NovaGold raises $175 million (March 22, 2010)

VANCOUVER — NovaGold Resources (NG-T, NG-X) is all cashed up — in two days the Vancouverbased company closed two financings to add US$175 million to its coffers.

In the first, NovaGold sold 18.2 million shares at US$5.50 apiece to bring in US$100 million, all to investment funds managed by New York-based brokerage Paulson & Co. The second financing saw NovaGold sell 13.6 million shares at the same price to Quantum partners, a private investment fund managed by Soros Fund Management.

The head of Soros Fund Management is George Soros, a highly successful currency speculator and stock trader. Soros is among the 30 richest people in the world, with a net worth of some US$13 billion.

NovaGold says it will use the new funds to work its advanced exploration properties, which include the Donlin Creek gold project in west-central Alaska, the Galore Creek copper-gold-silver project in northwest British Columbia, and the Ambler volcanogenic massive sulphide project in northern Alaska. All three projects boast huge resources but are situated in remote locales.

NovaGold also said it might use the new funds for acquisitions.

Development work at Galore Creek, which is a 50-50 joint venture with Teck Resources (TCK. B-T, TCK-N), kicked off in mid-2007 but was halted six months later when costs more than doubled, to $5 million from $2.2 billion. The dramatic increase in costs followed by the development suspension led some NovaGold shareholders to file a class action lawsuit against the company and some of its officers, alleging they made misleading statements about the project’s economic viability. In mid-February, the company settled the lawsuit for $28 million, to be covered by its insurance policy.

The partners are now working through a new mine plan that avoids some of the more costly aspects of the old plan and are considering a 2013 restart to construction. A new study on construction and production costs, originally slated for this year, is now not expected until early 2011.

News of the financings pushed the company’s share price up 35¢ to a new 52-week high of $7.41. In early 2009, NovaGold shares were about $2.66. The company has 188 million shares outstanding, 256 million fully diluted.