NovaGold Resources said on Wednesday it will acquire the shares it does not already own in Donlin Gold from Paulson Advisors in an all-stock deal that would create a gold producer worth US$4.2 billion.
Shares of NovaGoldResources rose 7.3 per cent around midday.
A record rally in gold prices has bolstered miners’ cash flows and improved their access to capital, encouraging them to expand reserves of the precious metal and grow their presence in safer mining regions such as Canada and the United States.
The deal aims to end split control of Donlin Gold and create a single, fully owned U.S.-listed entity for improve access to governmental agencies and sovereign wealth funds to support its next phase of project development.
It adds over 16 million ounces of measured and indicated resources to NOVAGOLD Resources. This includes 13 million ounces contained in proven and probable reserves and increases projected attributable gold production by over 520,000 ounces annually for 10 years.
Consolidating full project-level interest of Donlin Gold simplifies ownership at a critical juncture, ahead of the bankable feasibility study (expected mid-2027), upcoming project financing discussions, and a potential construction decision anticipated in 2028 or later, an analyst at RBC Capital Markets said.
Upon completion of the deal, a new company —NovaGoldCorporation — will be formed, with NOVAGOLD shareholders owning nearly 65 per cent and Paulson receiving about 35 per cent in exchange for its Donlin Gold interest.
Inclusive of its existing equity ownership in NovaGold, Paulson would own approximately 40 per cent in the new entity, the company said.
The new company, which would be incorporated in Delaware, will be co-chaired by NovaGold Chairman Thomas Kaplan and John Paulson, and its board will be expanded to 11 directors from 10.
The deal is expected to close in the fourth quarter.
---
Reporting by Dharna Bafna in Bengaluru; Editing by Jonathan Ananda
