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With the suspension of the Rock Creek mine and a dwindling cash position, analysts are increasingly worried about NovaGold Resources Inc.'s (NYSEMKT:NG) financial outlook.

The company has a $20-million bridge loan payment due on Dec. 29th. In order to cover all of its debt repayment, working capital and exploration expenses, RBC Capital Markets analyst Stephen Walker is assuming the company will raise $60-million in new equity, or a whopping 100 million shares.

"Failure to raise equity or sell assets would result in default of the $20-million bridge loan, financial distress and further downward pressure on the share price," he wrote in a note to clients.

Another option would be to sell a portion of its 50% stake in the Donlin Creek project, but Mr. Walker is assuming the company would prefer to issue new equity.

He estimated that NovaGold will have a cash deficit at the end of the year of C$24-million, exclusive of any financing or new credit facility. He expects the cash position to deteriorate even more by the end of 2009 if the company does not raise equity, sell all or part of an asset, or merge with another company.

Paolo Lostritto, an analyst at Wellington West Capital Markets, also noted that there is a "particular concern" over the bridge loan due next month, because the company's material assets are being used to securitize it.

He cut his rating on the stock to "speculative buy" from "buy," and lowered his price target 86% to C$1 a share. Mr. Walker maintained an "underperform" rating and lowered his target from C$3 to just C$0.50 a share.

Source: Analysts Agree: NovaGold Must Raise Equity or Sell Assets