NOVAGOLD GETS UPGRADE ON DONLIN PROJECT OPTIMISM

NovaGold Resources Inc. was upgraded to overweight from neutral at JPMorgan in anticipation of the miner receiving permits for its Donlin Gold project next year. Analyst John Bridges told clients that with project partner Barrick Gold Corp.’ s production trending downward, it will be motivated to push ahead.

“This should position NovaGold as the 50-per-cent owner of one of the few large gold projects,” Bridges said in a research note.

NovaGold has trailed the NYSE Arca Gold Bugs Index in 2016, largely because margins for operating miners have risen alongside oil prices. Bridges expects these companies will focus on finding and developing new miners, and that will put the spotlight on NovaGold.

“Many larger miners exited the 2000s with too much debt. Asset sales, cost cutting and improved margins have improved balance sheets,” the analyst said. Bridges also noted environmental groups have shown no interest in the Donlin project. “Given the fall-off in oil royalties and taxes, we feel both the state and First Nations Inuit groups would find this project very useful,” he said.