NOVAGOLD announced Wednesday it has reached definitive agreements to acquire Paulson Advisers LLC's remaining 40% interest in the Donlin Gold project in Alaska through an all-share transaction, giving NOVAGOLD 100% ownership of the asset. The acquisition creates a U.S.-domiciled company with an equity value of roughly $4.2 billion and is designed to simplify the corporate structure for project financing and decision-making as the company works toward completing a new bankable feasibility study. The transaction consolidates ownership of one of the world's largest undeveloped gold deposits, containing approximately 40 million ounces of measured and indicated resources.
NOVAGOLD Acquires Paulson's 40% Donlin Gold Stake in All-Share Transaction
Under the definitive agreements announced Wednesday, NOVAGOLD will acquire Paulson Advisers LLC's 40% interest in the Donlin Gold project, bringing NOVAGOLD's ownership to 100%. Following the transaction, existing NOVAGOLD shareholders will own about 65% of the new company, while John Paulson's hedge fund will hold an economic interest of roughly 40%. Paulson's voting power will be capped at 19.99% under governance agreements. Paulson will serve as Co-Chair alongside NOVAGOLD Chairman Thomas Kaplan. The transaction is expected to close in the fourth quarter of this year, subject to shareholder and regulatory approvals.
Transaction Creates $4.2 Billion U.S.-Domiciled Gold Developer
The acquisition establishes a U.S.-domiciled company with an equity value of roughly $4.2 billion. Management said the simplified corporate structure should streamline project financing and decision-making as the company works toward completing a new bankable feasibility study and eventually bringing Donlin into production. The company said the transaction removes the complexity of a joint venture and creates a single entity responsible for advancing what is projected to become the largest gold mine in the United States.
CEO Highlights Simplified Financing and Decision-Making Benefits
"The greater market cap gets you more visibility, greater liquidity, and I think it ultimately leads to simpler financing," Greg Lang, NOVAGOLD's President and CEO, said in an interview with Kitco News. "Everything is rolled up under NOVAGOLD, and that will make it easier for potential lenders to understand exactly who Donlin Gold is." Lang added that consolidating ownership should also speed development. "Just by its nature, streamlining the organization will make decision-making simpler," he said. "The fact that it's all under NOVAGOLD reporting to our board of directors really does help expedite the Donlin schedule."
Acquisition Completes Consolidation Following Barrick Purchase
The acquisition comes less than a year after NOVAGOLD and Paulson jointly purchased Barrick Mining's 50% interest in Donlin Gold, leaving NOVAGOLD with 60% ownership and Paulson with the remaining 40%. Wednesday's announcement effectively completes that consolidation, placing the entire project under a single corporate umbrella. Management described the transaction as immediately accretive to shareholders, noting that it increases net asset value per share, expands attributable reserves and resources, and boosts projected annual gold production by more than 520,000 ounces during the mine's first decade.
Donlin Gold Project Holds 40 Million Ounces of Measured Resources
Donlin Gold remains one of the world's largest undeveloped gold deposits, containing approximately 40 million ounces of measured and indicated resources at an average grade of 2.22 grams per tonne---more than double the global average for comparable projects, according to the company. Current plans envision annual production averaging 1.3 million ounces during the first decade of operation before averaging roughly 1.1 million ounces over a projected 27-year mine life.
Feasibility Study Scheduled for First Half of Next Year
"The feasibility study is being led by Fluor, supported by WSP, Worley and Hatch, and everything is proceeding on track," Lang said. "We've guided that it will be issued in the first half of next year." He added that the study will be the critical document needed to finalize project economics, establish a construction schedule and support financing discussions. "We need that for financing. It'll develop a schedule. It'll solidify production plans," Lang said. "Updating the feasibility study is really our key focus now."
Most Major Permits Secured Except Tailings Dam Approvals
On permitting, Lang struck an optimistic tone, noting that most major approvals have already been secured. "With the exception of the tailings dam and other water retention structures, all the permits are in place," he said. "The federal permitting is behind us, and that's important." The new structure should also improve access to financing from private investors, government agencies and sovereign wealth funds while establishing a single point of contact for stakeholders, including Alaska Native landowners Calista Corporation and The Kuskokwim Corporation.
U.S. Domicile Positions Company as Domestic Mining Leader
The transaction reflects growing investor interest in high-quality mining assets located in stable jurisdictions. Once the reorganization is complete, NOVAGOLD will become a U.S.-domiciled company with a single flagship asset in Alaska. "We have one asset, and it's in the United States," Lang said. "That has a lot of appeal---to be a U.S.-domiciled company building one of the largest gold mines in the country, if not the largest."
FAQ
What did NOVAGOLD announce on Wednesday regarding Donlin Gold?
NOVAGOLD announced Wednesday it has reached definitive agreements to acquire Paulson Advisers LLC's remaining 40% interest in the Donlin Gold project through an all-share transaction, giving NOVAGOLD 100% ownership of the Alaska project. The transaction creates a U.S.-domiciled company with an equity value of roughly $4.2 billion and is expected to close in the fourth quarter of this year, subject to shareholder and regulatory approvals.
How much gold does the Donlin Gold project contain?
Donlin Gold contains approximately 40 million ounces of measured and indicated resources at an average grade of 2.22 grams per tonne, according to the company. Current plans envision annual production averaging 1.3 million ounces during the first decade of operation before averaging roughly 1.1 million ounces over a projected 27-year mine life.
When will NOVAGOLD complete its updated feasibility study for Donlin Gold?
NOVAGOLD's President and CEO Greg Lang said the feasibility study is being led by Fluor, supported by WSP, Worley and Hatch, and the company has guided that it will be issued in the first half of next year. Lang stated the study will be the critical document needed to finalize project economics, establish a construction schedule and support financing discussions.
