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NG takes a big hit: Will reevaluate the position after the close

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NG takes a big hit: Will reevaluate the position after the close

The stock took a big hit to the downside

Article below explains the retreat of the stock and the the reason for suspending the project: We will discuss alternatives after the market close to try and minimize the loss from this position, damage has been done no reason to overreacte to this position until alternatives have been evaluated whihc we will tonight

Rising Costs Push NovaGold and Teck Cominco to Suspend British Columbia Project

NEW YORK (AP) -- NovaGold Resources Inc. and Teck Cominco Ltd. will halt construction of a copper, gold and silver project in British Columbia because of high costs and the stronger Canadian dollar, the mining companies said Monday.

The companies expect write-downs and are determining the amount and timing of those. They are also reviewing requirements for suppliers and the 400 employees working at the Galore Creek project.

NovaGold shares fell $8.20 or 39.%., to $11.75. They closed at $20.24 on Friday. Project reviews indicated that the capital cost of the project could go as high as $5 billion. Although the site holds high-quality deposits, expectations for long-term metal prices, as well as lower operating margins due to a stronger Canadian dollar, make the investment "uneconomic," the companies said.

Due to the decision, the companies have amended Teck Cominco's earn-in obligations. Teck Cominco will now invest an additional $72 million in the partnership to be used over the next five years to reassess the project and evaluate alternative strategies.

Teck Cominco's sole funding of other project costs incurred after Aug. 1 will now total $263 million. NovaGold and Teck Cominco will split the next $100 million of project costs 33 percent and 67 percent respectively, and .

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