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 deal is expected to close in the fourth quarter.
“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 reflects a broader push by gold miners to consolidate high-quality assets as record bullion prices boost cash flows and investor confidence. Companies with streamlined ownership structures are often better positioned to finance, permit and build large mines in low-risk jurisdictions such as Canada and the US.
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.
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.
