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appreciate what an ideal place it is to build a first-class mine. Suffice to say that he clearly gets what makes Donlin, as he told me, “one of the very best options on the gold price in the world.” More than that, he now speaks of Donlin to analysts and investors pretty much as I do, and often goes out of his way to remark on how our teams
– and he and I personally – are working so well together. The warm feelings are absolutely mutual.
10 Why shouldn’t one buy some Barrick to get exposure to Donlin?
If you accept my depiction of Donlin, by all means please feel free to do so! The Donlin narrative – and NOVAGOLD’s share price – represents a win-win for Barrick’s shareholders. If some investors buy NOVAGOLD’s shares as a pure play on gold, when our shares rise I am quite confident that Mark Bristow will ensure that this value is duly represented in analysts’ calculations of Barrick’s Net Asset Value (NAV). And rightly so. This could add up to gains of dollars per share for Barrick shareholders. Conversely, there will always be investors who desire the higher market capitalization, property diversification, and production profile of a major – and Mark’s management team is first-rate. So will some people take their exposure via Barrick? Sure. And probably sooner rather than later as I do not yet believe Donlin is remotely represented in Barrick’s share price. So for Barrick, Donlin is a good thing, regardless of whether they get credit for our market capitalization in their net asset value...or get additional buying of their shares as the story unfolds. As for the role that NOVAGOLD plays in this development, our attitude remains that what is good for our partner is always fine with us.
11 When do you think the partners will want to build Donlin?
Obviously it takes two to tango, and we have a partner in this equation. Still, taking the aforementioned bullishness into account, NOVAGOLD has a strategy regarding our flagship asset’s future, which has been articulated many, many times: We expect Donlin will be built when the gold price resumes its long-term uptrend and we can make not just an acceptable return, but a spectacular return.
So we’re clear: It is my personal belief that practically no gold mine should be built during this twilight period, before we hit new highs. Those who say that one has to build as fast as possible in order to capture a cycle, regardless of a market price for gold, are missing the plot. It’s actually a myth. Barring a few super high-grade freaks of nature, it is prudent investing to wait for a higher gold price. For there is truly no opportunity cost to taking one’s time. We are not in consumer goods or technology or other industries in which there exists a first-mover advantage to get to market. It really doesn’t exist in gold. In fact, the opposite is true: It pays to
be patient.
Having bucked the 10,000:1 odds to find something really big, the question is not “How quickly can you go into production?” but rather “Why not wait?” Why build a mine and sell gold at low prices when you can do the work necessary to optimize the operation while gold climbs back to $1,600 or $1,700 and beyond? The typical pushback to this fundamentally optimistic assertion is: “Yes, but how do you know gold will rise?” My response is that I don’t know for sure, but I strongly believe that it will surpass the old highs and that, if I am by chance wrong in my timing or fundamentals, then I pray to heaven not to be burdened with a producing mine, depleting my resources during a period of low or declining price. Can the real way to make money in mining possibly be to sell your endowment at any price, or would it rather be to believe in gold mining enough to be paid appropriately for it? And if you aren’t going to be paid appropriately for it, should you want to build it at all?
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