In Management’s Discussion and Analysis of Financial Condition and Results of Operations, “NOVAGOLD”, the “Company”, “we,” “us” and “our” refer to NOVAGOLD RESOURCES INC. and its consolidated subsidiaries. The following discussion and analysis of our financial condition and results of operations constitutes management’s review of the factors that affected our financial and operating performance for the three- and six-monththree-month periods ended May 31, 2022February 28, 2023 and May 31, 2021.2022. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained elsewhere in this report and our Annual Report on Form 10-K for the year ended November 30, 2021,2022, as well as other information we file with the Securities and Exchange Commission on EDGAR at www.sec.gov and with Canadian Securities Administrators on SEDAR at www.sedar.com. References herein to $ refer to United States dollars and C$ to Canadian dollars.dollars,in thousands, except for per share amounts.

Overview

We operate in the gold mining industry, primarily focused on advancing the Donlin Gold project in Alaska. The Donlin Gold project is held by Donlin Gold LLC (“Donlin Gold”), a limited liability company owned equally by wholly-owned subsidiaries of NOVAGOLD and Barrick.

Our corporate goals include continuing to advance the Donlin Gold project toward a construction decision; maintaining support for Donlin Gold among the project’s stakeholders; promoting a strong safety, sustainability, and environmental culture; maintaining a favorable reputation of NOVAGOLD; and preserving a healthy balance sheet. Our operations primarily relate to the delivery of project milestones, including the achievement of various technical, environmental, sustainable development, economic and legal objectives, obtaining necessary permits, completion of pre-feasibility and feasibility studies, preparation of engineering designs and the financing to fund these objectives.

Donlin GoldFirst quarter highlights

CommunityStakeholder and government engagement

To date, Donlin Gold has signed nine Shared Values Statements with villages in the Y-K region (Akiak, Sleetmute, Napaimute, Crooked Creek, Napaskiak, Nikolai, Tuluksak, Upper Kalskag, and Stony River) that formalize current engagement with key local communities. These agreements with Donlin Gold expand upon the long-term relationships already established with these communities and address specific community needs such as water, sewer, and landfill projects; the ice road that connects remote villages in the Yukon-Kuskokwim (Y-K) region; salmon studies; and suicide prevention programs.

Donlin Gold is committedfortunate to supporthave time-tested partnerships with Calista Corporation (“Calista”) and The Kuskokwim Corporation (TKC), owners of the needsmineral and surface rights, respectively. The project’s location on private lands specially selected for mineral development potential pursuant to the 1971 Alaska Native Claims Settlement Act is a key attribute that distinguishes it from most other mining assets in Alaska. Donlin Gold’s commitment to meaningful tribal engagement throughout project development and permitting has been reinforced by decades of itsreliable and dependable engagement with the community.

Donlin Gold continues to work with Calista and TKC in all aspects of outreach and engagement throughout the Yukon-Kuskokwim (“Y-K”) region. Crooked Creek, the closest community partnersto the project site in the Y-K region, inrecently struggled with access to reliable power and water, which shut down the areasschool, health clinic, and post office. In response, Donlin Gold, Calista and TKC provided support to Crooked Creek by purchasing and delivering a generator, alerting the State of education, healthAlaska’s emergency response team for additional assistance, and safety, cultural traditions,helping the local authorities to identify a longer-term solution for their infrastructure needs as well as environmental initiatives. During the second quarter 2022,assisting with access to available government funding.

Environment and social investments

Environmental stewardship, education, community wellness, and cultural preservation constitute key focus investments for Donlin Gold held the Lower Kuskokwim School District’s annual College and Career fair where 30 vendors and 89 students attended the virtual event; worked with The Kuskokwim Corporation (TKC) to fly drinking water to Red Devil, a local community, following a flood on May 9^th that contaminated water wells; sponsored Skwentna 200 snowmachine race and community gathering; was a principal partner in the 50^th anniversaryY-K region. The project supports these initiatives through fisheries studies and other environmental activities, subsistence and cultural preservation efforts, and educational grants. A wide range of activities and projects were carried out in the first quarter with Calista and TKC.

Donlin Gold was the premier sponsor for the McGrath Iron Dog community safety presentation as part of the Iditarod;Alaska Safe Riders program, promoting safety for snowmachines, all-terrain vehicles and recreational off-road vehicles. The non-profit organization is dedicated to reducing deaths and injuries from tragic accidents.

In partnership with Covenant House Alaska and Bethel Community Services, Donlin Gold is working on an action plan to address the chronic and ongoing youth food security issues within the Y-K region. To date, the three entities have successfully leased space from Bethel Winter House with the goal of developing a housing and service hub for 18 to 24 year-olds.

Donlin Gold in partnership with Bethel Community Services Foundation and the Aruqutet Project, a regional program to address food insecurity, throughout the Bethel community. Over 550 local households are enrolled in the program to date, with approximately 200 of them receiving food on any given month. Employing local staff and committed volunteers has proven critical for the program’s success.

In partnership with TKC, the village of Crooked Creek, the Akiak Native Community and the Napaimute Tribe, Donlin Gold sponsored a program to construct and maintain the Native Youth Olympics annual games, supporting healthyice roads to allow for winter travel between the remote Kuskokwim River communities. The ongoing development and maintenance of these roads allow for increased participation in community events, cultural activities, sports, and provided access for youth;emergency services, law enforcement and sponsoredtravel. On average a total of 300 miles of ice road is constructed and maintained annually.

Advancing education opportunities in Alaska is another high priority for the Arctic Encounter SymposiumCompany. NOVAGOLD recently awarded the first University of Alaska scholarship to an undergraduate student in mining or geological engineering. Donlin Gold supports the Excel Alaska program which is a non-profit providing supplemental academic, career and technical education intensives for rural youth and young adults across the largest annual Arctic policy eventY-K region. Student interview preparation sessions took place in the United States.first quarter with four more planned over the next two quarters. Through this preparation, the students receive high school credit towards graduation and concurrent college credits.

Permitting

The State’s Clean Water Act (CWA) Section 401 certification (the “401 Certification”)Permitting in Alaska has been a tremendous achievement to date and a substantial undertaking over many years to ensure a diligent, thorough, transparent, and inclusive process for all involved, including stakeholders from the Y-K region. Donlin Gold, its owners, and its partners Calista and TKC are intimately familiar with the permitting and regulatory processes applicable to the project and will continue to support the State in its defense of the Federal CWA Section 404 permit was formally appealedthorough and diligent permitting process. Together, they will also continue working to secure the various remaining state-level permits and certificates required for the project. Calista and Donlin Gold continued their proactive, bipartisan outreach to the CommissionerState Administration and new legislature in Alaska and with the Federal Administration and U.S. Congress in Washington, D.C. to highlight the thoroughness of the project’s environmental review and permitting processes as well as the benefits the project would deliver to all Native Alaskans. Alaska’s U.S. Senators and Governor have consistently expressed their long-term support of the Donlin Gold project.

The Donlin Gold camp re-opened in the first quarter of 2023 to continue fieldwork to collect geotechnical and hydrological information toward finalizing the next step in the design documentation required for the Alaska Dam Safety certificates, with anticipated field completion in 2023 and issuance of the certificates expected in 2026. In 2022, Donlin Gold applied for a new air quality permit based on updated air quality modeling and emissions controls information, and the regularly scheduled re-issuance of its Alaska Pollutant Discharge Elimination System (APDES) permit from the Alaska Department of Environmental Conservation (ADEC) in. The new air quality permit is expected to be issued by June 30, 2023, which corresponds to the expiration date of the current permit. ADEC has extended the existing APDES permit indefinitely until a new permit is finalized.

On June 3, 2020, Earthjustice joined by Orutsararmiut Native Council (ONC), Chevak, Kasigluk, Eek, Kwinhagak, Marshall, Nightmute, Tununak, Kwethluk, Kotlik, SalmonState, and the Alaska Community Action on Toxics filed a formal appeal with the ADEC Commissioner referredof the State’s water quality certification under Section 401 of the Clean Water Act. The appeal toprocess consists of an Administrative Hearing in front of an Administrative Law Judge for review.(ALJ) appointed by the ADEC Commissioner. The appeal focused on three narrow issues related to compliance with the State’s water quality standards near the mine site.ALJ was subsequently appointed. On April 12, 2021, the Administrative Law JudgeALJ issued his opinion for the Commissioner’s consideration recommending the 401 Certification be vacated. The ADEC Commissioner issued his decision to uphold the 401 Certification on May 27, 2021. The decision was appealed on June 28, 2021 in Alaska’sAlaska Superior Court by Earthjustice, on behalf of Orutsrarmiut Native Corporation (ONC).ONC. On September 27, 2021, Donlin Gold filed a motion requesting a short term stay in the case to allow the State to fully consider additional technical materials on mercury and temperature; the State indicated to the Court that they do not oppose the motion. On October 22, 2021, Donlin Gold submitted to ADEC expert technical reports on mercury and temperature. On November 22, 2021, ADEC filed an additional motion asking to remand the 401 certification back to ADEC to determine how the additional information affects the certification. Earthjustice did not oppose the motion although had comments on the remand process. On December 29, 2021, the Court issued an order dismissinggranted the remand request, dismissed the case without prejudice, and remandingleft in place existing certification. On May 13, 2022, the ADEC Water Division Director reaffirmed the 401 Certification to ADEC for consideration of additional technical information provided by Donlin Gold. The existing 401 Certification remains in effect during the remand period. On May 16, 2022, ADEC’s Division of Water upheld the 401 Certification.certification. On June 13, 2022, Earthjustice and ONC requested thatappealed the ADEC Commissioner conduct an additional adjudicatory hearing on the partelements of the Division of Water’s decision related to potential water temperature effectsto the Commissioner and requested an adjudicatory hearing with an ALJ. On July 14, 2022, the Commissioner granted the request for the hearing and a new ALJ was assigned. On September 14, 2022, Earthjustice filed their initial brief. Donlin Gold and ADEC filed response briefs on October 14, 2022. Earthjustice filed their final reply brief on October 21, 2022. The Commissioner’s decision, which he will make in Crooked Creek.collaboration with the ALJ, is expected in the first half of 2023. It is then subject to further review in Alaska Superior Court.

In April 2020, the Alaska Department of Natural Resources’ (ADNR) Division of Oil and Gas agreed to reconsider its decision on the State Right-of-Way (ROW) agreement and lease authorization for the buried natural gas pipeline. Under the reconsideration, on September 10, 2020, the ADNR issued for additional public comment a revised Consideration of Comments document. This document describes how the ADNR considered public input that was solicited in the ROW review, including how cumulative effects are addressed in the decision. The comment period on the document ended on November 9, 2020. On July 19, 2021, the ADNR Commissioner completed the reconsideration and upheld the ROW agreement and lease authorization. On August 9, 2021, two parties requested that the Commissioner conduct a further reconsideration. The first party was Earthjustice representing ONC, Cook Inletkeeper, and three villages. The second party was an individual who operates an outdoor guiding business around the pipeline route. The Commissioner rejected both further reconsideration requests on August 19, 2021. On September 20, 2021, Earthjustice, representing ONC, Cook Inletkeeper, and three villages, filed an appeal of the State pipeline ROW authorization in Alaska Superior Court. An appeal was also filed by a second party, the owner of an outdoor guiding business located near the pipeline route, on September 20, 2021. On April 5, 2022, Earthjustice filed its opening brief, which related to the scope of the cumulative effects analysis required by the Alaska Constitutional, statutory, and regulatory provisions, and related previous litigation. Alaska Department of Natural Resources (ADNR), Donlin Gold, and Calista filed response briefs on June 15-16, 2022. Earthjustice filed its reply on July 18, 2022, and requested oral arguments. The second appellant filed his initial brief on June 8, 2022. ADNR’s and Donlin Gold’s response briefs were submitted on August 22, 2022, and the second party in September 2021.appellant filed their reply brief on November 9, 2022. The two appeals have been consolidated into a single case that is pending before the Alaska Superior Court based in Anchorage, Alaska. Legal briefings are being preparedrequest for oral arguments was granted by the partiesCourt and we anticipate a decisionthey were held on the appealJanuary 11, 2023. Decisions in the second half of 2022 or the first half ofboth cases are expected in 2023.

In November 2020, the ADNR published

On May 25, 2022, Earthjustice, on behalf of ONC and five villages, filed an initial public notice for comment on Donlin Gold’s 12 applications for water rights for the mine site and transportation facilities, which closed on December 15, 2020. Water rights are for local surface water sources and groundwater to be used for process water, dust control, fire protection, and potable water. In March 2021, the ADNR held a second two-week public notice period, which closed on March 26, 2021. Allappeal of the final Water Rights were issued on June 29, 2021 by ADNR’s Division of Mining Land and Water. In July, they were administratively appealed to the ADNR Commissioner by Earthjustice, ONC, and five villages. On April 25, 2022, the ADNR Commissioner denied the appeal; however, Earthjustice, ONC and the five villages appealed the Commissioner’s decision in Alaska Superior CourtCourt. The appellants filed their initial brief on May 25,November 21, 2022. ADNR and Donlin Gold submitted their response briefs on March 8, 2023 and the appellants are preparing their final brief. A briefing schedule has not yet been set bydecision is expected within the Court.next year.

In September 2022, 13 tribes sent a letter to the U.S. Army Corps of Engineers (“Corps”) and the Environmental Protection Agency (EPA) requesting that the Corps consider requiring a supplemental environmental impact statement (EIS) on the Donlin Gold working with its Native Corporation partners, continuesproject and revoking the Clean Water Act Section 404 permit in light of what the tribes consider "new information” since the final EIS was issued in 2018. Also in September 2022, the same tribes submitted a separate letter to support the State of Alaska to advance other permits and certificates neededEPA requesting that they initiate a Clean Water Act Section 404(c) veto process for the project. Donlin Gold continues to work with Calista, TKC, ADNR, and the U.S. Bureau of Land Management on re-locating easements and public ROWs in the project area. The field work relatedproject. A Section 404(c) veto has recently been applied to the issuance of thePebble Project in Alaska Dam Safety certificatesbut is planned to recommence during second half of 2022 or the first half of 2023. The work was temporarily paused to concentrate on the 2020 and 2021 geological drill programs.

rarely used by EPA. In early January 2023, Donlin Gold is fortunateand Calista both submitted responses to have time-tested partnerships with Calista and TKC, owners of the mineral and surface rights, respectively. The project’s locationCorps on private land specially designated for mining activities throughwhy the 1971 Alaska Native Claims Settlement Act isrequests to prepare a key attribute that distinguishes it from most other mining assets in Alaska. Our commitmentsupplemental EIS or revoke the 404 permit should not be granted. In mid-January 2023, Donlin Gold also provided a response to meaningful tribal consultation throughout project development and permitting has been tested over decades of reliable and dependable engagement withEPA describing why the community.agency should not initiate a 404(c) process.

Donlin Gold project

DrillingThe focus at Donlin Gold is underway for 2022 and is designed for approximately 34,000 meters of tight spaced grid drilling in structural domains and in-pit and below-pit drilling in sparsely drilled areas of the open pit. The data from the 2021 drill program is being incorporated intoto update the geologic and resource models.models with the data derived from the extensive drill program that took place over the last three years; reviewing key project assumptions, inputs, and design components for optimization (mine engineering, metallurgy, hydrology, and infrastructure); advancing remaining permits through the regulatory process and supporting the State in maintaining the existing permits; and, through continued engagement, sustaining and expanding project support in the Y-K region.

Ultimately, subject to a formal decision by the 2021 and 2022 informationDonlin Gold LLC board the comprehensive work we are completing should assist in determininglead to the next steps to update thecommencement of a new Donlin Gold feasibility study andwhich, in turn, would initiate the detailed engineering work necessary to advance the project design before reaching a construction decision. The owners will advance the Donlin Gold project in a financially disciplined manner with a strong focus on engineering excellence, environmental stewardship, a strong safety culture and continued community engagement.

Our share of funding for the Donlin Gold project in the first halfquarter of 20222023 was $16,487.$5,744. In 2022,2023, we continue to expect our share of Donlin Gold LLC funding to be $30,000,$17,000, including $21,000$8,000 for follow-up drilling, camp improvementsexternal affairs, permitting, environmental, land, and studies,legal activities and $9,000 for permitting, community engagementproject planning and administration.fieldwork.

The Donlin Gold LLC board must approve a construction program and budget before the Donlin Gold project can be developed. The timing of the required engineering work and the Donlin Gold LLC board’s approval of a construction program and budget, the receipt of all required governmental permits and approvals, and the availability of financing, commodity price fluctuations, risks related to market events and general economic conditions among other factors, will affect the timing of and whether to develop the Donlin Gold project. Among other reasons, project delays could occur as a result of co-owner disagreements, public opposition, litigation challenging permit decisions, requests for additional information or analysis, limitations in agency staff resources during regulatory review and permitting, or project changes made by Donlin Gold or any impact on operations from COVID-19.LLC.

We record our interest in the Donlin Gold project as an equity investment, which results in our 50% share of Donlin Gold’s expenses being recorded in the income statement as an operating loss. The investment amount recorded on the balance sheet primarily represents unused funds advanced to Donlin Gold.

Consolidated Financial Results

Second quarter 2022 compared to 2021

In the second quarter of 2022, Net loss increased by $4,449$664 from 2021,2022 to 2023, primarily due to the expanded Donlin Gold work program. Lower accretion income due to the maturity of the $75,000 Newmont notean increase in July 2021 and higher interest expense on the Barrick promissory note, wasincreased permitting costs at Donlin Gold and higher corporate legal expenses, partially offset by foreign exchange movements.increased interest income and other income related the 2021 sale of the Company’s interest in the San Roque mineral property.

First six months 2022 compared to 2021

In the first six months of 2022, Net loss increased by $6,488 from 2021, primarily due to the expanded Donlin Gold work program. Lower accretion income and higher interest expense on the Barrick promissory note was offset by an increase in the fair market value of marketable securities and foreign exchange movements.

Liquidity and Capital Resources

Liquidity overview

At present, we believe we have sufficient working capital available to cover anticipated funding of the Donlin Gold project and corporate general and administrative costs untilthrough completion of an updated Donlin Gold feasibility study. Further, we believe we have sufficient working capital available to cover anticipated costs and expenses for at least the next three years. Substantial additional capital will be required once a decision to commence engineering and construction is reached by the Donlin Gold board for the Donlin Gold project, at which point substantial additional capital will be required.project. Future financings to fund construction are anticipated through debt, equity, project specific debt, and/or other means. Our continued operations are dependent on our ability to obtain additional financing or to generate future cash flows. However, there can be no assurance that we will be successful in our efforts to raise additional capital on terms favorable to us, or at all. For further information, see our Annual Report on Form 10-K for the year ended November 30, 2021, as filed with the SEC and the Canadian Securities Regulators on January 26, 2022, section Item 1A, Risk Factors – Our ability to continue the exploration, permitting, development, and construction of the Donlin Gold project, and to continue as a going concern, will depend in part on our ability to obtain suitable financing.

Our anticipated expenditures in fiscal year 20222023 are approximately $46,000,$31,000, including $30,000$17,000 to fund the Donlin Gold project, $13,000 for corporate general and administrative costs, $2,000 for withholding taxes on share-based compensation and $1,000 for working capital and other items.

Our financial position includes the following as of May 31, 2022:February 28, 2023:

Cash flows

In the secondfirst quarter of 20222023 cash and cash equivalents decreased by $4,841,$9,721, primarily to fund our share of Donlin Gold and for corporate administrative expenses, partially offset by a net $8,000 received from term deposits.expenses. The decrease in cash used in the secondfirst quarter of 20222023 compared to 20212022 was due to the net increase in net proceeds received from term deposits, partially offset by the expanded Donlin Gold work program.

In the first six months of 2022 cash and cash equivalents decreased by $18,832, primarily to fund our share of Donlin Gold, for corporate administrative expenses, and for withholding taxes on share-based payments, partially offset by a net $8,000 received from term deposits. The increase in cash used in the first six months of 2022 compared to 2021 was due to the expanded Donlin Gold work program, the timing of corporate liability insurance payments increasedin 2022, withholding tax paid on share-based compensation in 2022 (no cash was used for CEOPSUs vested in 2023) and CFO withholdings in 2021), partially offset by a net increase in net proceeds received from term deposits.the sale of the San Roque mineral property.

Outstanding share data

As of June 22, 2022,March 28, 2023, the Company had 333,337,307333,982,678 common shares issued and outstanding. Also, as of June 22, 2022,March 28, 2023, the Company had: i) a total of 9,365,9469,161,465 stock options outstanding; 8,218,8477,930,333 with a weighted-average exercise price of $5.80$6.26 and the remaining 1,147,0991,231,132 of those stock options with a weighted-average exercise price of C$7.71;8.10; and ii) 1,288,1001,605,500 PSUs and 333,519310,957 deferred share units outstanding. Upon exercise or pay out, as applicable, of the foregoing convertible securities, the Company would be required to issue a maximum of 11,631,61511,880,672 common shares.

Our financial instruments are exposed to certain financial risks, including credit and interest rate risks.

Credit risk

Concentration of credit risk exists with respect to our cash and cash equivalents, term deposit investments and notes receivable. Cash and cash equivalents are primarily held at three of the largest Canadian domestic chartered banks with high deposit credit ratings (S&P: AA- or A-1(mid), Moody’s: Aa1 or Aa3). All term deposits are held through two of the largest Canadian domestic chartered banks with high investment-gradedeposit credit ratings (S&P: AA-, Moody’s: Aa1) and have maturities of less than one year or less.year. The notes are receivable from a subsidiary of Newmont, a publicly traded company with investment-grade credit ratings. The notes are guaranteed by Newmont.

Interest rate risk

The interest rate on the promissory note owed to Barrick is variable with the U.S. prime rate. Based on the amount owing on the promissory note as of May 31, 2022,February 28, 2023, and assuming all other variables remain constant, a 1% change in the U.S. prime rate would result in an increase/decrease of approximately $1.2$1.3 million in the interest accrued on the promissory note per annum.

Management, with the participation of our President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of May 31, 2022.February 28, 2023. On the basis of this review, our President and Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the Exchange Act) during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s internal controls over financial reporting are based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

PART II - OTHER INFORMATION

From time to time, we are a party to routine litigation and proceedings that are considered part of the ordinary course of our business. We are not aware of any material current, pending, or threatened litigation.

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended November 30, 2021,2022, as filed with the SEC on January 26, 2022.25, 2023. The risk factors in our Annual Report on Form 10-K for the year ended November 30, 2021,2022, in addition to the other information set forth in this quarterly report, could materially affect our business, financial condition or results of operations. Additional risks and uncertainties not currently known to us or that we deem to be immaterial could also materially adversely affect our business, financial condition or results of operations.

None.

None.

These disclosures are not applicable to us.

None.

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.