UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement under Section 14(d)(4) of the Securities Exchange Act of 1934
(Amendment No. ___)
NOVAGOLD RESOURCES INC.
(Name of Subject Company)
NovaGold Resources Inc.
(Name of Persons Filing Statement)
Common Shares
(Title of Class of Securities)
66987E206
(CUSIP Number of Class of Securities)
Rick Van Nieuwenhuyse
NovaGold Resources Inc.
Suite 2300 200 Granville Street
Vancouver, BC V6C 1S4
Canada
(604) 669-6227
(Name, address, and telephone numbers of person
authorized to receive notices and communications
on behalf of the persons filing statement)
Copy to:
Bob Wooder | Christopher J. Barry |
Blake, Cassels & Graydon LLP | Dorsey & Whitney LLP |
595 Burrard Street, Suite 2600 | 1420 Fifth Avenue |
Three Bentall Centre | Suite 3400 |
Vancouver, BC V7X 1L3 | Seattle, WA 98101 |
Canada | USA |
(604) 631-3330 | (206) 903-8800 |
[ x ] Check the box if the filing relates solely to preliminary
communications made before the
commencement of a tender offer.
Legend |
NovaGold will file a directors' circular with Canadian securities regulatory authorities and a recommendation statement with United States Securities and Exchange Commission with the respect to the offer. Investors and shareholders are strongly advised to read the directors' circular and recommendation statement when they become available, as well as any amendments and supplements to those documents, because they will contain important information. Investors and shareholders may obtain a free copy of the directors' circular at www.sedar.com or the recommendation statement from the Securities and Exchange Commission's website at www.sec.gov. Free copies of these documents can also be obtained by directing a request to NovaGold at the address referred to below. YOU SHOULD READ THE TAKE-OVER BID CIRCULAR AND DIRECTORS' CIRCULAR CAREFULLY BEFORE MAKING A DECISION CONCERNING THE OFFER.
Forward-Looking Statements |
This presentation includes certain forward -looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization and resources, exploration results, production, cost estimates and future plans and objectives of the Company, are forward -looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" and elsewhere in the Company's Annual Information Form for the year ended November 30,2005, filed with the Canadian securities regulatory authorities and the Company's annual report on Form 40-F filed with the Securities and Exchange Commission.
NovaGold (AMEX,TSX: NG) |
Shares (millions) | |
Issued & Outstanding | 89.1 |
Fully Diluted | 104.2 |
Average Daily Volume (AMEX + TSX) | ~1 Million shares/day |
Management/Directors Ownership | 10% |
Market Capitalization (Fully Diluted) | US$1.8 B (C$2.0 B) |
Cash + Securities (June 2006) | US$210 M (C$240 M)* |
In-the-Money Warrants/Options | US$105 M (C$120 M)* |
2006 US$176 Million Equity Financing led by: Citigroup, RBC and Bear Stearns Funds for Construction of Rock Creek Mine and Galore Feasibility and Permitting to make Construction decision
* Calculated using exchange rate of 1.14 US$ to 1.00 C$. |
1 |
Key Investment Highlights and Strategy |
Ø | Pipeline of world class, long-lived advanced exploration stage projects in North America |
Ø | Goal to achieve initial annual gold production in 2007 of 100,000 oz/yr, growing to ~1.0 million(1) oz/yr Mid-tier level by 2011 |
Ø | Management team with proven exploration, development, construction and operating expertise |
Ø | Strong balance sheet, unhedged and debt-free |
(1) Assumes NovaGold 70% ownership of Donlin Creek. |
2 |
Summary Terms of the Unsolicited Offer |
Barrick Offer | Ø On July 24, 2006, Barrick Gold announced its intention to launch a US$14.50 per share unsolicited Take-Over Bid for NovaGold |
Ø Implies NovaGold equity value of US$1.5 billion and Enterprise Value of US$1.29 billion | |
Implied Valuation | Ø Enterprise Value / Resources(1) US$33 / oz of Gold |
Ø Implied Premiums(2) 1-day: 24.3% / 1-month: 13.9% | |
Ø 35-day Take-Over Bid begins once formal offer has commenced | |
Structure | • Barrick has not yet filed/mailed its take-over bid circular |
Ø Deal will be financed from existing cash and available credit facilities | |
Ø Receipt of all necessary regulatory clearances | |
Conditions | Ø Absence of material adverse change |
Ø Minimum 75% tender on fully-diluted basis | |
Ø Special committee has been formed | |
Ø RBC and Citigroup retained as financial advisors | |
Company Response | Ø Authorized to enter into discussions with 3rd parties |
Ø Numerous expressions of interest in the past and since the Barrick offer | |
ØCommitted to maximizing Shareholder value |
(1) Assumes NovaGold 70% ownership of Donlin Creek. |
(2) 1-day premium calculation based on July 21st closing price of US$11.67. 1-month premium calculation based on June 23rd closing price of US$12.73. |
3 |
Why Barricks Unsolicited Bid for NG Now? |
NovaGolds Management Believes Barrick:
Ø |
Will not meet its timeline to earn an extra 40% at Donlin Creek |
| |
Ø |
Wants to acquire NovaGold before the company revalues with permits in place and production coming on stream |
Ø |
Needs new large deposits to maintain future production levels |
Ø |
Wants to improve its political risk profile with North American based assets |
4 |
Enterprise Value/Ounce of Total Gold Resource |
Source: Minerals Economics Group.
NovaGold is not yet in production. Assumes valuation Enterprise Value
= Market Cap - Cash + Debt. Updated as of July 21, 2006. NovaGold calculated
using US$ 14.50 offer price and fully - diluted shares outstanding.
NovaGold valuation attributes no value to any additional metal (Copper,
Silver or Zinc) besides Gold. Assumes 70% of Donlin Creek. |
5 |
Precedent Transaction Analysis |
(1) Adjusted price is equal to equity price paid plus debt less cash |
6 |
Pipeline of World Class Mining Projects |
Ø | Donlin Creek, Alaska, USA (70% ownership) | |
• |
Largest undeveloped Gold deposit in North America* | |
• |
Joint venture with Barrick Gold (30%) with option for Barrick to earn additional 40% interest | |
• |
Native American partners Calista Corporation has the option to acquire 15% interest | |
Ø | Nome Gold Mines, Alaska, USA (Rock Creek, Big Hurrah & Nome Gold) (100% ownership) | |
• |
Rock Creek will be Companys first Gold mine to begin operations | |
• |
Permitting and construction in 2006, initial production 2007 | |
• |
Native American Partners Bering Straits Native Corporation and Sitnasauk Corporation | |
Ø | Ambler, Alaska, USA (51% ownership) | |
• |
One of the worlds largest high-grade undeveloped Copper-Zinc-Gold-Silver deposits* | |
• |
Earning 51% joint venture interest with Rio Tinto | |
• |
Native American Partner Nana Regional Corporation | |
Ø | Galore Creek, British Columbia, Canada (100% ownership) | |
• |
One of the worlds largest undeveloped Copper-Gold deposits* | |
• |
Buy-in agreement for 100% ownership on principal property | |
• |
Feasibility Study completed in second half 2006, start construction in 2007 | |
• |
First Nations Partner Tahltan Central Council |
* Source: Minerals Economics Group |
7 |
Project Locations: Alaska / Western Canada |
8 |
Donlin Creek: Project Overview |
Ø | Native Corporation and State of Alaska support for project | |
Ø | One of the Largest undeveloped Gold deposits in the world | |
• | Measured & Indicated Gold Resource: 14.8 M ozs / Inferred Resource: 13.6 M ozs | |
• | Sulfide mineralization grading ~ 3 g/t with ~ 90% recovery using pressure oxidation | |
Ø | NovaGold (70%) and Barrick (30%) joint venture | |
Ø | To earn an additional 40% interest in the project Barrick must: | |
• | Fund or advance all costs to complete Feasibility Study | |
• | Bankable Feasibility Study by November 2007 | |
• | Board of Directors to Approve Construction by November 2007 | |
• | Construction Budget in place by March 2008 | |
Ø | 17 year mine life with annual gold production of 1.0 - 1.3 M ozs from open pit mine in first 5 years | |
Ø | Exploration Program Expanded to $57 Million, 80,000 meter Drill Program (May 2006) |
9 |
Ownership of Donlin Creek |
Ø | NovaGold management believes Barrick will not achieve milestones |
|
• | Pre-Feasibility Study is required to initiate permitting |
|
• | re-Feasibility for Donlin is not targeted until the end of March 2007 |
|
• | After permits have been submitted, it will take at least 2 years to approve |
|
• | We believe permits (including the completion of an Environmental Impact Statement) would be required for a final Bankable Feasibility Study and a valid Board construction decision |
|
|
||
Ø | Barrick / NovaGold initiated strategic discussions in February 2006 |
|
• | Modification of Donlin Creek agreement to allow Barrick to earn its additional 40% interest under a modified timeline |
|
• | Potential joint venture on Galore Creek project |
|
• | No discussion of corporate acquisition occurred at any time |
|
|
||
Ø | If Barricks unsolicited acquisition of NovaGold is successful, it would eliminate any concerns that Barrick may have regarding its ability to meet earn-in milestones at Donlin Creek |
10 |
Donlin Creek, Alaska |
11 |
Donlin Creek, Alaska |
Geologic Cross Section |
12 |
Project Locations: Alaska / Western Canada |
13 |
Nome Gold Mines, Alaska |
14 |
Nome Gold Mines (Rock Creek): | ||
Project Overview |
Ø | Native Corporation and State of Alaska support for project | |
Ø | Final detailed engineering completed | |
Ø | First of three permits received | |
Ø | Construction to start upon receipt of permits in 2006 | |
Ø | Initiate 100,000 oz/yr gold production level in 2007 | |
Ø | Project advantages: | |
• | State maintained road access | |
• | Surplus power available | |
• | Open pit: mineralization starts at surface | |
• | Free milling gold | |
• | Project construction being financed from existing cash | |
Ø | Exploration upside (Big Hurrah, Saddle, Nome District) $3.5 million budgeted 2006 |
15 |
Nome Gold Mines Equipment |
In Port of Nome, Alaska |
16 |
Project Locations: Alaska / Western Canada |
17 |
Ambler Project Overview |
Ø | Earning 51% under Option Agreement from Rio Tinto | |
Ø | NovaGold manager of exploration and development through Feasibility | |
Ø | Inferred Resource 36.3 Million Tonnes (Arctic Deposit) | |
• | Updated NI-43-101(1) complaint in progress |
Gold | Silver | Copper | Zinc | Lead | |
Grade | 0.7 g/t | 55 g/t | 4.0% | 5.5% | 0.8% |
Contained Metal |
0.82 M ozs |
64.1 M ozs |
3.2 B lbs |
4.4 B lbs |
0.6 B lbs |
Ø | 375 square kilometer land position with excellent prospectivity for new discovery of additional deposits |
(1) National Instrument 43-101
- Standard of Disclosure for Mineral Projects, which governs disclosure
of scientific or technical information in relation to mineral projects
by Canadian public companies, requires disclosure of mineral reserves
and resources to fall within specifically defined categories. The historic
resource for the Ambler deposit set out above, although believed
by management of NovaGold to be relevant and reliable, pre-dates NI 43-101
and is not compliant with NI 43-101 resource categories.
|
18 |
Ambler Project, Alaska |
VMS District Regional Geology |
19 |
Project Locations: Alaska / Western Canada |
20 |
Galore Creek, British Columbia |
21 |
Galore Creek: Project Overview |
Ø | One of North Americas Largest Undeveloped Copper-Gold-Silver Deposits | |
Ø | Signed Participation Agreement with Tahltan First Nation | |
Ø | Final Feasibility Study underway, target construction in 2007 | |
Ø | Environmental Assessment process scheduled for completion first half 2007 | |
Ø | 65,000 tpd, 20-year mine life, deposits open to further expansion | |
Ø | High quality concentrate product (30% copper grade) | |
Ø | Low cost green power available (Coast Mountain Hydro Acquisition closing August 3rd) | |
Ø | Initial 6 year expected production: | |
• | 300,000 oz gold, 2.25 M oz silver, 370 M lbs copper annually | |
• | Over $200 million in annual after-tax cash flow at $400/oz Gold and $1/lb Copper | |
• | Total cash costs (co-product): $140/oz for gold and $0.57/lb copper | |
• | Total cash costs (with by-product credits): -$300/oz for gold or $0.36/lb copper | |
Ø | Rothschilds engaged as advisor for project financing | |
Ø | Initial 2006 budget of US$35M to complete Feasibility Study, permitting, expansion drilling and option payment on principal property |
22 |
Galore Creek Schematic Cross Section |
23 |
Galore Creek, British Columbia |
Mine and Facility Plan |
24 |
Comparative Gold Resource Base |
Source:
Metals Economics Group. Includes Proven and Probable Reserves if present
plus Measured and Indicated Resources along with Inferred Resources. NovaGold
does not have any Proven and Probable Reserves. Assumes NovaGold interest
in Donlin is 70%. |
25 |
NovaGold Management Team |
Rick Van Nieuwenhuyse | Don MacDonald | Peter Harris |
President & Chief Executive | SVP & Chief | SVP & Chief Operating Officer |
Officer | Financial Officer |
Greg Johnson | Doug Brown | Nome Gold Mines | Galore Creek Mine | Galore Creek Mine |
VP Corp Communications | VP Business | Operations Team | Operations Team | Construction Team |
& Strategic Development | Development & | |||
Special Projects | Doug Nicholson | Carl Gagnier | Martin Creaney | |
VP/General Manager | VP/General Manager | Project Design and | ||
Alaska Gold | NovaGold Canada | Construction Consultant | ||
Joe Piekenbrock | Ken Pohle | Dean Lindsay | Curtis Williams | |
VP Exploration | Construction Manager | Senior Projects Engineer | Project Manager | |
Galore Creek | Alaska Projects | Warren Woods | Alberto Chang | Alex Argus |
Exploration Team | Exploration Team | Mine Manager | Chief Mining Engineer | Construction Manager |
Keith Lee | Susan Craig | Paul Cocklin | ||
Scott Petsel | Jerry Zieg | Mill Manager | Environmental Manager | Asst Construction Manager |
Exploration Manager | Exploration Manager | |||
Canada | Alaska | Charlotte MacCay | Gary McFatridge | |
Environmental Manager | Earthworks Manager | |||
Jim Muntzert | Stan Dodd | |||
Senior Project Manager | Senior Project Geologist | Human Resources Management | Brad Osaduik | |
Const. Controls Manager | ||||
Sacha Iley | ||||
Human Resources Manager | Andrea Zaradic | |||
Alexco/Yukon Projects | John Odden | Engineering Manager | ||
Senior Project Geologist | Resource & Technology Management | Forrest Kerr Hydroelectric | ||
Mike Stammers | ||||
Senior Project Geologist | Don Penner | Kevin Francis | Jack Cote | |
Senior Project Geologist | Resource Manager | IT Manager |
26 |
NovaGolds Depth in Construction | ||
Management |
Galore Creek Construction Team
Curtis Williams
Galore Creek Construction
Manager
Galore Construction |
Role |
Experience Years |
Major Projects |
C. Williams | Project Manager | 30 |
Zaldivar, Musselwhite, Porgera, Other |
C. Creaney | Site Engineering | 25 |
South Deep, Musselwhite, Diavik Diamond, Zaldivar, Other |
M. Creaney | Project Consultant | 30 |
Pueblo Viejo, South Deep, Zaldivar, Porgera, Other |
A. Argus |
Construction Manager |
35 |
Pueblo Viejo, South Deep, Zaldivar, Musselwhite,
Porgera, |
P. Cocklin | Asst.Construction Manager | 25 |
Porgera, Granny Smith, Musselwhite, Zaldivar, Other |
J. Morrison | Sen. Area Manager - Tunneling | 25 |
Pogo Gold, Kensington, Greens Creek, Nome Marine Placer, Other |
G. McFatridge | Area Manager - Earthworks | 30 |
Dona Lake, Bulyanhula Gold, Musselwhite, Campbell, Other |
L. Chevalier | Area Manager - Earthworks | 35 |
Pogo Gold, Pokrovskoye Gold, Coquihalla Construction, Brenda Mines, Other |
B. Osaduik | Controls Manager | 26 |
Snap Lake, Pueblo Viejo, Pamour Expansion, Red Dog, Other |
I. McNaughton | Contract Management | 30 |
South Deep, Granny Smith, Porgera, Big Bell, Other |
G. Leck | Contract Management | 35 |
Porgera, Las Cristinas, Zaldivar, Misima, Other |
B. Callaghan | Safety Manager | 35 |
Weyerhauser Grande Prairie Pulp Mill, Dow Chemical Hydrocarbons, Shell Caroline Gas Plant, Syncrude Canada, Other |
K. Dawson | Aviation Management | 27 |
Red Mountain, Ministry of Forest, New Zealand Helicopter Logging, Helicopter Audits, Other |
Candidate Selected | Environmental/Sustainability | 20 |
Pueblo Viejo, La Coipa, Zaldivar, Cerro Casale, Other |
Candidate Selected | Design Manager | 20 |
Pueblo Viejo, Porgera, Lihir, Other |
27 |
NovaGolds Depth in Operations |
Carl Gagnier
VP/General Manager
NovaGold Canada
Galore Operations | Role | Experience Years |
Major Projects |
D. Lindsay | Senior Projects Engineer | 37 | Pueblo Viejo, Zaldivar, Gibraltar, Endako, Other |
A. Chang | Chief Mine Engineer | 22 | Yanacocha, Dome, Mt. Milligan, Kemess, Gibraltar, Zaldivar, Other |
S. Petsel | Canada Manager of Exploration | 18 | Red Diamond, Dolores, Kingking, Sunnyside, Other |
S. Craig | Environmental Manager | 20 | Brewery Creek, Castle Mountain, Ministry of Energy |
D. Stoopnikoff | Environmental Superintendent | 13 | Terasen (Gas Pipeline), Premier Gold, Myra Falls, Other |
J. Muntzert | Sr. Project Manager | 30 | Cripple Creek, Donlin Creek, Freeport, Arctic, Other |
F. Gish | Sr. Project Geologist | 25 | Casino Project, MARG, Cash Resources |
S. Morris | Project Geologist | 29 | Campbell, A-J Mining, Big Horn, Miami East, Other |
J. Mallory | PA Implementation Manager | 29 | Zaldivar, La Coipa, Gibraltar |
Forrest Kerr Construction | Years | ||
A. Zaradic | Engineering Manager | 18 | Oyu Tolgoi, Onca Puma Nickel, Ekati, Other |
Candidate Selected | Manager Green Power | 14 | Forrest Kerr, Mclymont Creek, More Creek, Copper Mountain, Other |
N. Brazier | Electrical Design | 30 | South Deep, Zaldivar, Las Cristinas, Porgera |
28 |
Nome Project Team |
Doug Nicholson
VP/General Manager
Alaska Gold
Nome Construction |
Role |
Experience Years |
Major Projects |
K. Pohle | Construction Manager | 31 | Nixon Fork, Fort Knox, Copper Range, Round Mountain, Other |
W. Woods |
Mine Manager |
27 |
Eagle Pitcher Filtration and Minerals, Fort Knox Mine, Round Mountain |
K. Lee |
Mill Manager |
25 |
Red Dog, Grant, Independence, McGrath Municipal Water Treatment, Other |
C. MacCay | Environmental Manager | 20 |
Red Dog, Bema Gold Dredge |
T. Martinson | HR Superintendent | 7 |
Norton Sound Hospital |
R. Manes | Project Manager/Construction Manager | 25 |
Anatolia Minerals, Power Plant, San Cristobal, Kori Kollo, Other |
D. Weber | Project Cost Controls Manager | 20 |
Anatolia Minerals, Power Plant, San Cristobal, Kori Kollo, Other |
L. Wallin | Commissioning Manager | 30 |
Leeville Project |
I. Alexander | Instrument Field Engineer | 12 |
Anatolia Minerals, Nixon Fork, Greater Natural Buttes Processing |
J. Rankin | Area Manager Piping | 30 |
Power Plant, Greater Natural Buttes Processing |
R. Foltyn | Area Manager Mechanical | 35 |
Anatolia Minerals, San Cristobal, Kori Kollo, Nixon Fork |
Nome Operations |
Role |
Experience Years |
Major Projects |
W. Woods |
Mine Manager |
27 |
Eagle Pitcher Filtration and Minerals, Fort Knox Mine, Round Mountain |
K. Lee | Mill Manager | 25 |
Red Dog, Grant Mine, Independence Mine, McGrath Municipal Water Treatment, Other |
J. Odden | Chief Geologist | 15 |
Fort Knox |
T. Martinson | HR Superintendent | 7 |
Norton Sound Hospital |
29 |
Track Record of Consistent and Superior | ||
Shareholder Returns |
30 |
Conclusion |
Ø |
NovaGold has consistently delivered value to shareholders (2000-2006 YTD CAGR: ~70%) |
Ø |
The Board and Management are focused on optimizing our world class assets to maximize shareholder value |
Ø |
Construction and operating management teams are in place to reach full producer status |
Ø |
NovaGold currently owns 70% of Donlin Creek |
Ø |
Management believes it is not possible for Barrick to meet the terms necessary for them to earn additional 40% interest in Donlin Creek |
Ø |
Recent exploration and/or development stage acquisitions are valued at approximately $80/ounce of Gold Resource |
Ø |
Mid-tier producers average valuation is over $200/ounce of Gold Resource |
31 |
Cautionary Note to United States Investors |
This presentation
uses the terms measured, indicated and inferred
resources. United States investors are advised that, while such terms are recognized
and required by Canadian securities laws, the United States Securities and Exchange
Commission (the SEC) does not recognize them. Under United States
standards, mineralization may not be classified as a reserve unless
the determination has been made that the mineralization could be economically
and legally produced or extracted at the time the reserve determination is made.
United States investors are cautioned not to assume that all or any part of
measured or indicated resources will ever be converted into reserves. Further,
inferred resources have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or economically. It cannot
be assumed that all or any part of the inferred resources will ever
be upgraded to a higher category. Therefore, United States investors are also
cautioned not to assume that all or any part of the inferred resources exist,
or that they can be mined legally or economically.