Gold's M&A rush
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NovaGold Resources (TSX: NG) on Wednesday announced plans to buy the 40% stake it doesn't already own in Donlin Gold Holdings, creating a company valued at $4.2 billion.
Why it matters: Mining M&A has hit the motherlode this year.
- There were $26.3 billion in deals in Q2. That's up 68% quarter over quarter, and is the second highest quarterly total since S&P began tracking the metric in 2013.
Driving the news: NovaGold is acquiring the stake it does not own in the Alaskan gold miner from Paulson Advisers, creating a new U.S.-domiciled company that plans to be listed on the NYSE.
- This would create the "largest gold development project in the U.S.," per the announcement.
- Paulson has a stake in NovaGold Resources that will leave it with a 40% economic interest in the new business that will be dubbed (wait for it) NovaGold Corp.
Flashback: Donlin was valued at roughly $2 billion a year ago, when Paulsen and NovaGold took a 50% stake in the business.
The big picture: The price of gold had been surging, and is currently 20% above its price from one year ago, despite retreating from its peak.
- Growing AI infrastructure and energy transition needs have driven up demand for goods like copper, gold, lithium, and rare earth elements.
- The Trump administration has also aggressively sought to increase gold production. Last week, it moved forward with a plan to auction off sections of water surrounding American Samoa for potential deep-sea mining.
Between the lines: Starting a new mine is costly and time-consuming, and some attempts, including the American Samoa plan, have already hit populist backlash. That's only helped M&A.
