Monday, August 30, 2010

NovaGold (AMEX:NG) Expanding Financing Search

After having a cash infusion of $175 million from combined investments from Paulson & Co. Inc. and Quantum Partners Ltd., it put NovaGold (AMEX:NG) (TSE:NG) in the enviable position of having a two-year cushion to work with.

But aren't resting on that by any means, as estimates for their part in the development of Galore Creek copper-silver-gold mine, which they're partnering with Teck Resources (NYSE:TCK), and on Donlin Creek, which they're partnering with Barrick Gold Corp. (NYSE:ABX), comes in at about $4 billion.

When you consider the estimated revenue for NovaGold is $2 million this year, it's incredible to look at the numbers being thrown at them.

This isn't of about where they are, but where they're going to be, and once the feasibility studies are completed, we'll have a better look. But the large amount of resources at just these two mines are staggering, and will generate a flow of revenue for years.

For example, at Galore Creek, there is an indicated resource of close to 9 billion pounds of copper and 7.3 million ounces of gold. By the time these mines begin operating, assuming they do, it will be at a time when demand will continue to be high; for sure for copper, with gold being less certain depending on when production begins.

At earliest production at Galore isn't expected to launch until 2016, and most of the time they won't meet those dates, so it could be assumed to be even later than that.

NovaGold also has significant projects in Argentina, with their San Roque project, and in Alaska with the Ambler project, which may contain one of the largest copper-zinc deposits in the world.

They have a bright future, but it will be an expensive one to develop, and that's why NovaGold Chief Executive Officer Rick Van Nieuwenhuyse has been reaching out to Asia to woo investors in the company.

In exchange for investment, NovaGold is offering a piece of the metal production, which is a huge attractant to the Asian region who will be building out infrastructure for years.

Even in this recession, metal will be in demand, and is expected to surge again whenever a real recovery begins. Now it's a race to get the needed financing to supply the hungry markets.

With the demand out there, a significant number of interested parties should emerge, and NovaGold does have some time to find the best partners.

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