Donlin Gold Deal: A Golden Opportunity for NOVAGOLD and Paulson?

The gold sector is abuzz with news that Barrick Gold (GOLD) has agreed to offload its 50% stake in the Donlin Gold project in Alaska for a total of $1.0 billion to NOVAGOLD Resources (NG) and Paulson Advisers, marking a pivotal shift in the ownership and trajectory of one of the world’s largest undeveloped gold deposits. This transaction, expected to close by late 2025’s second quarter or early third quarter, positions NOVAGOLD and Paulson to take control of a project with 39 million ounces of gold in Measured and Indicated Resources, a trove that could redefine the North American gold landscape.

A Strategic Stake Sale for Barrick, a Bold Bet for Paulson

Barrick’s decision to exit Donlin Gold—a partnership it co-founded with NOVAGOLD in 1995—reflects its focus on simplifying its portfolio and prioritizing capital efficiency. The $1 billion windfall will bolster Barrick’s balance sheet, allowing it to return more value to shareholders amid a challenging gold price environment. For NOVAGOLD and Paulson, the move is a calculated gamble on the project’s immense potential. With Paulson acquiring a 40% stake and NOVAGOLD boosting its ownership to 60%, the partnership gains majority control over a project that, if developed, could produce 1.1 million ounces of gold annually over a 27-year mine life—a scale that rivals top-tier gold mines globally.

The Project’s Gravity: High-Grade Gold in a Tier One Jurisdiction

Donlin Gold’s 2.24 grams per tonne gold grade—double the global average—is its crown jewel. This high grade reduces mining costs and enhances profitability, making the project a standout in an industry where grades are declining. The deposit’s location in Alaska, a “Tier One” mining jurisdiction with robust infrastructure and supportive regulatory frameworks, further elevates its appeal. However, the project’s success hinges on navigating ongoing permitting battles.

Permitting Progress and Regulatory Risks

While the partnership is advancing state permitting efforts, key hurdles remain. Alaska’s 401 Water Quality Certification and water rights permits are under judicial review, with decisions expected in 2025. Meanwhile, a federal court has ordered federal agencies to reassess risks tied to the project’s tailings storage facility under the National Environmental Policy Act (NEPA). Oral arguments for this case were held in April, and a ruling could delay permits critical to the project’s timeline.

Financial Fortitude and Paulson’s Confidence

NOVAGOLD enters the transaction with a $93 million cash buffer as of February 2025, providing a solid foundation to fund its $21.5 million 2025 budget for Donlin Gold activities. Paulson’s $800 million commitment underscores its confidence in the project’s value, especially given its history of success with Detour Gold, which it helped advance to production. The partnership’s revised strategy—shifting exploration efforts to convert inferred resources to reserves and updating the Feasibility Study—aims to accelerate the project toward a construction decision.

The Prize: A Multibillion-Dollar Asset

At $1,800/oz gold, Donlin Gold’s 39 million ounces of Measured and Indicated Resources represent a $68.2 billion resource base. Even under conservative assumptions, the project’s annual production of 1.1 million ounces would rank it among the top 10 gold mines globally. For investors, the project’s scale and high-grade nature could deliver outsized returns if permits are secured and development proceeds as planned.

Key Risks to Consider

• Regulatory Delays: A negative ruling on the NEPA compliance could force costly revisions to environmental plans or delay permits indefinitely.
• Gold Price Volatility: While Donlin’s high grade mitigates some cost pressures, a prolonged dip below $1,500/oz could reduce project economics.
• Funding Gaps: While NOVAGOLD’s current liquidity is strong, advancing the project to production will require billions in capital expenditure.

Conclusion: A Transformative Play with Upside—and Downside

The Donlin Gold transaction is a high-stakes bet on one of the world’s most promising gold projects. The partnership’s control over a 39 million-ounce resource base at twice the industry’s average grade positions it to become a cornerstone of North American gold production. However, regulatory approvals are non-negotiable—without them, the project’s value evaporates.

For investors, NOVAGOLD’s stock (NG) offers exposure to this megaproject, though it remains volatile. The partnership’s $1 billion commitment signals conviction in Donlin’s potential, but execution will be key. If permits are secured and the Feasibility Study confirms economics, Donlin Gold could deliver $6 billion+ in annual revenue at current gold prices—a payoff that justifies the risk for long-term investors.

In a sector hungry for Tier One, high-margin assets, Donlin Gold’s potential makes it a goldmine worth watching—and perhaps, betting on.

Data as of Q2 2025. Market conditions and project timelines are subject to change.