NovaGold board opposes Barrick offer, solicits other merger deals

Section:

NovaGold Board Recommends Shareholders
Reject Hostile Bid by Barrick Gold

Company Press Release via Market Wire
Monday, August 14, 2006

http://biz.yahoo.com/iw/060814/0153653.html

VANCOUVER, British Columbia -- NovaGold Resources Inc. shareholders
are advised that the Barrick bid:

-- Significantly undervalues NovaGold's world-class mineral projects and growth potential.

-- Fails to reflect the value of NovaGold's 70% ownership of the
Donlin Creek project.

-- Ignores approaching development milestones that will demonstrate
further value.

* * *

NovaGold Resources Inc. today announced that its Board of Directors, based on the recommendation of its special committee of independent directors, unanimously recommends that NovaGold shareholders reject the unsolicited offer by Barrick Gold Corp. to acquire all the outstanding shares of NovaGold for US$14.50 per share in cash.

After careful consideration, including consultation with its financial and legal advisers, NovaGold's Board concluded that the Barrick Offer significantly undervalues NovaGold and is not in the best interests of its shareholders.

In its directors' circular, filed today with securities regulators, NovaGold's board strongly recommends that all NovaGold shareholders reject the Barrick offer and not tender their shares.

"The Barrick offer falls significantly short of providing fair value to NovaGold's shareholders and would deprive them of significant upside potential," said Gerald McConnell, chairman of the Special Committee of NovaGold's Board of Directors. "Our Special Committee and the full Board of Directors unanimously determined that the Barrick Offer is inadequate and significantly undervalues NovaGold's world-class gold and copper projects and the Company's growth potential. There is no rationale for accepting the Barrick bid and many reasons to reject it."

The board believes:

-- Barrick's offer does not reflect the value of NovaGold's 70% ownership of the Donlin Creek project, one of the largest gold deposits in the world, and the likelihood that Barrick will fail to meet the conditions that would allow it to earn an additional 40% interest in the project.

-- The low value of Barrick's hostile bid represents a significant discount on a number of key valuation metrics. Mr. McConnell said: "For example, based on current estimates and excluding any value for NovaGold's substantial copper esources, Barrick is offering only US$33 per ounce of gold resource, which is significantly below the average of more than US$100 per ounce paid in the four most recent comparable gold transactions. NovaGold expects to provide updated estimates of its gold resources shortly."

-- The Barrick bid is also far below the average control premium paid in similar mining transactions globally, within Canada, and by Barrick itself. At US$14.50 per share, the Barrick bid represents a premium of only 13.9% above the share price of NovaGold 20 trading days prior to the announcement of the Offer. On the same basis, the average premium paid in unsolicited global metals and mining transactions since 2000 has been 60% and, within Canada, 56%. Barrick has paid an average premium of 58% in six transactions since 2000, including its proposed acquisition of Pioneer Metals Corporation

-- The Barrick bid also fails to recognize NovaGold's proven track record of resource growth, its 70% compound annual increase in share value over the past seven years, and that NovaGold is approaching project milestones in the months ahead that have the potential to deliver significant additional value to shareholders of NovaGold as an independent company. Shareholders who accept an undervalued cash
bid now will not have the opportunity to participate in any future value generated by NovaGold.

The NovaGold board believes that Barrick's bid is motivated by Barrick's concern that it will not be able to meet the conditions
that would allow it to increase its interest in the Donlin Creek project from 30% to 70% by November 2007.

"The offer is an attempt by Barrick to salvage its ability to earn an
additional 40% interest in the Donlin Creek project at the expense of NovaGold's current shareholders," Mr. McConnell said.

"We were surprised that Barrick launched its hostile offer for NovaGold, given that our management team had been in active discussions with Barrick for several months in an effort to find an amicable solution to Barrick's concern with the conditions in the Donlin Creek Joint Venture Agreement, and to negotiate a possible joint venture for the Galore Creek project," Mr. McConnell said. "NovaGold shared with Barrick confidential information about the Galore Creek project including non-public exploration information and plans."

After providing the confidential information to Barrick, NovaGold
announced its offer for Pioneer Metals Corp., which owns the subsurface rights to the Grace property adjacent to the Galore Creek project. Subsequently, Barrick announced its own competing offer for Pioneer on the same day it announced its hostile bid for NovaGold. As a result of Barrick's actions, NovaGold is also announcing today that it has commenced a lawsuit against Barrick in which the Company is seeking a court order that any shares Barrick acquires under its bid for Pioneer will be held under a constructive trust for the benefit of NovaGold.

NovaGold's management and Board of Directors does not consider Barrick's competing bid for Pioneer Metals Corp. as an impediment to the development of the Galore Creek project. NovaGold has applied to the British Columbia government for a surface lease over a portion of the Grace property and other permits to start construction at Galore Creek. The British Columbia government, as owner of the surface rights, has the power to grant NovaGold a surface lease with or without Pioneer's approval.

Mr. McConnell added: "It is clear that the market agrees that the Barrick offer is inadequate. Since July 24, 2006, when Barrick announced its intention to make its hostile offer, NovaGold's shares have consistently traded above Barrick's US$14.50 per share offer price. In fact, NovaGold shares recently closed at US$17.28, or 19.2 % above the Barrick offer."

"With a pipeline of world-class mining projects, a proven track record of resource growth and a strong and experienced management team, we believe NovaGold is poised to deliver superior shareholder
returns. For the reasons outlined in its Circular, NovaGold's Board strongly recommends that all NovaGold shareholders reject the Barrick Offer and not tender their shares," Mr. McConnell said.

The circular notes that NovaGold's directors, executive officers and
management, who collectively hold approximately 10% of NovaGold's
outstanding common shares on a fully diluted basis, have indicated that they do not intend to tender their shares to the Barrick offer.

In making its recommendation that shareholders reject the hostile Barrick Offer, NovaGold's Special Committee and Board of Directors considered a number of factors including, among others:

-- The Barrick offer significantly undervalues NovaGold's world-class
mineral projects and its growth potential.

-- The Board of Directors believes that the Barrick offer fails to adequately compensate shareholders for the significant strategic and scarcity value of NovaGold's world-class assets. NovaGold's two most
important deposits, the Donlin Creek gold deposit and the Galore Creek copper-gold deposit, rank among the largest undeveloped
deposits of their kind in the world and are located in geopolitically stable countries. Such assets are highly strategic and marketable because they are difficult to discover or acquire.

-- The Barrick offer places an enterprise value on NovaGold of US$33 per ounce of gold resource or US$19 per ounce of gold equivalent resource (assuming 70% ownership of Donlin Creek), which represents a
significant discount to the enterprise value per ounce of resource paid in other recent transactions. (Enterprise value is defined as the equity price paid plus debt and less cash.)

-- The Barrick offer does not provide an adequate premium for control of NovaGold.

-- The Barrick offer is significantly below premiums paid in recent transactions for other mining assets that do not have the same strategic, world-class potential and low geopolitical risk as NovaGold's Donlin Creek and Galore Creek projects.

-- Barrick's offer does not reflect NovaGold's current 70% ownership in the Donlin Creek project and the likelihood Barrick will fail to meet the milestones that would allow it to earn an additional 40% interest in that project.

-- Despite Barrick's efforts to convince the market otherwise, NovaGold's board strongly believes that NovaGold will retain its 70% ownership in the Donlin Creek project and take back management of the project.

-- The timing of Barrick's offer is highly opportunistic and disadvantageous to NovaGold shareholders since, if successful, the bid would deprive them of the potential for significant near-term value enhancement of their shares.

-- While NovaGold has already delivered compound annual share price appreciation of 70% over the past seven years, it is approaching significant milestones that will demonstrate additional value. For
example, NovaGold expects permits shortly to allow construction to begin at its Rock Creek project, with production expected within nine months. Permits for Galore Creek are anticipated in the first half of
2007, to be followed immediately by a construction decision.

-- When all current projects reach their production targets, and with its 70% ownership of Donlin Creek, NovaGold is expected to be producing more than a million ounces of gold, two million ounces of silver, and 370 million pounds of copper.

-- Market valuations typically increase significantly as companies move toward production.

-- The Barrick offer was timed to coincide with a general decline in share prices of gold companies. The Barrick offer is only 9.7% above the lowest price for NovaGold shares in the six months prior to the
offer, and is 29.1% below the high for the shares over the same period. As recently as May 2, 2006, prior to the Barrick offer, the shares traded as high as US$16.47, 13.6% above the Barrick offer.

-- The Barrick offer represents a substantial discount to the current trading price of NovaGold shares.

-- Since Barrick announced its intention to make a hostile offer on July 24, 2006, NovaGold shares have consistently traded above the Barrick offer price.

-- On August 11, 2006, the closing price of NovaGold shares was US$16.61, or 14.6% higher than the consideration offered under the Barrick offer.

-- Opinions of the financial advisers.

-- RBC Capital Markets and Citigroup Global Markets Inc. have each provided a written opinion that, as of August 12, 2006, the
consideration under the Barrick offer was inadequate from a financial point of view to NovaGold's shareholders.

-- Alternative transactions are being pursued by NovaGold with some of the world's largest mining companies to generate greater value for NovaGold's shareholders.

-- Immediately following Barrick's July 24, 2006 announcement, NovaGold formed a Special Committee of independent directors to consider a range of strategic alternatives, including any competing offers it may receive.

-- NovaGold has been solicited by, and has initiated contact with, a number of third parties, including some of the world's largest mining companies, who have expressed an interest in considering alternative transactions. Discussions are being pursued with these third parties
to generate value-enhancing alternatives.

-- NovaGold's board believes that tendering shares to the Barrick offer before the Board of Directors and its advisors have had an opportunity to fully explore all available alternatives may preclude the possibility of a financially superior transaction emerging.

RBC Dominion Securities Inc., a member company of RBC Capital Markets, and Citigroup Global Markets Inc. are serving as financial advisors to the Special Committee, and Borden Ladner Gervais LLP and Dorsey & Whitney LLP are serving as legal advisers.

NovaGold is mailing to its shareholders its Directors' Circular setting forth the formal recommendation of the Board of Directors to reject the Barrick offer.