Novagold, Paulson consolidate Donlin Gold holdings through merger to develop 'holy grail' gold mine in America
TSX- and NYSE-listed gold miner Novagold Resources has announced it will acquire Paulson's Donlin Gold Holdings' 40% interests in the Donlin Gold project, in Alaska, in an all-share transaction, which will create a leading US-based gold developer valued at $4.2-billion.
Novagold and Paulson Advisers entered into a series of definitive agreements on July 21, pursuant to which Novagold's ownership interest in Donlin Gold will increase from 60% to 100%.
The new company, NovaGold Corporation, will be listed on the NYSE, of which current Novagold shareholders - including Paulson's equity interest - will own about 65%, with Paulson due to receive 35% ownership on a fully diluted basis in exchange for its ownership interest in Donlin Gold.
Taking into account Paulson's existing equity ownership in Novagold, Paulson will own about 40% of the economic interest while its voting interest in the new company will be capped at 19.99%.
Donlin Gold is poised to produce 1.3-million ounces of gold a year in its first decade of operations, followed by 1.1-million ounces a year over the remainder of the 27-year mine life, rendering the project the largest gold development in the US.
The Paulson's deal, Novagold says, is value accretive to shareholders in that a leading US gold developer will be created, with a $4.2-billion equity value and 100% ownership of Donlin Gold. The deal results in immediate accretion to Novagold shareholders on multiple key metrics including net asset value per share, gold reserves and resources per share and projected attributable production metrics.
The merger also streamlines corporate decision-making and increases operational and capital efficiency at Donlin Gold, while preserving Novagold's independent governance through specific lock-up, standstill and voting restrictions.
NovaGold Corporation will be co-chaired by Dr Thomas Kaplan and John Paulson and will be expanded from ten directors to 11 directors. Paulson will have the right to nominate two directors as long as its equity ownership remains above 15% in the new company. Paulson intends to nominate Marcelo Kim as the second board designee to the new NovaGold Corporation board.
Consolidating the companies' interests in Donlin Gold into NovaGold Corporation enhances Donlin's organisational structure and will facilitate, streamline and expedite the development of the mine, says Paulson. Kaplan adds that Donlin Gold constitutes a "holy grail" for gold mining investors and the accretive consolidation of 100% of what is projected to become America's single-largest gold mine now takes that conviction to a whole new level.
