- The law firm release, published
July 8, 2020 in an attempt to solicit clients, is based entirely on a fundamentally flawed “report” issued byJ Capital Research (JCAP) that reiterates numerous false and misleading statements published by the short seller onMay 28, 2020 about the positions and expertise of two of the most professional and experienced mining teams in the world –NOVAGOLD RESOURCES INC. (“NOVAGOLD” or “the Company”) and Barrick Gold Corporation (“Barrick”); and - Shareholders should rely on NOVAGOLD’s comprehensive rebuttals, which were issued on
June 8, 2020 and include a media release, Chairman’s letter to shareholders, and line-by-line Fact Matrix countering each of the short sellers’ false and misleading statements.
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NOVAGOLD RESPONDS TO LAW FIRM’S FOUR INACCURATE STATEMENTS
NOVAGOLD responds to the four misrepresentations below that were included in the law firm’s solicitation release distributed
1. MISREPRESENTATION: “the company’s co-owner, Barrick, told investors it does not even include Donlin in its 10-year plan”
NOVAGOLD and BARRICK: A DEDICATED AND ALIGNED PARTNERSHIP IN DONLIN GOLD LLC
Firstly, Barrick is not NOVAGOLD’s co-owner. It is the Company’s partner in the project. Secondly, this statement by JCAP is cherry-picked and out of context in a deliberately distortive manner for the purpose of misleading investors and injuring its shareholders. The elementary reason Barrick ‘hasn’t included Donlin Gold in its new 10-year plan’ is because the partners, Barrick and NOVAGOLD, are fully aligned in working toward a construction decision at a time when both the project optimization is complete and market conditions are favorable for their shareholders. To suggest otherwise is tantamount to creating negative news where none exists. In actual fact, during the same fourth quarter 2019 earnings conference call1 referenced in the law firm’s solicitation, Dr.
In addition, Barrick provided an update on Donlin Gold, during their first quarter 2020 earnings results webcast presentation on
2. MISREPRESENTATION: “A deposit so remote and technologically challenging that the mine will never be built.”
Objective technical work by NOVAGOLD, Barrick, and a number of the most reputable contractors and engineering firms in the mining industry over nearly two decades have determined that the deposit is most definitely “not so remote and technically challenging that it will never be built”. Suggesting the contrary is indeed nonsense. These experts have determined that Donlin Gold can be built and, in the right market conditions, should be built.
JCAP’s grossly misleading statement about Donlin Gold’s future is particularly groundless given the fact that in
Those are only some of Donlin Gold’s relative advantages. To our knowledge, rarely has a project commenced operations with a gold deposit3 of approximately 39 million ounces of gold in the measured and indicated mineral resource categories, inclusive of proven and probable mineral reserves (541 million tonnes at an average grade of approximately 2.24 grams per tonne in the measured and indicated resource categories on a 100% basis) 4, defined with approximately 1,400 drill holes totaling over 339,000 meters.
NOVAGOLD and Barrick are fully aligned in carefully monitoring all of the above developments to advance Donlin Gold towards construction, at a time when both partners conclude that they can achieve maximum benefits for all stakeholders, including our shareholders. Given the industry’s suffering from both asset scarcity and the ravages of rising jurisdictional risk, we believe that having equal ownership in a Tier 1 asset5 located in one of the safest national jurisdictions6 suggests that time is clearly on our side.
3. MISREPRESENTATION: “The deposit will require
JCAP’s statement that ‘management [is] deliberately misleading investors’ is false and libelous. Management has not misled anyone. Initial capital as per FSU2 (as defined below) is
4. MISREPRESENTATION: “JCAP also contends that “[t]he proposed natural gas pipeline central to powering the project is dead on arrival.” The report quotes an engineer who worked on costing the pipeline as saying he “doesn’t know of any engineering company that has the experience to build such a complex pipeline.”
These are false and misinformed statements. Let us compare those referenced above: On the one side is an unnamed source quoted in JCAP’s “report” and on the other is CH2M Hill (“CH2M”), one of the sector’s most reputable firms. In 2013,
CH2M’s standing in the industry is reflected by the excellent work that was done in support of the natural gas pipeline plan for Donlin Gold – as reinforced by support from four highly experienced pipeline construction contractors, four civil infrastructure contractors, environmental consultants, and a risk analysis by an independent third party consultant. The result: a thorough business and development plan that was completed and included in FSU2. Consistent with Donlin Gold’s commitment to excellence and due diligence,
Dr.
“That a law firm attempted to solicit NOVAGOLD shareholders based entirely on a fundamentally flawed “report” issued by JCAP – one that the Company has systematically shown to be rife with flat-out falsehoods and misleading information – is par for the course in this dirty game. Even with NOVAGOLD’s line-by-line factual rebuttal available to them, the law firm did nothing more than repeat a slapdash mixture of errors of fact, falsehoods, and discredited assertions. The timing of this solicitation is curious – coming the day after NOVAGOLD’s announcement of the filing of its lawsuit for defamation against JCAP in connection with its “short and distort” scheme – a suit that we fully believe NOVAGOLD will win.
We shall not be issuing responses to every dart aimed at us. We seek to highlight Hagens Berman’s press release, however, because it is emblematic of the amateurishness and abject ignorance of the public statements made recently about NOVAGOLD by JCAP and now repeated by others. To the extent that any of our shareholders believe they have been damaged, I encourage them to seek advice about whether any redress is available to them from the real perpetrator of wrongs: JCAP. Those who are interested should examine NOVAGOLD’s rebuttal to JCAP’s tapestry of deceit to understand the truth behind the falsehoods. I am quite sure that any thoughtful examination will conclude that, contrary to Hagens Berman’s narrative, JCAP is the one peddling the falsehoods and misrepresentations. I also suggest that the investing public refresh their understanding of the investment case for NOVAGOLD, for Donlin really is unique in its combination of attributes. There is a reason why NOVAGOLD – a pure play on what we believe to be the best development-stage asset in gold – so outperformed the averages such that we were clearly causing pain to short sellers.
The reasons are straightforward. Donlin Gold is a “category killer” that, we are confident, will not only be built if gold does what we expect it will do but, if anything, likely would be one of the only big mines built during the next bull market in gold. In an era characterized by asset scarcity and dwindling jurisdictional options for miners, it is NOVAGOLD’s contention that Donlin Gold may well be – yes – unique. We are not aware of any other development-stage gold asset in the world that enjoys Donlin Gold’s rare combination of resource size, high grade for an open pit, attractive operating costs, obvious exploration potential, decades-long mine life, pro forma production profile (it has the potential to become the largest pure gold producing mine in the world) – and to be so in
We are confident that informed investors will see the absurdity of JCAP’s so-called analysts whose experience in the sector is so ridiculous when compared to that of NOVAGOLD’s management and investor base. To our knowledge, JCAP has no known experience in mining, other than two past recommendations: namely, a short on Fortescue Metals Group, which subsequently nearly trebled in value, and a bullish stance on Mongolian Mining Corporation. That stock has since fallen 99% in value.
Ultimately, investors should not be fooled by JCAP and see this exercise for what it is: a scam, a heist if you will, that now represents an opportunity to new investors at the expense of the existing ones. The investment case, however, remains stronger than ever. As we have stated multiple times, it is our firm belief that the scarcity of high-quality assets in safe jurisdictions will render NOVAGOLD a “go-to” stock in the gold development space. As a pure play on the Donlin Gold brand that we anticipate will soon be seen as Alaska’s “Carlin Trend”, our company’s outperformance in the marketplace presumably became of great concern to short sellers who had only to look at the price charts to understand that NOVAGOLD represents an extraordinary vehicle for gold investors. In this at least, they are right.”
NOVAGOLD provided a comprehensive rebuttal to the JCAP “report” countering each false and misleading statement. These rebuttal statements were all distributed on
- Media Release: “NOVAGOLD Provides Comprehensive Response to Misleading and False Short-Seller Report”: https://www.novagold.com/_resources/news/2020-06-08.pdf
- Chairman’s Letter: “NOVAGOLD Chairman Thomas S. Kaplan Addresses Misleading Short-and-Distort Report by Short Seller”: https://www.novagold.com/_resources/news/2020-06-08b.pdf
- Line-by-Line “Fact Matrix Report Detailing Falsehoods and Intentionally Misleading Statements Contained in the
May 28, 2020 JCAP Report”: https://www.novagold.com/_resources/news/2020-06-08c.pdf
As announced on
Furthermore, as NOVAGOLD has shown repeatedly, it believes that JCAP is spreading false and misleading information about the Company and is the perpetrator of wrongs. The Company encourages anyone who is interested to read the documents referenced above to see the truth.
About NOVAGOLD
NOVAGOLD is a well-financed precious metals company focused on the development of its 50%-owned Donlin Gold project in
Scientific and Technical Information
Some scientific and technical information contained herein with respect to the Donlin Gold project is derived from the “Donlin Creek Gold Project Alaska, USA NI 43-101 Technical Report on Second Updated Feasibility Study” prepared by AMEC with an effective date of
Clifford Krall, P.E., who is the Mine Engineering Manager for NOVAGOLD and a “qualified person” under NI 43-101, has approved and verified the scientific and technical information related to the Donlin Gold project contained in this media release.
NOVAGOLD Contacts:
Vice President, Corporate Communications
Manager, Investor Relations
604-669-6227 or 1-866-669-6227
Cautionary Note Regarding Forward-Looking Statements
This media release includes certain “forward-looking information” and “forward-looking statements” (collectively “forward-looking statements”) within the meaning of applicable securities legislation, including the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are frequently, but not always, identified by words such as “expects”, “anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible”, and similar expressions, or statements that events, conditions, or results “will”, “may”, “could”, “would” or “should” occur or be achieved. Forward-looking statements are necessarily based on several opinions, estimates and assumptions that management of NOVAGOLD considered appropriate and reasonable as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, included herein are forward-looking statements. These forward-looking statements include statements regarding the response of the Company to the JCAP report; the potential development and construction of Donlin Gold; the sufficiency of funds to continue to advance development of Donlin Gold; perceived merit of properties; mineral reserve and resource estimates; and future share price performance of NOVAGOLD. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements are not historical facts but instead represent NOVAGOLD’s management expectations, estimates and projections regarding future events or circumstances on the date the statements are made.
Important factors that could cause actual results to differ materially from expectations include the need to obtain additional permits and governmental approvals; the timing and likelihood of permits; the need for additional financing to explore and develop properties and availability of financing in the debt and capital markets; the outbreak of the coronavirus global pandemic (COVID-19); uncertainties involved in the interpretation of drill results and geological tests and the estimation of reserves and resources; the need for continued cooperation between NOVAGOLD and Barrick Gold Corp. for the continued exploration, and development and eventual construction of the Donlin Gold property; the need for cooperation of government agencies and native groups in the development and operation of properties; risks of construction and mining projects such as accidents, equipment breakdowns, bad weather, disease pandemics, non-compliance with environmental and permit requirements, unanticipated variation in geological structures, ore grades or recovery rates; unexpected cost increases, which could include significant increases in estimated capital and operating costs; fluctuations in metal prices and currency exchange rates; whether a positive construction decision will be made regarding Donlin Gold or
Cautionary Note to
This media release has been prepared in accordance with the requirements of the securities laws in effect in
On
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1 Barrick Gold Corp. Q4 2019 Earnings Conference Call
2 Slide 20, Barrick Gold “Results for Q1 2020…" webcast presentation,
3 S&P Global Intelligence, research of assets with gold as the primary commodity and level of resources prior to first production, 1990-2020.
4 Donlin Gold data as per the Second Updated Feasibility Study (as defined herein). Donlin Gold measured resources of approximately 8 Mt grading 2.52 g/t and indicated resources of approximately
5 Barrick Gold defines a Tier 1 gold asset as a mine with a stated mine life in excess of 10 years with annual production of at least five hundred thousand ounces of gold and total cash cost per ounce within the bottom half of Wood Mackenzie’s cost curve tools (excluding state-owned and privately owned mines); https://www.barrick.com/English/news/news-details/2019/Nevada-Gold-Mines-Launched-Best-Assets-Best-people-Will-Deliver-Best-Value/default.aspx#:~:text=A%20Tier%20One%20gold%20asset%20is%20a%20mine%20with%20a,owned%20and%20privately%20owned%20mines.
6 Fraser Institute Annual Survey of Mining Companies 2019, Investment Attractiveness Index, where
https://www.fraserinstitute.org/sites/default/files/annual-survey-of-mining-companies-2019.pdf
7 Donlin Gold data as per the Second Updated Feasibility Study (as defined herein). Donlin Gold measured resources of approximately 8 Mt grading 2.52 g/t and indicated resources of approximately
Source:
2020 GlobeNewswire, Inc., source