Traders Cooperative

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*** The GATA view re: Barrick's bid for NovaGold ***

Who Ya Gonna Call ... Ghostbusters? No -- Goldbusters

By: Bill Murphy, Le Metropole Cafe, Inc.,
-- Posted Thursday, 10 August 2006

(excerpted)

Last evening I had the pleasure of having dinner with Rick Van Nieuwenhuyse, president and CEO of NovaGold Resources, Inc. (AMEX, TSX: NG) As most of you must know, NovaGold is suddenly fighting a hostile takeover bid from Barrick Gold.

In days of yore Rick, born in Belgium, was head of exploration for Placer Dome before deciding to build his own company. He was very aware that the former chairman of Placer, John Willson, was one of GATA's first corporate supporters. (When Willson retired, Placer went anti-GATA and began to hedge its gold production at around $300 per ounce.)

At the moment the most significant happening in the gold world is Barrick's bid for NovaGold. For many reasons this cannot be allowed to succeed at a price less than $30 per share. (NovaGold this week has been trading a little below $17.) For their own interest and the interest of a free gold price, all gold shareholders, whether they own NovaGold shares or not, must OPPOSE Barrick's bid.

Here's why:

* Placer Dome got fouled up and only fiddled around with some of the NovaGold properties in which they were joint partners.

* Having taken over Placer Dome, Barrick was like a breath of fresh air to NovaGold because it promised to spend a lot of money to drill the properties at an aggressive pace.

* NovaGold laid out the entire deal to Barrick, and all was hunky-dory for Nova's shareholders until, OUT OF NOWHERE, Barrick launched a hostile takeover bid -- and while Van Nieuwenhuyse was on vacation in Italy.

* Barrick's hedge book is mega-toxic so the company is desperate for the unhedged gold in the ground at NovaGold, with which Barrick would extricate itself from a nightmare. Taking over NovaGold will help Barrick immensely. This cannot be allowed to happen UNLESS Barrick has to pay so much that it impairs their credit situation:

TORONTO (Standard & Poor's) July 25, 2006--Standard & Poor's Rating Services today said it placed its 'A-' long-term corporate credit and senior unsecured debt ratings on Barrick Gold Corp. on CreditWatch with negative implications after the company announced an unsolicited US$1.53 billion takeover of NovaGold Resources Inc. (unrated). The 'A-2' CP rating on Barrick is affirmed.

The CreditWatch stems from the increased risk in Barrick's conservative financial profile, which is currently supported by large cash balances that contribute to low net debt leverage.

"The company has stated that it would fund the acquisition of NovaGold with cash and debt, which will weaken its funds flow to debt metrics," said Standard & Poor's credit analyst Donald Marleau.

The assets to be acquired are development properties that generate no appreciable cash flow, nor will they without substantial development capital expenditures. On the other hand, the assets will enhance Barrick's operating profile over the longer term by increasing reserves and resources in Alaska and British Columbia, which are areas of low political risk. In addition, the acquisition of NovaGold adds the 30% of the Donlin Creek development project that Barrick did not already own, while the parallel acquisition of Pioneer Metals Corp. (unrated) for C$65 million will consolidate Barrick's land position around NovaGold's Galore Creek project in northern British Columbia.

Standard & Poor's expects to resolve the CreditWatch within a few weeks. The rating outcome will take into account the probability of Barrick successfully completing the NovaGold acquisition as proposed and the resultant effects on the company's financial profile.

-END-

* If Barrick is forced to pay up, it will severely hurt the company's credit standing and ability to hang in there with the increasingly vulnerable Gold Cartel.
* The flagship property of NovaGold is Donlin Creek in Alaska, a 28.5-million ounce resource. That is the figure the company is allowed to use due to stringent filing requirements. Barrick knows that the gold at Donlin Creek is closer to 50 MILLION OUNCES because Barrick played good guy to NovaGold to learn everything before turning to their usual bad-guy drill. Barrick KNOWS!

* Some of the smartest people I know tell me that anything under $30 per share for NovaGold can be considered practically theft by Barrick and an insult to deserving NovaGold shareholders. In response to NovaGold's appeal to GATA, we ask the entire GATA ARMY, and the whole gold world, to make sure Barrick is unable to take over NovaGold for anything less than that price. GATA consultant Adrian Douglas, a substantial NovaGold shareholder, puts it in perspective:

Dear Sir,
Public record shows that your fund/institution is a large holder of NovaGold shares. I would like to bring to your attention some very important information concerning Barrick Gold who has launched a hostile bid for NovaGold.

Barrick is a company where some detailed public domain hard facts are now available on it being complicit in the suppression of the gold price. First and foremost is Barrick’s own confession to manipulating the gold price on behalf of the central banks as admitted in a filing in US Federal court (http://www.gata.org/node/4279).

In this same GATA (Gold Anti Trust Action Committee) reference a speech by Mr. William R. White of the BIS is cited in which a scheme to suppress gold was admitted.

A report by Cheuvreux/Credit Agricole (http://www.gata.org/node/4270) confirms many of the findings of GATA. A recent report by the IMF http://www.gata.org/node/4123 confirms what GATA has claimed for many years that Central Banks treat gold in the vault and gold receivables as the same line item. This means that gold loaned out or swapped to be sold in the market to suppress the gold price has been "invisible" to gold market participants as it still appears on the Central Banks balance sheet as if it were in the bank vault. This gives a totally erroneous and deceptive impression of an abundant supply of gold when in fact mine supply can not meet demand.

The scheme to suppress gold is FACT. It has been admitted to by important key official figures. Barrick’s involvement in the scheme is also FACT. They admitted to it themselves in that they said they were acting on behalf of the Central banks who have immunity from prosecution.

Bob Landis pointed out in his article (March 24, 2006. Now They Tell Us: BIS Confirms Rigging Gold Prices http://www.goldensextant.com/ ) that the entering into the public record that the BIS and Central Banks do indeed manipulate the gold price when they feel it is "useful" means that Gold Company Executives have a fiduciary responsibility to declare this to their shareholders when issuing a prospectus for new offerings of shares and securities. By extension, it is reasonable to conclude that because any fund or institutional investment manager has a fiduciary responsibility to act in the best interests of its investors he or she must be fully cognizant of the background of Barrick and what type of activities it has participated in as relevant and essential information in order to reach a decision with respect to the Barrick hostile offer.

If gold had only kept pace with inflation it would now be $2000/oz let alone being able to have its price reflect the shrinking supply and increasing demand situation. A gold price of such a magnitude would value NovaGold at $145 per share and not $14.5 per share as is being offered. Barrick is complicit in the scheme that has resulted in NovaGold being valued 90% less than where it should be. It is unthinkable then that Barrick should be allowed to acquire NovaGold at that price!

We strongly urge you to examine carefully the true value and the potential value of NovaGold and to reject the current offer by Barrick. Even in today’s suppressed gold price environment a very conservative valuation of NovaGold would put it at more than $30 per share. Barrick should not be allowed to cheat your investors out of a very valuable mining company which has a much brighter future in terms of shareholder value as an independent mining entity.

Regards

* If Barrick is forced to pay up for NovaGold, it will be a landmark deal that will affect the takeover of other gold companies. The price of gold is going to go nuts in the years ahead. The only reason the price of gold is not at least twice what it is today is because of the heinous and corrupt Gold Cartel. They must not be allowed to profit from this corruption.

* Thanks to NovaGold, GATA now has the practical opportunity to capitalize on all we have accomplished over the years. Many of our supporters have rightly suggested doing this and doing that and doing some other thing -- much of which we have already done, in many cases to no avail, as we have gone to the financial and mining industry establishment to correct the wrongs. In this case we don't need the establishment. We need only NovaGold shareholders. We need only to make everyone aware of what is going on here, and that is JUST WHAT WE ARE GOING TO DO.

GATA is asking that our entire ARMY mobilize to win the day for all of us.

* Barrick is going to pay a dear price for being what it is and for what it has done to help the Gold Cartel keep the gold price down. For starters, and we are only warming up, GATA would like the ARMY to contact NovaGold's major shareholders to oppose the Barrick offer for the reasons cited above.

With just the following, we can reach around 30 percent of NovaGold's shareholders:


Sprott Asset Management Inc 4.65%
[e-mail]

SNYDER CAPITAL MANAGEMENT, LP 3.78%
[e-mail]

ROYCE & ASSOCIATES, INC. 3.09%
[e-mail]

NWQ INVESTMENT MANAGEMENT COMPANY, LLC 3.04%
[e-mail]

WELLS FARGO & COMPANY 2.61%
[e-mail]

NEUBERGER BERMAN, LLC 11.03%
[e-mail]

BLACKROCK INC. 1.81%
[e-mail]

This is VERY doable if you will all make an effort. Take a little time and contact these firms and fill them in for their own benefit.
What struck me the most during my meeting with Rick Van Nieuwenhuyse was a conversation he had with his 8-year-old son, who said of Barrick: "Dad, this means they lied to you." Rick could not disagree. Even more, his son is a big "Star Wars" fan and in his world and NovaGold's, Barrick is now the Evil Empire and it must be defeated.

NovaGold has requested GATA's "Force" to defeat the Evil Empire of the Gold Cartel and its agent, Barrick Gold. We are warming up to do just that.

http://news.goldseek.com/LemetropoleCafe/1155222180.php