NovaGold completes $15 Million Financing (September 20, 2002)

Vancouver — NovaGold Resources (NRI-T) has completed a equity financing worth $15 million. The money will be used to accelerate the pre-feasibility and feasibility studies on the Donlin Creek gold deposit in Alaska.

The equity offering was oversubscribed at 2,958,040 units. Each unit consisted of one common share and one-half of a common share purchase warrant. Each full warrant allows the holder to purchase one common share of NovaGold within the next 18 months at an exercise price of $6.50 per common share.

The current Donlin Creek drill program is on-track to be completed in October at which time NovaGold will have earned its 70% interest in the project. An updated gold resource estimate will be completed following the conclusion of drill program and receipt of the final assay results.

NovaGold expects that the in-pit expansion drill program will expand the current resources. The measured resource is currently pegged at 5.05 million tonnes grading 3.84 grams gold per tonne, or 623,000 contained ounces. This is based on a 2.0 gram per tonne gold cut-off grade. The indicated portion of the resource tallied to 68.9 million tonnes grading 3.49 grams gold, or 7.73 million contained ounces. The inferred category added another 92.4 million tonnes grading 3.66 grams gold, or 10.87 million contained oz.

When the cut-off grade was elevated to 3.5 grams gold the measured and indicated resource was 26.9 million tonnes grading 5.06 grams gold, or 4.4 million contained oz. The inferred portion weighed in at 36.8 million tonnes grading 5.22 grams gold, or 6.2 million contained oz.

One of the main goals of the current drill program is to delineate additional near-surface, higher-grade resources within, as well as adjacent to, the modeled open pit boundaries with a goal of reducing the overall strip ratio and increasing the total gold resource.

NovaGold will earn a 70% interest in the Donlin Creek gold deposit from Placer Dome by spending a minimum of US$10 million on exploration and development before 2011. Once vested, a joint venture between NovaGold and Placer Dome would be established and Placer Dome will have 90 days to decide on one of three options: a) to remain at 30% interest and participate as a minority partner; or b) to convert to a 5% Net Profits Interest (NPI); or c) to exercise a back-in right to re-acquire a majority interest in the project (70% Placer Dome, 30% NovaGold) by expending three times that expended by NovaGold at the time the back-in is exercised, conducting a feasibility study, and making a decision to mine at a production rate of not less than 600,000 ounces of gold per year within a five year period from the exercise of the back-in. At NovaGold’s election Placer Dome would provide financing for NovaGold’s share of the mine development costs out of future mine cash flow.