Barrick sells Donlin stake to Paulson, Novagold for $1B

Canada’s Barrick Gold (TSX: ABX; NYSE GOLD) is exiting the Donlin Gold project in Alaska by selling its 50% stake for US$1 billion (C$1.38 billion) to hedge fund billionaire John Paulson and Novagold Resources (TSX: NG).

Paulson Advisory is to acquire 80% of Barrick Gold’s interest Dolin Gold, with Novagold purchasing the remaining 20%. Both parties will contribute to the purchase price proportionally, according to separate statements from the mining companies.

Novagold will also have the option to buy debt owed to Barrick for $90 million if completed before closing, or $100 million within 18 months after the deal closes.

Located in the Kuskokwim region in southwest Alaska, Donlin Gold hosts about 39 million oz. of gold in measured and indicated resources with an estimated grade of 2.24 grams per tonne, or twice the industry average of 1.03 grams, the companies said.

Studies from 2021 show Donlin Gold could have a 27-year mine life with average annual production expected to reach approximately 1.1 million ounces. The project has expansion potential with resources along about three km of an 8-km mineralized belt. 

“Donlin Gold is one of the most attractive development gold projects in the world,” Paulson said in a statement. “Donlin Gold constitutes a superb opportunity for us to gain leverage to gold in the United States at an attractive valuation.”

Joint venture

Paulson, who heads hedge fund Paulson & Co. and is already a major Novagold investor, will become “a full and equal partner” in the project. Novagold and Barrick formed the Donlin joint venture in 2007.

Barrick said it would use proceeds from the sale to strengthen the balance sheet and boost shareholder returns.

Shares of Barrick fell 0.6% in Toronto to $28.16 apiece Tuesday morning as wider markets gained. Novagold surged 20% to $5.16. Both stocks had been lifted by record gold prices, which briefly topped $3,500 per oz. amid market concerns over U.S. President Donald Trump’s push to remove Federal Reserve Chair Jerome Powell.

The transaction is expected to close in this year’s second or early third quarter. At that point, Novagold is to hold a 60% stake in Donlin Gold, with Paulson owning the remaining 40%.