Billionaire investor John Paulson, with JV partner Novagold Resources (TSX:NG) have snapped up Barrick Gold's (NYSE:GOLD) 50% stake in Alaska's prolific 39Moz Donlin gold project for US$1 billion.
His investment firm Paulson Advisory will acquire 80% of Barrick’s interest and already JV partner Novagold the remaining 20% - for US$800m and US$200m respectively.
Billionaire gold bug Paulson, now with a 40% stake in the project, says Donlin is one of the most attractive gold developments in the world.
“With 39 million ounces of gold at double the industry-average grade, and an optimal location in the prime jurisdiction of Alaska - already the second-largest gold-producing state in the United States - we believe that the project could create value for decades to come,” Paulson said in a statement.
A midas touch from one of Wall Street’s hall-of-famers
John Paulson is no stranger to Wall Street - and is known as the mastermind of ‘the greatest trade in history’ - when he bet big against a roaring American housing market that ultimately tanked and led to the 2008 global financial crisis.
Just last year, he had been touted as a leading candidate to become part of the Trump administration and would have been a key figure in the U.S. President’s ensuing trade war with China.
“Although various media outlets have mentioned me as a candidate for the Secretary of the Treasury, my complex financial obligations would prevent me from holding an official position in President Trump’s administration at this time,” Paulson announced.
The billionaire is also no stranger to gold, making bullion his next target and correctly predicting its rise over the ensuing years - reportedly making US$5 billion in 2010 alone from investing in it.
He has shares in Canada's Equinox Gold, Seabridge Gold, Iamgold and Novagold itself, according to investor tracker Whalewisdom.
He’s publicly bullish on the commodity today, too.
“The primary driver of gold demand was central banks trying to increasingly diversify out of paper currencies and into gold as a reserve currency,” he said.
“I don’t think that’s going to change.”
Novagold's stock rallied an eye-whopping 36% on its Paulson-backed purchase of Donlin, buoyed by record gold prices that have rocketed past US$3,500/oz amid the current market uncertainty.
Paulson, a major shareholder in Novagold, will become a "full and equal partner" in the project.
Meanwhile, Barrick says it plans to use the proceeds to “fortify its balance sheet and enhance shareholder returns”.
The deal is expected to close in Q2 or early Q3 this year.
