NOVAGOLD Slips After Annual Loss Widens on One-Time Charge
The pre-revenue mining company reported a 424% EPS miss, overshadowing progress at its flagship Donlin Gold project in Alaska.
NOVAGOLD Resources (NYSE: NG) shares declined as much as 3.85% after the company reported a fiscal year-end loss that was substantially wider than analysts had forecast. The development-stage mining company, which holds a 50% stake in one of the world's largest undeveloped gold deposits, saw its bottom line impacted by a large non-cash impairment charge.
For the fiscal year, the Vancouver-based company posted a loss per share of $0.25, a stark miss of 424% compared to the consensus Wall Street estimate of a $0.048 loss per share. The company, which currently generates no revenue, attributed the deeper loss primarily to a $39.6 million non-cash, non-recurring charge related to its investment in another mining company.
NOVAGOLD's stock fell to $9.99 in trading following the announcement, moving closer to the midpoint of its 52-week range of $2.26 to $10.90. The company's market capitalization stood at approximately $4.23 billion.
Despite the negative headline earnings figure, company management directed investor attention toward continued progress at its core asset, the Donlin Gold project in Alaska. In its year-end report, NOVAGOLD highlighted a landmark transaction that it stated positions Donlin Gold "as the next generational project primed for development." The Donlin project, which NOVAGOLD is advancing in a partnership with Barrick Gold, is considered one of the most significant and highest-grade known open-pit gold reserves globally. With over 39 million ounces of measured and indicated gold resources, its future development is the central thesis for investors in the company.
The significant earnings miss highlights the financial realities for a pre-revenue exploration and development company. Expenditures on permitting, technical work, and community engagement are necessary investments that weigh on quarterly results long before any gold is produced. The company's financial statements show a cash burn that investors must weigh against the long-term potential of its Alaskan asset.
Still, the analyst community remains broadly positive on NOVAGOLD's long-term prospects, largely based on the sheer scale and quality of the Donlin project. According to data from MarketBeat, the consensus rating for the stock is a 'Strong Buy' from five analysts, with an average price target of $12.92, suggesting a significant upside from its current trading level. This sentiment indicates that most analysts are looking past the current operational losses and focusing on the future value of the underlying asset, especially in a favorable long-term gold price environment.
Looking forward, investors will be closely monitoring milestones related to the Donlin Gold project's permitting and development timeline, as well as the company's management of its treasury to fund operations until the project can move toward a construction decision. The next 12 to 18 months are critical for the project's de-risking, with stakeholders awaiting updates from the partners' ongoing work on geologic modeling and engineering studies. The latest financial results serve as a reminder of the costs involved in bringing a world-class mine to fruition.