NovaGold Shares Drop 12% on Disappointing Donlin Creek Results

| About: NovaGold Resources, (NG)

Nova Gold Resources Inc.'s (NYSEMKT:NG) investors appeared less than enthusiastic with the latest drilling results coming out of Donlin Creek, driving the shares down more than 12% on Tuesday.

RBC Capital analyst Stephen D. Walker, however, wasn't as grim in his assessment of the results, telling clients the impact should be mildly positive for the gold miner.

NovaGold said the 2006 and 2007 infill drill results from Donlin – 50% owned by NovaGold and 50% by Barrick Gold Corp. (NYSE:ABX) – uncovered an average grade of 3.61 grams per tonne. That, according to Mr. Walker, is higher than the 2.4 grams per tonne average of its existing M&I resource, and suggests the potential for an increase in the gold grade.

In a note to clients he said:

This has positive implications for the ultimate size of the gold resource at Donlin Creek.

Overall, results confirm our view that the majority of Donlin's current 17 million ounce inferred resource base could be translated to measured and indicated gold resources in 2008, effectively increasing the deposit's total M&I gold resource base to over 30 million ounces.

Mr. Walker left his "sector perform" rating and C$12 price target unchanged.