NOVAGOLD(NG) - 2025 Q3 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section details the nature of forward-looking statements, their inherent risks, and the assumptions they are based upon, particularly concerning the Donlin Gold project Forward-Looking Statements Overview This section outlines the nature of forward-looking statements in the report, which concern future operations, exploration, financial resources, and project viability, including the Donlin Gold project. These statements are not historical facts and involve predictions, expectations, and assumptions about future events - Forward-looking statements cover anticipated results, exploration, financial resources, and future events or conditions, including the Donlin Gold project[6] - These statements are not historical facts and involve predictions, expectations, beliefs, plans, projections, objectives, assumptions, or future events[7] Assumptions and Risks Forward-looking statements are based on material assumptions that could prove incorrect and are subject to various known and unknown risks and uncertainties. These risks include the ability to achieve production at Donlin Gold, dependence on co-owner cooperation, future gold prices, estimated costs, permitting, infrastructure development, and potential litigation outcomes - Forward-looking statements are based on material assumptions that could prove significantly incorrect[8] - Key risks include the ability to achieve production at Donlin Gold, dependence on co-owner cooperation, future gold prices, estimated capital and operating costs, and obtaining necessary permits[8] - Additional risks include uncertainty of Donlin Gold production, financing development, commodity price fluctuations, and market/economic conditions[9] - The company does not assume any obligation to update forward-looking statements unless required by law, and investors should not place undue reliance on them[11] PART I - FINANCIAL INFORMATION This section presents the company's unaudited interim financial statements, management's analysis, market risk disclosures, and internal controls Item 1. Financial Statements This section presents NOVAGOLD's unaudited condensed consolidated interim financial statements, including balance sheets, statements of loss and comprehensive loss, cash flows, and equity. These statements reflect the company's financial position and performance for the periods ended August 31, 2025, and November 30, 2024, and are prepared in accordance with U.S. GAAP Condensed Consolidated Interim Balance Sheets This section presents the company's condensed consolidated interim balance sheets as of August 31, 2025, and November 30, 2024 | ASSETS (US$ thousands) | August 31, 2025 | November 30, 2024 | | :----------------------- | :-------------- | :---------------- | | Cash and cash equivalents | 58,169 | 42,224 | | Term deposits | 67,000 | 59,000 | | Current assets | 126,166 | 102,754 | | Investment in Donlin Gold | 214,948 | 2,597 | | Total Assets | 345,385 | 109,753 | | LIABILITIES (US$ thousands) | | | | Current liabilities | 4,689 | 4,486 | | Promissory note | 162,622 | 151,522 | | Total Liabilities | 168,273 | 157,169 | | EQUITY (DEFICIT) (US$ thousands) | | | | Common shares | 2,251,186 | 1,989,245 | | Accumulated deficit | (2,183,969) | (2,104,932) | | Total Equity (Deficit) | 177,112 | (47,416) | - Total assets significantly increased to $345,385 thousand as of August 31, 2025, from $109,753 thousand as of November 30, 2024, primarily driven by a substantial increase in the Investment in Donlin Gold[15] - Total equity shifted from a deficit of $(47,416) thousand to a positive equity of $177,112 thousand, largely due to increased common shares and contributed surplus[15] Condensed Consolidated Interim Statements of Loss and Comprehensive Loss This section presents the company's condensed consolidated interim statements of loss and comprehensive loss for the periods ended August 31, 2025, and 2024 | (US$ thousands, except per share) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General & administrative | 6,279 | 5,120 | 16,900 | 18,982 | | Equity loss – Donlin Gold | 7,450 | 2,814 | 16,212 | 9,765 | | Total Operating expenses | 13,729 | 7,934 | 33,112 | 28,747 | | Loss from operations | (13,729) | (7,934) | (33,112) | (28,747) | | Warrant expense | — | — | (39,607) | — | | Interest expense - promissory note | (3,827) | (3,833) | (11,100) | (11,132) | | Net loss | (15,646) | (10,743) | (79,037) | (34,761) | | Comprehensive loss | (15,646) | (10,695) | (78,977) | (34,731) | | Net loss per common share | (0.04) | (0.03) | (0.22) | (0.11) | - Net loss for the nine months ended August 31, 2025, significantly increased to $(79,037) thousand from $(34,761) thousand in the prior year, primarily due to a $(39,607) thousand warrant expense[19] - Equity loss from Donlin Gold more than doubled for both the three-month and nine-month periods, reflecting increased activity and the company's higher ownership stake[19] Condensed Consolidated Interim Statements of Cash Flows This section presents the company's condensed consolidated interim statements of cash flows for the periods ended August 31, 2025, and 2024 | (US$ thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | (903) | (4,039) | (7,992) | (10,609) | | Net cash provided by (used in) investing activities | (260,150) | (2,805) | (235,611) | 10,604 | | Net cash provided by (used in) financing activities | 25,481 | (157) | 259,504 | (174) | | Net change in cash and cash equivalents | (235,567) | (6,996) | 15,945 | (177) | | Cash and cash equivalents at end of period | 58,169 | 45,572 | 58,169 | 45,572 | - Net cash used in investing activities dramatically increased to $(260,150) thousand for the three months ended August 31, 2025, primarily due to the $210,050 thousand investment in Donlin Gold[21] - Net cash provided by financing activities saw a significant increase to $259,504 thousand for the nine months ended August 31, 2025, driven by equity issuances totaling $270,754 thousand[21] Condensed Consolidated Interim Statements of Equity (Deficit) This section presents the company's condensed consolidated interim statements of equity (deficit) as of November 30, 2024, and August 31, 2025 | (US$ thousands, shares in thousands) | November 30, 2024 | August 31, 2025 | | :----------------------------------- | :---------------- | :-------------- | | Common shares (Shares) | 334,567 | 406,898 | | Common shares (Amount) | $1,989,245 | $2,251,186 | | Contributed surplus | $93,377 | $134,941 | | Accumulated deficit | $(2,104,932) | $(2,183,969) | | Total equity (deficit) | $(47,416) | $177,112 | - Total equity shifted from a deficit of $(47,416) thousand at November 30, 2024, to a positive equity of $177,112 thousand at August 31, 2025, primarily due to significant equity offerings[23] - Common shares outstanding increased from 334,567 thousand to 406,898 thousand, reflecting new equity issuances[23] Notes to Condensed Consolidated Interim Financial Statements This section provides detailed notes to the unaudited condensed consolidated interim financial statements, explaining the company's operations, significant accounting policies, segment information, and specific financial instrument details. Key updates include the change in functional currency, the increased ownership in Donlin Gold, and details of recent equity transactions and related party dealings NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION This note describes NOVAGOLD's primary asset, the Donlin Gold project, and the recent change in its functional currency to the U.S. dollar - NOVAGOLD's principal asset is a 60% interest in the Donlin Gold project in Alaska, USA, with no realized revenues from this asset[25] - Effective April 22, 2025, the functional currency of NOVAGOLD RESOURCES INC. changed from the Canadian dollar to the U.S. dollar due to increasing U.S. dollar denominated activities and financing[27] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines the company's significant accounting policies, including the treatment of contingent notes receivable, investment in Donlin Gold, and new accounting standards - The company has a $75,000 contingent note receivable from the 2018 sale of Galore Creek, which has not been assigned a value as approval of the project construction plan is not yet probable[29] - Investment in Donlin Gold is accounted for under the equity method; despite a 60% economic interest, the company is not the primary beneficiary of the Variable Interest Entity (VIE) due to equal 50/50 governance rights with its new partner, Paulson[30] - New accounting standards ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) are effective for the fiscal year ended November 30, 2025, with no material impact expected from ASU 2023-07[34][35] NOTE 3 – SEGMENTED INFORMATION This note explains that the company's chief operating decision-maker evaluates the business primarily from a geographic perspective, focusing on the Donlin Gold project - The Chief Executive Officer, as the chief operating decision-maker, considers the business from a geographic perspective, focusing on the performance of the investment in the Donlin Gold project in Alaska, USA[36] NOTE 4 – NOTES RECEIVABLE This note details the company's notes receivable from the sale of its interest in the Galore Creek project, including the contingent portion - The company received $75,000 on July 27, 2021, and $25,000 on July 27, 2023, from Newmont for the sale of its interest in the Galore Creek project[37] - No value was assigned to the final $75,000 contingent note as Galore Creek project construction approval was not probable as of August 31, 2025[38] NOTE 5 – INVESTMENT IN DONLIN GOLD This note details the significant increase in the company's investment in Donlin Gold, including the acquisition of an additional 10% interest - On June 3, 2025, NOVAGOLD acquired an additional 10% interest in Donlin Gold for $200,000, increasing its stake to 60%, while Paulson acquired a 40% interest for $800,000[39] - The acquisition of the additional 10% interest, a working capital adjustment of $980, and transaction costs of $9,070 were capitalized to the Investment in Donlin Gold[40] | Changes in Investment in Donlin Gold (US$ thousands) | Three months ended Aug 31, 2025 | Nine months ended Aug 31, 2025 | | :--------------------------------------------------- | :------------------------------ | :----------------------------- | | Balance – beginning of period | $4,248 | $2,597 | | Acquisition of additional 10% interest | 210,050 | 210,050 | | Share of losses | (7,450) | (16,212) | | Funding | 8,100 | 18,513 | | Balance – end of period | $214,948 | $214,948 | NOTE 6 – OTHER ASSETS This note provides a breakdown of other current and long-term assets, including receivables and prepaid expenses | Other Assets (US$ thousands) | August 31, 2025 | November 30, 2024 | | :--------------------------- | :-------------- | :---------------- | | Other current assets | 997 | 1,530 | | Other long-term assets | 4,271 | 4,402 | | Total Other Assets | 5,268 | 5,932 | - Receivable from Donlin Gold increased from $212 thousand to $651 thousand, while prepaid expenses decreased from $1,207 thousand to $221 thousand[45] NOTE 7 – PROMISSORY NOTE This note details the promissory note payable to Barrick, including its principal, accrued interest, prepayment option, and security package modifications - The company has a promissory note payable to Barrick of $162,622 thousand, comprising $158,916 thousand in principal and $3,706 thousand in accrued interest at U.S. prime plus 2%[46] - An amended and restated secured promissory note provides an option to prepay the note in full for $100,000 thousand on or before December 3, 2026[47] - The security package was modified to exclude Donlin Gold property or membership interest but remains secured by NGRA's right to proceeds from Donlin Gold[47] NOTE 8 – OTHER LIABILITIES This note provides a breakdown of other current and long-term liabilities, including remediation liabilities | Other Liabilities (US$ thousands) | August 31, 2025 | November 30, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Other current liabilities | 335 | 413 | | Other long-term liabilities | 962 | 1,161 | | Total Other Liabilities | 1,297 | 1,574 | - Remediation liabilities decreased from $244 thousand to $159 thousand (current) and from $400 thousand to $325 thousand (long-term)[48] NOTE 9 – EQUITY TRANSACTIONS This note details the company's recent equity offerings, including a public offering, private placement, and the issuance of Backstop Warrants - In May 2025, the company closed a public equity offering and concurrent private placement, raising aggregate gross proceeds of $243,839 thousand, plus an additional $26,915 thousand from an overallotment option exercise[49][50] - The company issued 25,500,000 Backstop Warrants to institutional investors, enabling them to purchase common shares at an exercise price of $3.00 per share, with an estimated fair value of $39,607 thousand recorded as a non-cash expense[51][53] NOTE 10 – FAIR VALUE ACCOUNTING This note describes the company's financial instruments and their fair value classification, particularly marketable equity securities - The company's financial instruments include cash, term deposits, receivables, marketable equity securities, payables, and a promissory note[54] - Marketable equity securities, valued at $3,398 thousand as of August 31, 2025, are classified within Level 1 of the fair value hierarchy due to quoted market prices in active markets[54] NOTE 11 – GENERAL AND ADMINISTRATIVE EXPENSE This note provides a breakdown of general and administrative expenses, highlighting changes in share-based compensation, salaries, and professional fees | G&A Expense (US$ thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Share-based compensation | 2,000 | 515 | 4,393 | 5,319 | | Salaries and benefits | 2,038 | 2,055 | 5,831 | 6,186 | | Professional fees | 1,006 | 1,624 | 3,227 | 4,142 | | Total G&A | 6,279 | 5,120 | 16,900 | 18,982 | - General and administrative expenses increased by $1,159 thousand for the three months ended August 31, 2025, compared to the prior year, primarily due to higher share-based compensation[55] - For the nine months ended August 31, 2025, G&A expenses decreased by $2,082 thousand, mainly due to lower share-based compensation, professional fees, and salaries and benefits[55] NOTE 12 – OTHER INCOME (EXPENSE), NET This note details other income and expenses, net, focusing on changes in the fair market value of marketable equity securities | Other Income (Expense), Net (US$ thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Change in fair market value of marketable equity securities | 662 | 7 | 945 | 978 | | Gain on sale of mineral property | — | — | — | 743 | | Total Other Income (Expense), Net | 670 | (14) | 922 | 1,708 | - Other income, net, for the three months ended August 31, 2025, was $670 thousand, a significant increase from $(14) thousand in the prior year, primarily due to a higher change in fair market value of marketable equity securities[57] NOTE 13 – SHARE-BASED COMPENSATION This note provides a breakdown of share-based compensation expenses and unrecognized compensation costs for stock options and PSU awards | Share-based Compensation (US$ thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Stock options | 1,200 | 485 | 2,440 | 3,134 | | Performance share unit plan | 730 | (39) | 1,745 | 1,982 | | Deferred share unit plan | 70 | 69 | 209 | 203 | | Total Share-based Compensation | 2,000 | 515 | 4,394 | 5,319 | - Total share-based compensation increased to $2,000 thousand for the three months ended August 31, 2025, from $515 thousand in the prior year, mainly due to higher stock option and PSU expenses[58] - As of August 31, 2025, the company had $5,677 thousand of unrecognized compensation cost for 5,308,654 non-vested stock options and $4,919 thousand for 2,074,300 non-vested PSU awards[60][61] NOTE 14 – RELATED PARTY TRANSACTIONS This note details transactions with related parties, including services provided to Donlin Gold and equity transactions involving a major shareholder - The company provided management and administrative services to Donlin Gold for $201 thousand and $533 thousand in the three and nine months ended August 31, 2025, respectively[62] - NOVAGOLD issued 25,500,000 Backstop Warrants with a fair value of $39,607 thousand to institutional investors, including Electrum Strategic Resources L.P., an affiliate of NOVAGOLD's Chairman and largest shareholder[63] - Electrum also purchased 13,333,334 shares in a private placement concurrent with the public equity offering[64] NOTE 15 – SUPPLEMENTAL CASH FLOW INFORMATION This note provides supplemental cash flow details, including interest and dividends received and non-cash financing activities | Supplemental Cash Flow Information (US$ thousands) | Three months ended Aug 31, 2025 | Three months ended Aug 31, 2024 | Nine months ended Aug 31, 2025 | Nine months ended Aug 31, 2024 | | :------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest and dividends received | 1,956 | 365 | 3,871 | 3,445 | | Income taxes paid | — | 437 | 223 | 537 | - The issuance of Backstop Warrants with an estimated total fair value of $39,607 thousand was recorded as a non-cash expense and represents a non-cash financing activity[66] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on NOVAGOLD's financial condition and operational performance for the three and nine months ended August 31, 2025. Key discussions include the acquisition of Barrick's interest in Donlin Gold, related financing activities, project advancements, community engagement, permitting status, consolidated financial results, revised 2025 guidance, and liquidity Highlights This section summarizes key events, including the acquisition of Barrick's interest in Donlin Gold and the associated financing activities - On June 3, 2025, NOVAGOLD and Paulson completed the $1 billion acquisition of Barrick's 50% interest in Donlin Gold, increasing NOVAGOLD's economic stake to 60%[69] - NOVAGOLD funded its portion of the acquisition through a public equity offering ($195.2 million) and a private placement ($64.4 million), totaling $260.4 million[70] Company Overview This section provides an overview of NOVAGOLD's operations, primarily focusing on the Donlin Gold project, and its corporate goals - NOVAGOLD operates in the gold mining industry, primarily focused on advancing the Donlin Gold project in Alaska, where it holds a 60% economic interest[71] - Corporate goals include completing the Bankable Feasibility Study (BFS), maintaining a favorable reputation, promoting community outreach and sustainability, and managing treasury effectively[72] Overview of Donlin Gold Transaction and Financing Activities in the Third Quarter This section details the Donlin Gold acquisition, the amended LLC agreement, the promissory note modification, and the public equity offering - NOVAGOLD acquired an additional 10% interest in Donlin Gold for $200 million, increasing its stake to 60%, while Paulson acquired the remaining 40% for $800 million[73] - An amended and restated LLC agreement for Donlin Gold ensures equal governance rights between NOVAGOLD and Paulson, despite NOVAGOLD's 60% economic interest[74][76] - The promissory note with Barrick was amended, allowing NOVAGOLD to prepay it for $100 million by December 3, 2026, and modifying the security package[75] - A public offering of 47,850,000 common shares at $3.75 per share, including an overallotment option, generated approximately $195.2 million in net proceeds[77] Donlin Gold project This section provides updates on the Donlin Gold project, including the Bankable Feasibility Study, drill program results, community engagement, and permitting status - Donlin Gold issued an RFP for its Bankable Feasibility Study (BFS) to top-tier engineering firms, with contract award expected before year-end[81] - Initial results from the 2025 drill program confirmed consistent mineralization, with standout intervals up to 23.49 g/t gold, supporting a new resource model and BFS advancement[81][82] - Donlin Gold expanded outreach efforts, hosted site tours for investors, analysts, and government representatives, and strengthened community ties through various cultural and social initiatives[78][85][87] - All permits and approvals for Donlin Gold remain in place despite ongoing legal challenges, with the company supporting federal and state agencies in defending their permitting processes[94] Consolidated Financial Results This section discusses the company's consolidated financial performance, highlighting changes in net loss and Donlin Gold expenses - Net loss increased by $4.9 million in Q3 2025 YoY due to higher Donlin Gold field expenses and general and administrative (G&A) expenses[95] - For the first nine months of 2025, net loss increased by $44.3 million YoY, primarily due to a $39.6 million non-cash warrant expense and higher Donlin Gold field expenses[95] - Donlin Gold expenses were higher due to the company's increased 60% share and increased site activity in 2025 compared to 2024[96] Revised 2025 Guidance This section outlines the revised financial guidance for 2025, including increased funding for Donlin Gold and corporate general and administrative costs - NOVAGOLD's share of Donlin Gold 2025 funding is expected to increase to $24.0 million (from $43.0 million total budget) due to its incremental 10% funding obligation[98] - 2025 corporate general and administrative costs are projected to increase to $18.0 million (from $16.0 million) due to higher professional fees related to the Donlin Gold Transaction[98] Liquidity and Capital Resources This section assesses the company's liquidity position, including cash and term deposits, cash flow changes, and outstanding equity instruments - As of August 31, 2025, the company had $125.2 million in total cash and term deposits, sufficient to cover anticipated funding and G&A costs for at least the next two and a half years[100] - Cash equivalents decreased by $235.6 million in Q3 2025, primarily due to the $210.1 million Donlin Gold Transaction payment and net term deposit purchases, partially offset by equity offering proceeds[101] - A backstop agreement provided commitments up to $170 million for the Donlin Gold acquisition, in consideration for which 25,500,000 warrants were issued to investors[103][105] - As of September 26, 2025, the company had 406,926,988 common shares outstanding, along with 25,500,000 warrants, 9,812,434 stock options, 2,074,300 PSUs, and 308,245 deferred share units[107] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to financial risks, specifically credit risk and interest rate risk. Credit risk is concentrated in cash and term deposits held at investment-grade Canadian banks. Interest rate risk arises from the variable interest rate on the promissory note to Barrick, with a 1% change in the U.S. prime rate impacting accrued interest by approximately $1.6 million annually - Credit risk exists with cash, cash equivalents, and term deposit investments, all held at investment-grade Canadian chartered banks[110] - The promissory note to Barrick has a variable interest rate (U.S. prime plus 2%), meaning a 1% change in the U.S. prime rate would alter accrued interest by approximately $1.6 million per annum[111] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of August 31, 2025. A deficiency was identified regarding the untimely filing of a Form 8-K for a director's resignation, which has since been remediated through revised policies and additional training. Despite the past delinquency, controls were deemed effective, though the company will be ineligible to use Form S-3 until July 2026 - A deficiency in disclosure controls was identified due to the untimely filing of a Form 8-K regarding a director's resignation[112] - Remedial steps, including revising written policies and instituting additional training, were taken, and disclosure controls and procedures were concluded to be effective as of August 31, 2025[112] - As a result of the delinquent Form 8-K filing, the company will be ineligible to use Form S-3 to register securities with the SEC until July 2026[112] PART II - OTHER INFORMATION This section covers legal proceedings, updated risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits Item 1. Legal Proceedings The company is routinely involved in ordinary course litigation and proceedings but is not aware of any material current, pending, or threatened litigation - The company is not aware of any material current, pending, or threatened litigation[115] Item 1A. Risk Factors This section updates the risk factors from the Annual Report on Form 10-K, highlighting new or materially changed risks. Key risks include dependence on the cooperation of the Donlin Gold co-owner, the impact of disproportionately reduced voting rights despite a 60% economic interest, and the consequences of a recently identified and remediated deficiency in disclosure controls - The company is dependent on the cooperation of its Donlin Gold co-owner (Paulson) for project exploration and development, as governance rights are shared equally despite NOVAGOLD's 60% economic interest[118] - NOVAGOLD's voting interests in Donlin Gold are contractually reduced to 50% in the Amended and Restated LLC Agreement, which may reduce the value attributed to its interest and its ability to assert proportionate rights[119] - A deficiency in disclosure controls and procedures was identified and remediated, but any future failures could harm operating results, impede timely reporting, and affect access to capital markets[120][121] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[122] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[123] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[124] Item 5. Other Information. There is no other information to report for the period - No other information to report[125] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including key agreements, certifications, and XBRL data - Key exhibits include the Amended and Restated LLC Operating Agreement, Amended and Restated Promissory Note, and various certifications (CEO, CFO)[131]