Novagold Resources to Take Full Control of Donlin Gold in All-Share Deal

Novagold Resources plans to acquire the remaining 40% of the Donlin Gold project in an all-share transaction, giving it 100% ownership and creating a single U.S.-domiciled parent company, New NovaGold. The company says the deal should be immediately accretive and simplify financing and development, with Donlin projected to produce 1.3 million ounces of gold annually in its first 10 years and boost Novagold’s attributable reserves and resources. The transaction still needs shareholder and regulatory approvals, but Novagold expects it to close in the fourth quarter; the new structure would keep Paulson influential while capping his voting power at 19.99%.

Novagold Resources NYSEAMERICAN: NG said it has entered into definitive agreements to acquire 100% ownership of the Donlin Gold project through an all-share transaction with Paulson’s Donlin Gold Holdings, consolidating the Alaska gold project under a single U.S.-domiciled parent company. Greg Lang, Novagold’s president and CEO, described the agreement as a “transformative all-share transaction” that would combine Novagold’s existing 60% interest in Donlin Gold with Donlin Gold Holdings’ 40% stake. The new parent company, referred to during the presentation as New NovaGold, will be a Delaware corporation with an estimated pro forma market capitalization of about $4 billion to $4.2 billion, according to company officials.

On a fully diluted basis, existing Novagold shareholders, including John Paulson’s current equity stake in Novagold, are expected to own about 65% of New NovaGold. Former Donlin Gold Holdings shareholders will own about 35%. Paulson’s combined economic interest in New NovaGold is expected to be approximately 40%, with his voting interest capped at 19.99%.

Governance Structure and Closing Timeline Lang said each Novagold share will be exchanged for one voting share of New NovaGold. He added that Novagold’s independence would be preserved through lock-up, standstill and voting restrictions tied to Paulson’s stake. The New NovaGold board will be co-chaired by Thomas Kaplan, Novagold’s chairman, and Paulson, founder of Paulson. The board is expected to expand from 10 to 11 directors. Paulson will be able to nominate two directors as long as his ownership remains above 15% of New NovaGold’s issued and outstanding shares. Lang said Paulson intends to nominate himself as co-chair and Marcelo Kim as the second designee at closing. The transaction requires approval by at least two-thirds of votes cast by Novagold shareholders, as well as court and regulatory approvals and other customary closing conditions. Lang said the company expects the transaction to close in the fourth quarter.

Company Cites Accretion and Financing Benefits Novagold executives said the transaction would simplify ownership and decision-making at Donlin Gold while improving access to capital for the project’s next phase of development. Lang said the transaction would make Novagold a “leading U.S. pure-play gold developer” with 100% ownership of Donlin Gold, which he said is expected to produce 1.3 million ounces of gold annually during its first 10 years. He said that would represent an increase of more than 520,000 attributable ounces of annual production for Novagold. Lang also said the transaction is immediately accretive on net asset value per share and on gold reserves and resources per share. He said it adds 16 million ounces of measured and indicated resources, including 13 million ounces attributable to proven and probable reserves, bringing pro forma totals to 33 million ounces of reserves and 40 million ounces of resources.