Barrick offloads entire stake in NovaGold (April 30, 2007)

Vancouver — Making good on the planned sale of its 14.8% stake in NovaGold Resources (NG-T, NG-X), Barrick Gold (ABX-T, ABX-N) has divested its 13.6-million share position in the company, which it targeted in a hostile takeover attempt last year.

Just after the April 20th opening bell in American Stock Exchange trading, a pair of large NovaGold transactions (9 million and just over 3 million shares, respectively) were registered at US$16.25 per share. Earlier in the week, Barrick also sold about 1.5 million NovaGold shares through the markets.

In early April, Barrick tipped the market off to its intentions to “dispose of all or a portion of the NovaGold shares owned by it in the open market.”

The divesture comes after a heated hostile takeover attempt of NovaGold in which Barrick came up short, failing to acquire enough shares to take control. Barrick allowed its US$16-per-share offer to expire last December with only a minority interest tendered.

“We had that stake and decided that it didn’t make much sense and there were better opportunities to deploy that capital elsewhere,” said Barrick’s senior vice-president of corporate communications, Vincent Borg.

Barrick recently entered into a purchase agreement to acquire Emperor Mines’ (EMPMY-O, EMP-A) 20% interest in the Porgera gold mine, in Papua New Guinea, for US$250 million. The acquisition will give Barrick a 95% interest in the mine, which produced about 542,000 oz. gold in 2006.

NovaGold recently closed its public offering of 12.5 million shares at US$16.25 apiece to raise gross proceeds of US$203 million. Underwriters hold an option to purchase up to an additional 1.875 million shares at the same price for 30 days from closing to cover any over-allotments. Funds are earmarked for exploration and construction at the Galore Creek copper-gold project, in northwestern British Columbia, which holds proven and probable reserves of 540.7 million tonnes grading 0.56% copper, 0.3 gram gold per tonne and 5.3 grams silver per tonne.

Barrick and NovaGold are partnered on the Donlin Creek gold project, in Alaska. Barrick holds a 30% stake in the project, with NovaGold at 70%. Barrick can earn another 40% interest if it completes a bankable feasibility study and there is a decision to build a mine by November 2007.

The project hosts a measured and indicated resource of 215 million tonnes averaging 2.4 grams gold (about 16.6 million contained ounces) plus an additional 227 million inferred tonnes grading 2.34 grams gold (about 17.1 million contained ounces).

Shares of NovaGold edged up 9 to close at $18.15 apiece on April 20. Based on its 92 million shares outstanding, the company posts an almost $1.7-billion market capitalization and has a 52-week trading range of $11.62-$20.44. Barrick shares closed up a dime at $32.55.