NOVAGOLD RESOURCES INC (NG) stock intrinsic value fair value estimate & owner earnings analysis

NovaGold does not produce or sell anything today. Its only real asset is a 60% interest in the Donlin Gold project in Alaska, one of the largest undeveloped gold deposits in the world, held jointly with the investment firm Paulson & Co. The project has no mine built yet: no construction decision has been made, and the roughly $9.2 billion needed to build it has not been raised. The ownership stake in Donlin Gold used to be 50/50 with Barrick. On June 3, 2025, NovaGold and Paulson jointly paid Barrick $1 billion for its half, lifting NovaGold's share to 60% (governance of the joint venture stays split evenly between the two remaining owners). NovaGold funded its side of that deal with a $260 million stock sale. That single transaction is the reason the company's cash burn, share count and balance sheet all look different from a year ago, and it is a genuine sign that its two remaining owners are willing to keep putting real money behind the project rather than let it drift, unlike Barrick. What the deposit could be worth, if built: a technical and economic study the company filed alongside its latest annual report estimates roughly 29.5 million ounces of recoverable gold over a 27-year mine life, and puts the after-tax value of the whole project (before splitting it between owners) at about $5.1 billion, using a conservative gold price of $2,100 an ounce and discounting at 5% - a return of about 10%. At a higher, still company-disclosed gold price of roughly $2,500 an ounce, that value rises to nearly $8.7 billion. The main federal and state permits needed to build the mine have already been issued, though a lawsuit sent one narrow piece of the pipeline permit back to regulators for further review, with an outcome expected around May 2027; the original approval stays in force while that plays out. What it costs to keep the project alive in the meantime: NovaGold funds its share of ongoing study and permitting work at the joint venture, plus its own overhead, entirely through cash on hand and periodic stock sales - it has never generated operating cash flow. Over the last nine fiscal years this cost has run fairly consistently between 7 and 14 cents per share annually, funded by issuing new shares rather than pinching profits, since there are none. With the stake now at 60% instead of 50%, that run-rate is likely to settle a bit higher than its historical median from here. At fiscal year-end (November 30, 2025) the company held about $115 million in cash and term deposits and owed Barrick roughly $166 million on a note tied to the old joint-venture agreement - though it holds an option to prepay that note in full for just $100 million if it acts by December 3, 2026, which is worth doing given the cash on hand. (Liquidity has strengthened further in the months since, following additional financing.) Three ways this can play out. In the weak case, financing for construction never comes together on workable terms within a reasonable span of years, and NovaGold keeps issuing shares just to fund its share of ongoing costs indefinitely, without ever building the mine - a real risk for a deposit that has already been under study for two decades without a construction decision, and one made more concrete by the pending permit review noted above. On that path we assign no value to the mine itself, and the shares are worth roughly what's left after the ongoing funding need and the Barrick obligation - which comes out modestly negative, since the Barrick note already exceeds the company's cash position before any project value is counted. In our middle, most-likely case, the feasibility study now underway confirms the economics, and a construction financing plan eventually gets assembled - but doing so on a project this size almost certainly means bringing in new capital partners or lenders, which would dilute NovaGold's 60% stake well below where it sits today, and large first-of-their-kind mining projects routinely run over budget. Weighing those realistic dilution and cost-overrun effects, and the several years it would take to reach a construction decision, against the project's own disclosed economics, points to a value of a little over $2 per share. In the strong case, the joint venture's own plans execute about as well as they could: the feasibility study holds up, financing is arranged without materially diluting NovaGold's ownership - helped by a well-funded partner in Paulson - and the mine is built and run close to the economics already disclosed, at a gold price the company itself has modeled. That points to a value approaching $8 per share. One accounting judgment worth noting: because NovaGold holds its interest in the mine as a joint-venture stake rather than owning the mine's equipment directly, its recurring cash contributions to fund that joint venture (as opposed to the one-time $210 million cost of buying the extra 10% stake last year) were treated as the equivalent of maintenance spending - the real, recurring cost of keeping the project alive - separate from the one-off purchase. Given how wide the gap is between these outcomes - a business that could be worth nothing, or worth several times a typical trading price, depending entirely on a financing and construction decision that has not yet been made - the margin-of-safety price is set at a large discount to our middle-case estimate, and would move closer to that estimate once a credible financing plan for construction is actually announced alongside a positive feasibility study result.