In his The Gold Newsletter, he explains, "Over the long tern, the price of of gold will be set not by governments or speculators, but by those who look to gold as a bulwark against the ravages of inflation. Despite the vast tides of money flowing into and out of the "paper gold" markets as hedgers and speculators fight their daily games of tug-of-war, investors and savers across the globe continue to buy gold."
Lundin continues, "Unlike the short-term traders, they care less about headlines and more about the mountain of debt growing higher and higher on the horizon. They appreciate a fact that will eventually grow evident to all - that this debt is too large to be paid in full. It simply must be inflated away.
"Meanwhile, at anywhere near current price levels mining can be a very profitable game. So, discovery and development will continue to be the drivers for tomorrow's big winners in the juniors. And as you are about to see, there's a lot going on in this regard....
"NovaGold Resources (NG) struck gold recently, but not of the measured and indicated variety. Instead the company cemented valuable relationships with hedge fund icons George Soros and John Paulson.
"In early March, NovaGold...in quick succession...locked down a US$100 million at US$5.50 per share financing with Paulson's firm and a US$75 million financing with Quantum Partners, an investment firm affiliated with Soros, at the same price.
"The financings by Paulson and Soros, both shareholders before the financing, firmly entrenched NovaGold in the big leagues. Indeed, NovaGold's blue-ribbon shareholder list, which includes the savvy investment group Electrum Strategic Resources LLC, couldn't get any bluer.
"These long-view investors realize that the company controls two gold projects -- Donlin Creek and Galore Creek -- that are among the largest pending development anywhere in the world.
"The funds from these recent financings will be used to fund exploration and development work at those projects, as well as at Rock Creek and the early-stage Ambler property. NovaGold may also use the money for acquisitions. The company recently provided an update on these properties, which I'll summarize here:
"At its 50%-owned Donlin Creek project in northwest Alaska, NovaGold and Barrick Gold are assessing scenarios for reducing power and processing costs, including the potential to bring in a source of natural gas.
"These studies are targeted for completion by mid-year. In the meantime, NovaGold says that last year's drilling and higher gold prices have increased proven and probable gold reserves to 33.6 million ounces. That's 4.3 million ounces (15%) higher than the last estimate in May 2009.
"At its 100%-owned Ambler project in northern Alaska, NovaGold is reviewing options for regional infrastructure development with the State of Alaska and local communities.
"Meanwhile, a new project team will plan exploration, advance environmental baseline studies and conduct engineering and technical studies to gain a better understanding of the size and potential of the district.
"At its 100%-owned Rock Creek project in northwest Alaska, NovaGold has improved water management to keep the project in line with permit requirements. The company is also assessing development options, with a go-forward decision expected later this year.
"At its 50%-owned Galore Creek project, NovaGold and Teck Resources are working on a new mine plan that's based on an optimized and simplified design and higher copper and gold prices than used in previous studies.
"The partners expect that work to lead to a revised pre-feasibility study, with completion targeted for the first half of 2011. The mine planwill also look at ways to reduce the construction timeline and overall costs and to increase production rates.
"At some point, the value of Galore Creek will be fully recognized by investors as development moves forward. In the meantime, NovaGold is a buy on weakness."
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