NovaGold Earnings Call: Donlin Push Amid Rising Costs

Novagold Resources Inc ((TSE:NG)) has held its Q4 earnings call. Read on for the main highlights of the call.

NovaGold’s Donlin Push Balances Big Upside With Rising Near‑Term Costs

NovaGold Resources’ latest earnings call struck a cautiously optimistic tone, highlighting major strategic wins and technical progress at the giant Donlin Gold project while acknowledging elevated near‑term losses, higher spending commitments, and added permitting work. Management emphasized increased ownership in a tier‑one gold asset, strong institutional backing, a reinforced balance sheet, and de‑risked engineering, arguing these positives outweigh the challenges of larger cash outlays, a supplemental environmental review, and the need for substantial future project financing.

Increased Ownership and Deepened Strategic Partnership

NovaGold now controls a 60% interest in the Donlin Gold project after completing a sizeable transaction with Barrick and bringing in Paulson as a major partner. Paulson’s roughly 40% economic stake—backed by an investment of about $800 million—adds considerable financial depth and strategic alignment around advancing Donlin toward development. Management framed the increased ownership as a transformative step: NovaGold now has greater exposure to a large, high‑grade gold asset in a stable jurisdiction, while partnering with a well‑capitalized, long‑term investor that can help support future financing rounds.

Treasury Strengthened by Significant Financing Activity

Despite a year of heavy capital deployment, NovaGold ended fiscal 2025 with a treasury of $115.1 million, up $13.9 million year over year. This improvement came after closing both a public offering and a private placement that together generated net proceeds of $259.6 million. Management highlighted the ability to raise substantial capital on reasonable terms as a key validation of Donlin’s perceived quality. However, the company acknowledged that the large cash inflows were partially offset by the sizeable payment to boost its Donlin stake, underscoring the capital‑intensive nature of its strategy.

Intensive On‑Site Activity and High‑Grade Drill Results

Operationally, 2025 was described as an active year for Donlin, with an 18,000‑meter drill program completed under what management called “impeccable” safety performance. The drilling returned high‑grade intercepts, including intervals exceeding 26 grams per tonne, reinforcing Donlin’s reputation as a rare large, high‑grade open‑pit gold deposit. These results will feed into resource conversion, mine design work, and the upcoming bankable feasibility study, helping to refine pit geometry, scheduling, and the overall production plan.

A Tier‑One Scale, High‑Grade Gold Resource

Management repeatedly underscored Donlin’s scale and quality as the core of the investment thesis. The project hosts approximately 40–45 million ounces of gold in total resources at a robust average grade around 2.25 grams per tonne—well above typical open‑pit gold grades globally. Planned production averages more than 1 million ounces per year, with the first decade expected to deliver about 1.3 million ounces annually and a mine life of roughly 30 years. At current gold prices, management believes this combination of grade, scale, and longevity positions Donlin as a potential cornerstone asset in the global gold sector.

Permitting Progress Backed by Legal Validation

On the permitting front, NovaGold reported that federal permitting is complete in substance, though a court has remanded one federal permit for further study, requiring a supplemental environmental impact statement focused on tailings release scenarios. State permitting is described as substantially complete. Importantly, court rulings to date have affirmed that regulators conducted thorough analyses and properly documented their decisions, which management views as validation of the underlying work. While the supplemental study adds effort and some timing risk, the company stressed that the process builds on a strong regulatory foundation.

Finalized Tailings Design Reduces Technical Risk

The call highlighted a key de‑risking milestone: the tailings facility design has been finalized and submitted to the state. The design uses a downstream rockfill dam, fully lined and anchored to bedrock—an approach generally seen as more conservative and robust than many legacy tailings structures. Management presented this as a critical step in addressing environmental and safety concerns, noting that a clear, engineered solution is now available to regulators, lenders, and potential partners as they evaluate the project’s risk profile.

Local Hiring and Community Engagement as Core Pillars

NovaGold emphasized its community strategy, noting that more than 80% of site employees during the 2025 program were hired from nearby villages. The company has also expanded its network of shared value agreements, now covering 20 local communities, and has undertaken local restoration projects. Management framed this as both a social license and risk management issue: deeper community ties can help support long‑term project stability, particularly given Donlin’s multi‑decade development horizon and the importance of local buy‑in for permitting and operations.

Near‑Term Execution: BFS, Project Management, and Exploration Upside

The company is preparing to enter its next major technical phase with a bankable feasibility study (BFS). NovaGold expects to announce the engineering firm responsible for the BFS within weeks, with the study itself expected to take around 18 months. A dedicated project manager, Frank Arquise, has been hired to oversee this effort, signaling a more execution‑focused phase for Donlin. Beyond the current resource, management pointed out that only about 5% of the land package—roughly 3 kilometers of an 8‑kilometer mineralized trend—has been explored, leaving roughly 95% of the belt untouched and offering long‑term exploration optionality.

Concentrated Institutional Shareholder Base

NovaGold’s shareholder register remains tightly held, with the top 10 shareholders controlling nearly two‑thirds of the outstanding stock. Management portrayed this concentrated institutional base as a strategic advantage, providing stability, aligned long‑term horizons, and potentially smoother support for future equity financing. The presence of large, committed holders also underpins market confidence in Donlin’s long‑term value, even as the project moves through capital‑intensive and riskier development stages.

Fiscal Discipline Versus Spending Guidance

Although NovaGold is in a development phase, management highlighted a measure of cost discipline. Fiscal 2025 cash expenditures totaled $41.2 million, coming in about $0.8 million below guidance. While the absolute dollar amounts will climb as the project advances, staying within or under budget is important for investor confidence—particularly as the company prepares for substantially higher spending in 2026 to fund its enlarged share of Donlin activities and corporate needs.

Net Losses Driven by One‑Time Warrant Charge

The company reported a fiscal 2025 fourth‑quarter net loss of $15.6 million, an increase of $4.7 million from the prior year period, and a full‑year net loss of $94.7 million. A significant component of this result was a $39.6 million non‑cash, nonrecurring charge associated with warrants issued as consideration for a backstop commitment tied to the Donlin transaction. Management stressed that while headline losses are sizable, a large portion reflects accounting for this one‑time equity‑linked cost rather than ongoing operating burn, which investors may view differently when assessing long‑term value.

Rising Near‑Term Expenditures and Cash Requirements

NovaGold’s financial commitments are rising in tandem with its larger stake in Donlin. The company’s share of Donlin funding increased by $10.1 million in 2025. For 2026, anticipated expenditures are approximately $98.5 million, including about $78.8 million for NovaGold’s 60% share of Donlin spending and $19.7 million for corporate general and administrative costs. While the current treasury provides a buffer, these figures underscore meaningful near‑term cash requirements and the likelihood that NovaGold will need to access capital markets again as Donlin advances through the BFS and toward a construction decision.

Regulatory Remand and Supplemental EIS Timing Risk

The court‑ordered remand for a supplemental EIS focusing on tailings release scenarios represents a notable overhang. Although prior rulings validated the quality of the original EIS and permitting work, the additional study introduces incremental timing and process risk. Management indicated that this work is being folded into a broader, coordinated permitting framework, but investors will be watching for clarity on schedule impacts. The supplementary analysis underscores that, even with strong technical work, major North American projects are subject to complex and evolving regulatory scrutiny.

Slightly Higher Strip Ratio and Cost Implications

An updated technical report on Donlin noted a modest increase in the strip ratio, driven by slightly flattened pit slopes and a different interpretation of dilution. While management characterized the impact as modest, a higher strip ratio typically means increased mining volumes per ounce of ore, which can pressure operating costs. The company expects the upcoming BFS to refine these parameters further, potentially optimizing pit design and operating plans to offset some of the cost implications.

Large Upfront Capital Deployment for Additional Donlin Stake

NovaGold spent $210.1 million at the start of fiscal 2025 to secure an additional 10% ownership interest in Donlin. This move significantly boosted NovaGold’s leverage to the project’s future cash flows but also reduced its immediate liquidity headroom. Management framed the trade‑off as a deliberate long‑term bet: owning more of a tier‑one asset today, at the cost of higher short‑term financial strain. Investors will weigh the enhanced upside against the company’s need to manage its cash runway and future financing steps carefully.

Persistent Need for Major Project Financing

Even with the strengthened treasury and Paulson’s backing, management acknowledged that Donlin will ultimately require substantial additional capital to move from feasibility to construction and then into production. The project’s scale and infrastructure needs imply a large future funding package, likely combining equity, debt, and possibly strategic or offtake arrangements. While management sees strong prospects for capital access given Donlin’s projected economics at current gold prices, the size and timing of future raises remain a key strategic and valuation question for shareholders.

Forward Guidance: Bigger Spend, Key Milestones, and Long Horizon

Looking ahead, NovaGold’s guidance blends rising near‑term spending with clear project milestones. For fiscal 2026, the company expects total expenditures of about $98.5 million, most of which will fund its 60% share of Donlin activities, with the rest covering corporate overhead. The BFS is expected to take roughly 18 months once the engineering firm is formally appointed, and management reiterated Donlin’s target production profile of more than 1 million ounces of gold per year over about 30 years, with approximately 1.3 million ounces annually in the first decade. The team also highlighted that economics at around $2,100 per ounce gold yield double‑digit returns, reinforcing their conviction in the project’s value. Meanwhile, further exploration across the largely unexplored land package could add future upside beyond the already large resource base.

In sum, NovaGold’s earnings call painted a picture of a company doubling down on a world‑class asset, confident in Donlin’s long‑term potential yet candid about the rising near‑term financial and regulatory hurdles. Increased ownership, strong institutional backing, and tangible technical progress at site underpin a constructive long‑term story, but investors will have to navigate higher cash burn, permitting complexity, and the eventual need for major project financing. For those comfortable with development risk and a multi‑year horizon, Donlin’s scale and grade remain the central attractions.