NovaGold Could Face Revived Takeover Bid from Barrick

Calling NovaGold Resources Inc.(NG) “damaged goods,” Citigroup (C) analyst John Hill downgraded the miner’s shares to “hold” from “buy,” and cut his price target to $10 from $23. On Monday, NovaGold and Teck Cominco Ltd. announced they would halt work at the Galore Creek copper-gold project in British Columbia.

Mr. Hill wrote in a note that,

We believe the Galore shut-in fundamentally impairs NovaGold, and derails an investment thesis based on ‘de-risking’ in-ground resource value through achieving development milestones.

He expects the company to face pressure for strategic change and suggested Barrick Gold Corp. could revive its failed takeover offer.

NovaGold has a 50/50 joint venture with Barrick at the Donlin Creek gold project in Alaska, considered one of the world’s largest gold deposits.

When asked if he was now worried about a takeover, on Monday NovaGold CEO Rick Van Nieuwenhuyse told the Financial Post, “We think we’ve made the right decision here looking at the long-term interest of our shareholders, and I don’t think that’s a reason to speculate on what might happen in the M&A world.”