Here’s my extremely superficial analysis of NovaGold. NovaGold’s main asset is its Donlin Gold joint venture with Barrick. Barrick has pretty much come out and said that it doesn’t think that the deposit is worth pursuing. Therefore, this stock is doomed. I don’t care if Seth Klarman owns it.
NovaGold’s press release tries to put a positive spin on everything but pretty much NovaGold is screwed:
In reference to Donlin Gold as well as Cerro Casale, Barrick Gold stated in its filing, among other things, that it “would not make a decision to construct them at this time. However, they contain large, long-life mineral resources in stable jurisdictions, have significant leverage to the price of gold, and therefore represent valuable long-term opportunities for the company.” Barrick Gold went on to say that it “will maintain and enhance the option value of these projects by advancing permitting activities, at reasonable costs, which in the case of Donlin Gold, will take a number of years.”
If this deposit were economic, Barrick would pursue it. Even if it were barely economic (or barely not), Barrick still might pursue it. This is what Barrick has done in the past. It went after a number of bad gold projects. Then they didn’t make as much money as they should have made even though the price of gold skyrocketed. So, the old CEO was fired. In any case, if Barrick doesn’t want to pursue this deposit, then it is unlikely that any other senior miner will want to pursue it.
*Disclosure: No position in NovaGold.
Long Term Value, a value investing-oriented blog, has various posts mentioning NovaGold.