Gold prices buoyed by tariff fears; US duties on 1-kilo bars spur supply concerns
Investing.com - Citi initiated coverage on NovaGold Resources (NYSE:NG) with a Buy rating and a $7.00 price target on Tuesday. The gold mining company, currently trading at $4.95 and commanding a market capitalization of $2 billion, has attracted analyst attention with targets ranging from $6.96 to $8.96.
The Citi analyst highlighted that NovaGold stock remains well below its 2020 levels of approximately $10 per share, when gold was trading under $2,000 per ounce. The firm classified the rating as "High-Risk," noting that the pre-production gold junior offers investors significant leverage to gold prices alongside substantial execution risk. According to InvestingPro data, the stock has shown strong momentum, posting a 48% gain over the past six months and trading near its 52-week high of $5.06.
NovaGold owns 60% of the Donlin Gold project in Alaska, with the remaining 40% held by Paulson Advisers. According to Citi, the project has the potential to become the second-largest gold mine in the United States, with production capacity of approximately 1.5 million ounces.
The development faces significant challenges, including an estimated $10 billion capital expenditure requirement. Citi noted that Barrick’s recent exit serves as a catalyst to advance the project after more than 20 years of inactivity.
The project timeline remains extended, with an updated Technical Report expected in the second half of 2027 and no mine production anticipated before 2030 at the earliest. Citi indicated that project economics become attractive at gold prices above $2,500 per ounce but are not viable below $2,000 per ounce.
In other recent news, NovaGold Resources Inc. has been at the center of several significant developments. The company recently received an upgrade from RBC Capital, with analysts raising the stock rating from Sector Perform to Outperform and increasing the price target to $7.00. This upgrade is linked to renewed interest in the Donlin project in Alaska, where work on an updated feasibility study is set to resume. In a separate legal matter, the Alaska Superior Court upheld a critical water quality certification for NovaGold’s proposed gold mine, affirming compliance with state water quality standards. This decision supports the company’s efforts to advance the Donlin Gold project.
Additionally, NovaGold and investment firm Paulson Advisers LLC have entered into an agreement to acquire a 50% interest in the Donlin Gold project from Barrick Gold (NYSE:B) Corporation for $1 billion. This transaction will increase NovaGold’s stake in the project to 60%, with Paulson acquiring a 40% interest. The deal is expected to close between late Q2 and early Q3 of 2025, subject to regulatory approvals. Following the acquisition, both companies plan to update the feasibility study and focus on expanding the project’s reserves and resources. This partnership aims to advance the Donlin Gold project responsibly, leveraging the strengths of both NovaGold and Paulson.
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