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Globe and Mail
2 days ago
- Business
- Globe and Mail
Market Factors: New TSX highs come with a caveat
In this edition of Market Factors, I'll detail the dominance of precious metals stocks in the rally from the 2025 lows and also how the real estate services sector is about to be automated. The diversion is Bezos-related and as always we'll look ahead to the important data releases for the next week. It's obviously a good thing when the S&P/TSX Composite Index hits a new high but there's a caveat for this one: performance has been driven by a sector that has little to nothing to do with the domestic economy or innovation. Scotiabank strategist Simon Fitzgerald-Carrier wrote that gold and silver stocks, up 47 per cent and 41 per cent respectively year to date, account for exactly half of the TSX's 2025 return. The impressive dominance of precious metals stocks in driving benchmark returns is even more apparent if we look at the recovery from the 2025 low on April 8. The benchmark's top performer was Novagold Resources Inc., up 85.2 per cent. Seven of the top 12 performing stocks for the April 8 to present period were precious metals stocks (this includes the highly precious metals-focused Sprott Inc.). Uranium stocks were also clearly visible in the top 12 – Cameco Corp. (up 80.9 per cent), Energy Fuels Inc. (63.8 per cent) and Nexgen Energy Ltd. (62.9 per cent) were all there – but let's not get distracted. Mr. Fitzgerald-Carrier attributes precious metals price momentum to uncertainty regarding U.S. tariffs. I also think gold is benefiting from the leadership-related lunatic discount the market is applying to the U.S. dollar. The Scotiabank strategist believes precious metals stocks can continue to outperform. A survey of central banks by the World Gold Council released Tuesday found that 95 per cent of respondents (73 central banks were surveyed) expected central bank gold reserves to increase over the next 12 months. Mr. Fitzgerald-Carrier also expects that rising U.S. inflation will cut into real Treasury yields, putting further downward pressure on the greenback that will push bullion prices higher. Precious metals are a problematic topic in financial theory. Personally I respect the role of precious metals in history and certainly respect the gains recently made by investors in the sector. On the other hand I lean more towards Warren Buffett's view that he'd rather own farmland, which generates annual income. One thing that's certain is that the recent gold-driven highs in the TSX are more proof that global investors are skeptical about the U.S. and aren't assuming that everything's rosy in the domestic economy and corporate world. Morgan Stanley real estate analyst Ron Kamden covers the U.S. but his belief, that AI will soon automate big swathes of public REIT and commercial real estate (CRE) services occupations, will likely have cross-border financial effects. Mr. Kamden believes that 37 per cent of all public REIT and CRE services jobs can be automated by AI. He estimates the cost savings at US$34-billion, or 16 per cent of operating cash flow in the sector. Management, accounting for 17 per cent of occupations, is the most at risk for automation followed by sales (14 per cent), administrative support (13 per cent) and installation maintenance repairs (12 per cent). I'm not sure how AI is going to repair the plumbing but these categories combine for 56 per cent of all jobs in REITs/CRE services jobs. AI applications that replace all these expensive humans, if they come to pass in the U.S., will soon drift across the border. Domestic REIT services CEOs would be negligent not to do so because their operations would become much, much more profitable for owners or shareholders. A lot of people hate Jeff Bezos but I like getting my packages delivered the next day. Mr. Bezos defends his outsize wealth by saying it represents 14 per cent of a company he built, and he helped the rest of the shareholders get wealthy too. He is, objectively, a tremendous executive, so much so that Warren Buffett called him the best business person he's ever seen. It's getting harder to defend Mr. Bezos though. I am a full-on capitalist but not sure that anyone in a healthy society should be rich enough to fund their own space program, for one. He built a massive yacht, which is fair enough, but he also commissioned a US$100-million support yacht called the Abeona for it. That seems a bit obnoxious to me. More recently, Gizmodo reported on an island off Florida nicknamed Billionaire Bunker on which Mr. Bezos owns a house. The island is connected to the mainland by a bridge guarded by dudes with guns to keep the riffraff out but it doesn't have its own water treatment facilities. It turns out that Billionaire Bunker residents are mad because the mainland won't take its sewage without a big fee. Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page. David Berman explains why the Iran-Israel conflict has only had a limited impact on crude oil prices so far Investment scammers are posing as economist David Rosenberg and bilking victims out of hundreds of thousands of dollars Mike Dolan of Reuters cautions that the U.S. dollar exit could be a crowded trade for some time. Meanwhile, Jamie McGeever reports that foreign central banks are shrinking U.S. asset exposure The domestic calendar of economic data releases and major earnings reports remains light for the coming week. It starts with retail sales results for April, which are out Friday. Economists forecast a 0.4 per cent headline gain month over month but a 0.2 per cent drop for the ex-autos reading. CPI numbers for May will be issued next Tuesday but economist guesses at the result are not available. For earnings, Alimentation Couche-Tard reports next Wednesday and analysts predict US$4.88 per share in profits. U.S. data starts with industrial production results for May. An exactly flat month-over-month reading is expected. The Federal Reserve announced no change in interest rates on Wednesday, as widely expected. Carnival Corp. (US$0.239 per share expected) and FedEx (US$5.887) release earnings on Tuesday. See the full earnings and economic calendar here
Yahoo
08-05-2025
- Business
- Yahoo
How a billionaire's bet on Donlin mine could inject new life into the huge, slow-moving Alaska gold project
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways Max Graham The Northern Journal For years, plans to develop Alaska's largest gold prospect appeared to have stalled amid lawsuits and questions about costs. Now, a $1 billion deal could inject new life into the massive Donlin gold project in Western Alaska. That's the message, at least, from the investors who are doubling down on Donlin, including two prominent East Coast billionaires. They say they're more motivated to push the project toward production than the global mining giant that just pulled out. In a sale announced this week, Barrick Gold Corp., one of the world's most prolific gold mining companies, will give up its half of Donlin. Paulson Advisers, a Florida-based firm led by financier John Paulson, is paying Barrick $800 million for 40 percent of the project. The remaining 10 percent will go to Novagold Resources for $200 million . Novagold is a publicly-traded company that already owned half of the project and has been working on it alongside Barrick for years. Barrick, which operates gold and copper mines in the U.S., Africa, South America and the Middle East, brought deep pockets to Donlin, along with expertise as a developer. But the company also had competing priorities and wasn't pressed to move Donlin from exploration into the multibillion-dollar construction phase, Novagold's chairman, Thomas Kaplan, said at a briefing this week. Donlin, which is one of the world's largest gold prospects, is gaining deeper backing from Paulson, a longtime investor in the metal who already owned shares in Novagold. He says he's poised to bring not only new cash to the project but also fresh intent to speed it along. 'Our goal is to immediately advance this project toward production,' Paulson said at the briefing. A coveted, contentious deposit Donlin has been studied for years and Novagold estimates that it contains deposits of gold worth more than $100 billion. Boosters consider the project to be one of Alaska's most promising deposits, given its sheer size. But it's also one of the most contentious. Its developers enjoy considerable support from elected officials and Alaska Native-owned corporations, which own the land where Donlin sits. They see the project as an opportunity to create hundreds of jobs and generate revenue for local governments and Indigenous shareholders. But Donlin faces staunch opposition from several tribal governments as well as regional and statewide conservation groups. They fear the effects of a large-scale mine in a remote region where people have long depended on salmon and other wildlife and traditional foods. Paulson's investment comes as four separate lawsuits over Donlin's state and federal permits work their way through the courts — and as questions linger about the economics and logistics of powering a sprawling, open-pit operation. The mine would be built on tundra near the upper reaches of the Kuskokwim River, far from existing roads and the electricity grid. The Donlin prospect sits on land owned by Alaska Native corporations. (Donlin Gold via The Northern Journal) Donlin is almost fully permitted but has not moved into construction in part, according to its new owners, because Novagold and Barrick weren't aligned on how quickly to proceed. Traditionally a gold company, Barrick has recently shifted its focus to copper — a key component for electric cars and other modern technologies that some investors consider a more strategic, long-term bet. Barrick has appeared more interested in developing copper mines in other countries than in advancing Donlin, according to industry observers. 'I think what held (Donlin) back in the past was Barrick, through no fault of their own,' Paulson said. 'They had many projects around the world. And Donlin was somewhat of an orphan asset.' Market analysts at Jefferies, a New York investment bank, echoed Paulson in their own review of the deal. 'From what we could tell, Donlin was not a priority in Barrick's portfolio — not anytime soon, anyway — and so we are not surprised by the sale,' the review said. The analysts added, however, that the deal appears to have come at the right time for Barrick because of rising gold prices — which likely boosted Donlin's value. Gold has hit repeated record-high prices in recent months and is now selling at more than $3,300 per ounce, up some 30 percent this year. Barrick appears poised to use cash from the sale to invest in its other mines. In a press release , the company's chief executive, Mark Bristow, said Donlin 'might be better suited in the hands of others, while we pursue our priority portfolio of Barrick-managed growth projects.' A Barrick spokesperson declined to comment further. Kaplan, Novagold's chairman, said he harbors no ill will toward Barrick and looks forward to celebrating the Donlin deal with Bristow 'over a bottle or two or three of very, very fine Bordeaux.' He also said at the briefing, perhaps jokingly, that he almost named one of his children Donlin. Kaplan himself is a billionaire investor, who, like Paulson, has long been known for his enthusiasm for gold. His firm, The Electrum Group, invested in Novagold over a decade ago and is now the company's largest shareholder. The Wall Street Journal reported this week that Kaplan made multiple attempts to buy Barrick's half of Donlin over the past 15 years. 'Donlin for me was the Holy Grail,' Kaplan told the Journal. Novagold's stock has jumped nearly 60 percent since the sale was announced, in a sign that investors view it as a good deal. Along the Kuskokwim River, downstream of the Donlin prospect and thousands of miles from Wall Street, the deal elicited a range of opinions. Some said they hadn't heard about the project's change in ownership. Others said it made no difference to their opposition. 'It's scary and frustrating,' said Beverly Hoffman, an elder in Bethel, a Kuskokwim River town and regional hub. As someone who 'depends on the food resources to sustain our way of life,' Hoffman said in a phone interview, 'it angers me that this money can just be thrown around." The Donlin prospect sits above Western Alaska's Kuskokwim River, pictured here. (Nathaniel Herz, Northern Journal) Hoffman co-founded Mother Kuskokwim Tribal Coalition, a regional advocacy group that's fighting Donlin. She said she'd like Paulson, the investor, to come visit her in Bethel. 'I'll take him out in a boat,' she said. 'I would love to talk salmon with him. I would love to talk birds and berries." Like many Bethel residents, Hoffman is a shareholder of the regional, Indigenous-owned company Calista Corp., which owns rights to the minerals at Donlin. The corporation, which selected those lands for their mineral potential under the 1971 Alaska Native Claims Settlement Act, has strongly supported Donlin, given its potential to pay royalties to Calista and create jobs for shareholders. 'Although there's this news about a planned ownership change, our vision and our priorities at Calista have not changed,' said Vice President of Corporate Affairs Thom Leonard. Calista periodically meets with Donlin's owners, has had a 'very positive' history with Novagold and doesn't expect that to change, Leonard added. 'We're ready to move forward when it's proven and we believe that it's safe to do so.' A politically connected investor It still might be too early to say exactly how the sale will affect the mine's prospects, according to Brett Watson, an economist at University of Alaska Anchorage who follows the industry closely. Watson is waiting to see what changes Novagold and Paulson make to Donlin's operations this year, and how quickly the owners move to update their economic analysis of the project. Before Barrick's sale, Donlin had announced plans to spend $43 million on exploratory drilling and other operations this year. As soon as the deal closes, the new ownership team aims to begin a key step toward construction: an $80 million, two-year update of an existing economic study of Donlin, said Novagold's chief executive, Greg Lang. Donlin is already halfway done with its planned drilling for the year, he added. Once the sale is finalized, Lang said in an interview, Novagold and Paulson will look to expand Donlin's budget, 'if appropriate.' Paulson originally gained fame by making billions of dollars in a bet against the U.S. housing market leading up to the 2008 financial crisis. Since then, Paulson has poured large sums into mining, becoming one of the country's highest-profile gold investors. His firm holds a roughly 35 percent stake in Perpetua Resources, which is building a large mine in Idaho with support from the Trump administration. That project targets gold and antimony — an element that's surged in value amid a trade war with China — and it recently has progressed quickly from the study phase toward construction . 'We want to repeat that success we've had with Perpetua, with Donlin,' Paulson said. 'It was a similar mine development as we have here. Only Donlin is much larger.' Paulson & Co., Paulson's family investment office, has other mining interests in Alaska, though the billionaire has largely stayed behind the scenes. They include a one-third stake in International Tower Hill Mines, a small company looking to develop a gold deposit north of Fairbanks. The firm also owns nearly 9 percent of Trilogy Metals, which is seeking to build a copper mine near the end of the controversial, state-proposed Ambler Road in remote Northwest Alaska. Beyond investing, Paulson is known for his ties to President Donald Trump. He donated millions of dollars to Trump's presidential campaign and hosted a fundraiser last year at his home in Palm Beach, Florida. He was floated last year as a potential U.S. treasury secretary pick. A spokesperson for Paulson referred a request for comment to Novagold.
Yahoo
24-04-2025
- Business
- Yahoo
International mining giant dropping out of partnership in Alaska gold mining project
Mine worker Justin Andrew examines and core samples at the Donlin mine camp on Aug. 11, 2022. Outside is the hillside that would be dug for its gold if the huge mine is developed. Barrick Gold, a large Canadian mining company, is selling off its half-share ownership in the Donlin Gold project. (Photo by Yereth Rosen/Alaska Beacon) A major mining company is pulling out of Western Alaska's Donlin Gold project, selling most of its shares to a U.S. billionaire with a history of investing in gold. Barrick Gold Corp., a Canadian company that operates in 18 countries, said Tuesday it is selling its 50% share in Donlin Gold for about $1 billion. Under the deal, Novagold Resources Inc., the smaller Canadian mining company that has been Barrick's Donlin partner, will add another 10% share of the project's ownership to its current 50% share, while an investment company headed by billionaire John Paulson will wind up with a 40% share in the project. Paulson's company was already a major Novagold shareholder. The deal is expected to close at about midyear, Barrick said. In dual statements, the companies said the sale is mutually beneficial. In its statement about the deal, Novagold praised Paulson's expertise and said the ownership change will help move the project forward. 'For myriad reasons, Paulson is quite literally the finest partner we could have hoped for. The embodiment of 'smart money,' John has been recognized as having a unique ability to identify the right vehicle to execute legendary trades. John and his team's expertise and counsel will be invaluable as we work to advance Donlin Gold through feasibility and financing,' Novagold Chairman Thomas Kaplan said in the company's statement. Paulson, also quoted in the statement, called Donlin 'one of the most attractive development gold projects 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,' he said in the statement. Paulson has investments in other gold-mining companies, including International Tower Hill Mines Ltd., which is trying to develop a gold mine at Livengood, northwest of Fairbanks. In its statement, Barrick said that by selling off its share in the Donlin project, it will be able to continue a strategic shift that includes more of a focus on copper. 'The Donlin agreement allows Barrick to exit the Donlin Gold Project at an attractive valuation, while allowing NOVAGOLD and Paulson to pursue the development of the project. This is a good example of an instance where an asset we own might be better suited in the hands of others, while we pursue our priority portfolio of Barrick-managed growth projects,' Mark Bristow, Barrick's president and chief executive, said in the statement. The Donlin project has been controversial in Western Alaska and elsewhere. Supporters say it will bring important economic benefits to a region of the state that has long struggled with poverty. Supporters include the for-profit Native corporations that own the mineral rights and surface lands where the mine project is located: Calista Corp., owned by Yup'ik people of the Yukon-Kuskokwim region, and The Kuskokwim Corp., owned by people from 10 villages along the mid-Kuskokwim region. Those Native corporations are partners in Donlin and point out that revenues from the mine, if it starts operating, will be shared with Native corporations statewide under terms of the 1971 Alaska Native Claims Settlement Act. Opponents, who include Yukon-Kuskokwim tribal members and Native corporation shareholders themselves, consider the mine to be a threat to the ecosystem and to the food resources and cultural practices that depend on it. Tribal opponents have been fighting the mine in state and federal courts. To opponents, Barrick's sell-off is a sign of project trouble. Sophie Swope, executive director of an anti-Donlin tribal coalition called Mother Kuskokwim, said Barrick's sell-off is a sign of project trouble. 'The Donlin Gold Mine is a bad investment—plain and simple. It's riddled with environmental, economic, operational, reputational, regulatory, and legal risks—and completely lacks a social license to operate,' Swope said in a statement. She cited the mine's planned 471-foot tailings dam, which has been a particular source of controversy, the potential for river contamination and the expected increase in disruptive barge traffic as some of the concerns. While Donlin Gold has received key permits, final development decisions have not been made. The Toronto-based Globe and Mail reported Tuesday that there had been disagreements between Barrick and Novagold over how to proceed with Donlin. The transaction leaves the Donlin project without a major partner with experience operating large producing mines. Novagold does have some operating experience, but it is spotty. It developed a mine near Nome, the Rock Creek Mine, but was able to operate it for only two months in 2008. During construction in 2007, two workers died at the site, and the company was later penalized for water pollution violations as well. The site was later acquired by the Bering Straits Native Corp., which completed reclamation in 2016, according to state officials. Last month, other assets from the property were sold off. Another controversial Alaska mining project, the Pebble copper project in Southwest Alaska, also lost its major corporate partner. In 2013, Anglo American, one of the world's largest mining companies, dropped out of the Pebble Limited Partnership, leaving Northern Dynasty Minerals Ltd. as the sole partner. In 2014, another major international mining company, Rio Tinto, also dropped out by donating its 19% Northern Dynasty shares to Bristol Bay regional nonprofits. The Pebble project is limbo. The U.S. Environmental Protection Agency in 2023 invoked a provision in the Clean Water Act to bar federal permitting because of anticipated damages to salmon habitat. Northern Dynasty is trying to overturn that finding and has expressed optimism that the Trump administration will help revive the project. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Bloomberg
22-04-2025
- Business
- Bloomberg
Barrick to Sell Alaska Gold Stake to John Paulson, Novagold
Barrick Gold Corp. is exiting an Alaskan mining project by selling its 50% stake to billionaire John Paulson and Novagold Resources Inc. for $1 billion, according to people familiar with the matter. The agreement for the Donlin Gold project could be announced as soon as Tuesday, the people said. Novagold will pay $200 million, while Paulson Advisers LLC will put up $800 million, said the people, who asked not to be identified discussing a private matter.
