Barrick Gold Corp. (TSX:ABX, NYSE:GOLD) is selling its 50% stake in the Donlin Gold Project for $1 billion, a move that Jefferies analysts describe as a significant strategic win.
The deal involves Barrick selling its stake to affiliates of Paulson Advisers LLC and NOVAGOLD Resources, who will acquire 80% and 20% of the project, respectively.
Jefferies sees the transaction as highly favorable for Barrick, with the sale price far surpassing the company's net asset value (NAV) estimate of $288 million for Donlin.
According to Jefferies, the sale suggests Barrick sold at an opportune moment, given current gold prices.
“Donlin was not a priority in Barrick's portfolio, not anytime soon anyway, and so we are not surprised by the sale,” Jefferies analysts wrote.
“We are, however, surprised at the sale price, which suggests Barrick sold at the right time given where gold prices are.”
The investment bank also emphasized that Donlin had not been a major focus in Barrick’s development pipeline, and the cash from the sale will be used to fund other projects, including the Reko Diq initiative.
The sale is expected to strengthen Barrick's balance sheet, with analysts projecting a net cash position of $1.3 billion by Q3 2025, up from a net debt position of $553 million in Q1 2025. The transaction is also expected to help advance Barrick’s growth projects and potentially return capital to shareholders.
Donlin, located in Alaska, is one of the largest undeveloped gold deposits in the world, with a measured and indicated resource of 39 million ounces of gold at 2.24 grams per tonne. The project has faced permitting challenges but could see faster approvals under a change in political leadership, according to analysts.
Following the sale, Jefferies has maintained its "Buy" rating on Barrick, with a target price of $29, which represents a potential upside of 42% from the current stock price of $20.45.