Golden Frontier: NOVAGOLD and Paulson Complete $1 Billion Acquisition of Barrick's Donlin Gold Stake

Gold's Alaskan Frontier: NOVAGOLD and Paulson's $1B Gamble on Donlin

NOVAGOLD RESOURCES INC. and Paulson Advisers LLC have completed their acquisition of Barrick Mining Corporation's 50% stake in the massive Donlin Gold project for $1 billion. The transaction, closed on June 3, transforms the ownership structure of what many consider one of the world's most promising undeveloped gold deposits, nestled in the remote wilderness of western Alaska.

The deal increases NOVAGOLD's ownership from 50% to 60% for $200 million, while Paulson Advisers, led by billionaire investor John Paulson, acquires a 40% interest for $800 million. The partners have established a new joint venture with equal governance rights, marking a significant pivot point for a project that has languished in development limbo for over a decade.

Billion-Dollar Bet in Alaska's Golden Hills

The acquisition comes amid record gold prices hovering above $3,400 per ounce, creating a potentially lucrative opportunity for the new partners. Donlin Gold sits among the world's largest undeveloped high-grade deposits, with proven reserves exceeding 39 million ounces at approximately 2.1 grams per ton.

"This constitutes a truly transformational transaction and an exciting new chapter for Donlin Gold as we advance one of the best and most jurisdictionally attractive gold development projects in the world," said Greg Lang, NOVAGOLD's President and CEO.

For NOVAGOLD, the increased stake solidifies its position as a pure-play gold developer with a flagship asset capable of producing approximately 1.1 million ounces annually over a projected 27-year mine life. For Paulson Advisers, the acquisition represents a significant wager on gold's continued strength and the project's long-term viability.

Industry analysts note the strategic alignment between the partners. "NOVAGOLD brings deep project knowledge, having co-managed Donlin for years, while Paulson's team contributes extensive capital markets experience and a track record in gold investing," explains one mining sector specialist who requested anonymity due to client relationships.

Strategic Exit for Barrick

For Barrick Gold, the divestiture aligns with CEO Mark Bristow's strategy to refocus on core assets—particularly copper—and to allocate capital toward higher-priority growth projects. The timing allowed Barrick to capitalize on strong gold valuations and exit at what the company described as "an attractive valuation."

The transaction also frees Barrick from the substantial capital commitments that Donlin would require. With estimated development costs of approximately $7.4 billion, the project represents one of the industry's most capital-intensive undertakings, requiring extensive infrastructure including a 315-mile pipeline and port facilities.

Financial Maneuvering and Future Funding

NOVAGOLD has positioned itself financially for the next phase of development, completing an upsized public offering and private placement that closed on May 9. The company reported $327 million in cash as of March 1, sufficient to fund its acquisition costs and share of ongoing activities.

Notably, NOVAGOLD opted not to prepay $90 million in outstanding debt owed to Barrick, instead retaining an option to prepay $100 million within 18 months. If that option remains unexercised, the debt—valued at $158.9 million as of the closing date—will continue accruing interest at U.S. prime plus 2%, compounded semi-annually.

This decision has drawn mixed reactions from market observers. "By not exercising the $90 million prepayment option at closing, NOVAGOLD effectively extended financing costs," notes a mining finance expert. "If gold prices fall, repaying $100 million within 18 months for debt valued at $158.9 million may strain cash flows or force further equity issuances."

The joint venture will need to secure substantial additional financing to advance the project toward production. Industry estimates suggest that maintaining its 60% stake will require NOVAGOLD to contribute approximately $1.3 billion in equity funding over the coming years, likely necessitating further capital raises.

Tackling Technical and Environmental Hurdles

The partners face significant challenges in bringing Donlin to production. The project's remote location in western Alaska entails harsh weather, limited seasonal access, and complex logistics that can inflate costs and complicate development timelines.

Environmental concerns also loom large. Multiple Alaska Native tribes have filed lawsuits challenging key federal permits, arguing that environmental impact statements inadequately address potential salmon habitat destruction, mercury contamination, and increased barge traffic on the Kuskokwim River.

"Most regional tribes oppose Donlin, arguing that mining conflicts with cultural values and subsistence lifestyles," says an environmental policy researcher familiar with the project. "The question becomes whether immediate revenues outweigh generational risks."

While regional Native corporations Calista and TKC support the project and stand to receive royalties, local opposition has created regulatory uncertainty. A federal judge in 2021 recommended rescinding a critical water quality certificate, highlighting the complex permitting landscape the partners must navigate.

Immediate Plans and Market Response

Following the transaction, NOVAGOLD and Paulson announced plans to review the project's 2025 budget, estimated at $43 million on a 100% basis. Key priorities include:

• Commencing an update to the Feasibility Study with a dedicated team
• Executing a 2025 drill program focused on converting and expanding reserves
• Advancing technical work and engineering designs
• Supporting permitting efforts and maintaining existing authorizations
• Continuing stakeholder outreach in Alaska

The market has responded positively to the acquisition, with NOVAGOLD's shares rising approximately 36% following the original April announcement. This reflects investor confidence in the new partnership structure and the potential for accelerated development under the revised ownership model.

Investment Outlook: Balancing Opportunity and Risk

For investors, Donlin Gold represents a high-stakes proposition with potential for substantial returns but significant execution risk. At current gold prices near $3,500 per ounce, the project's economics appear robust on paper.

However, analysts caution that several factors could significantly impact returns, including:

• Capital intensity: The $7.4 billion development cost requires disciplined execution to prevent overruns
• Permitting timeline: Ongoing litigation could delay key authorizations by 12-24 months
• Environmental design requirements: Potential mandates for enhanced tailings management could add hundreds of millions to development costs
• Gold price volatility: Returns are highly sensitive to long-term gold prices

"On a risk-adjusted basis, we estimate Donlin could yield an expected IRR of approximately 15% for NOVAGOLD, with significant upside potential if gold remains strong and development proceeds smoothly," suggests a mining equity analyst. "The key variables to watch are permitting progress, capital cost control, and of course, the gold price environment."

For Paulson Advisers, the investment represents a leveraged bet on gold that could deliver outsized returns if the project advances without major setbacks. Some market observers speculate that a successful feasibility update in 2026 could attract acquisition interest from major producers seeking to replenish reserves.

Looking Ahead

The path forward for Donlin Gold involves a complex interplay of technical, financial, and social considerations. While the project offers remarkable scale and grade in a stable jurisdiction, the partners must navigate significant execution challenges to realize its potential.

As Greg Lang notes, "We look forward to providing updates on the key milestones in the coming months, starting with our revamped and determined efforts regarding the Feasibility Study workstream."

For investors and industry observers, Donlin represents a fascinating case study in resource development—a project of extraordinary potential facing equally substantial hurdles. With NOVAGOLD and Paulson now at the helm, the next chapter in this decades-long saga promises to be pivotal in determining whether Alaska's golden frontier will finally be opened to large-scale production.

Investment Perspective: While Donlin Gold represents a potentially transformative asset with significant leverage to gold prices, investors should carefully consider the extended timeline to production and substantial funding requirements. Those with a longer investment horizon may find value in NOVAGOLD shares at current levels, provided they can tolerate the volatility associated with permitting decisions and feasibility updates expected in 2026. As always, consult with a financial advisor before making investment decisions, as past performance does not guarantee future results.