NovaGold Reaches Agreement on Terms of Litigation Settlement for $28 million

02/16/2010 - NovaGold Resources Inc. (NYSE-AMEX, TSX: NG) announced on February 16, 2010 that it has entered into a memorandum of understanding to settle outstanding securities class action lawsuits in both the United States and Canada, in which NovaGold and certain of its directors and officers were named as defendants for $28 million. The settlement will be covered by NovaGold's insurance, and the Company does not anticipate having to pay out any of its cash under the terms of the settlement. The memorandum of understanding is subject to agreement on formal documentation and both U.S. and Canadian court approval after public notice.

Rick Van Nieuwenhuyse, President and CEO of NovaGold said, "We are pleased to have settled these proceedings. While we believe we ultimately would have been successful in defending the allegations, this settlement allows us to focus 100% of our attention on executing our business plan: advancing our world-class properties to production and growing our company by exploring and developing new opportunities.”

08/07/2008 - According to a press release dated August 7, 2008, the Complaint charges NovaGold and certain of its officers and directors with violations of the Securities Act of 1933 and Securities Exchange Act of 1934. NovaGold is engaged in the business of exploration and development of mineral properties. Throughout the Class Period, Defendants falsely portrayed NovaGold as a rapidly growing company on the verge of moving from a mid-tier exploration and development company to a mid-tier gold and copper production company by issuing a series of materially false and misleading statements regarding the costs, progress and viability of its multi-billion dollar Galore Creek project.

Specifically, the complaint alleges that the Class Period begins on October 25, 2006, when NovaGold issued a press release touting the results of a feasibility study performed by Hatch Ltd. (”Hatch”) that purportedly “confirmed” the economic viability of the Galore Creek project. According to a statement made by the Company’s President and CEO, Rick Van Nieuwenhuyse (”Nieuwenhuyse”), in the October 25, 2006 press release, “the Feasibility Study confirms that Galore Creek is one of the world’s largest undeveloped copper-gold-silver projects with one of the lowest cash costs in the industry ….” The Feasibility Study estimated the capital costs for the Galore Creek project to be Cdn $2.2 billion. The Hatch Feasibility Study enabled the Company to successfully fend off a hostile takeover bid by mining giant Barrick Gold by maintaining the average closing price of the Company’s shares above Barrick Gold’s $16 per share tender offer. In fact, when fending off Barrick Gold’s takeover bid Nieuwenhuyse assured shareholders “that at US$16, NovaGold shares are better than money in the bank.” The Hatch Feasibility Study also allowed the Company to raise hundreds of millions of dollars in an April 2007 secondary stock offering, thus providing a strong motive for the Defendants to misrepresent the Hatch Feasibility Study as a bankable study. Throughout the Class Period, the Company regularly and systematically assured the investing public that the construction of the Galore Creek project was on schedule and on budget.

On November 26, 2007, the Company shocked investors when it announced that it would suspend activities at Galore Creek based on the results of an updated feasibility study, which estimated the capital costs for the Galore Creek project to be Cdn $5 billion — approximately 127 percent greater than Hatch had estimated in October 2006. Upon the release of this news, the Company’s shares declined $10.76 per share, or more than 53 percent, to close on November 26, 2007 at $9.48 per share, on unusually heavy trading volume.