NOVAGOLD RESOURCES INC 10-K

Item 8. Financial Statements and Supplementary Data   Report of Independent Registered Public Accounting Firm   To the Shareholders and Board of Directors of NOVAGOLD RESOURCES INC.   Opinions on the Financial Statements and Internal Control over Financial Reporting   We have audited the accompanying consolidated balance sheets of NOVAGOLD RESOURCES INC. and its subsidiaries (together, the Company) as of November 30, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, cash flows and equity for each of the three years in the period ended November 30, 2020, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of November 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).   In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 30, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.   Basis for Opinions   The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.   Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.   Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.   Definition and Limitations of Internal Control over Financial Reporting   A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.            53 NOVAGOLD RESOURCES INC.     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   Critical Audit Matter   The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.    Recognition of the contingent note receivable   As described in Notes 2, 4 and 15 to the consolidated financial statements, on July 27, 2018, the Company completed the sale of its 50% interest in the Galore Creek Partnership and its 40% interest in the Copper Canyon mineral property (“the sale”). As part of the consideration for the sale, the Company received a $75 million note (the “contingent note receivable”), which is contingent upon the approval of a Galore Creek project construction plan by the owner(s).  The Company had not assigned a value to the contingent note receivable as management determined that Galore Creek project construction approval was not probable as of the closing of the Galore Creek sale. Management’s determination did not change as of November 30, 2020.  The contingent note will be recognized when, in management’s judgment, it is probable that the payment will occur, and that the amount recorded will not reverse in future periods.   The principal considerations for our determination that performing procedures relating to the recognition of the contingent note receivable is a critical audit matter are that there was judgment made by management when determining if recognition was required, which in turn led to a high degree of subjectivity in performing audit procedures to evaluate management’s determination of the probability of whether a construction plan will be approved.     Addressing the matter involved performing procedures and evaluating audit evidence, in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s process of assessing the basis for recognizing the contingent note receivable. These procedures also included evaluating how management formulated their judgment as to the likelihood of the owner(s) of the project approving the Galore Greek project construction plan. This included considering both publicly available information and the latest annual progress report provided by the owner(s) of the project to the Company under the terms of the sale agreement.       (signed) PricewaterhouseCoopers LLP   Chartered Professional Accountants   Vancouver, Canada January 27, 2021     We have served as the Company's auditor since 1984.     54 NOVAGOLD RESOURCES INC.   CONSOLIDATED BALANCE SHEETS (US dollars in thousands)                         As of November 30,       2020     2019   ASSETS                 Cash and cash equivalents   $ 60,906     $ 67,549   Term deposits     61,000       81,000   Notes receivable (Note 4)     72,611       —   Other assets (Note 6)     1,869       1,790   Current assets     196,386       150,339   Notes receivable (Note 4)     23,405       92,679   Investment in Donlin Gold (Note 5)     2,614       1,840   Other assets (Note 6)     2,036       977   Total assets   $ 224,441     $ 245,835                     LIABILITIES   Accounts payable and accrued liabilities   $ 900     $ 880   Accrued payroll and related benefits     2,215       2,143   Income taxes payable     5       138   Lease obligations (Note 8)     207       —   Other liabilities     182       182   Current liabilities     3,509       3,343   Promissory note (Note 7)     109,801       103,787   Lease obligations (Note 8)     404       —   Deferred income taxes (Note 14)     —       751   Total liabilities     113,714       107,881                     Commitments and contingencies (Notes 7 and 8)                                       EQUITY   Common shares                 Authorized – 1,000 million shares, no par value                 Issued and outstanding – 330.4 and 327.6 million shares, respectively     1,972,029       1,965,573   Contributed surplus     81,203       82,254   Accumulated deficit     ( 1,918,629 )     ( 1,885,065 ) Accumulated other comprehensive loss     ( 23,876 )     ( 24,808 ) Total equity     110,727       137,954   Total liabilities and equity   $ 224,441     $ 245,835     The accompanying notes are an integral part of these consolidated financial statements.   Approved by the Board of Directors   /s/ Gregory A. Lang            /s/ Anthony P. Walsh   55 NOVAGOLD RESOURCES INC.   CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (US dollars in thousands except per share amounts)       Years ended November 30,       2020     2019     2018   Operating expenses:                         General and administrative (Note 11)   $ 18,735     $ 16,321     $ 18,493   Equity loss - Donlin Gold (Note 5)     14,502       10,491       8,798         33,237       26,812       27,291                             Loss from operations     ( 33,237 )     ( 26,812 )     ( 27,291 ) Interest expense on promissory note (Note 7)     ( 6,014 )     ( 7,286 )     ( 6,461 ) Accretion of notes receivable (Note 4)     3,337       3,220       1,061   Other income, net (Note 13)     1,569       4,395       1,751   Loss before income taxes and other items     ( 34,345 )     ( 26,483 )     ( 30,940 ) Income tax recovery (expense) (Note 14)     781       ( 1,278 )     ( 526 ) Net loss from continuing operations     ( 33,564 )     ( 27,761 )     ( 31,466 ) Net loss from discontinued operations, net of tax (Note 15)     —       —       ( 81,299 ) Net loss     ( 33,564 )     ( 27,761 )     ( 112,765 )                           Other comprehensive income (loss):                         Foreign currency translation adjustments     932       48       ( 4,062 ) Reclassification of cumulative translation adjustment included in net loss from discontinued operations (Note 15)     —       —       ( 13,776 ) Unrealized holding gain (loss) on marketable securities during period net of $ nil , $ nil and $ 128 tax recovery, respectively     —       —       ( 541 ) Reclassification adjustment for losses on marketable securities included in net loss from continuing operations (Note 13)     —       —       76         932       48       ( 18,303 )                           Comprehensive loss   $ ( 32,632 )   $ ( 27,713 )   $ ( 131,068 )                           Net loss per common share – basic and diluted                         Continuing operations   $ ( 0.10 )   $ ( 0.09 )   $ ( 0.10 ) Discontinued operations     —       —       ( 0.25 )     $ ( 0.10 )   $ ( 0.09 )   $ ( 0.35 )                           Weighted average shares outstanding                         Basic and diluted (thousands)     329,269       325,785       322,487       The accompanying notes are an integral part of these consolidated financial statements.     56 NOVAGOLD RESOURCES INC.   CONSOLID ATED STATEMENTS OF CASH FLOWS (US dollars in thousands)       Years ended November 30,       2020     2019     2018   Operating activities:                         Net loss   $ ( 33,564 )   $ ( 27,761 )   $ ( 112,765 ) Adjustments:                         Equity loss – Donlin Gold (Note 5)     14,502       10,491       8,798   Share-based compensation (Note 12)     7,057       6,176       7,727   Interest expense on promissory note (Note 7)     6,014       7,286       6,461   Net loss from discontinued operations, net of tax (Note 15)     —       —       81,299   Accretion of notes receivable (Note 4)     ( 3,337 )     ( 3,220 )     ( 1,061 ) Deferred income tax (recovery) expense (Note 14)     ( 751 )     671       80   Foreign exchange loss (gain)     606       ( 20 )     171   Change in fair value of marketable securities     ( 431 )     ( 93 )     —   Other operating adjustments     19       15       98   Net change in operating assets and liabilities (Note 17)     ( 135 )     328       ( 1,200 ) Net cash used in operating activities of continuing operations     ( 10,020 )     ( 6,127 )     ( 10,392 )                           Investing activities:                         Proceeds from term deposits     81,000       219,000       62,000   Purchases of term deposits     ( 61,000 )     ( 154,000 )     ( 152,000 ) Funding of Donlin Gold     ( 15,276 )     ( 11,122 )     ( 8,907 ) Other     —       ( 17 )     ( 13 ) Net cash provided from (used in) investing activities of continuing operations     4,724       53,861       ( 98,920 ) Net cash provided from (used in) investing activities of discontinued operations (Note 15)     —       —       102,448   Net cash provided from (used in) investing activities     4,724       53,861       3,528                             Financing activities:                         Withholding tax on share-based compensation     ( 1,652 )     ( 1,197 )     —   Net cash used in financing activities of continuing operations     ( 1,652 )     ( 1,197 )     —                             Effect of exchange rate changes on cash and cash equivalents     305       8       ( 86 ) Net change in cash and cash equivalents     ( 6,643 )     46,545       ( 6,950 ) Cash and cash equivalents at beginning of period     67,549       21,004       27,954   Cash and cash equivalents at end of period   $ 60,906     $ 67,549     $ 21,004     The accompanying notes are an integral part of these consolidated financial statements.     57 NOVAGOLD RESOURCES INC.   CO NSOLIDATED STATEMENTS OF EQUITY   (US dollars and shares in thousands)       Common shares     Contributed     Accumulated             Total       Shares     Amount     surplus     deficit     AOCL*     equity   November 30, 2017     322,219     $ 1,951,587     $ 83,534     $ ( 1,744,917 )   $ ( 6,175 )   $ 284,029   Share-based compensation     —       —       7,727       —       —       7,727   Deferred share units (DSUs) settled in shares     98       427       ( 427 )     —       —       —   Stock options exercised     906       2,847       ( 2,847 )     —       —       —   Net loss     —       —       —       ( 112,765 )     —       ( 112,765 ) Other comprehensive loss     —       —       —       —       ( 18,303 )     ( 18,303 ) November 30, 2018     323,223     $ 1,954,861     $ 87,987     $ ( 1,857,682 )   $ ( 24,478 )   $ 160,688                                                     Cumulative-effect adjustment of adopting ASU No. 2016-01     —       —       —       378       ( 378 )     —   Share-based compensation     —       —       6,176       —       —       6,176   Performance share units (PSUs) settled in shares     438       2,737       ( 2,737 )     —       —       —   DSUs settled in shares     32       120       ( 120 )     —       —       —   Stock options exercised     3,937       7,855       ( 7,855 )     —       —       —   Withholding tax on PSUs     —       —       ( 1,197 )     —       —       ( 1,197 ) Net loss     —       —       —       ( 27,761 )     —       ( 27,761 ) Other comprehensive income     —       —       —       —       48       48   November 30, 2019     327,630     $ 1,965,573     $ 82,254     $ ( 1,885,065 )   $ ( 24,808 )   $ 137,954                                                     Share-based compensation     —       —       7,057       —       —       7,057   PSUs settled in shares     410       1,026       ( 1,026 )     —       —       —   Stock options exercised     2,372       5,430       ( 5,430 )     —       —       —   Withholding tax on PSUs     —       —       ( 1,652 )     —       —       ( 1,652 ) Net loss     —       —       —       ( 33,564 )     —       ( 33,564 ) Other comprehensive income     —       —       —       —       932       932   November 30, 2020     330,412     $ 1,972,029     $ 81,203     $ ( 1,918,629 )   $ ( 23,876 )   $ 110,727       * Accumulated other comprehensive loss       The accompanying notes are an integral part of these consolidated financial statements.         58 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     NOTE 1 – THE COMPANY     NOVAGOLD RESOURCES INC. and its affiliates and subsidiaries (collectively, “NOVAGOLD” or the “Company”) operate in the mining industry, focused on the exploration for and development of gold mineral properties. The Company has no realized revenues from its planned principal business purpose. The Company’s principal asset is a 50 % interest in the Donlin Gold project in Alaska, USA. The Donlin Gold project is owned and operated by Donlin Gold LLC, a limited liability company that is owned equally by wholly-owned subsidiaries of NOVAGOLD and Barrick Gold Corporation (“Barrick”).     NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Presentation   The Consolidated Financial Statements include the accounts of NOVAGOLD RESOURCES INC. and its wholly-owned subsidiaries NOVAGOLD U.S. Holdings Inc., NOVAGOLD Resources Alaska Inc., NOVAGOLD USA, Inc., and AGC Resources Inc. All inter-company transactions and balances are eliminated on consolidation.   The Consolidated Financial Statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP). The preparation of the Company’s Consolidated Financial Statements in accordance with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of expenses during the reporting period. The Company bases its estimates and assumptions on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from the amounts recorded in these Consolidated Financial Statements.   References in these Consolidated Financial Statements and Notes to $ refer to United States (US) dollars and C$ to Canadian dollars. Dollar amounts are in thousands, except for per share amounts.   Foreign c urrency   The functional currency for NOVAGOLD RESOURCES INC. is the Canadian dollar and the functional currency for the Company’s U.S. operations is the U.S. dollar. Therefore, gains and losses on U.S. dollar denominated transactions and the effect of translating U.S. dollar denominated balances of Canadian operations are recorded in net loss. The effects of translating the Company’s Canadian operations from the Canadian dollar to the U.S. dollar are recorded in Other comprehensive income (loss).   Cash and cash equivalents   Cash and cash equivalents consist of cash balances and highly liquid investments with original maturities of three months or less, that are considered to be cash equivalents. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.   Term deposits   The Company’s term deposits are classified as held to maturity and recorded at cost. Term deposits are held at Chartered Canadian banks with original maturities of 12 months or less. The term deposits are not traded in an active market.   Discontinued o perations   The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results when the business is classified as held for sale. The results of discontinued operations are reported in Net income (loss) from discontinued operations , net of tax in the accompanying Consolidated Statements of Operations for current and prior periods, including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less cost to sell.   On July 27, 2018, the Company completed the sale of its 50 % interest in the Galore Creek Partnership (GCP) and its 40 % interest in the Copper Canyon mineral property in British Columbia, Canada (collectively referred to herein as “Galore Creek”). As a result, the Company presents Galore Creek as a discontinued operation for all periods presented. Accordingly, the Consolidated Statements of Loss and Comprehensive Loss and Cash Flows have been reclassified to present Galore Creek as a discontinued operation for all periods presented, and the amounts presented in these notes relate only to continuing operations unless otherwise noted. For additional information regarding discontinued operations, see Note 15.   59 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Contingent note receivable   A portion of the proceeds related to the sale of Galore Creek to Newmont includes a $ 75,000 note receivable, contingent upon the approval of a Galore Creek project construction plan by the owner(s). The Company has not assigned a value to the contingent note receivable as management determined that the approval of the Galore Creek project construction was not probable as of the closing of the Galore Creek sale or in subsequent periods. The contingent note will be recognized when, in management’s judgement, it is probable that the payment will occur, and that the amount recorded will not reverse in future periods.   Investment in affiliates   Investments in unconsolidated ventures over which the Company has the ability to exercise significant influence, but does not control, are accounted for under the equity method and include the Company’s investment in the Donlin Gold project. The Company identified Donlin Gold LLC as a Variable Interest Entity (VIE) as the entity is dependent on funding from its owners. All funding, ownership, voting rights, and power to exercise control is shared equally on a 50/50 basis between the owners of the VIE. Therefore, the Company has determined that it is not the primary beneficiary of the VIE. The Company’s maximum exposure to loss is its equity investment in Donlin Gold LLC.   The equity method is a basis of accounting for investments whereby the investment is initially recorded at cost and the carrying value is adjusted thereafter to include the investor’s pro rata share of post-acquisition earnings or losses of the investee, as computed by the consolidation method. Cash funding increases the carrying value of the investment. Profit distributions received or receivable from an investee reduce the carrying value of the investment.   Donlin Gold LLC is a non-publicly traded equity investee owning an exploration and development project. Therefore, the Company assesses whether there has been a potential impairment triggering event for other-than-temporary impairment by testing the underlying assets of the equity investee for recoverability and assessing whether there has been a change in the development plan or strategy for the project. If the underlying assets are not recoverable, the Company will record an impairment charge equal to the difference between the carrying amount of the investee and its fair value.   Income taxes   The Company accounts for income taxes using the liability method, recognizing certain temporary differences between the financial reporting basis of the Company’s liabilities and assets and the related income tax basis for such liabilities and assets. This method generates deferred income tax liabilities and assets for the Company, as measured by the statutory tax rates in effect. The Company derives its deferred income tax charge or benefit by recording the change in deferred income tax liabilities and asset balances for the year.   The Company’s deferred income tax assets include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.   Share-based payments   The Company records share-based compensation awards exchanged for employee services at fair value on the date of the grant and expenses the awards in the Consolidated Statements of Loss over the requisite employee service period. The fair values of stock options are determined using a Black-Scholes option pricing model. The fair values of PSUs are determined using a Monte Carlo valuation model. The Company’s estimates may be impacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additional stock option grants, estimates of forfeitures, the Company’s performance, and the Company’s performance in relation to its peers.   Net income (loss) per common share   Basic and diluted income (loss) per share are presented for Net income (loss). Basic income (loss) per share is computed by dividing Net income (loss) by the weighted-average number of outstanding common shares for the period. Diluted income per share reflects the potential dilution that could occur if securities or other contracts that may require the issuance of common shares in the future were converted. Diluted income per share is computed by increasing the weighted-average number of outstanding common shares to include the additional common shares that would be outstanding after conversion and adjusting net income for changes that would result from the conversion. Only those securities or other contracts that result in a reduction in earnings per share are included in the calculation.   60 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Recently adopted accounting pronouncements   Leases   In February 2016, Accounting Standards Update (“ASU”) No. 2016 - 02 was issued which, together with subsequent amendments, is included in ASC 842, Leases. The standard was issued to increase transparency and comparability among organizations by requiring the recognition of right-of-use ("ROU") assets and lease liabilities on the balance sheet for all leases with an initial term greater than one year. Certain qualitative and quantitative disclosures are also required.   On December 1, 2019, the Company adopted this standard using the modified retrospective approach with the effective date as of the date of initial application. Consequently, results for the year ended November 30, 2020 are presented under ASC Topic 842. No prior period amounts were adjusted and continue to be reported in accordance with previous lease guidance, ASC Topic 840, Leases. All leases were reassessed under the new standard including lease identification, lease classification, and initial direct costs in relation to its leases in effect as of December 1, 2019. The Company also elected the practical expedients allowing: i) the use of hindsight in determining the lease term and assessing impairment of ROU assets based on all facts and circumstances through the effective date of the new standard; ii) the short-term lease recognition exemption whereby ROU assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year; and iii) to combine lease and non-lease components and expense variable payments as rent/lease expense in the period incurred.   Adoption of the new standard resulted in recording an operating lease ROU asset and operating lease liability of approximately $ 399 on our Consolidated Balance Sheet as of December 1, 2019. Adoption of the standard did not have an impact on the Company’s beginning accumulated deficit, results from operations or cash flows. For required qualitative and quantitative disclosures related to leasing arrangements beginning in the period of adoption, see Note 8. Changes to the Company’s accounting policy as a result of adoption are discussed below.   The Company reviews all contracts and determines if the arrangement represents or contains a lease, at inception. Operating leases are included in  Other non-current assets  and  Other current  and  non-current liabilities  in the Consolidated Balance Sheets. The Company does not have any finance leases.   Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments. The operating lease ROU asset also includes any upfront lease payments made and excludes lease incentives and initial direct costs incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with a term of 12 months or less are not recorded on the balance sheet. The Company’s lease agreements do not contain any residual value guarantees.   Recently is sued accounting pronouncements   Fair Value Disclosure Requirements   In August 2018, ASU No. 2018 - 13 was issued to modify and enhance the disclosure requirements for fair value measurements. This update is effective in fiscal years, including interim periods, beginning after December 1, 2020. Adoption of this guidance is not expected to significantly impact the Company’s note disclosures.     NOTE 3 – SEGMENTED INFORMATION   Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. The Chief Executive Officer considers the business from a geographic perspective considering the performance of our investments in the Donlin Gold project in Alaska, USA (Note 5 ) and, prior to its disposal on July 27, 2018, the Galore Creek project in British Columbia, Canada (Note 15 ).   61 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)       NOTE 4 – NOTES RECEIVABLE   The Company has notes receivable from Newmont Corporation (“Newmont”) including a $ 75,000 note receivable upon the earlier of the completion of a new Galore Creek project pre-feasibility study or July 27, 2021, and a $ 25,000 note receivable upon the earlier of the completion of a Galore Creek project feasibility study or July 27, 2023. On closing of the Galore Creek sale, management estimated the fair value of the $ 75,000 and $ 25,000 notes receivable at $ 88,398 , assuming payments in three and five years, respectively, at a discount rate of 3.6 % based on quoted market values for Newmont debt with a similar term. The carrying values of the notes receivable are being accreted to $75,000 and $25,000 over three and five years, respectively. As of November 30, 2020, the carrying value of the notes receivable was $ 96,016 including $ 7,618 of accumulated accretion. A contingent note for $75,000 is receivable upon approval of a Galore Creek project construction plan by the owner(s). No value was assigned to the final $75,000 contingent note receivable. Management determined that Galore Creek project construction approval was not probable as of the closing of the Galore Creek sale. Management’s assessment did not change as of November 30, 2020.   Changes in the Company’s Notes Receivable are summarized as follows:       Years ended November 30,       2020     2019     2018   Balance – beginning of period   $ 92,679     $ 89,459     $ —   Fair value of notes receivable     —       —       88,398   Accretion of notes receivable     3,337       3,220       1,061   Balance – end of period   $ 96,016     $ 92,679     $ 89,459     Notes receivable consist of:       As of November 30,       2020     2019   Current portion   $ 72,611     $ —   Non-current portion     23,405       92,679       $ 96,016     $ 92,679       NOTE 5 – INVESTMENT IN DONLIN GOLD   The Donlin Gold project is owned and operated by Donlin Gold LLC, a limited liability company in which wholly-owned subsidiaries of NOVAGOLD and Barrick each own a 50 % interest. Donlin Gold LLC has a board of four directors, with two directors selected by Barrick and two directors selected by the Company. All significant decisions related to Donlin Gold LLC require the approval of at least a majority of the Donlin Gold LLC board members.   Changes in the Company’s I nvestment in Donlin Gold are summarized as follows:       Years ended November 30,       2020     2019     2018   Balance – beginning of period   $ 1,840     $ 1,209     $ 1,100   Share of losses:                         Mineral property expenditures     ( 14,339 )     ( 10,434 )     ( 8,785 ) Depreciation     ( 163 )     ( 57 )     ( 13 )       ( 14,502 )     ( 10,491 )     ( 8,798 ) Funding     15,276       11,122       8,907   Balance – end of period   $ 2,614     $ 1,840     $ 1,209     The following amounts represent the Company’s 50% share of the assets and liabilities of Donlin Gold LLC. Donlin Gold LLC capitalized the initial contribution of the Donlin Gold property as Non-current assets: Mineral property with a carrying value of $ 64,000 , resulting in a higher carrying value of the mineral property than that of the Company.   62 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)         As of November 30,       2020     2019   Current assets: Cash, prepaid expenses, and other receivables   $ 2,654     $ 3,115   Non-current assets: Right-of-use assets, property and equipment     1,339       462   Non-current assets: Mineral property     32,615       32,692   Current liabilities: Accounts payable, accrued liabilities and lease obligations     ( 1,271 )     ( 1,737 ) Non-current liabilities: Reclamation and lease obligations     ( 723 )     ( 692 ) Net assets   $ 34,614     $ 33,840       NOTE 6 – OTHER ASSETS       As of November 30,       2020     2019   Other current assets:                 Accounts and interest receivable   $ 577     $ 1,100   Prepaid expenses     1,292       690       $ 1,869     $ 1,790                     Other long-term assets:                 Marketable equity securities   $ 1,402     $ 935   Right-of-use assets     600       —   Office equipment     34       42       $ 2,036     $ 977       NOTE 7 – PROMISSORY NOTE   The Company has a promissory note payable to Barrick of $ 109,801 , comprised of $ 51,576 in principal, and $ 58,225 in accrued interest at U.S. prime plus 2 %. The promissory note resulted from the agreement that led to the formation of Donlin Gold LLC, where the Company agreed to reimburse Barrick for a portion of their expenditures incurred from April 1, 2006 to November 30, 2007. The promissory note and accrued interest are payable from 85 % of the Company’s share of revenue from future mine production or from any net proceeds resulting from a reduction of the Company’s interest in Donlin Gold LLC. The carrying value of the promissory note approximates fair value.   Changes in the Company’s Promissory Note is summarized as follows:       Years ended November 30,       2020     2019     2018   Balance – beginning of period   $ 103,787     $ 96,501     $ 90,040   Interest expense on promissory note     6,014       7,286       6,461   Balance – end of period   $ 109,801     $ 103,787     $ 96,501       NOTE 8 – LEASES   The Company leases office space under non-cancelable operating leases with original lease terms of five years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional five years. These optional periods have not been considered in the determination of ROU assets or lease liabilities associated with these leases as management did not consider it reasonably certain it would exercise the options.   The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. Additionally, short-term leases, which have an initial term of 12 months or less, are not recorded in the Consolidated Balance Sheets.   63 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Lease expenses are included in General and administrative expense – Office expense on the Consolidated Statements of Loss and include the following components for the year ended November 30, 2020:   Operating lease cost   $ 216   Variable lease cost     120   Short-term lease cost     4       $ 340     On February 1, 2020, the Company recorded a new operating lease obligation of $ 380 arising from obtaining ROU assets.   Future minimum lease payments under non-cancellable operating leases as of November 30, 2020, were as follows:   2021   $ 232   2022     237   2023     90   2024     92   2025     8   Thereafter     —   Total future minimum lease payments     659   Less: imputed interest     ( 48 ) Total   $ 611     Other information regarding leases for the year ended November 30, 2020 includes the following:   Cash paid for operating leases   $ 204   Right-of-use assets obtained in exchange for lease liabilities   $ 380   Weighted average remaining lease term (years) – operating leases     3.1   Weighted average discount rate – operating leases     5 %     NOTE 9 – SHARE CAPITAL   Common shares   The Company is authorized to issue 1,000,000,000 common shares without par value, of which 330,411,589 were issued and outstanding as of November 30, 2020, and 327,629,928 were issued and outstanding as of November 30, 2019.   Preferred shares   Pursuant to the Company’s Notice of Articles filed under the Business Corporations Act (British Columbia), the Company is authorized to issue 10,000,000 preferred shares without par value. The authorized but unissued preferred shares may be issued in designated series from time to time by one or more resolutions adopted by the Directors. The Directors have the authority to determine the preferences, limitations, and relative rights of each series of preferred shares. As of November  30, 2020 and 2019, no preferred shares were issued or outstanding.     NOTE 10 – FAIR VALUE ACCOUNTING   Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the significance of the inputs used in making the measurement. The three levels of the fair value hierarchy are as follows:   Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;   Level 2 — Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and   Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).   The Company’s marketable equity securities are valued using quoted market prices in active markets and as such are classified within Level 1 of the fair value hierarchy. The fair value of the marketable equity securities was $ 1,402 as of November 30, 2020 ( $ 935 as of November 30, 2019), calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.   64 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)       NOTE 11 – GENERAL AND ADMINISTRATIVE       Years ended November 30,       2020     2019     2018   Share-based compensation (Note 12)   $ 7,057     $ 6,176     $ 7,727   Salaries and benefits     6,274       5,904       6,531   Office expense     2,199       2,311       2,346   Professional fees     2,139       972       949   Corporate communications and regulatory     1,059       943       918   Depreciation     7       15       22       $ 18,735     $ 16,321     $ 18,493       NOTE 1 2 – SHARE-BASED COMPENSATION   Share incentive awards include a stock option plan for directors, executives, employees and eligible consultants, a PSU plan for executives, employees, and eligible consultants and a DSU plan for non-executive directors of the Company. Options granted to purchase common shares have exercise prices not less than the fair market value of the underlying share at the date of grant. As of November  30, 2020, 27.3 million common shares were available for future share incentive plan awards under all three plans.   The Company recognized share-based compensation expense (see Note 1 1 - General and administrative ) as follows:       Years ended November 30,       2020     2019     2018   Stock options   $ 4,309     $ 3,694     $ 3,767   Performance share unit plan     2,547       2,320       3,783   Deferred share unit plan     201       162       177       $ 7,057     $ 6,176     $ 7,727     Stock options   Stock options granted under the Company’s share-based incentive plans generally expire five years after the date of grant and vest in one - third annual increments beginning on the first anniversary of the date of grant. The value of each option award is estimated at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected term of the option award and share price volatility. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination experience. Expected volatility is based on the historical volatility of the Company’s shares at the date of grant over the same length of term. These estimates involve inherent uncertainties and the application of management’s judgment. In addition, management estimates the expected forfeiture rate and only recognizes expense for those options expected to vest. As a result, if other assumptions had been used, the recorded share-based compensation expense would have been different from that reported.   65 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     A summary of stock options outstanding as of November 30, 2020, and activity during the year ended November 30, 2020 are as follows:       Number of stock options (thousands)     Weighted- average exercise price per share     Weighted- average remaining contractual term (years)     Aggregate intrinsic value   November 30, 2019     12,527     $ 3.98                   Granted     1,781       7.27                   Exercised     ( 3,905 )     3.96                   November 30, 2020     10,403     $ 4.59       2.32     $ 56,113   Vested and exercisable as of November 30, 2020     5,722     $ 4.18       1.62     $ 33,146     The following table summarizes other stock option-related information:       Years ended November 30,       2020     2019     2018   Weighted-average assumptions used to value stock option awards:                         Expected volatility     46.1 %     46.9 %     50 % Expected term of options (years)     4       4       3   Expected dividend rate     —       —       —   Risk-free interest rate     1.5 %     2.7 %     1.8 % Expected forfeiture rate     3.1 %     3.1 %     2.3 % Weighted-average grant-date fair value   $ 2.70     $ 1.46     $ 1.35   Intrinsic value of options exercised   $ 24,137     $ 20,527     $ 3,744   Cash received from options exercised   $ —     $ —     $ —     As of November  30, 2020, the Company had $ 2,642 of unrecognized compensation cost related to 4,681,000 non-vested stock options expected to be expensed and vest over a period of approximately two years.   Performance share units   The Company has a PSU plan that provides for the issuance of PSUs in amounts as approved by the Company’s Compensation Committee. Each PSU award entitles the participant to receive one common share of the Company at the end of a specified period. The Compensation Committee may adjust the number of common shares for the achievement of certain performance and vesting criteria established at the time of grant. The actual performance against each of these criteria generates a multiplier that varies from 0 % to 150 %. Thus, the common shares that may be issued vary between 0 % and 150 % of the number of PSUs granted, as reduced by the amounts for participants no longer with the Company on the vesting date.   The value of each PSU granted is estimated at the grant date using a Monte Carlo simulation model. The Monte Carlo simulation model requires the input of subjective assumptions, including the share price volatility of the Company’s stock, as well as comparator index and the correlation of returns between the comparator index and the Company. Expected volatility is based on the historical volatility of the Company’s shares and the comparator index at the grant date. These estimates involve inherent uncertainties and the application of management’s judgment. As a result, if other assumptions had been used, our recorded share-based compensation expense would have been different from that reported.   66 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     A summary of PSU awards outstanding and activity during the year ended November 30, 2020 are as follows:       Number of PSU awards (thousands)     Weighted- average grant day fair value per award     Aggregate intrinsic value   November 30, 2019     1,664     $ 3.76           Granted     452       6.97           Vested     ( 648 )     3.85           Performance adjustment     216       3.85           November 30, 2020     1,684     $ 4.59     $ 24,107     As of November  30, 2020, the Company had 1,684,000 non-vested PSU awards outstanding of which 431,800 were fully expensed and vested on December 1, 2020 with a multiplier of 150 %. The remaining 1,252,200 non-vested PSU awards with $ 3,144 of unrecognized compensation cost will be expensed over a period of approximately two years.   The following table summarizes other PSU-related information:       Years ended November 30,       2020     2019     2018   Performance multiplier on PSUs vested     150 %     82 %     — % Common shares issued (thousands)     648       438       —   Total fair value of common shares issued   $ 2,855     $ 1,607     $ —   Withholding tax paid on PSUs vested   $ 1,652     $ 1,197     $ —     Deferred share units   The Company has a DSU plan that provides for the issuance of DSUs in amounts where the Directors receive half of their annual retainer in DSUs and have the option to elect to receive all or a portion of the other half of their annual retainer in DSUs. Each DSU entitles the Directors to receive one common share when they retire from the Company. The Company granted 21,602 , 35,851 and 45,103 DSUs to Directors with a weighted-average grant day fair value of $ 9.07 , $ 4.40 and $ 4.07 per DSU during 2020, 2019 and 2018, respectively. The Company issued nil, 31,721 and 98,160 common shares under the DSU plan in 2020, 2019 and 2018, respectively. As of November 30, 2020, there were 280,364 DSUs outstanding.     NOTE 1 3 – OTHER INCOME (EXPENSE) , NET       Years ended November 30,       2020     2019     2018   Interest income   $ 1,744     $ 4,190     $ 1,998   Change in fair market value of marketable securities     431       93       —   Foreign exchange gain (loss)     ( 606 )     20       ( 171 ) Other gain (loss)     —       92       ( 76 )     $ 1,569     $ 4,395     $ 1,751       NOTE 1 4 – INCOME TAXES   The British Columbia provincial corporate tax rate increased from 11 % to 12 % commencing January 1, 2018, resulting in an increase in the Company’s statutory tax rate to 26.92 % in 2018, and to 27 % in 2019 onward.   The U.S. tax reform enacted on December 22, 2017 ( the “Act”), allows a Section 250 deduction amounting to 37.5 % of the U.S. entity’s foreign derived intangible income (FDII) for the fiscal year ended November 30, 2020. The Company’s U.S. entities will be filing on a consolidated basis for the fiscal year ending November 30, 2020. Since the U.S. consolidated group is in a taxable loss position there is no FDII deduction allowed and no corresponding tax savings.   67 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     The Act also includes other provisions including the limitations on the use of future losses, repeal of the Alternative Minimum Tax regime, and the introduction of a base erosion and anti-abuse tax. These provisions are not expected to have immediate effect on the Company. Given the significant complexity of the Act, further implications of the Act may be identified in future periods.   The Company’s Income tax (recovery) expense consisted of:       Years ended November 30,       2020     2019     2018   Current:                         Canada   $ —     $ —     $ —   Foreign     ( 30 )     607       446         ( 30 )     607       446   Deferred:                         Canada     —       —       —   Foreign     ( 751 )     671       80         ( 751 )     671       80   Income tax (recovery) expense   $ ( 781 )   $ 1,278     $ 526     The Company’s Loss before income tax and other items consisted of:       Years ended November 30,       2020     2019     2018   Canada   $ ( 16,447 )   $ ( 12,584 )   $ ( 15,018 ) Foreign     ( 17,898 )     ( 13,899 )     ( 15,922 )     $ ( 34,345 )   $ ( 26,483 )   $ ( 30,940 )   The Company’s Income tax expense differed from the amounts computed by applying the Canadian statutory corporate income tax rates for the following reasons:       Years ended November 30,       2020     2019     2018   Loss before income taxes and other items   $ ( 34,345 )   $ ( 26,483 )   $ ( 30,940 ) Combined federal and provincial statutory tax rate     27 %     27 %     26.92 % Income tax recovery based on statutory income tax rates     ( 9,273 )     ( 7,150 )     ( 8,329 ) Reconciling items:                         Non-deductible expenditures     1,911       2,136       2,150   Foreign accrual property income (FAPI)     652       180       580   Effect of consolidated return for U.S. subsidiaries     ( 751 )     —       —   Effect of different statutory tax rates on earnings or losses of subsidiaries     ( 2 )     ( 658 )     ( 574 ) Effect of statutory tax rate change     —       —       73,135   Change in valuation allowance on deferred tax assets     6,638       6,773       ( 66,466 ) Other     44       ( 3 )     30   Income tax (recovery) expense   $ ( 781 )   $ 1,278     $ 526   Effective tax rate     2.3 %     ( 4.8 )%     ( 1.7 )%   68 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Components of the Company’s deferred income tax assets (liabilities) are as follows:       As of November 30,       2020     2019   Deferred tax income assets:                 Net operating loss carry forwards   $ 183,422     $ 175,383   Capital loss carry forwards     49,307       47,953   Mineral properties     654       638   Intangible assets     484       473   Property and equipment     203       194   Investment in affiliates     35,933       33,508   Unpaid interest expense     2,105       2,105   Unrealized loss on investments     316       368   Other     685       569         273,109       261,191   Valuation allowances     ( 271,016 )     ( 260,920 )       2,093       271   Deferred income tax liabilities:                 Investment tax credit     —       ( 8 ) Notes receivable     ( 1,975 )     ( 759 ) Capitalized assets and other     ( 118 )     ( 255 )       ( 2,093 )     ( 1,022 ) Net deferred income tax assets (liabilities)   $ —     $ ( 751 )   These amounts reflect the classification and presentation that is reported for each tax jurisdiction in which the Company operates. Net deferred income tax assets and liabilities consist of:       As of November 30,       2020     2019   Non-current deferred income tax assets   $ —     $ —   Non-current deferred income tax liabilities     —       ( 751 )     $ —     $ ( 751 )   69 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Net operating losses available to offset future taxable income are as follows:   Year of Expiry   U.S.     Canada   2024   $ 1,032     $ —   2025     1,246       —   2026     13,382       19,166   2027     18,493       1,861   2028     85       —   2029     11,223       12,062   2030     10,916       16,051   2031     16,580       15,975   2032     309,772       19,496   2033     14,529       14,712   2034     15,607       10,585   2035     16,383       9,666   2036     14,764       9,512   2037     14,111       6,329   2038     —       6,433   2039     —       5,843   2040     —       7,365   Indefinite     39,448       —       $ 497,571     $ 155,056     Under the U.S. tax reform, net operating losses arising in tax years ending after December 31, 2017 can be carried over to each taxable year following the tax year of loss (indefinitely). The Company has capital loss carry-forwards of approximately $ 364,799 ( November 30, 2019: $ 354,356 ) for Canadian tax purposes. These tax losses are carried forward indefinitely.   Future use of U.S. loss carry-forwards is subject to certain limitations under provisions of the Internal Revenue Code including limitations subject to Section  382, which relates to a 50% change in control over a three -year period and are further dependent upon the Company attaining profitable operations. Ownership changes occurred on January  22, 2009 and on December  31, 2012 and the U.S. tax losses related to NOVAGOLD Resources Alaska Inc. and its investment in Donlin Gold LLC for the prior three -year periods prior to the change in control may be subject to limitation under Section  382. Accordingly, the Company’s ability to use these losses may be limited or they may expire un-utilized. Losses incurred to date may be further limited if a subsequent change in control occurs.   Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax asset. Significant pieces of objective negative evidence evaluated included the cumulative loss incurred as of November 30, 2020. Such objective evidence limits the ability to consider other subjective evidence such as management’s projections for future growth. On the basis of this evaluation, as of November 30, 2020, a valuation allowance of $ 271,016 ( November 30, 2019: $ 260,920 ), inclusive of valuation allowance for investment tax credits has been recorded in order to measure only the portion of the deferred tax asset that more likely than not will be realized. The amount of the deferred tax asset considered realizable; however, could be adjusted if estimates of future taxable income during the carry forward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as management’s projections for growth.   Uncertain tax position   There were no uncertain tax positions as of November  30, 2020, 2019 and 2018. The Company recognizes any interest and penalties related to uncertain tax positions, if any, as income tax expense. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheet. As of November  30, 2020, 2019 and 2018, there were no accrued interest and penalties related to uncertain tax positions. The Company is subject to income taxes in Canada and the United States. With few exceptions, the tax years that remain subject to examination as of November  30, 2020 are 2016 to 2020 in Canada and 2017 to 2020 in the United States.   70 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)       NOTE 1 5 – DISCONTINUED OPERATIONS   Galore Creek transaction   On July 27, 2018, the Company completed the sale of its 50 % interest in the Galore Creek assets to Newmont. The Company received $ 100,000 on closing; a note for $ 75,000 receivable upon the earlier of the completion of a new Galore Creek project pre-feasibility study or July 27, 2021; a note for $ 25,000 receivable upon the earlier of the completion of a Galore Creek project feasibility study or July 27, 2023; and an additional note for $ 75,000 is receivable upon the approval of a Galore Creek project construction plan by the owner(s). The Company has no remaining interest in Galore Creek.   The details of our Net loss from discontinued operations, net of tax for the year ended November 30, 2018 are set forth below:   Equity loss – Galore Creek   $ ( 1,203 ) Income tax expense     —   Galore Creek operations, net of tax     ( 1,203 ) Loss on sale of Galore Creek, net of tax     ( 80,096 )     $ ( 81,299 )   For the year ended November 30, 2018, the Company recognized a L oss on sale of Galore Creek, net of tax , calculated as follows:   Cash consideration received on closing   $ 100,000   Refund of reclamation deposits     4,897   Less closing costs     ( 721 )       104,176   Fair value of notes receivable (Note 5)     88,398   Net proceeds     192,574   Less book values:         Investment in GCP     ( 248,367 ) Copper Canyon mineral property     ( 44,577 ) Reclamation deposits     ( 4,967 ) Reclassification of cumulative foreign currency translation adjustments     13,776   Deferred income tax recovery     11,465       $ ( 80,096 )   Other comprehensive income (loss) for the year ended November 30, 2018 was not impacted by discontinued operations as Galore Creek did not have any Other comprehensive income (loss) .   The details of our Net cash provided from (used in) investing activities of discontinued operations for the year ended November 30, 2018 are set forth below:   Funding of Galore Creek Partnership   $ ( 1,475 ) Net cash proceeds received     99,279   Reclamation deposits     4,644       $ 102,448       NOTE 16 – RELATED PARTY TRANSACTIONS   The Company provided technical services to Donlin Gold LLC for $ 658 in 2018. The Company did not provide technical services to Donlin Gold LLC in 2020 or 2019. As of November 30, 2020, the Company has accounts receivable from Donlin Gold LLC of $ 6 ( November 30, 2019: $nil ) included in Other current assets .     71 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)         NOTE 17 – NET CHANGE IN OPERATING ASSETS AND LIABILITIES       Years ended November 30,       2020     2019     2018   Changes in operating assets and liabilities:                         Other assets   $ ( 65 )   $ 646     $ ( 1,471 ) Accounts payable and accrued liabilities     ( 137 )     84       233   Accrued payroll and related benefits     67       ( 402 )     38       $ ( 135 )   $ 328     $ ( 1,200 )     NOTE 1 8 – SUPPLEMENTAL CASH FLOW INFORMATION       Years ended November 30,       2020     2019     2018   Interest received   $ 2,265     $ 3,094     $ 1,038   Income taxes paid   $ 376     $ 692     $ 331     Non-cash i nvesting a ctivities   During 2018, the Company recorded a non-cash increase to long-term notes receivable of $ 88,398 as a portion of the proceeds received on the sale of the Galore Creek assets (Note 4 ).     NOTE 1 9 – UNAUDITED SUPPLEMENTARY DATA   Quarterly data   The following is a summary of selected quarterly financial information (unaudited):       2020       Q1     Q2     Q3     Q4   Loss from operations   $ ( 6,282 )   $ ( 8,087 )   $ ( 10,895 )   $ ( 7,973 ) Net loss   $ ( 6,595 )   $ ( 7,233 )   $ ( 12,736 )   $ ( 7,000 ) Net loss per common share, basic and diluted   $ ( 0.02 )   $ ( 0.02 )   $ ( 0.04 )   $ ( 0.02 )         2019       Q1     Q2     Q3     Q4   Loss from operations   $ ( 5,663 )   $ ( 6,413 )   $ ( 7,216 )   $ ( 7,520 ) Net loss   $ ( 6,323 )   $ ( 5,515 )   $ ( 8,056 )   $ ( 7,867 ) Net loss per common share, basic and diluted   $ ( 0.02 )   $ ( 0.02 )   $ ( 0.02 )   $ ( 0.02 )               72 NOVAGOLD RESOURCES INC.     Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   None.