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Sunday, October 25, 2020

Weighing in on NovaGold Resources Inc. (USA) (NYSEMKT:NG)

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NovaGold Resources Inc. (USA) (NYSEMKT:NG) and it’s shareholders are prepared for a new Alaskan Gold Rush. After a tough shakeout in the gold industry, mining companies are finally turning things around, and that could be good news for companies like Vancouver-based NovaGold Resources, Inc. (NYSEMKT: NG), which holds a 50 percent controlling stake in one of the world’s top gold mining prospects.

Shares of NovaGold are currently trading in a range from $4.10 to $4.30, giving the company a total market capitalization of $1 billion. Over a 52-week period, shares of the company have traded as low as $3.05 and as high as $7.29.

NovaGold Resources Inc. (USA) (NYSEMKT:NG) has investors excited with the upbeat reports coming out about the company’s Donlin Gold project in southwestern Alaska. Based on mineral assessments at the site, it appears to be one of the largest and most prospective known gold deposits in the world. NG holds a 50% ownership stake in the project, together with production partners.

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Based on the good news related to the permitting and development of the Donlin Gold project, Wall Street investment house JP Morgan recently issued a stock upgrade for the stock, from “netural” to “overweight.” While analysts have a consensus price target of $6.99 for the stock over the next 12 months, JP Morgan has set a more aggressive $8 price target. According to JP Morgan, permitting at Donlin Gold will begin in 2017.

This Donlin Gold project is the flagship project of NovaGold Resources, which also holds a 50 percent stake in Galore Creek, a nearly 300,000 acre copper-gold-silver project in British Columbia. Adjacent to Galore Creek, NG also holds a 50 percent ownership interest in Copper Canyon, a copper-gold-silver project.

It’s important to note that NovaGold is only a mineral exploration company involved in permitting and development — it is not a miner or producer of gold or other minerals. As a result, in order to extract true value from these mining projects, NovaGold needs to have the right partners.

And this is an area where NG appears to be doing very well. Gold miners are in better condition now, whether by cost cutting or by consolidation, and they are now ready to get back in the gold production game. Moreover, a key production partner at Donlin Gold – Barrick Gold – has been looking to boost its production levels. Therefore, Barrick Gold is highly motivated to get the Donlin Gold project moving forward as quickly as possible. As an added bonus for investors, environmental groups do not appear to be erecting any barriers to future gold production at the site.

For investors, though, one important factor to keep in mind is the price of gold. A rising price of gold, obviously, makes the Donlin Gold, Galore Creek and Copper Canyon projects all more valuable. But, at the same time, one key factor in the price of gold are U.S. interest rates. Rising rates in the U.S. would boost the value of the dollar, which would be negative for gold investors. Therefore, it’s important to keep a close eye on the overall macroeconomic project.

Currently, though, everything in the market seems to be trending on the side of NovaGold. All signs are positive for the massive Donlin Gold project, and Wall Street investors appear to agree. Given the current share price of $4.17, the $8 price target just set by JP Morgan in late September would suggest a doubling in the value of NovaGold’s stock in the next 12 months. And that’s even before the company mines a single ounce of gold at Donlin. No doubt, miners are getting ready for another Alaska gold rush. We will keep a close eye on this and will continue to update update. For more news on NovaGold Resources and other fast-moving stocks, subscribe to OracleDispatch.com now and get our next fast moving pick.

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