NovaGold makes progress in Q3

NovaGold Resources (NG-T, NG-X) reported earnings of $16.7 million for the third quarter due mainly to the sale of its subsidiary NovaGreenPower.

That put earnings for the last nine months (ending Aug. 31) at $36.7 million. NovaGold recorded a loss of $4.2 million during the third quarter of last year and a loss of $12.2 million for the nine-month period in 2007. The company says the increase in earnings this quarter is mainly due to a gain of $33.5 million from the sale of NovaGreenPower. The actual price was $40 million and NovaGold has yet to receive $5 million in payments.

The company said the gain was offset by a foreign exchange loss of $7 million due to the devaluation of the Canadian dollar, $5.4 million in care and maintenance costs at its suspended Galore Creek project in northwestern British Columbia, and $5.4 million in write-downs for certain mineral properties.

At the end of August, NovaGold had about $21.4 million in cash, $11.6 million of which was designated for Galore Creek suspension activities.

In early September, the company said it had agreed to sell its 51% interest in its Ambler project and other early-stage base metal projects in Alaska for $20 million in common shares of Mantra Mining (MAN-V, MAMIF-O).

The company also announced the startup of mining operations at its Rock Creek Mine in Nome, Alaska, which is expected to produce 100,000 oz. of gold per year. The company expects to ramp up production over the fourth quarter.

At the end of September, NovaGopld secured a bridge loan for US$18.8 million with Auramet Trading, which will mature on Dec. 29 this year and will have a yearly interest rate of 12%.

And on Oct. 1, 2.31 million warrants were exercised at $7 per share for net proceeds of $15.3 million. About 1.19 million warrants expired unexercised.

NovaGold shares closed at $6.98 on Oct. 1, and have since dropped off significantly. Today shares fell 83 to $3.90 on a trading volume of 468,000 shares.