Vancouver-based NovaGold Resources Inc. is set to become the latest Canadian company to redomicile to the U.S., following a consolidation deal that the firm’s president and CEO says will make it one of the largest gold producers in the world.
“The transaction we announced this morning really transforms NovaGold,” Greg Lang told BNN Bloomberg in an interview on Wednesday.
“We’re consolidating ownership of Donlin, one of the largest undeveloped gold deposits in the industry. We will now control over 40 million ounces of resources and that in itself makes us one of the largest gold companies in terms of reserves.”
NovaGold said Wednesday it will acquire the remaining shares it does not already own in Donlin Gold from Paulson Advisors LLC in an all-stock deal, which will create a new gold mining corporation worth US$4.2 billion.
The deal will bring the Donlin Gold Project, located in Alaska, under the control of a single U.S.-based company after years of joint ownership.
“It’s really a fantastic transaction for us, and it simplifies our corporate structure immensely, putting Donlin under one owner,” said Lang.
Lang said NovaGold has “steadily advanced” the Donlin Gold Project in recent years, with the necessary permitting having been completed and a feasibility study currently underway.
“We envision that the mine will have an output of about 1.3 million ounces for tis first 10 years of operation at very competitive cash costs,” he said.
“I think it really is one of the truly strategic assets in the gold industry, and it’s fantastic that we now own 100 per cent of it.”
The new company, which will be incorporated in Delaware, will be co-chaired by U.S. billionaires Thomas Kaplan, NovaGold’s current chairman, and John Paulson, a hedge fund manager who made billions betting against subprime mortgages in the lead up to the 2008 financial crisis.
“Dr. Kaplan and Mr. Paulson have a long history together. Paulson has been one of our largest shareholders for over 15 years, and I think to say they are like-minded is an understatement,” Lang said.
“They both share the same vision and appreciate the leverage that Donlin Gold brings to NovaGold as well as our major shareholders… they balance each other out very well.”
The new firm – to be renamed NovaGold Corporation – will see current NovaGold shareholders own nearly 65 per cent of the company, while Paulson Advisors LLC will receive about 35 per cent in exchange for its Donlin Gold interest.
“As the major shareholder of (the new company), I share the conviction that Donlin Gold is a world class gold investment,” Paulson said in a NovaGold press release announcing the deal on Wednesday.
“I look forward to developing this magnificent project as co-chair, with Tom Kaplan and our teams. In addition, NovaGold will be redomiciled to the U.S., the home of Donlin Gold, which is quite simply the best jurisdiction in the world for gold investors.”
With files from Reuters
