It's a tough call. Reading this paragraph:
NOVAGOLD and its team see unprecedented opportunity in the years ahead as we continue to advance Donlin Gold. It is a one-of-a-kind asset with all the key attributes you could wish for in a mining project - size, quality, longevity, exceptional exploration potential, great partnerships and the jurisdictional appeal of being located in the United States. With 39 million ounces of gold in the Measured and Indicated resource categories, grading 2.2 grams of gold per tonne (more than twice the grade of a typical project in our sector), and anticipated annual gold production greater than one million ounces per year over a 27-year mine life and multiple exploration targets along the 8-kilometer gold-bearing mineralized trend, Donlin Gold simply has no peer in the gold industry. There is no doubt that the development of a major mine such as Donlin Gold represents a significant permitting, technical, logistical and financial challenge, but I am confident that the hard work, determination, conviction and patience of our experienced team will be rewarded. Implies a value of gold over $40 billion. NG's market cap is $1.7 billion and my understanding is they have a 50/50 stake in the project. Since we don't know the cost of extracting the gold, it's hard to say what the long term value of this is for current shareholders. I'm not sure but I don't think they have enough money to completely finish the project and start reaping the long term benefits.
So, what are the expected costs per ounce to extract the gold?
How much might they need to dilute the stock for additional capital to get started?
What are the capital requirements at their other mine?
House money always sounds very good to me, especially with long term investments. Tax implications are important as well. As long as you're not going to second guess too much if the stock retreats, then holding on isn't as hard. But if you'll likely beat yourself up over a missed opportunity....then I think that says a mouthful!! |
