NovaGold gets $60 million investment from Electrum

Canadian gold miner NovaGold Resources Inc. said Friday that it has struck a $60 million private placement deal with Electrum Strategic Resources and will use the cash to repay debt and fund exploration and development.

New York-based Electrum Strategic Resources LLC, part of a group that invests in metals miners around the world, will buy a 30 percent stake in NovaGold Resources Inc., the company said in a statement Friday.

NovaGold said the privately held Electrum Strategic is buying 46.2 million equity units at $1.30 per unit. Each unit contains a common share and a four-year warrant to buy a share for $1.50.

The deal will make Electrum the largest shareholder in NovaGold, and its holding could increase to 46 percent if it exercises warrants.

"We believe that Electrum's strategic alliance with NovaGold recognizes the tremendous value of the company's key assets _ its 50 percent stakes in two of the largest undeveloped gold and copper-gold deposits in the world," said NovaGold Chief Executive Rick Van Nieuwenhuyse.

The net proceeds of the placement will be used to repay the principal and interest of a $20 million bridge loan from Auramet Trading LLC, and to finance exploration and development.

NovaGold said in November that it would not have sufficient cash to meet its obligations if it couldn't raise additional funds by the end of 2008. The deal with Electrum will improve the junior miner's financial situation and allow it to avoid de-listing from the Toronto Stock Exchange.

"This investment substantially strengthens NovaGold's balance sheet and provides funding for the company's ongoing commitments to advance our key projects toward development," said Van Nieuwenhuyse.

The companies said Electrum has agreed to support management's nominees to the board at NovaGold's 2009 annual meeting, or to abstain.

Shares in Vancouver, British Columbia-based NovaGold rose 10 percent, or 15 cents, to $1.62 on the American Stock Exchange after the deal was announced.