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akin to the Carlin trend – not necessarily the same kind of system, but in terms of how the next big discovery at Carlin would lead to another discovery. And when we realized that the 30, 40 million ounces that we could see in 2008 were on a small percentage of the entire land package – concentrated on a three-kilometer area that had been heavily drilled, as well as being open at depth – I sent my chief geologist to assess it. This geologist, Dr. Larry Buchanan, is one of the great exploration geologists in the world. The Buchanan model is a textbook analysis of epithermal deposits that’s still unrivaled to this day.
And I sent Larry out and I said, “What do you think?” (This was after we’d already made the deal, which gave us effective
control.) I asked, “Are the
40 million ounces there?” And he said, “Oh no.” For
a moment my heart sank. We’re already in it. And he said, “I think there’s at least double, maybe more. In fact, I think that the next Donlin Gold is at Donlin Gold.” If you’re in the mining industry, you know, it’s an old adage: If you’re going out in search of elephants, go to elephant country. And what he was basically saying was in terms of the geological potential
at Donlin Gold, we were perhaps just scratching the surface. Now this got me
extremely excited despite the fact that everything that I know about mining development and operations would fit very generously into a thimble.
So when I got this conviction that NOVAGOLD was going to give me all the leverage I could possibly want to the underlying gold thesis, I realized we had a tiger by the tail. Now, up until that time – when we came into NOVAGOLD in 2008 – Electrum had perhaps the most widespread and diversified exploration portfolio in the world. I was the largest holder of mineral rights in mining, so I was told, in the Islamic world from
Mauritania all the way through to Pakistan, and it was one of the things that got me to open up doors and ultimately become partners with sovereign wealth funds from the Arabian Gulf. But around the time that we made the investment in NOVAGOLD, I’d come to believe that the era of “Go where the gold is” mentality was coming to an end. And that ultimately investors such as myself would gravitate toward jurisdictions where the rule of law wasn’t a novelty, where when you go to sleep at night you feel completely confident that when you wake up in the morning, what you thought you own the evening before, you still own. Therefore, I changed my mantra. So the mantra went from being “seek out great assets that give you extraordinary leverage to an underlying theme,” to “seek out great assets that give you extraordinary leverage to an underlying theme in a jurisdiction that will allow you to keep the fruits of that leverage when the time comes to ring the
cash register.”
Ultimately, we have in the picture a big partner who owns 50 percent. So some of it would be the dynamics between the two partners. Do you think that can be monetized?
A lot of this is unknown at this stage, but we know that you have a scarce asset. Gold is in itself scarce. Maybe you could just talk about the various things that would come into play in advancing NOVAGOLD. Why, in your opinion, will this particular asset outperform its peer group?
NOVAGOLD is the flagship asset of The Electrum Group. We have interests in multiple gold and silver assets – hence the name Electrum, which is a naturally occurring alloy of gold and silver – in North America as well as some exposure to Australia. For us, Donlin Gold is the holy grail. And the reason I say that is because we believe that Donlin Gold, as a vehicle for investors to be able to get true octane in the development space in gold, is unique. What does it mean to be unique? What it means
is that when you look at Donlin Gold’s attributes...Its size: There’s never been a gold mine that began production with 40 million ounces plus. The scale: We’re talking about something that could be a million-ounce-a-year producer. The mine life:
It is projected to start with 27 years of production. The cost structure: Because it is projected to be a high-grade mine for a
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