UPDATE 2-NovaGold Resources Q2 loss narrows

Wed Jul 15, 2009 2:42pm EDT

* Q2 loss C$0.03/shr vs yr-ago loss C$0.22/shr

* No plans to restart work on two major mines this year

* Will need external financing to develop properties (Adds details, analyst comment, updates share movement)

By Ashutosh Joshi

July 15 (Reuters) - Canada's NovaGold Resources Inc (NG.TO) reported a narrower quarterly loss, aided by lower expenses and a stronger Canadian dollar, and said it does not plan to restart construction of its two major mines this year.

For the second quarter ended May 31, the company's net loss was C$4.8 million ($4.23 million), or 3 Canadian cents a share, compared with C$23.2 million, or 22 Canadian cents, a year ago.

Revenue rose by about C$100,000 to C$400,000.

"Earnings are really irrelevant for this company at this point given the fact that no cash was being generated outside of the aggregate sales they have," Salman Partners analyst Haytham Hodaly told Reuters.

The analyst, who has a "sell" rating on the stock, said the company's earnings were in line with his expectations and that he does not expect its performance in the coming quarters to be different from this quarter.

NovaGold, which has minerals properties in Alaska and British Columbia, said it does not plan to commence development at its Donlin Creek and Galore Creek projects this year.

NovaGold said it will need external financing to develop its properties.

The company, which suspended work on its Rock Creek project last year, does not plan to recommence the project now.

In April, NovaGold had said it will consider options for Rock Creek this year, including restarting the mine, bringing in an operating partner or selling the mine. [ID:nN15494914]

Net expenses for the quarter fell 65 percent to C$9.1 million, as the company spent C$12.5 million less on exploration activities than a year ago.

The company recorded a foreign exchange gain of C$16.1 million, mainly due to the impact of the strengthening Canadian dollar on its U.S. currency denominated liabilities.

Shares of the Vancouver, British Columbia-based company were up 7 Canadian cents at C$4.83 on the Toronto Stock Exchange. ($1=1.134 Canadian Dollar) (Reporting by Ashutosh Joshi in Bangalore; Editing by Pradeep Kurup)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.