NOVAGOLD creates $4.2B US gold giant with Donlin deal

NOVAGOLD Resources (NYSE American, TSX: NG) will acquire the Donlin Gold stake it does not already own from Paulson Advisors in an all-stock transaction that creates a gold miner worth about $4.2 billion and simplifies ownership of one of the world’s largest undeveloped projects.

The deal will combine NOVAGOLD’s existing stake in Donlin with Paulson Advisors’ interest to form NovaGold Corporation, a Delaware-incorporated company. Existing NOVAGOLD shareholders will own nearly 65% of the new entity, while Paulson will receive about 35% in exchange for its Donlin interest. Including its current NOVAGOLD holdings, Paulson will own about 40% of the combined company.

The acquisition adds more than 16 million ounces of measured and indicated resources to NOVAGOLD, including 13 million ounces in proven and probable reserves, while increasing its attributable gold production by more than 520,000 ounces annually during Donlin’s first decade of operation.

“Consolidating our interest in Donlin into NOVAGOLD enhances Donlin’s organizational structure and will facilitate, streamline and expedite the development of the Donlin mine,” John Paulson said.

The deal, expected to close in the fourth quarter, reflects a broader push by gold miners to consolidate tier-one assets as record bullion prices strengthen balance sheets and improve access to capital. By ending split ownership of Donlin, NOVAGOLD also creates a single US-listed company that it said will improve access to government agencies and sovereign wealth funds to support the project’s next stage of development.

World-class asset

“Our combination epitomizes the ultimate ‘smart’ consolidation transaction in the gold industry that aligns the interest of everyone involved,” NOVAGOLD President and CEO Greg Lang said.

NovaGold Corporation will be co-chaired by NOVAGOLD chairman Thomas Kaplan and John Paulson, and its board will expand to 11 directors from 10. The miner will also redomicile to the US, home to the Donlin project.

Donlin Gold hosts approximately 40 million measured and indicated ounces grading 2.22 grams gold per tonne, including mineral reserves, making it one of the industry’s largest and highest-grade undeveloped gold deposits. The project is expected to produce about 1.1 million ounces annually over a 27-year mine life, with average annual production rising to about 1.3 million ounces during its first decade due to higher initial grades.