NOVAGOLD RESOURCES (NG) has finalized a significant agreement with Barrick Gold (GOLD, Financial) to acquire Barrick's 50% interest in Donlin Gold for $1 billion in cash. This transaction establishes a new partnership between NOVAGOLD and Paulson Advisers to advance the Donlin Gold project in Alaska.
As per the agreement, NOVAGOLD will boost its stake in Donlin Gold LLC from 50% to 60% by purchasing a 10% interest for $200 million. Meanwhile, Paulson will acquire the remaining 40% interest for $800 million, becoming an equal partner in managing the project. This deal is subject to regulatory approvals and standard closing conditions, with completion anticipated in late 2025 or early 2026.
Following the transaction's closure, NOVAGOLD and Paulson will sign a revised limited liability company agreement, ensuring equal governance rights. To finance its acquisition portion, NOVAGOLD secured commitments from Paulson, The Electrum Group, and Kopernik Global Investors, who agreed to invest up to $170 million in common shares at $3.00 per share. The remaining $30 million will come from NOVAGOLD's treasury. The investors received five-year warrants to purchase 25.5 million NOVAGOLD shares at $3.00 per share.
NOVAGOLD has the option to purchase Barrick's outstanding debt linked to Donlin Gold for $90 million if settled before the deal closes, or $100 million within 18 months post-closing. If not exercised, the debt will persist largely under existing conditions.
The transaction received nods from NOVAGOLD's Board and a Special Committee of independent directors. Post-closing, Donlin Gold plans to update its Feasibility Study, enhance exploration efforts, continue technical advancements, and maintain regulatory compliance. The partnership also aims to enhance community relations with local stakeholders such as Calista Corporation and The Kuskokwim Corporation.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 14 analysts, the average target price for Barrick Gold Corp (GOLD, Financial) is $23.81 with a high estimate of $31.50 and a low estimate of $19.00. The average target implies an upside of 16.45% from the current price of $20.45. More detailed estimate data can be found on the Barrick Gold Corp (GOLD) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Barrick Gold Corp's (GOLD, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Barrick Gold Corp (GOLD, Financial) in one year is $22.29, suggesting a upside of 9% from the current price of $20.45. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Barrick Gold Corp (GOLD) Summary page.
