As gold prices continue to reach new highs, Barrick Gold sells a 50% stake in the Donlin gold mine project

According to the Zhitong Finance APP, Barrick Gold (GOLD.US), a gold mining giant headquartered in Canada, announced on Tuesday Eastern Time that it has agreed to sell up to 50% of its stake in the Donlin Gold project in Alaska for approximately $1 billion in cash to affiliates of Paulson Advisers and NovaGold Resources (NG.US). As of the time of publication, Barrick Gold's stock price rose 1.8% in pre-market trading, while NovaGold increased by 9.32%. With spot/futures gold prices hitting new highs, the value of the Donlin Gold project continues to rise.

It is understood that Paulson and NovaGold will acquire 80% and 20% of Barrick Gold's interest in the Donlin Gold project, respectively, with some existing shareholders (including Paulson) providing support for NovaGold's purchase commitment. After the completion of the purchase, NovaGold's stake in Donlin Gold will increase from 50% to 60%, while Paulson will acquire a 40% stake and will jointly and equally manage the project with NovaGold.

Barrick Gold has also granted NovaGold an option to purchase all of Barrick Gold's outstanding debt owed by the Donlin project for $90 million before the completion of the transaction, or to exercise the option for $100 million within 18 months after the transaction is completed, at which point the option will expire—if the option is chosen to be exercised within 18 months after the transaction, it will be purchased at a value of $100 million.

To raise funds for NovaGold's acquisition, Paulson, The Electrum Group, and Kopernik Global Investors have committed to subscribe for up to $170 million in common stock at $3.00 per share, with the remaining $30 million gap to be self-raised by NovaGold.

“Donlin Gold is one of the most attractive gold mining development projects in the world,” said John Paulson. “The mine has 39 million ounces of gold, with a grade level twice the industry average, and is located in Alaska, the second-largest gold-producing state in the U.S., which is a high-quality jurisdiction—we believe this project will continue to create value for decades to come.”

Donlin Gold is regarded as a "world-class" gold mining project under construction due to its super-large scale, high grade, and location in a mature legal jurisdiction. As gold prices continue to hit new highs, the value of this project is on the rise; the introduction of the capital-rich and gold cycle-savvy Paulson Advisers after the transaction is expected to accelerate the update of feasibility studies and final construction decisions, while NovaGold's increased stake enhances its decision-making power.

Regarding gold prices, spot gold and New York gold futures further broke through the $3,500 per ounce mark during the Asian session on Tuesday, repeatedly setting historical highs this year. So far, spot and futures gold prices have risen by more than 30% this year In the context of increasing economic uncertainty, risk aversion continues to drive gold prices to new highs.

On Monday, U.S. President Trump reiterated his critical remarks about Federal Reserve Chairman Powell and hinted at the possibility of dismissing him. These comments raised concerns about the politicization of U.S. monetary policy, which could undermine the credibility of the Federal Reserve and significantly weaken investors' expectations for the U.S. economy and monetary policy outlook, triggering a rare "triple whammy" of stocks, bonds, and currencies in the U.S. financial markets, greatly reducing global confidence in holding U.S. dollar assets. Additionally, Trump's radical remarks have intensified concerns about ongoing global trade tensions, particularly between the U.S. and China, all of which have collectively driven gold prices to new highs recently