ADEC to allow for consideration of additional technical materials on mercury and temperature. After an administrative process, the Commissioner reaffirmed ADEC’s issuance of the 401 Certification on August 18, 2023. The suspension of the previously filed Alaska Superior Court case was then lifted and Earthjustice filed its opening brief with the Alaska Superior Court in January 2024. Briefing is complete and oral arguments were held on August 30, 2024. A decision is anticipated from the Alaska Superior Court in 2025. 

 

On September 20, 2021, Earthjustice, representing ONC, Cook Inletkeeper, and three Y-K villages, filed an appeal of the State pipeline ROW authorization in Alaska Superior Court. On April 12, 2023, the Alaska Superior Court affirmed the Alaska Department of Natural Resources’ (“ADNR”) issuance of the ROW lease in the Earthjustice case. Earthjustice appealed the Superior Court’s decision to the Alaska Supreme Court. On May 25, 2022, Earthjustice, representing ONC and five Y-K villages, filed an appeal of ADNR’s issuance of certain water rights permits to Donlin Gold in Alaska Superior Court. After briefing and oral argument, on September 1, 2023, the Alaska Superior Court affirmed ADNR’s decision on Donlin Gold’s water rights permits. On October 2, 2023, Earthjustice appealed the Superior Court’s decision to the Alaska Supreme Court. Earthjustice’s opening brief was submitted to the Alaska Supreme Court on January 4, 2024. Response briefs from the State of Alaska and Donlin Gold were completed in April 2024, and Earthjustice subsequently filed their reply brief in May 2024. Briefing on Earthjustice’s appeal of the Alaska Superior Court affirmation of ADNR’s issuance of the State pipeline ROW lease to the Alaska Supreme Court was completed in February 2024. Oral arguments for both the water rights permits and the State pipeline ROW were held November 12, 2024, and a decision is anticipated in 2025. 

 

On April 5, 2023, Earthjustice representing ONC and six Y-K villages filed suit against the U.S. government in Anchorage Federal District Court (the “Federal District Court”) asking the Federal District Court to invalidate the Donlin Gold JROD, which included the Corps’ issuance of the 404 permit and the Department of Interior, Bureau of Land Management’s issuance of the ROW lease for the portions of the pipeline on Federal lands. The U.S. Department of Justice (“DOJ”) is defending the issuance of the permits by those Federal agencies. The State of Alaska, Donlin Gold, and Calista were granted intervenor status in this case. The DOJ filed their brief supporting the issuance of the JROD and the sufficiency of the environmental analysis in the Final Environmental Impact Statement on April 2, 2024. Amicus briefs supporting the project were filed by the village of Crooked Creek and the Alaska federal Congressional delegation. Oral arguments were held on June 24, 2024, and the Federal District Court issued a decision on September 30, 2024. The decision rejected the plaintiffs’ arguments on two of the three issues raised in the litigation but agreed with plaintiffs that the federal agencies took too narrow of a view in analyzing the impact of a theoretical release from the tailings storage facility. The Federal District Court requested supplemental briefing on the appropriate remedy for addressing this issue. On October 7, 2024, the plaintiffs filed a request for reconsideration on one of the issues on which the Federal District Court had ruled against the plaintiffs and, at DOJ’s request, the Federal District Court suspended the schedule for briefing on the appropriate remedy until after the Federal District Court ruled on plaintiffs’ motion for reconsideration. On December 23, 2024, the Federal District Court denied plaintiffs’ request for reconsideration. Remedy briefing was completed in March 2025 and oral argument on remedy has been scheduled for April 14, 2025.  

 

 

To date, all permits and approvals granted to Donlin Gold by federal and state agencies remain issued and in place while the legal challenges described above proceed. We recognize the importance of preparedness and organization in these matters. With the unwavering support of Donlin Gold and its owners, we will continue to back the state and federal agencies in defending their thorough and diligent permitting processes and are committed to working with the federal agencies and all stakeholders on an appropriate remedy to address the Federal District Court’s decision.  

 

Consolidated Financial Results

 

Net loss decreased in the first quarter of 2025 by $1,202 from the comparative 2024 period, primarily due to lower stock-based compensation expense and lower Donlin Gold expenditures. Donlin Gold expenses in the first quarter of 2025 were below the quarterly run rate based on our 2025 guidance as Donlin Gold site activities commenced in February 2025 with the kick-off of this year’s field program. Other than stock-based compensation expense, which declined by $1,426 in the first quarter of 2025, general and administrative costs during the quarter were in line with the comparative 2024 period.

 

Liquidity and Capital Resources

 

Liquidity overview

With total cash and term deposits of $92,969, the Company has sufficient working capital available to cover anticipated funding of the Donlin Gold project and corporate general and administrative costs for at least the next two years at current spending levels. Additional capital may be required to complete an updated Donlin Gold feasibility study. Considerable additional capital will be required if a decision to commence engineering and construction is reached by Donlin Gold. Future financing to fund construction is anticipated through debt and equity offerings, project specific debt, and/or other means. Our continued operations, in the longer term, are dependent on our ability to obtain additional financing or to generate future cash flows. However, there is no assurance that we will be successful in our efforts to raise additional capital on terms favorable to us, or at all. For further information, see section Item 1A, Risk Factors – Our ability to continue the exploration, permitting, development, and construction of the Donlin Gold project, and to continue as a going concern, will depend in part on our ability to obtain suitable financing.

 

Our budgeted cash expenditures in fiscal year 2025 are approximately $37,500, including $21,500 to fund the Donlin Gold project, and $16,000 for corporate general and administrative costs.

 

Our financial position includes the following as of February 28, 2025:

 

●

Cash and cash equivalents of $33,969, primarily held at three large Canadian chartered banks with investment grade credit ratings.

 

●

Term deposits of $59,000 held at two large Canadian chartered banks with investment grade credit ratings with maturities of less than one year.

 

●

Promissory note payable to Barrick of $155,087 including accrued interest at U.S. prime plus 2%, compounded semi-annually. The promissory note and accrued interest are payable from 85% of the Company’s share of revenue from future Donlin Gold project production or from any net proceeds resulting from a reduction of the Company’s interest in Donlin Gold.

 

Cash flows

 

In the first quarter of 2025 cash and cash equivalents decreased by $8,255, primarily to fund our share of Donlin Gold and for corporate administrative expenses.

 

Cash used in operating activities and funding of Donlin Gold in the first quarter of 2025 were generally unchanged from the comparable prior year period. During the first quarter of 2025, the Company received $952 in cash proceeds from the disposal of a marketable security investment previously held by the Company, following its acquisition.

 

Outstanding share data

 

As of March 26, 2025, the Company had 334,646,571 common shares issued and outstanding. Also, as of March 26, 2025, the Company had: i) a total of 8,258,700 stock options outstanding; 7,261,300 with a weighted-average exercise price of $6.11 and the remaining 997,400 of those stock options with a weighted-average exercise price of C$7.56; and ii) 1,225,100 PSUs and 307,555 deferred share units outstanding. Upon exercise or pay out, as applicable, of the foregoing convertible securities, the Company would be required to issue a maximum of 10,403,905 common shares.

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

Our financial instruments are exposed to certain financial risks, including credit and interest rate risks.

 

Credit risk

 

Concentration of credit risk exists with respect to our cash and cash equivalents, and term deposit investments. All term deposits are held at two Canadian chartered banks with investment grade credit ratings and have maturities of less than one year.

 

Interest rate risk

 

The interest rate on the promissory note owed to Barrick is variable with the U.S. prime rate. Based on the amount owing on the promissory note as of February 28, 2025, and assuming all other variables remain constant, a 1% change in the U.S. prime rate would result in an increase/decrease of approximately $1.6 million in the interest accrued on the promissory note per annum.

 

Item 4.

Controls and Procedures

 

Management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of February 28, 2025. On the basis of this review, our President and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the Exchange Act) during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s internal controls over financial reporting are based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

 

PART II     - OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

From time to time, we are a party to routine litigation and proceedings that are considered part of the ordinary course of our business. We are not aware of any material current, pending, or threatened litigation.

 

Item 1A.

Risk Factors

 

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended November 30, 2024, as filed with the SEC on January 23, 2025. The risk factors in our Annual Report on Form 10-K for the year ended November 30, 2024, in addition to the other information set forth in this quarterly report, could materially affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we deem to be immaterial could also materially adversely affect our business, financial condition or results of operations.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.

Defaults Upon Senior Securities

 

None.

 

Item 4.

Mine Safety Disclosures

 

These disclosures are not applicable to us.

 

Item 5.

Other Information.

 

None.

 

Item 6.

Exhibits

 

See Exhibit Index.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: April 1, 2025	NOVAGOLD RESOURCES INC.
	By:	/s/ Gregory A. Lang
		Gregory A. Lang
		President and Chief Executive Officer (principal executive officer)

 

	By:	/s/ Peter Adamek
		Peter Adamek
		Vice President and Chief Financial Officer (principal financial and accounting officer)

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.		Description
31.1		Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2		Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101		The following materials are filed herewith: (i) Inline XBRL Instance, (ii) Inline XBRL Taxonomy Extension Schema, (iii) Inline XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) Inline XBRL Taxonomy Extension Definition.
104		Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.