Thank you for standing by. This is the conference operator. Welcome to the NOvaGold's Second Quarter Financial Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Melanie Hennessey, Vice President and Corporate Communications. Please go ahead.

Thank you, Galine, and good morning, everyone. We are pleased that you have joined us for NOvaGold's 2020 second quarter financial results and for an update on the Donlin Gold project. On today’s call, we have Dr. Thomas Kaplan, NOvaGold's Chairman; Greg Lang, NOvaGold's President and CEO; and David Ottewell, NOvaGold's Vice President and CFO. At the end of the webcast, we will take questions both by phone and by tech. I would like to remind our webcast and call participants that, as stated on Slide 3, any statements made today may contain forward-looking information, such as projections and goals, which are likely to involve risks detailed in our various EDGAR and SEDAR filings and forward-looking disclaimers included in this presentation. With that, I have the pleasure of introducing Greg Lang. Greg?

Thank you, Melanie, and good morning, everyone. Before I provide an overview of the second quarter results, I wanted to address the ongoing pandemic. In order to minimize the risk posed by Covid-19, NovaGold is maintaining a wide ranging set of policies at its offices in Salt Lake City, Vancouver and in conjunction with Barrick at the Donlin Gold office in Anchorage as well implementing an enhanced safety plan at the project site? All of these designed to ensure the safety and wellbeing of all personnel. NOvaGold's most important objective right now is the health and safety of its employees, partners and contractors. To that end, as shown on slide 4, the company has put in place measures to protect its personnel both in an office setting and in the field. Donlin Gold is regularly conducting safety meetings to address hygiene and sanitation practices, we request all employees to monitor their health and consult with health professionals, if feeling any symptoms. We are committed to providing an environment which all of our people make it home safe and healthy everyday. Slide 5, highlights the steady progress in the first half of the year for NOvaGold's operational activities, even with the temporary pause in the drill program during the first quarter. The year started strong with the receipt of State permits followed by preparation of the drill program and mobilization of drill rigs to the site in early March. All before temporarily pausing activities as a precautionary measure as a result of COVID-19. The drill program remobilized in late May, and we currently have four rigs operating. The multi year site investigation that commenced in mid 2019 as part of the project's Dam Safety Certification has been paused due to the prioritization of the ongoing drilling. It's not on the critical…

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

Thank you, Dave. The Donlin Gold project is in the Western part of the Great State of Alaska, as shown on slide 11 and is a 50:50 joint venture partnership with Barrick Gold. Mining is an important part of the Alaskan economy and becoming even more important to the state as revenues and employment decline in other sectors. There are six producing mines in the state and numerous exploration and development projects that are advancing as shown on the map. Other industries there have been experiencing low or no growth in Alaska and the impact of the COVID-19 crisis on the cruise ship and tourist industries may take many years to recover. With a long history of mining and a skilled workforce in the state, Donlin Gold offers the opportunity of a future with good paying, year round careers and training for young people to live close to home and maintain a subsistence way of life. Donlin Gold is largest gold development project in its category, as you can see, by looking at comparable development stage projects. It's truly unique in that it's federally permitted and starts with an endowment of almost 40 million ounces as shown on slide 12. And it's in a jurisdiction where the rule of law is not a novelty and has strong long-term partnerships with the native corporation Calista and TKC. If you look at the peer group average, Donlin's resource is over five times the other projects. People in mining will tell you that greatest king as shown on slide 13 at and 2.25 grams, Donlin Gold has twice the global average grade for large open-pit deposits. As we'll see not only is the global production of gold decreasing but the average grades continue to decline. Last year they decreased by 0.5 gram per…

Thank you very much, Greg. I'm going to take the opportunity today to be able to reacquaint our existing shareholders and the many new potential shareholders that have been attracted to our stock of late. In order to be able to highlight why it is that we believe that Donlin is the greatest gold development story in the world today and that NovaGold as a pure play on Donlin, which we consider to be the next Carlin, it's a great way to be able to play it. In addition, of course, for those who are Barrick shareholders, it gives me an opportunity to be able to explain why there are probably dollars of value in Barrick shares as well as a consequence of the progress which has been made and what Mark Bristow refers to as the global brand that is now Donlin. When we look at the first page or the title of our annual report today. It really does say at all the expression of Tier 1 assets has been most popularized, of course by Mark Bristow. Our -- that, what we have in Donlin is a Tier 1 asset in a Tier 1 jurisdiction. The superlative that can be attached to Donlin make it in the combination of attributes something that's not just the best in the space, but also unique. The reserves, size, the grade, the fact that it will be in one or two phases, the largest pure gold producing mine in the safest jurisdiction in the mine. Running over decades in multiple gold cycles, and obviously because of its superior grade at lower cash cost than other mines. But the story gets even better. This is our stock chart over the last year. I could have put up a two year chart, I could…

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

Thank you. Appreciate it. Hello, fellows. Finally, a real statement is that it's someone like Mark Bristow from Barrick was to come out and say, yes, we're going to expedite the Donlin project and fast rocket or make it one of our priorities. You would see that assured seller run for the hills in a day. They'd be gone. Now I don't think shareholders fully realized or the public fully realizes that $100 increase in the price of gold equates to almost a total market cap of NovaGold. So when you take into account proven improbable resources, me, I firmly believe that by January we are going to hit 2,000 on gold, and I think by the end of 2021 will be at 2,500 to 3,000. When you're talking about $2 trillion deficits for year after year after year from now, it's got to get and it will happen. And just taking into account someone like China. China internally mines 400 tons of gold annually and it's all sold and belongs to the Chinese government. When you look at the last 10 years that's 4,000 tons. Now China publicly admits that their inventories [1,900 -2,000] tons when in fact internally they mined 4,000 not to mention all the gold that they've been buying around the world. I think there's going to come a day that China will announce their gold reserves and that will be when there was a dollar crisis and when that day comes and China announces that they have 20,000 tons of gold, it'd be a whole different matter when it comes to Bretton Woods II. I'm walking as I'm talking to you. I'm sorry. The other query only I believe has one question and that question is, is Barrick allowed to increase the percentage that they own with the project? Are they allowed to buy more stocks or they restricted it just to 50%? And anybody can answer that.

Greg, shall I go ahead?

I'll take it. Well, go ahead, Tom.

No. You go ahead.

All right. So Donlin Gold LLC which holds the Donlin Gold project is 50% owned by Barrick and 50% owned by NovaGold. The Donlin Gold Board has two representatives from each company. The chairmanship alternates every year. This year Katherineraw, Barrick's Senior Executive for North America is the Chairman of Donlin Gold. Next year, I will be the Chairman. But it's a true 50:50 ownership structure in every sense of the word. Neither party has rights to the other does not have.

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

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

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

Absolutely. Thank you

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

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

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

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

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

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

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

Thank you. I was looking at the website and I noticed the feasibility study for the reserve and resources November 20111. And frankly I haven't read the short seller report and I'm not interested in reading it. And I'd like to say something nice about Donlin Creek but I sort of feel as though there are no facts at hand because the feasibility study hasn't been updated for eight years. When are you going to update the feasibility study? And are there a couple of key points of the changes in parameters that you could call our attention to?

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

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

John, I think, the study is still a pretty reasonable expectation of what it will cost to build and operate this mine. The capital was $6.7 billion. There have been some pluses and minuses along the way. We've engaged with outside parties on partnering on the gas pipelines. So that could take a $1 billion off of that. So there's -- the study is dated but it's not been a particularly inflationary time and even up in Alaska wages with all the layoffs in the petroleum industry, wages are not going up if anything they've turned -- turn the corner and are going down. So I think I wouldn't expect any material differences and fuel, don't underestimate the impact of $40 oil on an open pit mine. Fuel is a big part of the operating costs and that's clearly been cut in half. So I think when we're in a position to update the study, I think, particularly if we look at a stage development approach, I don't think I wouldn't expect anything materially different.

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

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

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

Sure. The gas pipeline what we envisioned is a 14-inch pipeline that runs from the Cook Inlet to the Donlin site. It was envisioned to be 14-inch steel; it was designed and costed by CH2 M Hill. They are one of the biggest pipeline design and construction companies operating in Alaska. They've got a proven track record up in the state and it's transmitting gas is a whole lot simpler than transporting liquid. And the study was done by a company that's their bread and butter is building pipelines up in the Arctic. And I think the work is particularly as we permitted it and applied for permits such as our FIMSA special use permit for the pipeline. The design and all aspects of it were reviewed in conjunction with that. And I think it's still remains a viable means of delivering fuel to the site. The current oil prices will take a hard look at that when we update the feasibility study. But it's certainly; there are five lines like it throughout Alaska in the colder climates.

How long does it take?

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

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

Well, I don't want to dwell a lot on the short seller report, but I but I will speak to it. I have been in industry for many years and have read some analyst reports that were -- had some mistakes or somewhat sloppy, but that's not what we're dealing with here. And other reports analysts had presented to us have generally been they asked management to review for accuracy of the reports. Obviously that did not happen with J Capital. And yes it really wasn't an analyst report. Top of the waves a couple things about that report. Our capital cost is $6.7 billion. Any junior analyst with any standing knows the difference between initial capital and sustaining capital. So I think that really is the fact that nobody tried to verify anything in that report speaks to the integrity of the people behind it. Pipelines and barging that's very common up in Alaska to say you can't build in permafrost of course you can. Management ownership in the company has steadily increased not decreased as noted in the report. So it's -- when you've got a 20 page report with literally hundreds of misstatements and misrepresentations, it takes a great deal of time to speak to that. And I would draw everybody's attention to the fact matrix that's on our website that it really just sets the record straight, if you will. I think hat's enough said on that. Please, if you have any lingering doubts about that report I would encourage you to review the fact matrix that we presented and to read our Chairman's letter on how he looks at the company and actions like this.

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

Well, the permitting is very definitely in the homestretch. We're -- the pipeline right away the state had issued the permit and then because of a request for additional information to review the cumulative impacts of the pipeline rather than side with it. The state rescinded the permit and they're now addressing the question raised. We think that will take another six months and they'll reissue the pipeline right away. But the permitting -- the federal permitting is has long since been completed and we're wrapping up the remaining state permits.

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

Well, rest assured that the issue of dilution is my top priority about a year ago when we had our AGM. I think the stock was with a three handle maybe a four handle and I was asked the question about how are we going to deal with financing this project. And I said, my guess is that when gold gets a little bit of a tailwind we will go up to the $9.5 area where we did our last round of financing in 2012. I personally think that anyone who had not sold in the intervening eight years or seven years probably was no longer there. But in any event and that we would move from there to the all-time highs of the last decade, which are 16. And as gold continued to move we would move into the 20s and depending on whether there was a construction decision to be made at that time that's where we would raise the equity for a construction decision. And I stand by that with the exception that I believe that time is really very much on our side more now than even a year ago. And that if I had to guess once we get see our shares back on track, we don't need money until we have a construction decision. And it's likely that our share price in my opinion it's a completely forward-looking statement discounted as you would be higher than in the 20s when we do our next raise. But that has always been my long-standing target just simply based on the fact that it's our stocking trade that when we raise money for a company, when we do a round of capital, we not only try to raise enough to be able to take us to a…

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

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

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