md&eh ?
NovaCopper Inc.
(An Exploration-Stage Company)
Management’s Discussion & Analysis
For the Fourth Quarter and Year Ended November 30,
2014
(expressed in US dollars)
NovaCopper Inc.
Year End 2014
Table of Contents
Management’s Discussion and Analysis ...............
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General ...........................................
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Description of business ...........................
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Property review ...................................
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Corporate developments ............................
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Project activities ................................
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Outlook ...........................................
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Summary of results ................................
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Fourth quarter results.............................
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Selected financial data ...........................
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Liquidity and capital resources ...................
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Contractual obligations ...........................
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Off-balance sheet arrangements ....................
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Outstanding share data ............................
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Financial instruments .............................
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New accounting pronouncements .....................
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Critical accounting estimates .....................
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Disclosure controls and procedures ................
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Internal control over financial reporting .........
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Risk factors ......................................
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Additional information ............................
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Cautionary notes ..................................
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NovaCopper Inc.
1
Year End 2014
NovaCopper Inc.
(An Exploration-Stage Company)
Management’s Discussion and Analysis
(expressed in US dollars)
General
This Management’s Discussion and Analysis (“MD&A”) o
f NovaCopper Inc. (“NovaCopper” or “the Company”) i
s dated February
5, 2015 and provides an analysis of our audited fin
ancial results for the year ended November 30, 2014
compared to the year
ended November 30, 2013.
The following information should be read in conjunc
tion with our November 30, 2014 audited consolidate
d financial
statements and related notes which were prepared in
accordance with United States generally accepted a
ccounting principles
(“U.S. GAAP”). A summary of the U.S. GAAP accountin
g policies are outlined in note 2 of the audited co
nsolidated financial
statements. All amounts are in United States dollar
s unless otherwise stated.
Scott Petsel, P.Geo., an employee and the Upper Kob
uk Mineral Projects Manager, is a Qualified Person u
nder National
Instrument 43-101 -
Standards of Disclosure for Mineral Projects
(“NI 43-101”), and has approved the scientific and
technical
information in this MD&A.
NovaCopper’s shares are listed on the Toronto Stock
Exchange (“TSX”) and the NYSE-MKT under the symbol
“NCQ”. Additional
information related to NovaCopper, including our an
nual report on Form 10-K, is available on SEDAR at
www.sedar.com and on
EDGAR at www.sec.gov.
Description of business
We are a base metals exploration company focused on
exploring and developing the Ambler mining distric
t located in Alaska,
U.S.A. We conduct our operations through a wholly-o
wned subsidiary, NovaCopper US Inc. (“NovaCopper US
”). Our Upper
Kobuk Mineral Projects, or UKMP Projects, consist of
: i) the 100% owned Ambler lands which host the Arc
tic copper-zinc-lead-
gold-silver Project; and ii) the Bornite lands bein
g explored under a collaborative long-term agreemen
t with NANA Regional
Corporation, Inc. (“NANA”), a regional Alaska Nativ
e Corporation, which host the Bornite carbonate-hos
ted copper Project.
We were formed in 2011 by NovaGold Resources Inc. (
“NovaGold”) to hold the UKMP Projects, and were spun
-out to
shareholders of NovaGold through a Plan of Arrangem
ent effective April 30, 2012. NovaGold shareholders
received one
NovaCopper common share for every six common shares
of NovaGold held on the effective date of the Plan
of Arrangement.
Property review
Our principal assets, the UKMP Projects, are located
in the Ambler mining district in Northwest Alaska.
Our UKMP Projects
comprise approximately 352,943 acres (142,831 hecta
res) consisting of the Ambler and Bornite lands.
Arctic Project
The Ambler lands, which host a number of deposits,
including the high-grade copper-zinc-lead-gold-silv
er Arctic Project, and
other mineralized targets within a 100 kilometer lo
ng volcanogenic massive sulfide (“VMS”) belt, are ow
ned by NovaCopper US.
The Ambler lands are located in Northwestern Alaska
and consist of 112,058 acres (45,348 hectares) of
Federal patented mining
claims and State of Alaska mining claims, within wh
ich VMS mineralization has been found.
On January 11, 2010, NovaGold purchased 100% of the
Ambler lands. As consideration, NovaGold issued 93
1,098 common
shares with a fair value of $5.0 million and agreed
to make two cash payments to the vendor of $12.0 m
illion each in
January 2011 and January 2012 for total considerati
on of $29.0 million. The January 2011 payment was m
ade by NovaGold on
January 7, 2011 and the January 2012 payment was ma
de in advance by NovaGold on August 5, 2011. Total
fair value of the
consideration was $26.5 million, including transact
ion costs associated with the acquisition of $0.1 m
illion. The vendor retained
a 1% net smelter return royalty that the owner of t
he property can purchase at any time for a one-time
payment of
$10.0 million.
We have recorded the Ambler lands as a mineral prop
erty with acquisition costs capitalized and explora
tion costs expensed in
accordance with our accounting policies. As a resul
t of the spin-out of NovaCopper from NovaGold, the
interim consolidated
financial statements have been presented under the
continuity of interest basis of accounting whereby
the amounts are based
on the amounts originally recorded by NovaGold as i
f we had held the property from inception.