10-K: NOVAGOLD Advances Donlin Gold Project Amidst Ownership Shift

NOVAGOLD increases its stake in the Donlin Gold project to 60%, advances feasibility study, and reports increased net losses for fiscal year 2025.

Summary

• NOVAGOLD increased its economic interest in Donlin Gold LLC to 60% from 50% on June 3, 2025, through a $200 million acquisition.
• Paulson acquired the remaining 40% interest in Donlin Gold for $800 million, with both owners now having equal governance rights.
• The company completed a $195.2 million public equity offering and a $64.4 million private placement, totaling $260.4 million, to fund the acquisition and future project expenses.
• A Bankable Feasibility Study (BFS) is advancing, with a Prime Contractor expected to be selected in the first quarter of 2026.
• An 18,454-meter drill program was completed in 2025, providing critical inputs for engineering, mine planning, and resource modeling.
• Donlin Gold's board approved a fiscal 2026 budget of $131.4 million ($78.8 million NOVAGOLD's share) for BFS, permitting, and other activities.
• Net loss for fiscal 2025 increased to $94.659 million from $45.621 million in 2024, primarily due to a $39.6 million non-cash warrant expense and higher Donlin Gold field expenses.
• Cash resources as of November 30, 2025, were approximately $120 million.
• The Donlin Gold project has proven and probable mineral reserves of 32.8 million ounces of gold averaging 2.02 grams per tonne.
• The total initial capital cost estimate for the Donlin Gold project is $9,233 million, a 24.7% increase from the 2021 estimate.
• Total sustaining capital estimate is $2,325 million, a 34.9% increase from the 2021 estimate.
• Life of Mine (LOM) operating costs total $24,504 million, or $48.54 per tonne processed.
• The project's after-tax Net Present Value (NPV) at a 5% discount rate is $5,058 million, with an after-tax Internal Rate of Return (IRR) of 10.3% and a payback period of 6.5 years.
• The project is most sensitive to gold price and gold grade fluctuations.
• The Alaska Supreme Court upheld the State pipeline Right-of-Way (ROW) and water rights permits in November 2025.
• A federal court remanded the Joint Record of Decision (JROD) to agencies to supplement the Environmental Impact Statement (EIS) analysis on a larger hypothetical tailings release, but permits remain in place.
• NOVAGOLD believes it was a Passive Foreign Investment Company (PFIC) for fiscal year 2025, which could have negative tax consequences for U.S. investors.

Sentiment

Score: 4

Explanation: While the company made a strategic acquisition and is advancing the project, the significant increase in net loss, substantial increases in capital cost estimates, and ongoing permitting delays and legal challenges, coupled with the PFIC status and S-3 ineligibility, present considerable headwinds and financial uncertainty. The positive NPV and IRR are based on a pre-feasibility study and future gold prices, which are subject to significant risks.

Positives

• Increased economic interest in the Donlin Gold project to 60%, solidifying strategic control.
• Successfully completed a $260.4 million equity financing to fund the acquisition and project advancement.
• Advancement of the Bankable Feasibility Study (BFS) with Request for Proposals (RFP) issued and Prime Contractor selection expected in Q1 2026.
• Completed an 18,454-meter drill program in 2025, providing critical data for engineering and resource modeling.
• Appointed Frank Arcese as Project Director, bringing over four decades of global project leadership experience.
• Demonstrated strong community engagement and environmental initiatives, including finalizing 20 Shared Values Statements with local communities.
• Successfully executed channel restoration work at Snow Gulch to restore natural habitat.
• The Alaska Supreme Court upheld the State pipeline Right-of-Way (ROW) and water rights permits, resolving significant legal challenges.
• The Donlin Gold project was formally accepted into the FAST-41 program, a federal initiative to streamline permitting.
• The project's economic evaluation shows positive after-tax results: NPV at 5% of $5,058 million and an IRR of 10.3%.
• The Donlin Gold project boasts substantial proven and probable mineral reserves of 32.8 million ounces of gold.
• Anticipated average annual Life of Mine (LOM) gold production is 1.1 million ounces, with 1.4 million ounces per year for the first five full years of production.
• Maintained an excellent safety record in 2025 with no recordable injuries or lost time incidents for Donlin Gold or NOVAGOLD.

Negatives

• Net loss significantly increased to $94.659 million in fiscal 2025 from $45.621 million in 2024.
• A $39.6 million non-cash, non-recurring charge related to warrants contributed to the increased net loss.
• Higher Donlin Gold field expenses, increasing by $9.0 million in fiscal 2025.
• General and administrative expenses increased by $0.4 million due to higher professional fees.
• The total initial capital cost estimate for the Donlin Gold project increased by 24.7% ($1,831 million) to $9,233 million.
• The total sustaining capital estimate increased by 34.9% ($602 million) to $2,325 million.
• The company is ineligible to use a Form S-3 registration statement to register its securities with the SEC until July 2026 due to a delinquent Form 8-K filing, potentially impacting future capital raises.
• A federal court remanded the Joint Record of Decision (JROD) to agencies for supplemental EIS analysis on a larger hypothetical tailings release, indicating further regulatory hurdles.
• Ongoing legal challenges to the Alaska Department of Environmental Conservation's (ADEC) Clean Water Act Section 401 Certification remain in state court.
• The company believes it was a Passive Foreign Investment Company (PFIC) for fiscal year 2025, which could have negative tax consequences for U.S. investors.
• A promissory note payable to Barrick of $166.3 million (including accrued interest) remains outstanding, with a prepayment option of $100 million expiring December 3, 2026.

Risks

• Uncertainty of whether there will ever be production at the Donlin Gold project.
• Dependence on the cooperation of the co-owner (Paulson) for Donlin Gold project activities, with potential for differing priorities.
• Voting interests are contractually reduced (50% voting interest despite 60% economic interest), reducing ability to assert proportionate rights.
• Failure to maintain an effective system of disclosure controls, as evidenced by a deficiency identified in Q3 2025.
• History of net losses and expectation of future losses until commercial production commences.
• Concentrated property portfolio, making the company solely dependent on the Donlin Gold project.
• Ability to finance the development of the Donlin Gold project through external financing, strategic alliances, or asset sales.
• Uncertainty of estimates for capital costs, operating costs, production, and economic returns, including the impact of inflation.
• Commodity price fluctuations, particularly the volatile market price of gold.
• Risks related to market events and general economic conditions.
• Opposition to operations from local stakeholders or non-governmental organizations (NGOs) or civil society.
• Permits and governmental approvals necessary for development and operation may not be available on a timely basis, subject to reasonable conditions, or at all.
• Uncertainties relating to the assumptions underlying mineral reserve and mineral resource estimates, such as metal pricing, metallurgy, mineability, marketability, and operating/capital costs.
• Inability to develop or access the infrastructure required to construct and operate the Donlin Gold project, given its remote location and challenges with access, water, power, and the natural gas pipeline.
• Uncertainty related to title and other rights to the Donlin Gold project, which are subject to agreements with Native corporations.
• Risks related to the largest shareholder (Electrum) having significant influence on the company.
• Conflicts of interest of some directors and officers due to involvement with other natural resource companies.
• Ongoing reclamation activities on mineral properties and potential requirements to fund additional work.
• Exposure to credit, liquidity, and interest rate risks.
• Mining is inherently risky and subject to conditions or events beyond control, such as environmental hazards, industrial accidents, and extreme weather.
• Significant governmental regulation, including environmental protection, management of toxic substances, and mine safety.
• Environmental laws and regulations may increase costs of doing business and restrict operations.
• Insurance may not cover all potential risks associated with mining operations.
• Title and other rights to mineral properties cannot be guaranteed and may be subject to prior unregistered agreements, transfers, or claims.
• Increased demand for equipment, skilled labor, and services, leading to cost increases.
• Difficulty attracting and retaining qualified management and technical personnel.
• Uncertainty as to the outcome of potential litigation.
• Effects of global climate change on the Donlin Gold project, including impacts on transportation and water management.
• Dependence upon information technology systems, which are susceptible to disruption, damage, failure, and cybersecurity attacks.
• The company's status as a Passive Foreign Investment Company (PFIC) for U.S. investors could have negative tax consequences.
• Potential internal instability of the Waste Rock Facility (WRF) design due to organic and ice-rich overburden deposits.
• The proposed use of a geotextile for filter protection of the Tailings Storage Facility (TSF) underdrain system could delay approval for construction.
• Weak ash layers or shale joints with slickensides in the TSF foundation could require flatter slopes, increasing fill volume and cost.
• Insufficient or inadequate borrow material could delay TSF embankment construction, impacting production.
• Failure of a temporary water diversion dam could create dam safety or operational issues for the TSF.
• Sulfur content variability in mill feed poses a risk to production efficiency.
• Stockpiling sulfide ore may lead to oxidation that could negatively impact flotation performance and gold recovery.
• Intermittent areas of permafrost and poor ground conditions at facility sites could affect foundation design and site preparation.
• Concrete retaining walls within the plant site footprint pose a risk of failure over the 27-year operation.
• The seismic design of plant site buildings and structures is based on the 2006 International Building Code, which may not align with the current 2021 edition.
• Additional Horizontal Directional Drill (HDD) crossings may be required for the natural gas pipeline, potentially increasing costs and delays.
• Groundwater data near major faults remains sparse, increasing uncertainty in hydrogeologic interpretations.
• Use of outdated MODFLOW versions limits accuracy for complex pit simulations and future pit lake modeling.
• Without appropriate controls, widespread arsenic contamination of water resources could occur.
• Reliance on natural gas introduces a strategic risk due to Alaska's limited supply and potential permitting delays for the pipeline.

Future Outlook

The company expects to continue incurring net losses until the Donlin Gold project commences commercial production and generates sufficient revenues. It anticipates raising additional capital through equity and/or debt financings, exercise of stock options, and other means to fund the Bankable Feasibility Study (BFS) and subsequent construction. The timing of development is contingent on obtaining all necessary permits and financing, as well as commodity price fluctuations. The U.S. Army Corps of Engineers (USACE) has submitted a schedule for completing the supplemental Environmental Impact Statement (EIS) analysis by mid-2027. The company is actively engaged with potential projects to address natural gas supply limitations in Alaska, which could benefit the project and regional consumers.

Management Comments

• Management has identified key project requirements and commenced recruiting for critical positions to support the advancement of the BFS and move the project toward construction and commercial operation.
• NOVAGOLD is committed to fostering, cultivating, and preserving a culture of diversity, equity and inclusion, recognizing employees as valuable assets.
• NOVAGOLD's primary objective is to ensure the health and safety of its employees, partners, and contractors, reflected in its Health and Safety Policy and strong safety performance.
• NOVAGOLD continues to support the State of Alaska in defending the Alaska Department of Environmental Conservation's (ADEC) Clean Water Act Section 401 Water Quality Certification, which is the only remaining challenge to Donlin Gold's permits in state court.
• Donlin Gold and its owners continue their unwavering support of the state and federal agencies in defending their thorough and diligent permitting processes, including working with the federal agencies and all stakeholders on an appropriate remedy to address the Federal District Court's remand decision.

Industry Context

The filing positions the Donlin Gold project as potentially the 'largest single gold mine in the United States,' highlighting NOVAGOLD's ambition to be a major developer in the North American gold mining sector. The company operates in a competitive environment for financing and technical expertise. The discussion of Alaska's limited natural gas supply and Donlin Gold's potential as a large industrial off-taker underscores the project's significant regional energy implications and its potential to influence broader industry trends in resource development and infrastructure.

Comparison to Industry Standards

• The process design is based on conventional and proven technology for the concentrator, flotation, pressure oxidation (POX), and cyanidation facilities for large, modern gold processing plants.
• The semi-autogenous mill, ball mill, and pebble crushing (SABC) circuit was selected as the comminution circuit due to its lowest capital cost, ability to cope with clay fraction in ore, suitability for climatic conditions, ease of operation and maintenance, flexibility in throughput rates, wide application in the milling industry, and Barrick's extensive experience.
• The mercury abatement system has been designed to comply with the December 2010 U.S. Environmental Protection Agency (EPA) National Emissions Standard for Hazardous Air Pollutants for gold ore processing and production facilities.
• The Tailings Storage Facility (TSF) design follows the Alaska Department of Natural Resources (ADNR) dam safety guidelines.
• The airstrip design is based on U.S. Department of Transportation, Federal Aviation Administration (FAA) standards.
• The natural gas pipeline will be regulated by the U.S. Department of Transportation (DOT) under Title 49 of the Code of Federal Regulations, Part 192 – Transportation of Natural Gas and Other Gas by Pipeline: Minimum Federal Safety Standards (49 CFR 192).
• The project's approach to community engagement is guided by the principles in the International Council on Mining & Metals (ICMM) Position Statement on Mining and Indigenous Peoples, promoting constructive relationships based on respect, meaningful engagement, and mutual benefit.

Management Changes

Corporate Governance

Legal Proceedings

• Earthjustice, representing Orutsararmiut Traditional Native Council (ONC), Kwethluk, and Tuluksak, filed suit in the U.S. Federal Court for the District of Alaska, challenging BLM's and USACE's issuance of the Joint Record of Decision (JROD). On June 10, 2025, the Federal District Court remanded the matter to federal agencies to supplement the EIS to analyze a larger hypothetical tailings release, but did not vacate the permits.
• Earthjustice appealed the Alaska Superior Court's affirmation of the Alaska Department of Environmental Conservation's (ADEC) Clean Water Act Section 401 Certification to the Alaska Supreme Court. Briefing is in progress as of January 9, 2026.
• The Alaska Supreme Court issued a ruling in November 2025 upholding the Alaska Department of Natural Resources' (ADNR) issuance of the State pipeline Right-of-Way (ROW) and water rights permits, resolving previous legal challenges.

Related Party Transactions

• The company provided management and administrative services to Donlin Gold for $1.2 million in 2025.
• Electrum Strategic Resources L.P. (an affiliate of NOVAGOLD's Chairman, Dr. Thomas Kaplan, and largest shareholder) received 6,375,000 Backstop Warrants with an estimated fair value of approximately $9.9 million as consideration for a backstop commitment, which expired unexercised.
• Electrum also purchased 13,333,334 shares of NOVAGOLD for $50 million in a concurrent private placement.
• A promissory note payable to Barrick of $166.3 million (including $158.9 million principal and $7.38 million accrued interest) remains outstanding, with an option to prepay for $100 million on or before December 3, 2026.

Stakeholder Impact

• **Shareholders**: Experienced dilution from recent equity offerings and face potential future dilution from additional capital raises. U.S. holders are subject to potential negative tax consequences due to the company's Passive Foreign Investment Company (PFIC) status. The largest shareholder, Electrum, continues to exert significant influence.
• **Employees**: The company emphasizes health and safety, diversity, equity, and inclusion. Recruitment for critical positions is underway to support project advancement.
• **Local Communities (Yukon-Kuskokwim region, Alaska Native corporations Calista and TKC)**: The project aims to provide opportunities for direct employment, local procurement, community development, cultural heritage preservation, and environmental restoration. Ongoing engagement and consultation efforts are in place, with 20 Shared Values Statements finalized.
• **Regulatory Authorities**: The project is subject to a rigorous permitting regime, ongoing legal challenges, and the need for continuous compliance with federal, state, and local laws and regulations.
• **Creditors**: The promissory note to Barrick represents a significant liability, with a prepayment option available until December 2026.

Next Steps

• Select a Prime Contractor for the Bankable Feasibility Study (BFS) in the first quarter of 2026.
• Advance the BFS, maintain and secure outstanding permits, and continue government affairs, community relations, workforce development, and environmental activities.
• Complete detailed design packages for dam safety by the end of 2026/early 2027, with potential issuance of Dam Safety Certificates in 2028.
• The U.S. Army Corps of Engineers (USACE) is scheduled to complete the supplemental Environmental Impact Statement (EIS) analysis by mid-2027.
• Finalize a land agreement with Cook Inlet Region, Inc. (CIRI) for the remaining piece of the natural gas pipeline Right-of-Way (ROW).
• Obtain other operational permits immediately prior to construction, such as stream crossing permits from ADF&G, water sources from ADNR, and development permits from the Matanuska-Susitna borough.
• Conduct further evaluation to reduce dilution and optimize mining methods, including fleet sizing and selective mining unit optimization.
• Develop an operational placement plan for the Waste Rock Facility (WRF) facility that considers potential internal instability.
• Perform additional geotechnical testing on ash layers and shale slickensides for the Tailings Storage Facility (TSF) and pit slope design.
• Incorporate the 2025 drilling data information into both the geological model and Mineral Resource block model in the next update.
• Further address supply and demand concerns for the natural gas pipeline for the project and Anchorage-based communities.
• Update closure cost estimates in 2026 to reflect any changes in market conditions or regulatory requirements.
• Complete a reconciliation of the project as described in this report with the existing project permits to inform the upcoming mining study.

Key Dates

Recommendation

The significant increase in capital costs and net losses, coupled with ongoing permitting challenges and the PFIC status, present considerable risks and uncertainties. However, the strategic increase in ownership of the Donlin Gold project, its substantial proven and probable reserves, positive economic indicators (NPV, IRR) from the pre-feasibility study, and strong community engagement provide long-term potential. The stock is likely to remain volatile due to these factors, warranting a 'Hold' as investors await further clarity on financing, permitting, and project development.

Keywords

Gold Mining, Donlin Gold Project, Alaska, SEC Filing, 10-K, Mineral Reserves, Mineral Resources, Feasibility Study, Capital Costs, Operating Costs, Gold Price, Permitting, Environmental Impact, Corporate Governance, Equity Financing, Passive Foreign Investment Company, NOVAGOLD RESOURCES INC.