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gold is upheld in North America as it was in Africa, Donlin will not make the cut. So we would have to wait for higher prices to materialize – as well as the likely revision of that particular criterion for outsized and long-lived mines in safe jurisdictions. This clearly works for us. After all, it’s the embodiment of our strategy!
Having said that, Donlin already epitomizes the apotheosis of a tier-one asset, as defined by Barrick. If, of course, the optimization were to be so successful as to make the economics sing at prices that would make Barrick wish to go into production sooner rather than later, that revelation would work for us as well. Such a scenario could also make us the premier takeover candidate in gold. I may disagree with the strategy of pushing ahead before gold makes its big move to new highs, but I won’t be disagreeing with all of the M&A activity around us. The ultimate outcome would be beyond my control, as a 50% interest in Donlin would be tantalizing to anyone inclined to remain in our industry. The challenge faced by our shareholders then would be to take paper that would not lead to, in Peter Lynch’s classic expression of abomination, “de-worsification.” For unless we took cash, the problem essentially would be that the virtues that make NOVAGOLD a perfectly focused pure play would be diluted by its addition to a broader portfolio. And if offered cash, I would ask again: Where else would one be able to deploy the money so exquisitely – in a laser-like manner – on what we feel represents the best of the best, and the safest, that this industry has to offer? Unless we are truly paid for the future, it would be a really tough call. One could attempt a hostile takeover, but our shareholders are a fiercely well-educated and loyal lot – not to mention highly independent thinkers. Cajoling us all would take some serious skills of persuasion. Of course, management is neither entrenched nor egomaniacal, and it exists to serve all the shareholders – a responsibility that is taken very seriously indeed.
In essence, no matter how one games this out, we believe that NOVAGOLD and its owners emerge as winners. Our ideal scenario is for the partners to continue optimizing Donlin and to prepare the project for the day when we all decide to make a construction decision. Under that scenario, which we consider likely, gold prices should be significantly higher. It would be reasonable to expect that our share price, in that case, likewise would be significantly higher. We would hope that the shares of our partner would be a lot higher as well, while their shareholders, feeling more comfortable about balance sheets, would by then be reaching for high-quality growth in the one part of the world in which nobody has experienced problems of resource nationalism or instability. In that purposeful scenario – with the owners of a tier-one mine in a tier-one jurisdiction enjoying a treasure trove – a good time should be had by all.
9 Has the past year given you a better line of sight into Barrick’s thinking?
There’s no doubt in my mind that the posture of Barrick toward Donlin has been growing warmer and warmer as the Randgold team has come up to speed on the asset and become more intimately acquainted with what they own. The optimization process is going well, and the geological model is shaping up nicely. As the Barrick/NOVAGOLD teams work on testing the geometry of the deposit to establish a future mine’s optimal throughput, the camaraderie has only been accentuated. In truth, we are thrilled with the engagement from the “new Barrick.” It is very much worth noting that, despite Barrick always maintaining its commitment to the permitting process, in fact we hit a delightful milestone of sorts last summer when Mark Bristow became the first Barrick CEO in a decade to actually visit the property! Mark is a professional’s professional, and anyone who is familiar with his management style will know that he is hands-on – and that such an approach should be no surprise.
But still, seeing the white swan – or the peregrine, as I have taken to calling Mark more recently – on site at Donlin was a truly welcome occasion for all concerned. Mark met our Native corporation partners and senior state officials. Being a geologist, he experienced the deposit firsthand in a way that one really has to in order to fully
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