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*** CEO accuses Barrick of sucking the wealth out of NovaGold ***


CEO accuses Barrick of sucking the wealth out of NovaGold

By: Dorothy Kosich
16-AUG-06 08:00

RENO, NV (Mineweb.com) -- NovaGold President and CEO Rick Van Nieuwenhuyse is fighting mad, and determined to battle Barrick to the finish over what he claims is a litany of illegal and unethical behavior by the world’s biggest gold miner.

In an interview with Mineweb Tuesday, Van Nieuwenhuyse said he believes that Barrick found it “cheaper to take us out” with a $1.3 billion all cash, hostile bid rather than comply with the contractual obligations of a November 2007 deadline. Van Nieuwenhuyse accused Barrick of intending to “suck the wealth” out of NovaGold with an inferior all-cash offer that fails to take into account all of the junior company’s gold resources.

NovaGold has also filed litigation in British Columbia’s Superior Court to fight what Van Nieuwenhuyse called Lac-type confidentiality breaches involving Barrick’s competing bid against NovaGold’s offer for Pioneer Metals.

Van Nieuwenhuyse told Mineweb that NovaGold has been negotiating for several months with Barrick to find an amicable solution to Barrick's concern with the conditions in the Donlin Creek Joint Venture Agreement, and to also negotiate a possible joint venture for the Galore Creek project.

NovaGold contends that Barrick's bid for their company is motivated by fears that the senior miner will not be able to meet the conditions that would allow it to increase its interest in the Donlin Creek project from 30% to 70% by November 2007. Van Nieuwenhuyse said NovaGold wanted guaranteed financing for the Galore Creek project (an estimated $1 billion) from the major mining company, and 100% ownership of a Nevada gold mine in which Barrick has an interest.

Although Van Nieuwenhuyse declined to name the Nevada mine NovaGold wants, Mineweb has identified the property as the Round Mountain JV near Tonopah, Nevada. The mine is operated by Kinross Gold. Last year, Barrick’s share of Round Mountain production was 368,000 ounces of gold at an average total cash cost of $246 per ounce.

"The offer is an attempt by Barrick to salvage its ability to earn an additional 40% interest in the Donlin Creek project at the expense of NovaGold's current shareholders," Mr. McConnell said. Under the original 2002 agreement between NovaGold and Placer Dome (which was subsequently acquired by Barrick), Toronto-based Barrick currently holds 30% interest in the project with the right to increase it to 70% by funding $32 million of exploration and development expenditures at Donlin Creek, delivering a feasibility study to NovaGold by November 21, 2007, and obtaining Barrick board approval to construct a mine on the property.

Van Nieuwenhuyse stressed to Mineweb that the intent of the agreement “is absolutely clear” that Barrick had to start building a mine at Donlin Creek by November 21, 2007.

During that negotiation, NovaGold asserted that it shared confidential information about the Galore Creek project including non-public exploration information and the junior explorationist’s strategy for developing the property. Barrick is accused of subsequently using that information in its bid to acquire Pioneer Metals.

Pioneer owns the subsurface rights to the Grace property adjacent to the Galore Creek project. On July 24, Barrick announced a friendly all-cash bid of Cdn$60.1 million for Pioneer. Under the terms of their lock-up agreement, 40% of Pioneer’s shares had already been purchased by Barrick.

Meanwhile, Van Nieuwenhuyse insists that Barrick’s bid for NovaGold only considers the value of the junior company’s measured and indicated resources, and ignores the company’s inferred ounces. He suggested that while NovaGold doubled its share price during the past seven years, Barrick has only managed to produce an 11% return for its investors.

Van Nieuwenhuyse also asserted that the all-cash bid by Barrick is not the best value for NovaGold shareholders since 30% of that money must be paid back in taxes.

Finally, Van Nieuwenhuyse told Mineweb he had not asked the Gold Anti-Trust Action Committee (GATA) to help NovaGold battle Barrick’s hostile bid. He attributed GATA’s decision to join the fight to the organization’s long-standing dislike of Barrick and its gold hedging policies.

http://www.mineweb.net/gold_silver/931147.htm