Environmental and Social Responsibility in NovaGold Resources Inc

NovaGold is a company making geographic expedition activities in the field of cherished metals and necessary development of mineral belongingss in Alaska, British Columbia, Canada, and the United States. The Company spearheads its operations through entirely owned subordinates, partnerships and joint ventures.

On January 8, 2009, the Company sold its retentions in Alexco Resource Corp. On January 7, 2010, NovaGold and its entirely owned subordinate, Alaska Gold Company, took over the Ambler belongings in northern Alaska.

Legal and Ethical Actions

The Company was confronting a category action case in the territory tribunal of New York for misdemeanor of security Torahs. Similar category action cases were besides filed in the Supreme Court of British Columbia and in the Ontario Superior Court of justness in Canada. The $ 28.0 million colony was covered by insurance companies and the company did non hold to payout from ain resources under the footings and conditions. ( Marketwire 2011 )

NovaGold commenced environmental surveies in 1996, which consisted of Meteorology, wetlands word picture related to mineral resource estimations, aquatic surveies in the chief drainages, H2O quality surveies, and some waste stone word picture. This was further expanded to tellurian wildlife and avian studies, detailed aquatic surveies, ambient air monitoring and cultural site studies.

NovaGold is equipped to the full to get the better of any challenges, even though it may necessitate more clip and with the advancement of work, it will get down demoing in the portion monetary value. NovaGold clearly understand its community duties and following all environmental norms would work to acquire all necessary licenses to do the undertaking most successful and lone one of its sort in the universe. ( Safehaven 2010 )

Stockss of NovaGold are traded on NASDAQ, AMEX, and New York Stock Exchange.

Gross and Income

From the latest consequences available for the twelvemonth ended Nov 30, 2010 of NovaGold Resources Inc. , it is seen that gross has fallen to C $ 0.6M. Surprisingly, cost of goods sold has non gone down proportionally and it has remained at C $ 46.3M. Losingss have gone up to the melody of C $ -203.5M.

( NovaGold Financials 2010 )

Basic Financial Ratios & A ; Industrial Comparison

Tax return on Assetss: Net Income/ Total Assets stands negative at -5.17 % , on industrial comparing it stands as 60-80th percentile.

Tax return on Capital: Given as after-tax runing income by the book value of invested capital and that comes to -5.55 % , on industrial comparing it stands as 60-80th percentile.

Tax return on Equity: Net Income/Shareholder ‘s Equity stands at -34.48 % , on industrial comparing it stands as 40-60th percentile.

Recognition Ratios:

Current Ratio: given by Current Assets/Current Liabilities stands at 5.3 times ; on industrial comparing it stands as 60-80th percentile.

Quick Ratio: given as Current Assets-Inventory/Current Liabilitiess stands at 5.1 times ;

on industrial comparing it stands as 60-80th percentile.

Margin Ratios:

Gross Margin: given as Revenue-Cost of goods sold/Revenue that stands at -7631.22 % , on industrial comparing it stands as 0-20th percentile.

EBITDA Margin: -9295.16 % , on industrial comparing it stands as 0-20th percentile.

Debt-Equity Ratio: Entire Debt/ Total Equity stands at 20.5, on industrial comparing it stands as 60-80th percentile.

Entire Liabilities/Total Assets: 23.8, on industrial comparing it stands as 60-80th percentile.

( NovaGold Resources )

Gross saless Prognosis:

NovaGold is a company making geographic expedition activities in the field of cherished metals and necessary development of mineral belongingss in Alaska, British Columbia, Canada, and the United States. The Company spearheads its operations through entirely owned subordinates, partnerships and joint ventures.

The company has outstanding undertakings in Donlin Creek, and Galore Creek. It has besides Ambler copper-gold-silver sedimentation. NovaGold ‘s mines are situated in Alaska, and British Columbia, a part known for authorities support to tackle its excavation potencies.

The Donlin Creek

The Donlin Creek mine, which is traveling to be a flagship mine and is likely to be merely of its sort worldwide that, is capable of bring forthing more than a million ounces of gold per twelvemonth. Donlin Creek mine is jointly owned by NovaGold and Barrick Gold on a 50/50 footing.

NovaGold carried out the feasibleness survey in April 2009 to measure the production and economic estimations from the Donlin Creek plus. Reserve base is estimated at 33.6 million ounce. The mine life is estimated about 25 old ages. Gold production is expected to average around 1.5 million ounces. This is likely to do Donlin Creek as most promising gold bring forthing mines in the universe. This is likely to come into production once licenses are received. The feasibleness survey was done when governing international monetary value of gold was $ 825/ounce.

The purpose of the company direction is to utilize natural gas to cut down operating costs. The feasibleness work will acquire completed by the 2nd half of 2011. Based on this, board will subject a license application integrating natural gas that will extinguish Diesel as a fuel. The board of the company will so apportion fresh budget for the building. ( Gold Stocks Daily )

Galore Creek

This is one of the universe ‘s most promising and largest copper-gold-silver sedimentations. It has highest grade gold Ag sedimentations. NovaGold and Teck Resources each have an equal involvement in the undertaking.

Ever since NovaGold initiated the undertaking of Galore Creek, it received a support from local communities, British Columbia, and Alaska Government. NovaGold received the Environmental Assessment Certificate in February 2007, and after they received the federal and local mandates, the building work went in front swimmingly ; nevertheless, owing to increased capital expenditures building activities was suspended and Board initiated optimisation surveies to happen out some alternate schemes for the undertaking.

With perkiness in gold and Cu markets, NovaGold and its spouse Teck are reexamining more aggressive schemes after holding optimisation surveies which ask for modified attacks to the undertaking leting a shorter building and resettlement of the installations along the entree route to hold easier building and therefore take downing the hazards associated with building and operations. Some of the actions aim at following.

There is a planned 40 % addition in throughput from the original design.

Tunnel and entree route are being realigned.

The processing installation is being realigned to let for the future enlargement

Prefeasibility survey will complete by the 2nd one-fourth of 2011.

Mentality

NovaGold is presently focused on Donlin Creek and Galore Creek belongingss. The company is forming and finishing the feasibleness survey to put in natural gas pipe line, and fixing for the license petitions for the undertaking. Primary power beginning of the undertaking will be natural gas instead than Diesel and will be updating capital demands and hard currency flow estimations.

The feasibleness survey will acquire completed in the 2nd half of 2011 and consequently, Donlin Creek LLC will be continuing to subject license applications for the undertaking. ( Safehaven 2010 )

Expected Tax return

Donlin Creek Project

The undertaking is likely to supply Gold production of about 1.5 million ounces per twelvemonth at an mean cost of $ 444/oz. Entire gold recovery is likely to be 89.5 % through the assorted procedures of suppression, and milling. These procedures are farther followed by floatation, and force per unit area oxidization.

Average one-year hard currency flow: Base $ 1000/oz

First 5 old ages: 944 M

First 10 old ages: 805M

Average one-year Cash Flow

Cash flow in $ M

First Full 5 old ages

944

Accumulative Net Cash Flow After-Tax undiscounted

5,876

IRR Pre-tax in %

12.3

IRR After-tax in

10.2

Payback

5 old ages

Beginning: Donlin Creek Feasibility Study

Donlin Creek has yet non commenced building. NovaGold and Barrick are researching the ways to cut down on cost.

Capital Structure:

NovaGold ‘s authorised portion capital is 1,000,000,000 common portions and 10,000,000 preferable portions.

The company ‘s long term debt is within normality and stands at $ 120M.

Current Evaluation

The estimated annual production of gold to the melody of 2.5 million ounces could acquire a market cap of 35 billion US dollar based on the present rating of $ 1400/ounce. The market cap of NovaGold presently is merely $ 3.3 billion US dollar.

NovaGold does n’t hold any operations ; nevertheless, there are some of import statistics:

Soon, the company has 233 million portions outstanding ;

The company ‘s debt stands at $ 120 million ;

and the company has $ 152 million in hard currency

( Gold Stocks daily )

Dividend: In absence of any excess and no operations, the company has refrained from declaring any dividend. It is improbable that the company will declare any dividend until company ‘s operations are in full swing. Stockholders of the company will hold to wait for a twosome of old ages for a inaugural dividend.

Evaluation of the NovaGold Stock:

The company has non yet commenced any operations and hence no theoretical account of stock rating can be applied. The lone theoretical account that can be applied is based on expected future hard currency flows based on current monetary value of gold, which is governing at $ 1400/ounce and available militias in company ‘s dominant site viz. Donlin Creek and Galore Creek.

Decision: Uncertainty on environmental clearance is decidedly a large issue and likely to take considerable clip.

The Ag liner or for that affair gold liner to the company is lifting monetary values of gold, Ag and Cu. If the company can cut down the building cost of the mines, acquire all environmental clearance by the terminal of this twelvemonth so undertaking offers immense promise to the stockholders ; nevertheless, presently, the company is go throughing through a batch of uncertainnesss for many analysts are of the position that company is improbable to acquire required environmental clearance. NovaGold has ever been banking on Donlin Creek undertaking and building cost is immense to the melody of $ 4- $ 5 billion. It will be an acclivitous undertaking to finance such a large undertaking. As an option, they can besides be sold off to Barrick Gold and as for another option the company board may believe of farther enlargement of equity with debt to finance the building of Donlin Creek. In that event, stock of NovaGold will hold down ward force per unit area and so stock does non offer any immediate promise for investing and it will be better to wait for farther development with respect to environmental clearance and feasibleness survey that is likely to be available by 2nd one-fourth of 2011.