Market Overview

NovaGold Lower Slightly After StreetSweeper Report


Shares of NovaGold Resources Inc. (NYSE: NG) were trading lower by more than 1 percent on Thursday following a negative report by The Street Sweeper on Wednesday.

The Street Sweeper's Sonya Colberg argued that while "there may be gold" in NovaGold Resources' properties, investors "better not count" on the company "digging it out."

Colberg noted that NovaGold owns 50 percent of 2 separate properties in Alaska (Donlin Gold) and Canada (Galore Creek). Meanwhile, the company is awaiting government approval for over 100 permits in its Alaska property while its Canadian property hasn't seen any gold recovery despite numerous attempts since 2003.

"Expected expenses are massive," the report stated. " The prospects are iffy. The risks are enormous. And the excavation route goes straight through investors' wallets."

Risks To Capital

Colberg pointed out that NovaGold stated back in May that it has sufficient capital to complete the permitting of the Donlin Gold project. However, the company stated that it can do so only if "gold prices remain at current levels."

At that time, gold was trading around $1,234 per ounce. However, the price of gold is currently flirting with the $1,100 per ounce mark. "Oddly," the report noted, "shares are up while the price of gold is down since May."

Colberg further speculated that NovaGold may be forced to undertake a stock offering given the company's cash burn of $2 million a quarter while it faces at least $3 billion in construction costs.

"That glitter around NovaGold right now is just about as likely to be fool's gold as real gold," the report concluded.

Posted-In: Donlin Gold Galore CreekShort Sellers Short Ideas Commodities Markets Movers Trading Ideas


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