RG.V & Novagold NG.TO
This is my independent opinion. Didn’t listen to NG webcast this morning.
After taking some time to digest disappointing NG pre-feas here are my thoughts:
CAPEX has blown through roof from 1.8B in 2007 to 5.1B. There is no way NG will get debt financing as they could only borrow at base-case Au-AG-Cu prices and IRR is only 7% on that 5.1B in CAPEX.
It will be rather difficult, if not impossible, to raise 5.1B+ in equity even at current mineral prices. The Galore Project needs $2000+ Au, $5+ Cu and $50+ Ag to move forward for either equity financing or debt financing. With these mineral prices lenders will raise their long term mineral price assumptions and thereby debt financing becomes feasible.
It looks like Galore will have to be mothballed for a couple years.
This creates a conundrum as there is some big wall street money in NG and many shareholders are still in red as NG share price was higher in Early 2007 before initial Galore construction mothballed due to CAPEX overruns.
The story looks to me that if Romios hits it big on Trek that it makes them a more compelling takeover target than one day ago when we didn’t know the NG Galore economics.
As RG’s Trek Zone is right above proposed NG mill in West More Valley, NG could start mining the Trek zone first before spending the further CAPEX to build the tunnel and conveyor to the Galore Valley which is probably around $1B. Basically, NG is looking at power, water, road and a 95k ton/day mill built to eventually process Galore Valley ore but processing RG Trek Property Ore first.
This is all highly speculative. The RG Thesis is a lot simpler if NG pre-feasibility was more economic.