NOVAGOLD RESOURCES INC (NG)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 was transformational: NG increased its Donlin Gold LLC ownership to 60% post-quarter via the $1.0B transaction with Paulson; quarter-end cash and term deposits were $318.737M, with pro forma treasury of ~$136M after the transaction costs and overallotment closing .
• Reported net loss was ($54.275M) and EPS was ($0.15), driven primarily by a non‑cash, non‑recurring $39.607M warrant expense that impacted EPS by ~$0.11 after-tax .
• Versus S&P Global consensus, EPS materially missed (actual −$0.149 vs est −$0.040), while EBITDA was a positive surprise (actual −$5.8M vs est −$12.4M). The EPS miss was explained by the one-time warrant charge; EBITDA benefited from lower-than-estimated operating costs in the quarter*.
• Management signaled 2025 spending will be higher than prior guidance due to the ownership increase (from 50% to 60%) and transaction-related costs; Donlin’s feasibility study workstream is expected to commence with contracts awarded by year-end, and drilling progressed to 8,401m out of the 15,000m program .

What Went Well and What Went Wrong

What Went Well

• Ownership and governance: NG completed the strategic transaction with Paulson; NG now owns 60% of Donlin with equal governance rights, calling the quarter “transformational” and a “pivotal catalyst” to advance Donlin .
• Operational progress: Donlin’s 2025 drill program advanced with 8,401m completed toward 15,000m, pivoting to resource conversion/expansion after the transaction announcement .
• Liquidity strength: Quarter-end cash and term deposits were $318.737M, reflecting net equity and private placement proceeds; management highlighted strong market support and the ability to fund near-term milestones .

What Went Wrong

• EPS miss due to one-time charges: Q2 EPS of ($0.15) significantly missed consensus, driven by a $39.607M non‑cash warrant expense associated with an unexercised backstop commitment; after-tax EPS impact ~$0.11 .
• Higher 2025 cash spending expected: NG guided that its share of Donlin funding and corporate G&A will be higher than prior guidance ($21.5M and $16.0M, respectively) as a result of the ownership increase and transaction costs .
• Ongoing litigation over permits: While the federal court denied a request to vacate permits, it remanded for supplemental NEPA analysis on a hypothetical larger tailings release—adding timeline complexity, albeit not viewed as on the critical path by management .

Financial Results

Notes:

• “—” indicates not applicable given no revenue; NG is a development-stage company with no production .
• Values marked with “*” retrieved from S&P Global.

Liquidity and Balance

KPIs and Program Progress

Estimate vs Actual (S&P Global)

Notes:

• EPS, EBITDA consensus/actual from S&P Global; values retrieved from S&P Global.
• Revenue actual is not applicable (development-stage; no production) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “This quarter was transformational… a watershed event… Our new partnership with Paulson will allow us to now advance one of the world’s largest-known gold development projects” — Gregory A. Lang, President & CEO .
• “Today we completed the successful and strategic Donlin Gold transaction… an exciting new chapter… we look forward to providing updates on key milestones… starting with our revamped… Feasibility Study workstream.” — Gregory A. Lang .
• “Our near-term priorities include commencing the Feasibility Study update, executing the 2025 drill program… and pursuing further exploration at depth.” — NG outlook statement .
• “We expect our share of Donlin Gold funding to be higher than our previously issued 2025 guidance… Similarly, we expect corporate G&A cash expenditures to be significantly higher…” — NG guidance update .

Q&A Highlights

• Litigation remedy scope/timeline: Management described a narrow NEPA remedy focused on studying a hypothetical larger tailings release, anticipated to take ~6–8 months; not viewed as on the critical path .
• Feasibility study cost and timing: Estimated $80–$100M and ~2 years; decision contingent on drilling results and updated inputs .
• Funding adequacy: Treasury described as robust and sufficient for near-term activities; litigation support continues alongside agencies .
  Note: Q2 2025 call transcript was not available in our document set; highlights reflect prior quarter Q&A.

Estimates Context

• EPS: Large miss versus consensus due to a one-time non‑cash warrant expense (actual −$0.149 vs est −$0.040; difference ~−$0.109). Management quantified the warrant’s after‑tax EPS impact at ~$0.11, explaining the variance .
• EBITDA: Better than consensus (actual −$5.81M vs est −$12.35M), indicating lower-than-estimated operating costs in Q2*.
• Coverage is limited (EPS estimates: 2; Revenue estimates: 1), consistent with development-stage status.
  Values marked with “*” retrieved from S&P Global.

Key Takeaways for Investors

• The ownership shift to 60% and equal governance with Paulson is a material strategic catalyst; watch for feasibility update contract awards by year-end and potential scope/timetable disclosures .
• EPS miss is largely technical/non-cash (warrant expense); underlying cash usage and EBITDA were better than expected relative to consensus* .
• Expect higher 2025 cash spending (Donlin funding and corporate G&A) versus prior guidance due to greater ownership and transaction/legal costs; formal update targeted by Q3 release .
• Litigation over permits continues but with permits preserved; the court ordered supplemental NEPA analysis without vacating key permits—reducing tail risk while extending process timelines .
• Liquidity remains a strength; quarter-end cash & term deposits were $318.737M, enabling acceleration of feasibility and drilling programs .
• Near-term trading catalysts include feasibility update workstream announcements, drilling progress updates, and any permitting status changes (ADNR comments on Dam Safety Certificates) .
• Medium-term thesis hinges on successful feasibility update (costs, capex/opex profile), stakeholder alignment, and sustained gold price support to unlock Donlin’s scale/grade advantages .

S&P Global disclaimer: Values marked with “*” are retrieved from S&P Global.