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, 2023 and 2022, and the related consolidated statements of loss and comprehensive loss, cash flows and equity (deficit) for each of the three years in the period ended November 30, 2023, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2023 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, 2023, 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 Report of Management on Internal Control over Financial Reporting appearing under Item 9A. 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 Matters   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 and 4 to the consolidated financial statements, on July 27, 2018, the Company sold its interest in the Galore Creek project (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 has 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 or in subsequent periods. Management’s assessment did not change as of November 30, 2023. 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 the judgment by management when determining if recognition was required, which in turn led to a high degree of auditor judgment and subjectivity in performing procedures and evaluating management’s assessment of the probability of whether a Galore Creek project 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 assessment of the basis for recognizing the contingent note receivable. These procedures also included, among others, evaluating the reasonableness of management’s assessment regarding the probability of the owner(s) of the project approving the Galore Creek 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.       /s/ PricewaterhouseCoopers LLP   Chartered Professional Accountants   Vancouver, Canada January 24, 2024 271   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,       2023     2022   ASSETS                 Cash and cash equivalents   $ 45,749     $ 63,882   Term deposits     80,000       62,000   Notes receivable (Note 4)     —       24,421   Other assets (Note 6)     1,470       2,235   Current assets     127,219       152,538   Investment in Donlin Gold (Note 5)     3,071       3,848   Other assets (Note 6)     3,000       2,803   Total assets   $ 133,290     $ 159,189                     LIABILITIES   Accounts payable and accrued liabilities   $ 703     $ 769   Accrued payroll and related benefits     2,799       2,532   Other liabilities (Note 9)     404       1,298   Current liabilities     3,906       4,599   Promissory note (Note 7)     136,748       123,685   Other liabilities (Note 9)     859       1,002   Total liabilities     141,513       129,286                     Commitments and contingencies (Notes 7, 8 and 9)                               EQUITY (DEFICIT)   Common shares                 Authorized – 1,000 million shares, no par value                 Issued and outstanding – 334.2 and 333.8 million shares, respectively     1,986,938       1,983,962   Contributed surplus     88,621       82,866   Accumulated deficit     ( 2,059,311 )     ( 2,012,508 ) Accumulated other comprehensive loss     ( 24,471 )     ( 24,417 ) Total equity (deficit)     ( 8,223 )     29,903   Total liabilities and equity (deficit)   $ 133,290     $ 159,189       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,       2023     2022     2021   Operating expenses:                         General and administrative (Note 12)   $ 21,783     $ 20,109     $ 20,210   Equity loss - Donlin Gold (Note 5)     18,529       28,163       16,625         40,312       48,272       36,835                             Loss from operations     ( 40,312 )     ( 48,272 )     ( 36,835 ) Interest expense on promissory note (Note 7)     ( 13,063 )     ( 7,962 )     ( 5,922 ) Interest and dividend income     5,791       1,591       458   Accretion of notes receivable (Note 4)     579       849       2,556   Remediation expense     ( 541 )     ( 366 )     ( 938 ) Other income (expense), net (Note 14)     782       784       282   Loss before income taxes     ( 46,764 )     ( 53,376 )     ( 40,399 ) Income tax recovery (expense) (Note 15)     ( 39 )     33       ( 137 ) Net loss     ( 46,803 )     ( 53,343 )     ( 40,536 )                           Other comprehensive income (loss):                         Foreign currency translation adjustments     ( 54 )     ( 1,128 )     587         ( 54 )     ( 1,128 )     587                             Comprehensive loss   $ ( 46,857 )   $ ( 54,471 )   $ ( 39,949 )                           Net loss per common share – basic and diluted   $ ( 0.14 )   $ ( 0.16 )   $ ( 0.12 )                           Weighted average shares outstanding                         Basic and diluted (thousands)     334,057       333,236       331,546     The accompanying notes are an integral part of these consolidated financial statements.   56 NOVAGOLD RESOURCES INC.     CONSOLIDATED STATEMENTS OF CASH FLOWS (US dollars in thousands)       Years ended November 30,       2023     2022     2021   Operating activities:                         Net loss   $ ( 46,803 )   $ ( 53,343 )   $ ( 40,536 ) Adjustments:                         Equity loss – Donlin Gold     18,529       28,163       16,625   Interest expense on promissory note     13,063       7,962       5,922   Share-based compensation     8,731       8,214       8,235   Remediation expense     541       366       938   Foreign exchange (gain) loss     43       ( 595 )     336   Accretion of notes receivable     ( 579 )     ( 849 )     ( 2,556 ) Change in fair value of marketable securities     ( 269 )     ( 189 )     ( 418 ) Gain on sale of mineral property     ( 556 )     —       ( 200 ) Other operating adjustments     49       ( 44 )     7   Net change in operating assets and liabilities (Note 17)     ( 535 )     ( 2,056 )     1,784   Net cash used in operating activities     ( 7,786 )     ( 12,371 )     ( 9,863 )                           Investing activities:                         Proceeds from term deposits     148,000       148,000       141,578   Purchases of term deposits     ( 166,000 )     ( 132,000 )     ( 158,799 ) Funding of Donlin Gold     ( 17,752 )     ( 28,435 )     ( 17,587 ) Proceeds from notes receivable     25,000       —       75,000   Proceeds from sale of mineral property     556       —       200   Other     ( 132 )     73       —   Net cash provided from investing activities     ( 10,328 )     ( 12,362 )     40,392                             Financing activities:                         Withholding tax on share-based compensation     —       ( 2,122 )     ( 731 ) Net cash used in financing activities     —       ( 2,122 )     ( 731 )                           Effect of exchange rate changes on cash and cash equivalents     ( 19 )     ( 387 )     420   Net change in cash and cash equivalents     ( 18,133 )     ( 27,242 )     30,218   Cash and cash equivalents at beginning of year     63,882       91,124       60,906   Cash and cash equivalents at end of year   $ 45,749     $ 63,882     $ 91,124     The accompanying notes are an integral part of these consolidated financial statements.   57 NOVAGOLD RESOURCES INC.     CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) (US dollars and shares in thousands)       Common shares     Contributed     Accumulated             Total equity       Shares     Amount     surplus     deficit     AOCL*     (deficit)                                                     November 30, 2020     330,412     $ 1,972,029     $ 81,203     $ ( 1,918,629 )   $ ( 23,876 )   $ 110,727                                                     Share-based compensation     —       —       8,235       —       —       8,235   Performance share units (PSUs) settled in shares     574       1,460       ( 1,460 )     —       —       —   Stock options exercised     1,430       5,031       ( 5,031 )     —       —       —   Withholding tax on PSUs     —       —       ( 731 )     —       —       ( 731 ) Net loss     —       —       —       ( 40,536 )     —       ( 40,536 ) Other comprehensive income     —       —       —       —       587       587   November 30, 2021     332,416     $ 1,978,520     $ 82,216     $ ( 1,959,165 )   $ ( 23,289 )   $ 78,282                                                     Share-based compensation     —       —       8,214       —       —       8,214   PSUs settled in shares     430       1,731       ( 1,731 )     —       —       —   Deferred share units (DSUs) settled in shares     53       249       ( 249 )     —       —       —   Stock options exercised     854       3,462       ( 3,462 )     —       —       —   Withholding tax on PSUs     —       —       ( 2,122 )     —       —       ( 2,122 ) Net loss     —       —       —       ( 53,343 )     —       ( 53,343 ) Other comprehensive loss     —       —       —       —       ( 1,128 )     ( 1,128 ) November 30, 2022     333,753     $ 1,983,962     $ 82,866     $ ( 2,012,508 )   $ ( 24,417 )   $ 29,903                                                     Share-based compensation     —       —       8,731       —       —       8,731   DSUs settled in shares     48       246       ( 246 )     —       —       —   Stock options exercised     446       2,730       ( 2,730 )     —       —       —   Net loss     —       —       —       ( 46,803 )     —       ( 46,803 ) Other comprehensive income     —       —       —       —       ( 54 )     ( 54 ) November 30, 2023     334,247     $ 1,986,938     $ 88,621     $ ( 2,059,311 )   $ ( 24,471 )   $ ( 8,223 )   * 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 not 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 (“Donlin Gold”), 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 including 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 currency   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 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.   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.   59 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     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 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.   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 is a non-publicly traded equity investee owning an exploration and development project. Therefore, the Company assesses whether there has been a potential triggering event for other-than-temporary impairment by assessing 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 assets 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 fair values of PSU retention incentive awards are based on their grant date market prices. 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)       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 the 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 investment in the Donlin Gold project in Alaska, USA (Note 5).     NOTE 4 – NOTES RECEIVABLE   Changes in the Company’s Notes receivable are summarized as follows:       Years ended November 30,       2023     2022     2021   Balance – beginning of period   $ 24,421     $ 23,572     $ 96,016   Accretion of notes receivable     579       849       2,556   Payment received     ( 25,000 )     —       ( 75,000 ) Balance – end of period   $ —     $ 24,421     $ 23,572     Galore Creek   On July 27, 2018, the Company sold its interest in the Galore Creek project to a subsidiary of Newmont Corporation (“Newmont”) for cash proceeds of $ 100,000 , a $ 75,000 note due upon the earlier of the completion of a Galore Creek pre-feasibility study or July 27, 2021, a $ 25,000 note due upon the earlier of the completion of a Galore Creek feasibility study or July 27, 2023, and a contingent note for $ 75,000 due upon approval of a Galore Creek project construction plan by the owner(s). The Company received from Newmont $ 75,000 on July 27, 2021, and $ 25,000 on July 27, 2023.   No value was assigned to the final $ 75,000 contingent note. The Company determined that Galore Creek project construction approval was not probable as of the closing of the Galore Creek sale. The Company’s assessment did not change as of November 30, 2023.   Minas San Roque   On November 3, 2021, the Company sold its 49 % interest in the Minas San Roque project in Argentina to Marifil S.A., a subsidiary of International Iconic Gold Mines Ltd. (“Iconic”) for cash proceeds of C$ 250 upon closing, a C$ 750 note receivable due on November 1, 2022, and a C$ 1,000 note receivable due on November 1, 2023. On closing, the Company determined the fair value of the notes was nil . Iconic completed the C$ 750 note repayment due on November 1, 2022 in December 2022, and the C$ 1,000 note repayment due on November 1, 2023 in January 2024, each after obtaining sufficient funding.     NOTE 5 – INVESTMENT IN DONLIN GOLD   The Donlin Gold project is owned and operated by Donlin Gold, a limited liability company in which wholly-owned subsidiaries of NOVAGOLD and Barrick each own a 50 % interest. Donlin Gold has a board of four representatives, with two representatives selected by Barrick and two representatives selected by the Company. All significant decisions related to Donlin Gold require the approval of at least a majority of the Donlin Gold board.   61 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Changes in the Company’s Investment in Donlin Gold are summarized as follows:       Years ended November 30,       2023     2022     2021   Balance – beginning of period   $ 3,848     $ 3,576     $ 2,614   Share of losses:                         Mineral property expenditures     ( 17,918 )     ( 27,690 )     ( 16,286 ) Depreciation     ( 571 )     ( 427 )     ( 300 ) Accretion     ( 40 )     ( 46 )     ( 39 )       ( 18,529 )     ( 28,163 )     ( 16,625 ) Funding     17,752       28,435       17,587   Balance – end of period   $ 3,071     $ 3,848     $ 3,576     The following amounts represent the Company’s 50% share of the assets and liabilities of Donlin Gold. Donlin Gold 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.       As of November 30,       2023     2022   Current assets: Cash, prepaid expenses, and other receivables   $ 3,410     $ 4,220   Non-current assets: Right-of-use assets, property and equipment     1,456       2,036   Non-current assets: Mineral property     32,615       32,615   Current liabilities: Accounts payable, accrued liabilities and lease obligations     ( 1,669 )     ( 2,322 ) Non-current liabilities: Reclamation and lease obligations     ( 741 )     ( 701 ) Net assets   $ 35,071     $ 35,848       NOTE 6 – OTHER ASSETS       As of November 30,       2023     2022   Other current assets:                 Accounts receivable   $ 43     $ 301   Interest receivable     99       62   Receivable from Donlin Gold     203       574   Prepaid expenses     1,125       1,298       $ 1,470     $ 2,235                     Other long-term assets:                 Marketable equity securities   $ 2,102     $ 1,845   Right-of-use assets     757       939   Office equipment     141       19       $ 3,000     $ 2,803       NOTE 7 – PROMISSORY NOTE   The Company has a promissory note payable to Barrick of $ 136,748 , comprised of $ 51,576 in principal, and $ 85,172 in accrued interest at U.S. prime plus 2 %. The average effective interest rate was 10.3 %, 6.8 %, and 5.3 % in 2023, 2022 and 2021, respectively. The promissory note resulted from the agreement that led to the formation of Donlin Gold, 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. The carrying value of the promissory note approximates fair value.   62 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Changes in the Company’s Promissory Note is summarized as follows:       Years ended November 30,       2023     2022     2021   Balance – beginning of period   $ 123,685     $ 115,723     $ 109,801   Interest expense on promissory note     13,063       7,962       5,922   Balance – end of period   $ 136,748     $ 123,685     $ 115,723       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. Certain of our leases include payments that vary based on the Company’s level of usage and operations. These variable payments are not included within ROU assets and lease liabilities in the Consolidated Balance Sheets. Additionally, short-term leases, which have an initial term of 12 months or less, are not recorded in the Consolidated Balance Sheets.   Lease expenses are included in General and administrative  expense – Office expense on the Consolidated Statements of Loss and include the following components:       Years ended November 30,       2023     2022     2021   Operating lease cost   $ 232     $ 234     $ 235   Variable lease cost     121       126       122   Short-term lease cost     5       5       4       $ 358     $ 365     $ 361     Future minimum lease payments under non-cancellable operating leases as of November 30, 2023, were as follows:   2024   $ 234   2025     157   2026     154   2027     159   2028     164   Thereafter     56   Total future minimum lease payments     924   Less: imputed interest     ( 123 )     $ 801     63 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     Other information regarding leases includes the following:       Years ended November 30,       2023     2022     2021   Cash paid for operating leases   $ 193     $ 238     $ 235   Variable lease cost     121       126       127   Short-term lease cost     5       5       5       $ 319     $ 369     $ 367                             ROU assets obtained in exchange for lease liabilities   $ —     $ 750     $ —   Weighted average:                         Remaining lease term (years) – operating leases     4.8       5.6       2.3   Discount rate – operating leases     5.9 %     5.8 %     5.0 %     NOTE 9 – OTHER LIABILITIES       As of November 30,       2023     2022   Other current liabilities:                 Remediation liabilities   $ 212     $ 1,156   Lease obligations     192       142       $ 404     $ 1,298                     Other long-term liabilities:                 Remediation liabilities   $ 250     $ 200   Lease obligations     609       802       $ 859     $ 1,002     NOTE 10 – SHARE CAPITAL   Common shares   The Company is authorized to issue 1,000,000,000 common shares without par value, of which 334,246,859 were issued and outstanding as of November 30, 2023, and 333,753,116 were issued and outstanding as of November 30, 2022.   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, 2023 and 2022, no preferred shares were issued or outstanding.     NOTE 11 – 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).   64 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     The Company’s financial instruments consist of cash and cash equivalents, term deposits, accounts receivable, receivable from Donlin Gold, accounts payable and accrued liabilities, and promissory note. The fair value of the promissory note approximates its carrying value based on accrued interest at U.S. prime plus 2 % and the terms for repayment from future mine production or from any net proceeds resulting from a reduction of the Company’s interest in Donlin Gold. The fair values of the Company’s other financial instruments approximate their carrying value due to the short‐term nature of their maturity. The Company’s financial instruments initially measured at fair value and then held at amortized cost include cash and cash equivalents, term deposits, accounts receivable, receivable from Donlin Gold, accounts payable and accrued liabilities, and promissory note. 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 $ 2,102 as of November 30, 2023 ($ 1,845 as of November 30, 2022), calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.     NOTE 12 – GENERAL AND ADMINISTRATIVE       Years ended November 30,       2023     2022     2021   Share-based compensation (Note 13)   $ 8,731     $ 8,214     $ 8,235   Salaries and benefits     7,009       6,710       6,599   Office expense     3,302       2,992       2,544   Professional fees     1,647       1,177       1,849   Corporate communications and regulatory     1,084       1,009       976   Depreciation     10       7       7       $ 21,783     $ 20,109     $ 20,210     NOTE 13 – 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, 2023, 30,610,851 common shares were available for future share incentive plan awards under all three plans.   The Company recognized share-based compensation expense (see Note 12 - General and administrative ) as follows:       Years ended November 30,       2023     2022     2021   Stock options   $ 4,594     $ 4,642     $ 4,721   Performance share unit plan     3,910       3,345       3,278   Deferred share unit plan     227       227       236       $ 8,731     $ 8,214     $ 8,235     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. The 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, 2023, and activity during the year ended November 30, 2023 are as follows:       Number of stock options     Weighted- average exercise price per share     Weighted- average remaining contractual term (years)     Aggregate intrinsic value   November 30, 2022     7,717,413     $ 6.18                   Granted     2,291,800       5.71                   Exercised     ( 1,914,311 )     ( 3.73 )                 Cancelled     ( 488,702 )     ( 7.08 )                 November 30, 2023     7,606,200     $ 6.59       2.38     $ 505   Vested and exercisable as of November 30, 2023     3,881,316     $ 6.75       1.28     $ 505     The following table summarizes other stock option-related information:       Years ended November 30,       2023     2022     2021   Weighted-average assumptions used to value stock option awards:                         Expected volatility     48.4 %     46.5 %     47.2 % Expected term of options (years)     4       4       4   Expected dividend rate     —       —       —   Risk-free interest rate     3.85 %     1.13 %     0.3 % Expected forfeiture rate     2.8 %     2.9 %     3.0 % Weighted-average grant-date fair value   $ 2.40     $ 2.49     $ 3.63   Intrinsic value of options exercised   $ 2,339     $ 5,723     $ 12,543   Cash received from options exercised   $ —     $ —     $ —     As of November 30, 2023, the Company had $ 2,721 of unrecognized compensation cost related to 3,724,884 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, 2023 are as follows:       Number of PSU awards     Weighted- average grant day fair value per award     Aggregate intrinsic value   November 30, 2022     1,257,200     $ 7.65           Granted     605,500       5.77           Retention awards granted     181,700       5.64           Expired     ( 438,900 )     ( 6.96 )         November 30, 2023     1,605,500     $ 6.89     $ 760     As of November 30, 2023, the Company had 1,605,500 non-vested PSU awards outstanding of which 319,300 were fully expensed and subsequently expired with no value. The remaining 1,286,200 non-vested PSU awards with $ 3,771 of unrecognized compensation cost will be expensed over a period of approximately two years. On December 15, 2022, 181,700 PSUs were granted to the Company’s executive officers as a retention incentive and will fully vest if their employment continues through June 30, 2024.   The following table summarizes other PSU-related information:       Years ended November 30,       2023     2022     2021   Performance multiplier on PSUs vested     — %     93 %     150 % Common shares issued     —       430,045       574,379   Total fair value of common shares issued   $ —     $ 2,903     $ 5,723   Withholding tax paid on PSUs vested   $ —     $ 2,122     $ 731     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 or the market value thereof in cash, at the Company’s option, when they retire from the Company. The Company granted 43,658 , 38,470 , and 25,957 DSUs to Directors with a weighted-average grant day fair value of $ 5.04 , $ 5.74 , and $ 8.86 per DSU during 2023, 2022, and 2021, respectively. The Company issued 48,446 , 52,930 , and nil common shares under the DSU plan in 2023, 2022, and 2021, respectively. As of November 30, 2023, there were 287,072 DSUs outstanding.     NOTE 14 – OTHER INCOME (EXPENSE), NET       Years ended November 30,       2023     2022     2021   Gain on sale of mineral property   $ 556     $ —     $ 200   Change in fair market value of marketable securities     269       189       418   Foreign exchange gain (loss)     ( 43 )     595       ( 336 )     $ 782     $ 784     $ 282       67 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)       NOTE 15 – INCOME TAXES   The Company’s statutory tax rate is 27 % and is expected to remain at this amount until 2024.   The Company’s Income tax expense (recovery) consisted of:       Years ended November 30,       2023     2022     2021   Current:                         Canada   $ —     $ —     $ 110   Foreign     39       ( 33 )     27         39       ( 33 )   $ 137   Deferred:                         Canada     —       —       —   Foreign     —       —       —         —       —       —   Income tax (recovery) expense   $ 39     $ ( 33 )   $ 137     The Company’s Loss before income taxes consisted of:       Years ended November 30,       2023     2022     2021   Canada   $ ( 18,213 )   $ ( 17,062 )   $ ( 17,723 ) Foreign     ( 28,551 )     ( 36,314 )     ( 22,676 )     $ ( 46,764 )   $ ( 53,376 )   $ ( 40,399 )   The Company’s Income tax (recovery) expense differed from the amounts computed by applying the Canadian statutory corporate income tax rates for the following reasons:               Years ended November 30,               2023             2022             2021   Loss before income taxes           $ ( 46,764 )           $ ( 53,376 )           $ ( 40,399 )                                                   Combined federal and provincial statutory tax rate     27.0 %     ( 12,626 )     27.0 %     ( 14,412 )     27.0 %     ( 10,908 ) Reconciling items:                                                 Non-deductible expenditures     - 5.9 %     2,767       - 4.5 %     2,411       - 6.1 %     2,483   Foreign accrual property income     - 3.6 %     1,682       - 1.2 %     666       - 1.9 %     771   Effect of different statutory tax rates on earnings or losses of subsidiaries     0.9 %     ( 407 )     1.0 %     ( 518 )     0.8 %     ( 323 ) Change in valuation allowance on deferred tax assets     - 18.5 %     8,623       - 22.3 %     11,852       - 20.1 %     8,115   Other     —       —       0.1 %     ( 32 )     —       ( 1 ) Income tax (recovery) expense     - 0.1 %   $ 39       0.1 %   $ ( 33 )     - 0.3 %   $ 137     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,       2023     2022   Deferred tax income assets:                 Net operating loss carry forwards   $ 193,508     $ 188,783   Capital loss carry forwards     47,995       48,264   Mineral properties     624       628   Intangible assets     462       465   Property and equipment     184       198   Investment in affiliates     47,522       44,713   Unpaid interest expense     2,105       2,105   Unrealized loss on investments     196       233   Asset retirement obligation     131       386   Other     1,129       1,068         293,856       286,843   Valuation allowances     ( 293,536 )     ( 285,611 )       320       1,232   Deferred income tax liabilities:                 Notes receivable     —       ( 942 ) Capitalized assets and other     ( 320 )     ( 290 )       ( 320 )     ( 1,232 ) Net deferred income tax assets (liabilities)   $ —     $ —     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       17,795   2027     18,493       1,777   2028     85       —   2029     11,223       11,515   2030     10,916       15,322   2031     16,580       15,249   2032     309,772       18,610   2033     14,529       14,044   2034     15,607       10,104   2035     16,383       9,227   2036     14,764       9,080   2037     14,111       6,037   2038     —       6,153   2039     —       5,578   2040     —       6,642   2041     —       —   2042     —       6,854   2043     —       4,153   Indefinite     72,413       —       $ 530,536     $ 158,140     69 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)     U.S. 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 $ 355,516 as of November 30, 2023 (November 30, 2022: $ 357,511 ) 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 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, 2023. 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, 2023, a valuation allowance of $ 293,536 (November 30, 2022: $ 285,611 ), 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, 2023, 2022 and 2021. 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, 2023, 2022 and 2021, 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, 2023, are 2018 to 2023 in Canada and 2019 to 2023 in the United States.   NOTE 16 – RELATED PARTY TRANSACTIONS   The Company provided management and administrative services to Donlin Gold for $ 990 in 2023 ($ 681 in 2022 and $ nil in 2021). As of November 30, 2023, the Company has accounts receivable from Donlin Gold of $ 203 (November 30, 2020: $ 574 ) included in Other current assets .     NOTE 17 – NET CHANGE IN OPERATING ASSETS AND LIABILITIES       Years ended November 30,       2023     2022     2021   Changes in operating assets and liabilities:                         Other assets   $ 694     $ ( 1,962 )   $ 1,605   Accounts payable and accrued liabilities     ( 62 )     128       ( 240 ) Accrued payroll and related benefits     268       ( 92 )     419   Remediation liability     ( 1,435 )     ( 130 )     —       $ ( 535 )   $ ( 2,056 )   $ 1,784     70 NOVAGOLD RESOURCES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (US dollars in thousands, except per share)       NOTE 18 – SUPPLEMENTAL CASH FLOW INFORMATION       Years ended November 30,       2023     2022     2021   Interest and dividends received   $ 5,754     $ 1,684     $ 1,024   Income taxes refunded   $ 325     $ 17     $ —   Income taxes paid   $ 75     $ —     $ 142                             71 NOVAGOLD RESOURCES INC.       Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   None.   Item 9A. Controls and Procedures   An evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K. Based on the foregoing, our management concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.   There was no change in our internal control over financial reporting that occurred during the year ended November 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.   REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING   Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of our assets are made in accordance with management’s authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.   Management conducted its evaluation of the effectiveness of our internal controls over financial reporting based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of November 30, 2023.   The effectiveness of our assessment of internal control over financial reporting as of November 30, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.     Item 9B. Other Information   None.           72 NOVAGOLD RESOURCES INC.     PART III   Item 10. Directors, Executive Officers and Corporate Governance   The information in our definitive Proxy Statement, filed pursuant to Regulation 14A promulgated under the Exchange Act for the 2023 Annual Meeting of Shareholders (the “2024 Proxy Statement”) regarding directors and executive officers and Section 16 reporting information appearing under the headings “Election of Directors” “Information Concerning The Board Of Directors And Executive Officers” and “Security Ownership Of Certain Beneficial Owners And Management And Related Shareholder Matters.” is incorporated by reference in this section. Finally, the information in our 2024 Proxy Statement regarding the Audit Committee under the heading “Statement of Corporate Governance Practices” is incorporated herein by reference.   We have adopted a Code of Business Conduct and Ethics that applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller or persons performing similar functions. This Code of Business Conduct and Ethics is posted on our website (www.novagold.com). We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, at the address specified above.   Our Code of Business Conduct and Ethics, and charters for each Committee of our Board are also available on our website. The Code of Business Conduct and Ethics and charters are also available in print to any shareholder who submits a request to: Corporate Secretary, NOVAGOLD RESOURCES INC., 201 South Main Street, Suite 400, Salt Lake City, UT, USA 84111.   Information on our website is not deemed to be incorporated by reference into this Annual Report on Form 10-K.   Item 11. Executive Compensation   The information appearing in our 2024 Proxy Statement under the headings. “Compensation Committee Interlocks and Insider Participation”, “Compensation Discussion & Analysis”, “Tabular Disclosure of Executive Compensation”, “Non-Executive Director Compensation” and “Compensation Committee Report” is incorporated by reference in this section.   Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters   The information appearing in our 2024 Proxy Statement under the heading “Security Ownership Of Certain Beneficial Owners And Management And Related Shareholder Matters” is incorporated herein by reference.   Equity Compensation Plan Information as of November 30, 2023   Plan Category   Number of securities to be issued upon exercise of options, warrants and rights (a)     Weighted average exercise price of outstanding options, warrants and rights (b)     Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)   Equity compensation plans approved by security holders                         Stock Award Plan     7,606,200 (1)   C$8.81/$6. (2)       19,133,549 (3) PSU     1,605,500 (4)     n/a       8,421,906 (5) DSU     287,072 (6)     n/a       3,055,397 (7) Equity compensation plans not approved by security holders     —       —       —   Total     9,498,772               30,610,852       73 NOVAGOLD RESOURCES INC.       (1) The options issued and outstanding represent approximately 2.28% of the Company’s Common Shares issued and outstanding as of November 30, 2023.   (2) Of the 7,606,200 options issued and outstanding, 884,400 have a weighted average exercise price of C$8.81 and 6,721,800 have a weighted average exercise price of $6.60.   (3) The number of options available for future issuance is a number equal to eight percent of the issued and outstanding Common Shares from time to time, less the number of outstanding options. The 19,133,549 options available for future issuance represent 5.72% of the Company’s issued and outstanding Common Shares as of November 30, 2023.   (4) Assumes vesting at 100% of PSU grant amount. PSUs can vest anywhere from 0% to 150% of the PSU grant amount depending upon performance against established quantitative performance criteria. The PSUs issued and outstanding represent approximately 0.48% of the Company’s Common Shares issued and outstanding as of November 30, 2023.   (5) The number of PSUs available for future issuance is a number equal to three percent of the issued and outstanding Common Shares from time to time, less the number of outstanding PSUs. The 8,421,906 PSUs available for future issuance represent 2.52% of the Company’s issued and outstanding Common Shares as of November 30, 2023.   (6) The DSUs issued and outstanding represent approximately 0.09% of the Company’s Common Shares issued and outstanding as of November 30, 2023.   (7) The number of DSUs available for future issuance is a number equal to one percent of the issued and outstanding Common Shares from time to time, less the number of outstanding DSUs. The 3,055,397 DSUs available for future issuance represent 0.91% of the Company’s issued and outstanding Common Shares as of November 30, 2023.   Item 13. Certain Relationships and Related Transactions, and Director Independence   The information appearing in our 2024 Proxy Statement under the heading “Interest Of Informed Persons In Material Transactions”, “Board of Directors” under the heading “Statement of Corporate Governance Practices” is incorporated herein by reference.   Item 14. Principal Accountant Fees and Services   The information appearing in our 2024 Proxy Statement regarding Audit Fees, Audit-Related Fees, Tax Fees, All Other Fees and Audit Committee Pre-Approval Policies under the subheading “Appointment of Auditors” is incorporated herein by reference.     74 NOVAGOLD RESOURCES INC.     PART IV   Item 15. Exhibits and Financial Statement Schedules   (a)(1) Financial Statements     Page Reports of Independent Registered Public Accounting Firm (PCAOB ID 271) 53 Consolidated Balance Sheets 55 Consolidated Statements of Loss and Comprehensive Loss 56 Consolidated Statements of Cash Flows 57 Consolidated Statements of Equity 58 Notes to Consolidated Financial Statements 59   (a)(2) Financial Statement Schedules   Schedule A – The Financial Statements of Donlin Gold LLC as of November 30, 2023 and 2022 and for the years ended November 30, 2023, 2022 and 2021.   No other financial statement schedules are filed as part of this report because such schedules are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. See Item 8. Financial Statements and Supplementary Data .   (a)(3) Executive Compensation Plans and Arrangements   Employment Agreement between the Registrant and Gregory A. Lang, dated January 9, 2012, identified in exhibit list below.   Employment Agreement between NOVAGOLD Resources Alaska, Inc. (a wholly-owned subsidiary of the Registrant) and Gregory A. Lang dated January 9, 2012, identified in exhibit list below.   Employment Agreement between NOVAGOLD USA, Inc. and David Ottewell, dated September 10, 2012, identified in exhibit list below.   2004 Stock Award Plan of NOVAGOLD Resources Inc. (as amended) identified in exhibit list below.   NOVAGOLD Resources Inc. Employee Share Purchase Plan identified in exhibit list below.   NOVAGOLD Resources Inc. 2009 Performance Share Unit Plan identified in exhibit list below.   NOVAGOLD Resources Inc. 2009 Non-Employee Directors Deferred Share Unit Plan identified in exhibit list below.   (b) Exhibits   Exhibit No.   Description       3.1   Certificate of Continuance (British Columbia) dated June 10, 2013 (incorporated by reference to Exhibit 99.1 to the Form 6-K dated June 19, 2013) 3.2   Certificate of Discontinuance (Nova Scotia) dated June 10, 2013 (incorporated by reference to Exhibit 99.2 to the Form 6-K dated June 19, 2013) 3.3   Notice of Articles (British Columbia) dated June 10, 2013 (incorporated by reference to Exhibit 99.3 to the Form 6-K dated June 19, 2013)     75 NOVAGOLD RESOURCES INC.     3.4   Amended and Restated Articles of NOVAGOLD RESOURCES INC. dated May 12,2021 (incorporated by reference to Appendix A to Registrant’s definitive proxy statement filed with the Securities and Exchange Commission on March 25, 2021) 4.1   Description of Common Shares 10.1   Amendment dated January 13, 2010 to Limited Liability Company Agreement dated December 1, 2007 between Donlin Gold LLC, Barrick Gold U.S. Inc. and NOVAGOLD Resources Alaska, Inc. (incorporated by reference to Exhibit 10.2 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.2   Limited Liability Company Agreement dated December 1, 2007 between Donlin Gold LLC, Barrick Gold U.S. Inc. and NOVAGOLD Resources Alaska, Inc. (incorporated by reference to Exhibit 10.8 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.3   2004 Stock Award Plan of NOVAGOLD Resources Inc. (as amended) (incorporated by reference to Appendix A to Registrant’s definitive proxy statement, filed with the Securities and Exchange Commission on March 24, 2023) 10.4   NOVAGOLD Resources Inc. Employee Share Purchase Plan (incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.5   NOVAGOLD Resources Inc. 2009 Performance Share Unit Plan (as amended) (incorporated by reference to Appendix C to Registrant’s definitive proxy statement, filed with the Securities and Exchange Commission on March 24, 2023) 10.6   NOVAGOLD Resources Inc. 2009 Non-Employee Directors Deferred Share Unit Plan (as amended) (incorporated by reference to Appendix E to Registrant’s definitive proxy statement, filed with the Securities and Exchange Commission on March 24, 2023) 10.7   Employment Agreement between the Registrant and Gregory A. Lang dated January 9, 2012. (incorporated by reference to Exhibit 10.15 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.8   Employment Agreement between the Registrant’s wholly-owned subsidiary, NovaGold USA, Inc., and David Ottewell, dated September 10, 2012. (incorporated by reference to Exhibit 10.17 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.9   Amendment dated July 15, 2010 to Limited Liability Company Agreement dated December 1, 2007 between Donlin Gold LLC, Barrick Gold U.S. Inc. and NOVAGOLD Resources Alaska, Inc. (incorporated by reference to Exhibit 10.18 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.10   Amendment dated June 1, 2011 to Limited Liability Company Agreement dated December 1, 2007 between Donlin Gold LLC, Barrick Gold U.S. Inc. and NOVAGOLD Resources Alaska, Inc. (incorporated by reference to Exhibit 10.19 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.11   Employment Agreement between the Registrant’s wholly-owned subsidiary, NOVAGOLD Resources Alaska, Inc., and Gregory A. Lang, dated January 9, 2012. (incorporated by reference to Exhibit 10.20 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2013, filed with the Securities and Exchange Commission on February 12, 2014) 10.12*   Share Purchase Agreement, dated July 25, 2018, by and among NOVAGOLD RESOURCES INC., Newmont Mining Corporation and Newmont Canada FN Holdings ULC (incorporated by reference to Exhibit 99.3 of the Form 8-K/A, filed with the Securities and Exchange Commission on October 3, 2018) 19.1   Registrant’s Insider Trading Policy adopted January 29, 2014, and amended May 18, 2023   76 NOVAGOLD RESOURCES INC.       21.1   Subsidiaries of the registrant 23.1   Consent of PricewaterhouseCoopers LLP 23.2   Consent of Wood Canada Limited 23.3   Consent of Paul Chilson 31.1   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 96.1   S-K 1300 Technical Report Summary on the Donlin Gold Project, Alaska, USA (incorporated by reference to Exhibit 96.1 to Registrant’s Annual Report on Form 10-K for the year ended November 30, 2021, filed with the Securities and Exchange Commission on January 26, 2022) 97.1   Registrant’s Incentive Compensation Recovery Policy dated November 17, 2023 101   The following materials are filed herewith: (i) Inline XBRL Instance, (ii) Inline XBRL Taxonomy Extension Schema, (iii) Inline XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) Inline XBRL Taxonomy Extension Definition. 104   Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *   Confidential treatment has been granted for certain portions of this Exhibit pursuant to Rule 24b-2 of the Exchange Act, which portions have been omitted and filed separately with the SEC   Item 16. Form 10-K Summary   None                                         77 NOVAGOLD RESOURCES INC.     SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.     NOVAGOLD RESOURCES INC.   By: /s/ Gregory A. Lang                                               Name: Gregory A. Lang Title: President and Chief Executive Officer   Date: January 24, 2024   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:   Signature   Title Date         /s/ Gregory A. Lang   President, Chief Executive Officer and Director (Principal Executive Officer) January 24, 2024         /s/ David A. Ottewell   Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) January 24, 2024         /s/ Thomas S. Kaplan   Board Chair January 24, 2024         /s/ Elaine Dorward-King   Director January 24, 2024         /s/ Diane Garrett   Director January 24, 2024         /s/ Hume Kyle   Director January 24, 2024         /s/ Kalidas Madhavpeddi   Director January 24, 2024         /s/ Kevin McArthur   Director January 24, 2024         /s/ Daniel Muñiz Quintanilla   Director January 24, 2024         /s/ Ethan Schutt   Director January 24, 2024         /s/ Anthony P. Walsh   Director January 24, 2024         /s/ Dawn Whittaker   Director January 24, 2024                 78     Item 15. (a)(2) Schedule A   Report of Independent Registered Public Accounting Firm   To the Board of Directors of Donlin Gold LLC   Opinion   We have audited the accompanying financial statements of Donlin Gold LLC (the “Company”), which comprise the balance sheets as of November 30, 2023 and November 30, 2022, and the related statements of loss and comprehensive loss, of cash flows and of equity for each of the three years in the period ended November 30, 2023, including the related notes (collectively referred to as the “financial statements”).   In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2023 and November 30, 2022, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2023 in accordance with accounting principles generally accepted in the United States of America.   Basis for Opinion   We conducted our audit in accordance with auditing standards generally accepted in the United States of America (“US GAAS”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.   Responsibilities of Management for the Financial Statements   Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.   In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are available to be issued.   Auditors ’ Responsibilities for the Audit of the Financial Statements   Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.     A-1     In performing an audit in accordance with US GAAS, we:     ● Exercise professional judgment and maintain professional skepticism throughout the audit.   ● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.   ● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.     ● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.   ● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.   We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.     /s/ PricewaterhouseCoopers LLP     Chartered Professional Accountants     Vancouver, Canada January 19, 2024                   A-2       DONLIN GOLD LLC BALANCE SHEETS (U.S. dollars in thousands)       At November 30,       2023     2022                     ASSETS   Cash   $ 5,907     $ 7,535   Inventory     244       332   Accounts receivable     285       193   Prepaid expenses     385       381   Current assets     6,821       8,441   Right of use assets (note 3)     -       75   Plant and equipment (note 4)     2,910       3,996   Mineral property (note 5)     65,230       65,230   Total assets   $ 74,961     $ 77,742                     LIABILITIES   Accounts payable and accrued liabilities   $ 2,620     $ 3,786   Lease obligations (note 3)     -       81   Due to related parties (note 6)     716       776   Current liabilities     3,336       4,643   Reclamation and remediation (note 7)     1,482       1,403   Total liabilities     4,818       6,046                     Commitments and contingencies (notes 3 and 8)                                   EQUITY   Partners’ contributions     573,104       537,600   Accumulated deficit     (502,961 )     (465,904 ) Total equity     70,143       71,696   Total liabilities and equity   $ 74,961     $ 77,742     The accompanying notes are an integral part of these financial statements.   A-3       DONLIN GOLD LLC STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (U.S. dollars in thousands)       Years ended November 30,       2023     2022     2021                             Operating expenses:                         Drilling, studies and engineering   $ 20,576     $ 37,914     $ 18,791   General and administrative     5,498       5,976       4,391   Permitting and environmental     3,470       4,816       4,120   Mineral property leases     3,234       3,605       3,191   Community relations     3,057       3,066       2,080   Depreciation     1,143       856       600   Accretion     79       93       80         37,057       56,326       33,253                             Loss from operations   $ (37,057 )   $ (56,326 )   $ (33,253 )   The accompanying notes are an integral part of these financial statements.     A-4         DONLIN GOLD LLC STATEMENTS OF CASH FLOWS (U.S. dollars in thousands)       Years ended November 30,       2023     2022     2021                             Operating activities:                         Net loss   $ (37,057 )   $ (56,326 )   $ (33,253 ) Adjustments:                         Depreciation     1,143       856       600   Other adjustments (Accretion and leases)     73       75       73   Changes in operating assets and liabilities:                         Prepaid expenses     (4 )     51       132   Inventory     88       (30 )     (256 ) Accounts receivable     (92 )     (51 )     (117 ) Accounts payable and accrued liabilities     (1,225 )     1,481       591   Net cash used in operations     (37,074 )     (53,944 )     (32,230 )                           Investing activities:                         Capital expenditures - plant and equipment     (58 )     (2,145 )     (862 ) Net cash used in investing activities     (58 )     (2,145 )     (862 )                           Financing activities:                         Partners’ contributions     35,504       56,870       35,174   Net cash provided from financing activities     35,504       56,870       35,174                             Increase/(Decrease) in cash during the year     (1,628 )     781       2,082   Cash at beginning of year     7,535       6,754       4,672   Cash at end of year   $ 5,907     $ 7,535     $ 6,754     The accompanying notes are an integral part of these financial statements.     A-5       DONLIN GOLD LLC STATEMENTS OF EQUITY (U.S. dollars in thousands)       Barrick contributions     NOVAGOLD contributions     Accumulated deficit     Total equity                                                                       December 1, 2020   $ 222,778     $ 222,778     $ (376,325 )   $ 69,231                                     Partners’ cash contribution     17,587       17,587       —       35,174   Net loss     —       —       (33,253 )     (33,253 ) November 30, 2021   $ 240,365     $ 240,365     $ (409,578 )   $ 71,152                                     Partners’ cash contribution     28,435       28,435       —       56,870   Net loss     —       —       (56,326 )     (56,326 ) November 30, 2022   $ 268,800     $ 268,800     $ (465,904 )   $ 71,696                                     Partners’ cash contribution     17,752       17,752       —       35,504   Net loss     —       —       (37,057 )     (37,057 ) November 30, 2023   $ 286,552     $ 286,552     $ (502,961 )   $ 70,143     The accompanying notes are an integral part of these financial statements.     A-6     DONLIN GOLD LLC NOTES TO FINANCIAL STATEMENTS (U.S. dollars in thousands)   NOTE 1 – NATURE OF OPERATIONS AND ECONOMIC DEPENDANCE   On December 1, 2007, Barrick Gold U.S. Inc. (“Barrick”) and NOVAGOLD Resources Alaska, Inc. (“NOVAGOLD”), formed Donlin Gold LLC, a Delaware limited liability corporation, (the “Company”) to advance the Donlin Gold Project in Alaska. Barrick and NOVAGOLD each own a 50% interest in the Company. Donlin Gold LLC has a board of four directors, with two nominees selected by each company. All significant decisions related to Donlin Gold LLC require the approval of both companies. The Company currently depends on Barrick and NOVAGOLD for all of its funding and has received commitments from its shareholders that they will fund the Company for the next twelve months. These financial statements have been prepared pursuant to Rule 3-09 of SEC Regulation S-X for inclusion in NOVAGOLD Resources Inc.’s 10-K, as the Company is an equity investee of NOVAGOLD Resources Alaska, Inc, a wholly owned subsidiary of NOVAGOLD Resources Inc.   The Company’s Board of Directors approved the Project's Updated Feasibility Study in July 2012. The Company subsequently initiated the permitting process. The U.S. Army Corps of Engineers (the “Corps”) issued the final Environmental Impact Statement (EIS) on April 27, 2018. On August 13, 2018, the Corps and the Bureau of Land Management (BLM) issued a joint Federal Record of Decision (ROD) for the Donlin Gold Project along with their respective federal permit authorizations. Several major State of Alaska authorizations have also been issued, including the approval of the Donlin Gold Reclamation and Closure Plan, Waste Management Permit, Water Discharge Permit, Permit to Appropriate Water, Title 16 Fish Habitat Permits for the mine area and right of way agreements with the State and BLM. At the end of 2023, four appeals remained active in both the State of Alaska and U.S. Federal courts concerning permits granted for the project. These include: the appeal of the Alaska Department of Environmental Conservation (ADEC) Clean Water Act Section 401 Certificate of Reasonable Assurance at the State Superior Court level; appeals regarding the state pipeline right-of-way and the water rights in the State’s Supreme Court; and one appeal concerning the EIS, ROD, and associated federal permits in the U.S. Federal Court.   NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Presentation   These financial statements are presented in United States dollars ($) and have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).   Use of estimates   The preparation of the Company’s financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to environmental, reclamation and closure obligations. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results will differ from amounts estimated in these financial statements.   Plant and equipment   On initial recognition, plant and equipment are recorded at cost subject to a ten-thousand-dollar threshold for capitalization. Plant and equipment are subsequently measured at cost less accumulated depreciation. Depreciation is recorded over the estimated useful life of the assets at the following annual rates:   Computer equipment – 5 years straight-line; Computer software – 5 years straight-line; Furniture and equipment – 5 years straight-line; and Leasehold improvements – straight-line over the lease term.   Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.   A-7     DONLIN GOLD LLC NOTES TO FINANCIAL STATEMENTS (U.S. dollars in thousands)   Leases   The Company reviews all contracts and determines if the arrangement represents or contains a lease, at inception. Operating leases are included in Right of use assets and Lease obligations (current and long-term) in the 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.   Mineral properties   All direct costs related to the acquisition of mineral property interests are capitalized. Mineral property exploration expenditures are expensed when incurred. When it has been established that a mineral deposit is commercially mineable, an economic analysis has been completed and permits are obtained, the costs subsequently incurred to develop a mine on the property prior to the start of mining operations are capitalized. Capitalized costs will be amortized following commencement of commercial production using the unit of production method over the estimated life of proven and probable reserves.   Asset retirement obligations   The Company records a liability based on the best estimate of costs for site closure and reclamation activities that the Company is legally or contractually required to undertake. The liability is estimated using expected discounted cash flows based on engineering and environmental reports and accreted to full value over time through periodic charges to income. Adjustments to the reclamation obligation arising from changes in estimates are recorded as a component of the mineral property.   Income taxes   The Company is not a taxable entity for income tax purposes. Accordingly, no recognition is given to income taxes for financial reporting purposes. Tax on the net income (loss) of the Company is borne by the owners through the allocation of taxable income (loss). Net income for financial statement purposes may differ significantly from taxable income for the owners as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the shareholders agreement.   Impairment of long-lived assets   Management assesses the possibility of impairment in the carrying value of its long-lived assets whenever events or circumstances indicate that the carrying amounts of the asset or assets group may not be recoverable. Management calculates the estimated undiscounted future net cash flows relating to the asset or assets. When the carrying value of an asset exceeds the related undiscounted cash flows, the asset is written down to its estimated fair value, which is usually determined using discounted future cash flows. Management’s estimates of mineral prices, mineral reserves, foreign exchange rates, production levels and operating capital and reclamation costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long-lived asset. It is possible that material changes could occur that may adversely affect management’s estimates.   A-8     DONLIN GOLD LLC NOTES TO FINANCIAL STATEMENTS (U.S. dollars in thousands)   Cash and cash equivalents   Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less which are considered to be cash equivalents. The fair value of the Company’s financial assets, which includes cash, approximates their carrying values due to their short-term nature.    Trade payables   The fair value of the Company’s financial liabilities, such as accounts payable and accrued liabilities approximates their carrying values due to their short-term nature.   Due to related parties   The amounts due to Barrick and NOVAGOLD are non-interest bearing, unsecured and without specified terms of repayment.   NOTE 3 – LEASES   The Company leases office space under a non-cancelable operating lease with an original lease term of 3.25 years. The lease requires monthly lease payments that are subject to annual increases throughout the lease term. The lease also includes a renewal option at the election of the Company to renew or extend the lease for an additional four years. The optional periods have not been considered in the determination of ROU assets or lease liabilities associated with the lease as management did not consider it reasonably certain it would exercise the option. The Company also leases land, however, since the non-cancelable lease terms do not exceed 12 months, these are quantified below as short-term leases and are not recorded in the Balance Sheets.   The Company performed evaluations of its contracts and determined its identified leases are operating leases and short-term leases. No variable leases with non-cancelable terms greater than one month were identified.   Operating lease expenses are included on the Statement of Loss in General and administrative expense and Mineral property leases and include the following components for the year ended November 30, 2022:   Operating lease cost   $ 75   Variable lease cost     —   Short-term lease cost     671       $ 746     There are no future minimum lease payments under non-cancellable operating leases as of November 30, 2023.   Other information regarding leases for the year ended November 30, 2023 includes the following:   Cash paid for operating leases   $ 87   Right-of-use assets obtained in exchange for lease liabilities   $ —   Weighted average remaining lease term (years) – operating leases     —     NOTE 4 – PLANT AND EQUIPMENT       At November 30,       2023     2022   Plant and equipment   $ 8,296     $ 8,239   Accumulated depreciation     (5,386 )     (4,243 )     $ 2,910     $ 3,996       A-9     DONLIN GOLD LLC NOTES TO FINANCIAL STATEMENTS (U.S. dollars in thousands)   NOTE 5 – MINERAL PROPERTY       At November 30,       2023     2022   Acquisition cost   $ 64,000     $ 64,000   Asset retirement cost     1,230       1,230       $ 65,230     $ 65,230     The Donlin Gold Project is located in the Kuskokwim region of southwestern Alaska on private, Alaska Native-owned mineral and surface land and Alaska state mining claims. The property is under lease for subsurface mineral rights from Calista Corporation and surface land rights from The Kuskokwim Corporation, two Alaska Native corporations. The mineral property was jointly owned by Barrick and NOVAGOLD through an unincorporated joint venture prior to the formation of the Company. Upon formation of the Company, the mineral property contributed was recorded based on the predecessor accounting values of Barrick and NOVAGOLD. As such, mineral property includes the historic acquisition cost as the partners’ initial contribution to the Company.     NOTE 6 – RELATED PARTY TRANSACTIONS   The Company received management and administrative services from Barrick for $332 in 2023, $1,288 in 2022, and $774 in 2021, and received from NOVAGOLD management and administrative services for 923 in 2023, $681 in 2022 and $nil in 2021. Both Barrick and NOVAGOLD amounts are included in General and Administrative, and drilling, studies and engineering expense.   The Company has accounts payable to Barrick at November 30, 2023 of $474 (2021: $425) for reimbursement of management and administrative services and to NOVAGOLD an of $243 (2022: $574) for reimbursement of third party contracted services on behalf of the Company.   NOTE 7 – RECLAMATION AND REMEDIATION   Significant reclamation and closure activities include rehabilitation and decommissioning of the camp and drill sites. Although the ultimate amount or timing of reclamation costs cannot be predicted with certainty, the estimated discounted cash flows required to settle the Company’s obligations for work undertaken at the site to date is $1,482.        At November 30,       2023     2022   Reclamation and Remediation     1,403       1,310   Accretion     79       93       $ 1,482     $ 1,403     NOTE 8 – MINERAL PROPERTY LEASES   The Company leases certain assets, such as mineral property leases, that are an exception to applying lease accounting under ASC 842. These mineral property leases coincide with the currently projected Donlin Gold mine life, with provisions for a further extension, should production continue beyond that. Future minimum annual mineral property lease payments are $2,548 in 2024, $3,548 in 2025, $3,548 in 2026, $3,548 in 2027, and $3,548 in 2028 totaling $16,740.             A-10