The Donlin gold project in Western Alaska, long seen as a significant but stalled gold prospect, has gained renewed momentum thanks to a recent $1 billion investment deal.
This move comes as two prominent East Coast billionaires have decided to increase their stakes in the project, signaling a commitment to push Donlin towards production.
On April 22, Barrick Gold Corp., a global leader in the mining industry, announced it would sell its 50% ownership in the project, indicating a shift in priorities.
Paulson Advisers, led by financier John Paulson, will acquire 40% of Donlin for $800 million, while Novagold Resources will purchase the remaining 10% for $200 million.
Novagold, which already owned half of the project, has been collaborating with Barrick for years.
Despite Barrick’s deep pockets and development expertise, the company had competing interests that led to a lack of urgency to move the project from exploration to construction.
Novagold’s chairman, Thomas Kaplan, expressed that Barrick’s varied priorities meant Donlin didn’t receive the attention it warranted.
Donlin is recognized as one of the world’s largest gold prospects, with estimated gold deposits worth over $100 billion, making it an enticing opportunity for investors.
The project has garnered support from elected officials and Alaska Native-owned corporations, who view it as a potential job creator and revenue generator for local governments.
However, it also faces significant opposition from tribal governments and conservation groups concerned about the environmental impacts of large-scale mining on traditional food sources.
As Paulson invests in Donlin, the project is currently embroiled in four ongoing lawsuits regarding its state and federal permits, raising questions about its economic viability and operational logistics.
Novagold’s new management believes the anticipated sale will allow for a more aligned approach to advancing the project.
Kaplan noted the lack of movement in transferring Donlin into the construction phase was partly due to Barrick’s various international commitments, which overshadowed Donlin’s potential.
Barrick has recently focused more on copper mining, thus seemingly deprioritizing the Donlin gold project.
Market analysts have indicated that Barrick’s sale at a time of rising gold prices was a strategic decision, since gold values have recently increased significantly.
Following the announcement of the sale, Novagold’s stock jumped nearly 60%, suggesting a positive market reaction to the deal.
In a statement following the announcement, Barrick’s CEO Mark Bristow acknowledged that Donlin may be better suited to different ownership that aligns more strategically with the project’s potential.
In contrast, the local community has varied opinions regarding the ownership change.
Beverly Hoffman, an elder from Bethel along the Kuskokwim River, expressed her frustration with the financial resources invested in the project, emphasizing her dependency on local food resources.
Hoffman, who is part of a regional advocacy group opposing Donlin, invited Paulson to visit Bethel to discuss local environmental concerns.
Calista Corporation, an Indigenous-owned firm that holds mineral rights for the land, continues to support the project’s advancement, believing it can provide job opportunities and royalties.
Both Novagold and Calista are poised to move forward positively as the project progresses.
As it stands, brett Watson, an economist, suggests that the impact of the sale on the project’s future remains uncertain.
He mentioned observing any operational changes under the new ownership and updates to the economic assessments of Donlin.
Currently, the owners are preparing to spend $43 million this year on exploratory drilling and operational plans.
Post-sale, the aim is to initiate an $80 million, two-year update of the economic study, a critical step towards beginning construction.
Paulson, recognized for his shrewd financial investments, has built a notable portfolio in the mining sector and is determined to replicate previous successes.
His firm holds shares in other mining ventures, including a significant minority ownership in a mine project in Idaho.
Paulson’s strong financial ties and political connections have also added a layer of complexity to the project’s future.
As this moment in Donlin’s history unfolds, both stakeholders and the local community await the subsequent developments with heightened interest.
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