UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 40-F
[ ] Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
[ x ] Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended November 30, 2008
Commission File Number 001-31913
NOVAGOLD RESOURCES INC.
(Exact name of registrant as specified in its charter)
Nova Scotia | 1041 | Not Applicable |
(Province or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code) |
(I.R.S. Employer Identification No.) |
Suite 2300, 200 Granville Street
Vancouver, British
Columbia Canada, V6C 1S4
(604) 669-6227
(Address and
telephone number of registrants principal executive offices)
DL Services, Inc.
1420 Fifth Avenue, Suite 3400
Seattle, Washington 98101
(206) 903-8800
(Name,
address (including zip code) and telephone number (including area code) of agent
for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class: | Name of Each Exchange On Which Registered: |
Common Shares, no par value | NYSE Alternext US LLC |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
For annual reports, indicate by check mark the information filed with this form:
[ x ] Annual Information Form | [ x ] Audited Annual Financial Statements |
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report: 107,518,216
Indicate by check mark whether the
Registrant by filing the information contained in this Form is also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934 (the Exchange Act). If Yes
is marked, indicate the filing number assigned to the Registrant in connection
with such Rule.
[ ] Yes [ x ] No
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [ x ] Yes [ ] No
EXPLANATORY NOTE
NovaGold Resources Inc. (the Registrant) is a Canadian issuer that is permitted, under multijurisdictional disclosure system adopted in the United States, to prepare its Annual Report pursuant to Section 13 of the Securities Exchange Act of 1934 (the Exchange Act) in accordance with disclosure requirements in effect in Canada that differ from those of the United States. The Registrant is a foreign private issuer as defined in Rule 3b-4 under the Exchange Act and in Rule 405 under the Securities Act of 1933. Equity securities of the Registrant are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the 1934 Act pursuant to Rule 3a12-3.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 40-F and the Exhibits included herein contain forward-looking statements concerning the Registrants plans at the Donlin Creek project, the Galore Creek project and Nome Operations (comprising Rock Creek, Big Hurrah and Nome Gold), estimated production, capital and operating cash flow estimates and other matters. 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, using words or phrases such as expects, is expected, anticipates, plans, projects, estimates, assumes, intends strategy, goals, objectives, potential or variations thereof or stating that certain actions, events or results may, could, would, 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 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:
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This list is not exhaustive of the factors that may affect any of the Registrants forward-looking statements. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Registrant 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 the Registrants Annual Information Form filed as Exhibit 1 to this Annual Report on Form 40-F, under the heading Risk Factors and elsewhere. The Registrants forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Registrant does not assume any obligation to update forward-looking statements if circumstances or managements beliefs, expectations or opinions should change. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.
RESOURCE AND RESERVE ESTIMATES
The Registrants Annual Information Form filed as Exhibit 1 to this Annual Report on Form 40-F has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. Unless otherwise indicated, all resource and reserve estimates included in the Registrants Annual Information Form have been prepared in accordance with Canadian National Instrument 43-101 (NI 43-101) and the Canadian Institute of Mining and Metallurgy Classification System. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 permits a historical estimate made prior to the adoption of NI 43-101 that does not comply with NI 43-101 to be disclosed using the historical terminology if the disclosure: (a) identifies the source and date of the historical estimate; (b) comments on the relevance and reliability of the historical estimate; (c) states whether the historical estimate uses categories other than those prescribed by NI 43-101; and (d) includes any more recent estimates or data available.
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Such historical estimates are presented concerning the Registrants Saddle mineralization adjacent to the Rock Creek property.
Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (SEC), and resource information contained herein may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term resource does not equate to the term reserves. Under U.S. 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. The SECs disclosure standards normally do not permit the inclusion of information concerning measured mineral resources, indicated mineral resources or inferred mineral resources or other descriptions of the amount of mineralization in mineral deposits that do not constitute reserves by U.S. standards in documents filed with the SEC. U.S. Investors should also understand that inferred mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimated inferred mineral resources may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of contained ounces in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves by SEC standards as in place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of reserves are also not the same as those of the SEC, and reserves reported by NovaGold in compliance with NI 43-101 may not qualify as reserves under SEC standards. Accordingly, information concerning mineral deposits set forth herein may not be comparable with information made public by companies that report in accordance with United States standards.
CURRENCY
Unless otherwise indicated, all dollar amounts in the Annual Report on Form 40-F are Canadian dollars. The exchange rate of Canadian dollars into United States dollars, based upon the noon rate of exchange as reported by the Bank of Canada was U.S.$1.00 = CDN$1.2372 on November 30, 2008, and was U.S. $1.00 = CDN $1.2541 on February 20, 2009.
ANNUAL INFORMATION FORM
The Registrants Annual Information Form for the fiscal year ended November 30, 2008 is included herein as Exhibit 1.
AUDITED ANNUAL FINANCIAL STATEMENTS AND
MANAGEMENTS
DISCUSSION AND ANALYSIS
Audited Annual Financial Statements
For audited financial statements, including the report of the auditors with respect thereto, see Exhibit 2 included herein. The Registrants financial statements are prepared in accordance with Canadian generally accepted accounting principles (GAAP), which differs from United States GAAP, and is subject to Canadian auditing and auditor independence standards, and therefore may not be comparable to financial statements of United States companies. For a reconciliation of differences between Canadian and United States generally accepted accounting principles, see Note 22 Significant differences from United States accounting principles, of the notes to the financial statements.
Managements Discussion and Analysis
For managements discussion and analysis (MD&A) see Exhibit 3.
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Tax Matters
Purchasing, holding or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this Annual Report on Form 40-F.
DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report on Form 40-F, the Registrant carried out an evaluation, under the supervision of the Registrants Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Registrants disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation as discussed below in the Managements Report on Internal Control over Financial Reporting under the heading Managements Annual Report on Internal Control over Financial Reporting US, the Registrants Chief Executive Officer and Chief Financial Officer have concluded that, as at the end of the period covered by this Annual Report on Form 40-F, the Registrants disclosure controls and procedures are effective to ensure that information required to be disclosed by the Registrant in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to the Registrants management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of NovaGold Resources Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. The Securities and Exchange Act of 1934 in Rule 13a-15(f) and 15d-15(f) defines this as a process designed by, or under the supervision of, the Companys principal executive and principal financial officers and effected by the Companys Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Companys internal control over financial reporting as of November 30, 2008. In making this assessment, the Companys management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework.
Based upon our assessment and those criteria, management concluded that the Companys internal control over financial reporting was effective as of November 30, 2008.
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Based upon our assessment at the previous year end, management concluded that the Companys internal control over financial reporting at November 30, 2007 was ineffective due to a material weakness identified by its external auditors in the preparation and review of the U.S. GAAP reconciliation to Canadian GAAP, specifically in respect to project expenditures capitalized or expensed under U.S. GAAP.
During the year, the Company addressed this material weakness by providing additional training and education for its accounting staff with respect to U.S. GAAP and consulted with external professional expertise on an earlier basis with respect to interpretation issues with U.S. GAAP. Management has concluded that the material weakness that existed at November 30, 2007 has been remediated during 2008.
ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
The required disclosure is included in the Auditors Report that accompanies the registrants Consolidated Financial Statements for the fiscal year ended November 30, 2008, filed as part of this Annual Report on Form 40-F.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
During the period covered by this Annual Report on Form 40-F, no changes occurred in the Registrants internal control over financial reporting, except with respect to remediation efforts associated with the Companys 2007 U.S. GAAP reconciliation material weakness discussed above, that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting.
The Registrants management, including the Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Registrant have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
The reports regarding the effectiveness of internal control over financial reporting are located in Exhibit 2 to this Form 40-F.
CODE OF ETHICS FOR CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL
OFFICER,
VP FINANCE AND CONTROLLER
The Registrant has adopted a Code of Ethics that applies to the Registrants President and Chief Executive Officer, Chief Financial Officer, VP Finance and Controller. It is available on the Registrants website at www.novagold.net and in print to any shareholder who requests it. All amendments to the code, and all waivers of the code with respect to any of the officers covered by it, will be posted on the Registrants website within five business days of the amendment or waiver, submitted on Form 6-K and provided in print to any shareholder who requests them.
The Registrant has also adopted a Code of Conduct that is applicable to all directors, officers and employees, which complies with the definition of a code of ethics as set forth in Item 406 of SEC Regulation S-K. It is available on the Registrants website at www.novagold.net and in print to any shareholder who requests it.
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CORPORATE GOVERNANCE GUIDELINES
The Registrants corporate governance practices are set forth on Schedule A of the Registrants Management Information Circular dated March 24, 2005 in compliance with the rules of the Toronto Stock Exchange and available in print to any shareholder who requests them.
The terms of reference of each of the Audit and Corporate Governance Committee and the Compensation Committee of the Registrant are available on the Registrants website at www.novagold.net and in print to any shareholder who provides the Registrant with a written request.
AUDIT COMMITTEE
The Registrants Board of Directors has a separately-designated standing Audit Committee established for the purpose of overseeing the accounting and financial reporting processes of the Registrant and audits of the Registrants annual financial statements. As at the date of the Annual Report on Form 40-F for the year ended November 30, 2008, the following individuals comprise the entire membership of the Registrants Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act:
James Philip
Kalidas
Madhavpeddi
Tony Giardini
Independence
The Registrant has adopted the criteria for director independence and unrelatedness prescribed by the Sarbanes-Oxley Act of 2002, Section 10A(m)(3) of the Exchange Act and Rule 10A-3(b)(1) promulgated thereunder and the NYSE Alternext US LLC (formerly the American Stock Exchange, or AMEX) (NYSE Alternext), for members of public company audit committees. A majority of the Registrants directors are independent in accordance with these criteria. Additionally, each of the members of the Audit Committee has been determined by the Registrant to be independent in accordance with such criteria.
Audit Committee Financial Expert
James Philip has been determined by the Registrant to meet the audit committee financial expert criteria prescribed by the Securities and Exchange Commission and has been designated as an audit committee financial expert. All three members of the Audit Committee are financially literate, meaning they are able to read and understand the Registrants financial statements and to understand the breadth and level of complexity of the issues that can reasonably be expected to be raised by the Registrants financial statements.
AUDIT COMMITTEE CHARTER
The Registrants Audit Committee Charter is available on the Registrants web site at www.novagold.net and in print to any shareholder who provides the Registrant with a written request.
PRINCIPAL ACCOUNTING FEES AND SERVICES INDEPENDENT AUDITORS
The following table sets forth the Registrants fees billed by its independent auditor, PricewaterhouseCoopers LLP, for the years ended November 30, 2008 and November 30, 2007:
Years ended November 30, | ||
2008 | 2007 | |
Audit Fees: | $608,650 | $824,350 |
Audit-Related Fees: | $nil | $nil |
Tax Fees: | $nil | $nil |
All Other Fees: | $nil | $26,970 |
Total: | $608,650 | $851,320 |
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Audit Fees are the total fees billed by PricewaterhouseCoopers LLP for the audit of the Registrants consolidated annual financial statements, reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees are fees billed by PricewaterhouseCoopers LLP for assurance and related services that are reasonably related to the performance of the audit or review of the Registrants financial statements and are not reported under Audit Fees. This category comprises fees billed for review and advisory services associated with the Registrants financial reporting.
All Other Fees for 2008 and 2007, respectively, are fees charged by PricewaterhouseCoopers LLP for services not described above.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES PROVIDED BY
INDEPENDENT AUDITORS
For information regarding the Audit Committees pre-approval procedures and policies, see Item 9 Directors and Officers Corporate Governance Pre-Approval Policies and Procedures in the Registrants Annual Information Form filed as Exhibit 1 to this Annual Report on Form 40-F. All of the services described in the table above under the heading Principal Accounting Fees and Services Independent Auditors were approved in conformity with the Audit Committees pre-approval process.
OFF-BALANCE SHEET ARRANGEMENTS
The Registrant has not entered into any off-balance sheet arrangements.
TABLE OF CONTRACTUAL COMMITMENTS
The following table lists as of November 30, 2008 information with respect to the Registrants known contractual obligations.
Payments due by period in thousands of Canadian dollars, unless currency is stated | |||||
Contractual Obligations |
Total
|
Less |
1- 3 years
|
3 5 years |
More |
|
than 1
|
|
|
Than 5
|
|
|
year |
|
|
years
|
|
Long-Term Debt Obligations (Convertible Notes) | US33,963 | US5,225 | US10,450 | US10,450 | US7,838 |
Capital (Finance) Lease Obligations | 2,790 | 949 | 1,459 | 382 | - |
Operating Lease Obligations | 6,329 | 942 | 1,586 | 1,199 | 2,602 |
Purchase Obligations | 1,484 | 1,484 | - | - | - |
Convertible Notes Holders Option | US95,000 | - | - | US95,000 | - |
The holders of the convertible notes will have a right to require the Company to repurchase all or part of the convertible notes on May 1, 2013 and upon certain fundamental corporate changes at a price equal to 100% of the principal amount of such notes plus any accrued and unpaid interest.
For additional information related to the Registrants contractual obligations and commitments see Notes 15 and 18c) in the Registrants consolidated financial statements (Exhibit 2) and the information concerning contractual obligations and commitments set forth under the heading Liquidity and capital resources in Managements Discussion and Analysis (Exhibit 3).
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NYSE ALTERNEXT CORPORATE GOVERNANCE
The Registrants common shares are listed on the NYSE Alternext. Section 110 of the AMEX company guide permits the NYSE Alternext to consider the laws, customs and practices of foreign issuers in relaxing certain NYSE Alternext listing criteria, and to grant exemptions from NYSE Alternext listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that the non-complying practice is not prohibited by home country law. A description of the significant ways in which the Registrants governance practices differ from those followed by domestic companies pursuant to NYSE Alternext standards is contained on the Registrants website at www.novagold.net.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.
Consent to Service of Process
The Registrant filed an Appointment of Agent for Service of Process and Undertaking on Form F-X signed by the Registrant and its agent for service of process on October 30, 2003 with respect to the class of securities in relation to which the obligation to file the Form 40-F arises, which Form F-X is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report on Form 40-F to be signed on its behalf by the undersigned, thereunto duly authorized.
NOVAGOLD RESOURCES INC. | |
/s/Robert J. MacDonald | |
R.J. (Don) MacDonald | |
Senior Vice President and Chief Financial Officer | |
Date: February 23, 2009 |
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EXHIBIT INDEX
The following exhibits have been filed as part of the Annual Report on Form 40-F:
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