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):
"At the December 2023 Donlin Gold LLC board meeting, NOVAGOLD proposed proceeding to an updated feasibility study while Barrick proposed continued drilling campaigns ."
Read the full article on Seeking Alpha
For further details see:
NovaGold: No Feasibility Refresh Planned This Year