Citi Assigns Buy Rating to NovaGold (NG)

NovaGold Resources Inc. (NYSEAMERICAN:NG) is one of the 13 Most Promising Gold Stocks According to Wall Street Analysts. On July 15, Citi initiated coverage on NovaGold Resources Inc. (NYSEAMERICAN:NG), giving the stock a Buy rating and setting the price target at $7.00.

Citi pointed out that NovaGold Resources Inc. (NYSEAMERICAN:NG) is still trading well below its 2020 levels of about $10 per share. This was when gold was trading below $2,00 per ounce.

The firm described NovaGold Resources Inc. (NYSEAMERICAN:NG) as “High-Risk” because it is a junior company that has not yet produced gold. While it offers investors significant leverage to gold prices, there is also huge execution risk.

NovaGold Resources Inc. (NYSEAMERICAN:NG) owns 60% of the Donlin Gold project in Alaska, while Paulson Advisers LLC owns the other 40%. Citi noted that this project has the potential to become the second-largest gold mine in the US, with production capacity of about 1.5 million ounces of gold.

However, the project faces major development challenges, including an estimated $10 billion capital expenditure requirement. Citi also pointed out that the recent exit of Barrick Mining Corporation (B) serves as a catalyst to advance the project after over 20 years of inactivity.

The Donlin Gold project timeline remains extended, with a new Technical Report expected in the second half of 2027 and no mine production expected before at least 2030. According to Citi, the project becomes attractive at gold prices above $2,500 per ounce but it might not make economic sense if gold prices are under $2,000 per ounce.

NovaGold Resources Inc. (NYSEAMERICAN:NG) is a precious metals company focused on the development of the Donlin Gold project in Alaska.

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Disclosure: None. This article is originally published at Insider Monkey.