NovaGold Resources Inc. extended a winning streak to its third consecutive trading day on Wednesday, with shares rising 10.30 percent to close at $6.21. The gain followed the company’s announcement of a definitive agreement to acquire Paulson Advisers LLC’s entire 40 percent stake in the Donlin Gold project through an all-share transaction valued at $4.2 billion.
Following the transaction’s completion, NovaGold will hold full ownership of the Donlin Gold project in Alaska. The development is projected to produce 1.3 million ounces of gold annually during its first decade and 1.1 million ounces annually over its full 27-year mine life. The project currently contains approximately 40 million ounces of measured and indicated mineral resources, with an average grade exceeding industry standards by more than twofold. These characteristics position Donlin Gold as the largest gold development project in the United States.
As part of the restructuring, NovaGold and Paulson Advisers will establish a new publicly traded entity called NovaGold Corporation, which will acquire the combined interests. Existing NG shareholders will receive shares in the new company on a one-for-one basis. Paulson Advisers will own 40 percent of the new venture, securing it a position as a major shareholder. The newly formed entity will list on the New York Stock Exchange, representing an upgrade from NovaGold’s prior listing on NYSE American.
The board structure was also modified, with co-chairs Thomas Kaplan and John Paulson heading the 11-member board, up from ten directors previously. Paulson Advisers retains nomination rights for two board seats as long as its equity stake remains above 15 percent. Billionaire John Paulson stated that consolidating his company’s interests strengthens the project’s organizational structure and will expedite its development.
Institutional investor interest in NovaGold has grown, with 25 hedge funds holding positions during the first quarter, compared to 20 funds in the final quarter of the prior year. Aggregate hedge fund positions totaled $486.7 million, representing a 4.6 percent increase from $465 million in the preceding quarter.
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