International mining giant dropping out of partnership in Alaska gold mining project
Mine worker Justin Andrew examines and core samples at the Donlin mine camp on Aug. 11, 2022. Outside is the hillside that would be dug for its gold if the huge mine is developed. Barrick Gold, a large Canadian mining company, is selling off its half-share ownership in the Donlin Gold project. (Photo by Yereth Rosen/Alaska Beacon)
A major mining company is pulling out of Western Alaska's Donlin Gold project, selling most of its shares to a U.S. billionaire with a history of investing in gold.
Barrick Gold Corp., a Canadian company that operates in 18 countries, said Tuesday it is selling its 50% share in Donlin Gold for about $1 billion. Under the deal, Novagold Resources Inc., the smaller Canadian mining company that has been Barrick's Donlin partner, will add another 10% share of the project's ownership to its current 50% share, while an investment company headed by billionaire John Paulson will wind up with a 40% share in the project. Paulson's company was already a major Novagold shareholder.
The deal is expected to close at about midyear, Barrick said.
In dual statements, the companies said the sale is mutually beneficial.
In its statement about the deal, Novagold praised Paulson's expertise and said the ownership change will help move the project forward.
'For myriad reasons, Paulson is quite literally the finest partner we could have hoped for. The embodiment of 'smart money,' John has been recognized as having a unique ability to identify the right vehicle to execute legendary trades. John and his team's expertise and counsel will be invaluable as we work to advance Donlin Gold through feasibility and financing,' Novagold Chairman Thomas Kaplan said in the company's statement.
Paulson, also quoted in the statement, called Donlin 'one of the most attractive development gold projects in the world.'
'With 39 million ounces of gold at double the industry average grade, and an optimal location in the prime jurisdiction of Alaska — already the second largest gold-producing state in the United States — we believe that the project could create value for decades to come,' he said in the statement.
Paulson has investments in other gold-mining companies, including International Tower Hill Mines Ltd., which is trying to develop a gold mine at Livengood, northwest of Fairbanks.
In its statement, Barrick said that by selling off its share in the Donlin project, it will be able to continue a strategic shift that includes more of a focus on copper.
'The Donlin agreement allows Barrick to exit the Donlin Gold Project at an attractive valuation, while allowing NOVAGOLD and Paulson to pursue the development of the project. This is a good example of an instance where an asset we own might be better suited in the hands of others, while we pursue our priority portfolio of Barrick-managed growth projects,' Mark Bristow, Barrick's president and chief executive, said in the statement.
The Donlin project has been controversial in Western Alaska and elsewhere.
Supporters say it will bring important economic benefits to a region of the state that has long struggled with poverty. Supporters include the for-profit Native corporations that own the mineral rights and surface lands where the mine project is located: Calista Corp., owned by Yup'ik people of the Yukon-Kuskokwim region, and The Kuskokwim Corp., owned by people from 10 villages along the mid-Kuskokwim region. Those Native corporations are partners in Donlin and point out that revenues from the mine, if it starts operating, will be shared with Native corporations statewide under terms of the 1971 Alaska Native Claims Settlement Act.
Opponents, who include Yukon-Kuskokwim tribal members and Native corporation shareholders themselves, consider the mine to be a threat to the ecosystem and to the food resources and cultural practices that depend on it.
Tribal opponents have been fighting the mine in state and federal courts.
To opponents, Barrick's sell-off is a sign of project trouble.
Sophie Swope, executive director of an anti-Donlin tribal coalition called Mother Kuskokwim, said Barrick's sell-off is a sign of project trouble.
'The Donlin Gold Mine is a bad investment—plain and simple. It's riddled with environmental, economic, operational, reputational, regulatory, and legal risks—and completely lacks a social license to operate,' Swope said in a statement.
She cited the mine's planned 471-foot tailings dam, which has been a particular source of controversy, the potential for river contamination and the expected increase in disruptive barge traffic as some of the concerns.
While Donlin Gold has received key permits, final development decisions have not been made. The Toronto-based Globe and Mail reported Tuesday that there had been disagreements between Barrick and Novagold over how to proceed with Donlin.
The transaction leaves the Donlin project without a major partner with experience operating large producing mines. Novagold does have some operating experience, but it is spotty. It developed a mine near Nome, the Rock Creek Mine, but was able to operate it for only two months in 2008. During construction in 2007, two workers died at the site, and the company was later penalized for water pollution violations as well. The site was later acquired by the Bering Straits Native Corp., which completed reclamation in 2016, according to state officials. Last month, other assets from the property were sold off.
Another controversial Alaska mining project, the Pebble copper project in Southwest Alaska, also lost its major corporate partner. In 2013, Anglo American, one of the world's largest mining companies, dropped out of the Pebble Limited Partnership, leaving Northern Dynasty Minerals Ltd. as the sole partner. In 2014, another major international mining company, Rio Tinto, also dropped out by donating its 19% Northern Dynasty shares to Bristol Bay regional nonprofits.
The Pebble project is limbo. The U.S. Environmental Protection Agency in 2023 invoked a provision in the Clean Water Act to bar federal permitting because of anticipated damages to salmon habitat. Northern Dynasty is trying to overturn that finding and has expressed optimism that the Trump administration will help revive the project.
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