NOTE 7. DEBT

12 Months Ended

Nov. 30, 2013

Debt Disclosure [Abstract]

NOTE 7. DEBT

	At November 30,
	2013		2012
Convertible notes	$	13,570	$	73,606
Promissory note		71,728		68,106
		85,298		141,712
Less: current portion		—		(73,606	)
	$	85,298	$	68,106

Scheduled minimum debt repayments are $nil in 2014, $15,829 in 2015, $nil in 2016 through 2018, and $85,298 thereafter.  The carrying value of the debt approximates fair value.

Convertible notes

On March 26, 2008, the Company issued $95,000  in 5.5% unsecured senior convertible notes (“Notes”) maturing on May 1, 2015, and incurred a 3.0% underwriter’s fee and other expenses aggregating $2,800, for net proceeds of $92,200. Interest is payable semi-annually in arrears on May 1 and November 1 of each year, beginning November 1, 2008. The conversion rate and accordingly the number of shares issuable were adjusted as a result of the NovaCopper spin-out which reduced the conversion rate from $10.61 to $9.656 per common share. On conversion, at the Company’s election, holders of the Notes will receive cash, if applicable, or a combination of cash and shares.

On May 2, 2013, the Company purchased $72,821 of the principal amount of its Notes, pursuant to the terms and indenture governing the Notes which provided Holders the opportunity to require the Company to purchase for cash all or a portion of their Notes (the "Put Option") on May 1, 2013. On September 16, 2013, the Company accepted Holders’ offers to purchase another $6,350 of the principal amount of the Notes. Following the Company’s purchases of the Notes, $15,829 of the principal amount of the Notes remain outstanding and due on May 1, 2015 and 1,639,370 common shares remain issuable upon conversion. Additional common shares may become issuable following the occurrence of certain corporate acts or events. The terms and other provisions of the indenture governing the Notes remain unchanged.

As the conversion price of the Notes is denominated in U.S. dollars, a currency different from the functional currency of the Company, an embedded derivative is recognized as a liability. The embedded derivative is recorded at fair value and re-measured each period with the movement being recorded as a gain or loss in net income (loss). The Notes are classified as a liability, less the portion relating to the embedded derivative feature. As a result, the recorded liability to repay the Notes is lower than its face value. Using the effective interest rate method and the 17.3% rate implicit in the calculation, the remaining difference of $3,700, characterized as the Note discount, is being charged to interest expense and accreted to the liability over the term of the Notes.

The Notes included two embedded derivatives which have been recorded on the balance sheets at fair value. Prior to May 1, 2013, the embedded derivative was measured with regard to both the Put option and the conversion feature. Subsequent to this date, the measurement of the embedded derivative is based solely on the conversion feature.

Changes in the carrying values of the Notes are summarized as follows:

	Years ended November 30,
	2013			2012		2011
Balance – beginning of period	$	73,606		$	66,966	$	61,342
Repurchases of Notes		(65,137	)		—		—
Accretion expense		5,101			6,640		5,624
Balance – end of period	$	13,570		$	73,606	$	66,966

The following table provides the net amounts recognized in the Consolidated Balance Sheets related to the Notes:

	At November 30,
	2013			2012
Principal amount	$	15,829		$	95,000
Unamortized debt discount		(2,259	)		(21,394	)
		13,570			73,606
Embedded derivative		83			17,934
Net carrying amount	$	13,653		$	91,540

Promissory note

As part of the Donlin Gold LLC agreement, the Company agreed to reimburse Barrick over time approximately $64,300, representing 50% of Barrick’s expenditures of $128,600 on the Donlin Gold Project from April 1, 2006 to November 30, 2007. The Company reimbursed Barrick for $12,700 of project development costs during 2008. A promissory note for the remaining $51,600 plus interest at a rate of US prime plus 2% will be paid out of NOVAGOLD’s share of future mine production cash flow. The Company has recorded $20,128 in accrued interest since the inception of the promissory note. At November 30, 2013, the promissory note had a carrying value of $71,728. Interest of $3,622 (2012: $3,400) for the year ended November 30, 2013 was expensed. Both parties are currently sharing development costs on a 50/50 basis.