ABX:CC - NovaGold: No Feasibility Refresh Planned This Year
2024-01-29 11:08:42 ET
Summary
- NovaGold Resources Inc. stock has declined 24% year-to-date, significantly underperforming its peer group.
- Fortunately, its balance sheet remains strong, with $125 million in cash, but it will need to come up with a plan post-2026 with ~$30 million in cash burn per year.
- On a negative note, the 70% increase in capex for (remote Arctic project) does not bode well for Donlin, which used Q1 2020 pricing to estimate upfront capex vs. Q1 2021 (Goose).
- In this update, we'll dig into the year-end 2023 results, NovaGold's valuation vs. peers (producers and developers), and whether the stock has entered a low-risk buy zone.
It's been a rough start to the year for the Gold Miners Index ( GDX ) in what's seasonally its best month (average January performance: +2.6%), with the index suffering a 9% decline. However, while many producers have taken a beating, few names have fared as poorly as NovaGold Resources Inc. ( NG ), which has found itself down 24% year-to-date. The culprit for the stock's weakness could be a line buried at the bottom of their year-end 2023 results, which stated the following (emphasis added):
NovaGold: No Feasibility Refresh Planned This Year"At the December 2023 Donlin Gold LLC board meeting, NOVAGOLD proposed proceeding to an updated feasibility study while Barrick proposed continued drilling campaigns ."