Barrick bid for NovaGold woos Grace from Pioneer

Vancouver – The strategic rationale behind Barrick Gold’s (ABX-T, ABX-N) all-cash bids for NovaGold Resources (NG-T, NG-X) and Pioneer Metals (PSM-T) goes well beyond strengthening its resource base and pipeline of advanced projects. The proposed acquisitions will also consolidate Barrick’s interest in the Donlin Creek gold project in Alaska, and end a contentious legal dispute that had threatened to stall timely development of NovaGold’s Galore Creek copper-gold-silver deposit in northwestern British Columbia.

In a proposed transaction valued at US$1.29 billion, or US$1.53 billion on a fully diluted basis, Barrick has offered NovaGold shareholders US$14.50 per share in cash, which represents a 24% premium over the pre-announcement closing price. The offer is subject to certain conditions, including the acceptance of not less than 75% of NovaGold’s common shares on a fully diluted basis.

At the same time, Barrick made a friendly bid for Pioneer, valued at about $60.1 million, or $64.7 million on a fully diluted basis. The cash offer of $1 per share represents a premium of 54% over the closing price prior to the announcement. The board of Pioneer has unanimously approved the offer. A group of shareholders, including officers and directors, representing more than 40% of Pioneer’s fully diluted shares will tender their shares under a lock-up agreement.

Barrick’s acquisition of NovaGold, assuming completion, would boost its pro forma measured and indicated gold resources by 54% to 34.7 million oz., while inferred resources would jump 89% to 28.2 million oz. NovaGold has not yet formally responded to Barrick’s offer.

A successful bid for both NovaGold and Pioneer will give Barrick 100% of the Galore Creek deposit, a bulk-tonnage project situated in a rugged and remote region about 75 km east of its Eskay Creek mine. The project is in the permitting and feasibility stages, and at last report, hosted measured and indicated resources of 6 million oz. gold, 75.4 million oz. silver, 6.8 billion lbs of copper, along with additional inferred resources.

NovaGold is earning a 60% interest in Pioneer’s Grace Claims adjacent to Galore Creek and recently made an offer to purchase 100% of Pioneer’s common shares for $0.57 per share in cash. Pioneer has urged its shareholders to reject the “woefully inadequate” offer.

Relations between the companies have been testy since the fall of 2005, when Pioneer filed a lawsuit against NovaGold alleging that that instead of conducting “legitimate exploration activities” on the Grace claims, NovaGold was carrying out condemnation drilling to identify tailings and waste disposal sites for a proposed mine at Galore Creek.

Pioneer refutes NovaGold’s assertion that the Grace claims do not host economic mineralization. NovaGold countered that assertion by releasing results that are marginal at best from previous drilling campaigns. The Barrick bid offers potential for the dispute to be resolved, allowing Galore Creek to be developed on a timely basis.

Another driver of Barrick’s bid is its strong interest in the Donlin Creek gold deposit in Alaska. The company acquired rights to earn up to a 70% interest in the project early this year when it acquired Placer Dome, and can now gain the remaining 30% held by NovaGold.

At year-end 2005, Donlin Creek hosted measured and indicated resources containing 14.8 million oz. gold, plus inferred resources containing another 13.6 million oz. gold. The project is at the feasibility and permitting stage.

NovaGold also holds several projects near Nome, Alaska, including Rock Creek, Big Hurrah, Nome Gold, and a joint-venture interest in the Ambler project, and has about $200 million in its treasury.