Update: NovaGold urges rejection of Barrick’s sweetened offer

Vancouver After reviewing Barrick Gold‘s (ABX-T, ABX-N) revised US$16.00 per share bid, NovaGold Resources (NG-T, NG-X) rebuffed the offer and urged its shareholders to do likewise saying it still fails to reflect the value of its 70% interest in the Donlin Creek gold project in Alaska, plus its other projects (particularly Galore Creek in B.C. and Rock Creek in Alaska).

NovaGold also argues Barrick is unlikely to meet back-in requirements — including spending of US$32 million, completion of a bankable feasibility study and a decision to start mine construction by Nov. 12, 2007 — to earn an additional 40% in the large western Alaskan gold deposit.

Barrick recently tabled its “best and final offer” that represents a more than 10% boost from its July 24th offer of US$14.50 per share. The increase comes despite Barrick chairman Peter Munk’s previous statements that the company would “absolutely not” have to raise its offer for NovaGold. Barrick has disclosed that 167,679 shares (0.18% of NovaGold’s total outstanding) have been tendered to its original offer. Conditions of the bid remain the same, including requirement that at least 50.1% of NovaGold shares be tendered. The offer values NovaGold at about US$1.7 billion.

“The board and significant NovaGold shareholders believe Barrick’s ‘best and final offer’ is simply not good enough,” said NovaGold president and CEO Rick Van Nieuwenhuyse in a statement. “The message to Barrick is simple, clear and consistent: either offer NovaGold shareholders full and fair value for their investment, or withdraw the offer so NovaGold can get on with its business of advancing projects toward production and creating value for shareholders.”

Following NovaGold’s rejection, Barrick president and CEO Greg Wilkins urged its shareholders to consider the Barrick offer “as money in the bank.”

“The choice is cash in the bank versus significant project risk and financial dilution” continued Wilkins. “Barrick’s offer eliminates the significant financing, development, operating, construction and commodity price risks for NovaGold shareholders. NovaGold shareholders will experience significant dilution in financing of the US$2.5-billion plus required to construct the Donlin Creek and Galore Creek projects.”

Following the recently revised bid, NovaGold shares got a modest boost to trade in the $17.70-range on the TSX and at the US$15.75-level on AMEX, now below Barrick’s offer price.