Nawar Alsaadi

How Much Is NovaGold Worth?

Bering, don’t you think Barrick was aware of the difficulty of doing business in the arctic when they decide to offer $1.6 billion for the company in 2006?

Regards,
Nawar

How Much Is NovaGold Worth?

Marco, if my answer your question, even though DC is not bringing cash flow just yet (and not likely for many years), you can not award it a 0 value, resources in the ground do have a value, but usually it is usually heavily discounted, based on a value of $100 oz per share, DC worth to NG is about $1.6 billion, this is if no extra resources is identified, which is highly unlikely in light of the finding at East Acma, management has indicated in March theoretically DC can go as high 40m oz to 50m oz, if management to add extra 5m oz, this alone should add an extra 500m to the marketcap.

Not to mention that Thomas has put $0 value on GC, Ambler, NovaGreen and all their other exploration properties.

Regards,
Nawar

How Much Is NovaGold Worth?

Thank you for the thorough analysis, I certainly agree with you that the stock is extremely undervalued at those levels in light of the amount of resources it hold in the ground, as well as the fact that it is moving into production this quarter.

I believe the issue with the depressed valuation is partially market inefficiency and partially genuine worry about the management credibility in relation to mining, as well as a worry about the level of dilution the stock may suffer in order for GC and DC to reach production.

For the stock to reach its potential value, I believe management need to do the following:

- Produce a realistic plan to develop GC and DC without substantial dilution, a plan could be a combination of hedging, selling of none-core assets, selling some extra equity in the projects ..etc. Management has talked about all of the above, however I believe the market does need further clarification and better understanding of management intentions.
- The company has suffered multiple delays with RC, going forward they need to stick to their projections, and hopefully exceed them; a strong performance at Nome will go a long way in adding to management credibility when it comes to mining operations.

In addition to the above, I have recently written to management, about exploring the idea of a combination with a small/medium producer (something like the New Gold combination), in order to gain the scale necessary to develop the mega DC and GC projects, while assuring a certain cash flow in the mean time, I believe the combination of NG with its massive resources with a producer the size of EGO (just an example) can unlock massive value and catapult both companies market caps to the mid-tire level.

Nawar Alsaadi
Disclosure: I am heavily long NG