Novagold hits back at short-seller with line-by-line dissection

Frik Els | June 8, 2020 | 12:22 pm Intelligence Markets Canada USA Gold 
Novagold sues short-seller JCAP
Donlin Gold camp. (Image provided by NovaGold)

Novagold Resources on Monday hit back against a report from J Capital Research released late May that accused managers of the Vancouver-based explorer of “systematically” misleading investors about its proposed Alaska gold mine over the last 15 years.

J Cap, a company founded in China a decade ago which usually targets overvalued media and tech companies for short-selling, said the Donlin Gold project, which is 50-50 owned by Novagold and Barrick, “will never be built” and “in short, this is a stock promote, not a mining plan.”

Shares in Novagold (NYSE: AMERICAN, TSX: NG) fell by more than 12% on Monday and are now down 25% since the publication of the report, pushing the company’s market value to $2.6 billion.

Greg Lang, Novagold president and CEO said the response, which includes a 40 page line-by-line rebuttal of the original J Cap report, explains why the company is “so determinedly assessing all of the legal options available to it in various jurisdictions.”

Among other points, Novagold says its response demonstrates:

  • Donlin Gold (the “project”), 50%-owned by NOVAGOLD, is clearly feasible as well as one of the world’s largest and highest-grade known open-pit gold deposits, as supported by extensive environmental, technical, and social studies conducted by numerous reputable firms;
  • NOVAGOLD and its partner Barrick Gold are advancing Donlin Gold toward development in a fiscally and socially responsible manner with a strong focus on technical excellence, safety, and environmental stewardship;
  • The company’s highly experienced and well-regarded management team is steadfast in its strategy toward successful execution of the project when the gold price, market conditions, and project optimization render it ready for development;
  • JCAP exhibited a fundamental lack of knowledge of geology, engineering, topography, technology, accounting and financial assessment methodology as it attempted to denigrate NOVAGOLD and its assets; and
  • JCAP’s misrepresentations, convenient omissions, and intentional muddling of chronology, events and data, as well as inappropriate comparisons and consistent reliance on unidentified, questionably credentialed “experts” exposed its deep lack of legitimacy.

Click here for the full report and here for a letter to shareholders from Novagold’s board chair Dr. Thomas S. Kaplan also released today.

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