NovaGold considering sale; shares hit 9-month low
TORONTO, Sept 3 (Reuters) - NovaGold (NG.TO) hit a 9-month low on Wednesday after the Canadian gold company said it was considering selling all or part of itself due to the sharp plunge of its shares over the past year.
NovaGold, whose main assets are 50-percent stakes in the Donlin Creek gold project in Alaska and the Galore Creek copper-gold property in British Columbia, said in a statement on Tuesday it was reviewing strategic alternatives to maximize shareholder value.
"We don't feel the current share price reflect the value of our two largest assets," Greg Johnson, the company's vice president of strategic development, told Reuters.
"If it means (spin-offs) or combinations or otherwise, then we're going to consider those things."
Potential buyers for Donlin and Galore would likely include NovaGold's joint venture partners on the respective projects, Barrick Gold (ABX.TO) and Teck Cominco (TCKb.TO).
Johnson would not comment on whether NovaGold has had any talks with specific partners or suitors.
Barrick spokesman Vince Borg would not comment, while Teck Cominco did not immediately return calls.
NovaGold has lost two-thirds of its value since announcing last November it and Teck would halt development on Galore Creek due to cost estimates that had soared to about C$5 billion ($4.7 billion).
Galore could yield about 430 million pounds of copper, 340,000 ounces of gold and 4 million ounces of silver a year when it starts producing.
Donlin Creek is expected to produce 1.5 million ounces of gold per year and could cost more than C$4 billion to build.
NovaGold's shares fell 5 percent on Tuesday, and were down another 4.7 percent at C$6.22 on the Toronto Stock Exchange on Wednesday, hitting its lowest level since the December.
"It's very open ended," said Paolo Lostritto, an analyst at Wellington West in Toronto.
"What may make sense is for them to reduce their interest in the respective projects, but have a carried interest in terms of production," he said.
Johnson said NovaGold and Teck plan to release a new mine plan for Galore Creek as early as October, which will include a revised tailing process that would involve processing ore outside of the Galore Creek Valley, rather than closer to the mine.
Problems with the original tailings plan were a big part of the cost run-up.
($1=$1.06 Canadian) (Reporting by Cameron French; Editing by Frank McGurty)
