WTF is going on over at Nadagold (NG)?

RICK!

First Greg Johnson, the NG investor relations VP since the year dot and longtime buddy of RICK! who goes back with him to the Placer days, makes a sudden decision to leave NG (and then weirdly join up with a going-nowhere-fast silver thing in Bolivia). Now the Nadagold CFO suddenly ups sticks and runs away from the new Soros/Paulson/Kaplan vehicle.

VANCOUVER, April 1 /CNW/ - NovaGold Resources Inc. ("NovaGold" or the "Company") (AMEX, TSX: NG - News News) announced today that Robert J. (Don) MacDonald, Senior Vice President and Chief Financial Officer, will be leaving NovaGold effective immediately. Mr. MacDonald joined NovaGold in 2003 and has served as the chief financial officer of the Company since such time. Mr. MacDonald has agreed to provide consulting services to the Company for the next six months to assist with transitional matters. "I would like to thank Don for his significant contributions to the Company", said Rick Van Nieuwenhuyse, President and Chief Executive Officer of NovaGold, "His efforts and dedication have been important factors in NovaGold's development". Elaine Sanders, Vice President Finance, will act as interim Chief Financial Officer while the Company conducts a search for Mr. MacDonald's replacement.

And we note in passing that the announcement is made later into the evening of Maundy Thursday, with fund mgrs around the world already travelling to their second homes on the coasts for long weekends. We also note that MacDonald decided it was a great idea to sell Nadagold stock in the last week or so:

Apr 01/10	Mar 29/10	MacDonald, Robert John	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$7.500
Apr 01/10	Mar 23/10	MacDonald, Robert John	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$7.900
Apr 01/10	Mar 22/10	MacDonald, Robert John	Direct Ownership	Common Shares	10 - Disposition in the public market	-7,000	$7.620

This stinks to high heaven.

Novagold: But Seriously Folks.......

Ok, no Nadagold or Rick! Van Alphabet jokes here for a second. It's time to seriously question this company and examine the short case for Novagold (NG) (NG.to). To do that we need to check out the circumstances of its three main projects, Rock Creek, Donlin Creek and Galore Creek.

Rock Creek: Supposedly opened last year but soon closed down and has remained shut. Violated environmental regulations and got into trouble with the authorities. Bad atmosphere and community relations with the people of Nome, Alaska. NG has no plans to re-open Rock Creek and has made noises about selling the asset. The Rock Creek debacle demonstrates that this company is inept and incapable of running a goldmine.

We should also remember the very shady and underhand insider selling that went on late last year. For sure Rick Van Nieuwenhuyse and Greg Johnson can claim they were forced to sell by margin calls once the financial woes were made public. However Johnson started systematically selling his stock way before any margin pressure could have been put on him. He started selling stock at the very same time as Rock Creek's "production" ran into serious problems...almost to the day, in fact. He also started selling his stock the very same day that Wellington West recommended NG as a buy with a 75% upside price target.

So thanks to its Rock Creek operation we have evidence at Novagold of managerial and mining incompetance, poor social and community relations and shady inside dealings.

Donlin Creek: The 43-101 compliant feasibility report announced two days ago was woeful. And this isn't just my view, as Ron Coll of Jennings called the numbers "atrocious". Novagold will push the absolute amount of gold at Donlin but it cannot and will never make up for the fact that the study calls for $4.5BN in capex, $803m in sustaining capital and then, after all that cash, can only promise a meagre 10% IRR if gold manages to get to and stay at $1,000/oz. That in layman's terms is a lot of buck for not much bang, trust me.

Then yesterday we heard JV partners Barrick (ABX) telling us that Donlin Creek was way down the list of its priorities. So let's put this as simply as possible: Unless gold goes to and stays at $1,500/oz, Donlin will never be a mine. Never. Not now not ever, it really is that simple.

Galore Creek: Finally we get to Galore Creek, a JV with Teck. As everyone in the mining business knows, Teck is going through a whole house of pain right now as it scrambles to make payment on the bridge loan it took out to pay for a whole heap of coal it wanted to buy (aka Fording). And as Teck is at heart an industrials mining company it's selling off all the non core PM asset that it can. There's very little chance that Teck will do more than the strict minimum at Galore to keep its share, something the market and NG has already acknowledged. Galore is another project along the lines of Donlin, and we already know that capex projection at Galore turned out to be shockingly high. Also, it has been examined and dropped and examined and dropped by several different mining company for decades on end and has never become a mine. This in itself is a wake-up call.


Company Struture: To cap this all off, the company reported having cash of $78m and working cap of $62m on February 28th and a burn rate of $100,000 per day once one-time charges are backed out. If that burn has kept on burning we'll be down to $56m in working capital by now.

However the market prices NG at a touch under $500m. So in the strange world that is Novagold, $56m + two unworkable projects + one for sale booked as a $110m asset= $500m. Even if we're as generous as can be, say NG has $80m cash right now and ignore any debt on board, we're assuming $300m for Donlin and Galore combined. To give you more colour here, Scotia this morning (Apr 30th) reduced the NPV of Donlin to zero. Also, Teck announced today it was continuing with its fire sale of assets by selling its Pogo project to Sumitomo. You seriously believe they're going to move forward a marginal project like Galore under present circumstances? Wanna buy a bridge?

Bottom line at NG: Inept management + bad assets + high burn rate+ rapidly declining cash pile = NG is a seriously overpriced stock. It's currently being held up where it is by a group of people in serious financial denial. That will change.

Recommendation: Short NG

DYODD.

UPDATE: Oh look who's selling his stock again...just days before that Donlin 43-101, too. Lordy, this mgmt stinks to high heaven.

Apr 29/09

Apr 22/09

Van Nieuwenhuyse, Rick

Direct Ownership

Common Shares

10 - Disposition in the public market

-10,000

$3.000

Nadagold (NG): If you'd listened....

.....you'd be short at U$3.70 too, just like your horntootin', smug (and somewhat richer) Otto. And before you open up the e-mail page, I know just how annoying I am. No need to remind either myself or my family. And no need to question the legitimacy of my parents' state of wedlock at the time I was born, either.

The short only started on Feb 5th but not covering yet. No way José.

Special Novagold chart of the day is.......

.......Greg Johnson's insider sales for 2008.

Click to enlarge

Things of interest to note here:

1) Check out the November 24st press release that mentions when things were seen to be going wrong at Rock Creek. Here's the relevant detail from the PR, and note how "mid October" exactly matches the time when Johnson started selling his shares.

The Rock Creek gold mine received regulatory authorizations and began commissioning start-up in September 2008. NovaGold was required to complete a number of additional environmental and operational tasks in the following weeks and months to ensure compliance with environmental requirements for the mine. Complications have arisen in meeting these regulatory requirements and the federal and state regulators have provided notice that certain conditions in the previously granted permits have not been fully met. Though the Company continues to work with state and federal regulators to resolve these matters, if such issues are not addressed to the satisfaction to the regulators, NovaGold's subsidiary could face financial penalties or have additional mitigation or monitoring requirements imposed. The Rock Creek mine has experienced unanticipated mechanical problems including an electrical failure with the milling circuit and the Company has ongoing concerns with the efficiency of the process and recovery circuit. These issues have been compounded by the effects of extreme arctic weather conditions experienced in Nome, Alaska. In mid October, NovaGold foresaw cash flow in 2009 from the Rock Creek mine of over C$25 million at the then prevailing gold price and exchange rates. The Company now does not expect the Rock Creek mine to generate significant net cash flow over the next six months using a gold price of US$750 per ounce and current exchange rates. As a result of expected further capital requirements and increased operating costs together with the uncertainty regarding the operation of the project and the resulting cash flow, the Company has decided to suspend operations at the Rock Creek mine. The cash flow from Rock Creek which the Company had intended to use to fund its ongoing obligations will therefore not be available. The regulatory consequences of a suspension are uncertain, however existing environmental requirements will continue to be met during this suspension. As part of its requirements under Canadian GAAP, the Company will be reviewing impairment testing for the project.

2) Note that the payback for $20m bridge loan that NG obtained from Auramet on September 26th was wholly dependent on the revenues generated from Rock Creek. Or in other words, once Rock Creek hit serious problems Johnson knew NG couldn't make that payment and started selling his shares.

3) Note how the October 20th sale was Johnson's first in 2008. Why did it suddenly occur to him to start selling on this date, and sell a small lot of shares on every single trading day until the news of NG financial disaster was finally made public?

If this isn't illegal insider selling I really don't know what is. Those people who added to Novagold's coffers on the October 1st warrants expiration now know where at least some of their money went.

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Nadagold (NG): more inside selling

Hey Greg, wipe that stupid smirk off your face. Stupid beard, too

Greg Johnson of Nadagold (NG) got rid of nearly half a million shares of the company he helped to sink recently (see filings below and linked here). Now note the difference between the 280k or so that were bailed in the 50c region and the other, slow drip sales he put in on the days leading up to last Monday's final admission of total corporate incompetance and failure.

Are you really telling me that he was forced into selling 10,000 shares, then 2k, then 5.6k, then 15k etc etc etc on a margin call when he had half a million pieces of this toilet paper on hand? Gimme a break, guys...this is criminal behaviour! Not only are you a blatant thief, Greg, but you're insulting your shareholders at the same time!

But the thing is, the ten filings listed below fromthe Canadian Insider website are only the tip of the iceberg. Greg Johnson started selling his shares on October 20th 2008 at $3.30 and managed to sell a total of $1.33m in shares between Oct 20th and Nov 20th. Johnson got rid of 524,381 shares in bite-sized chunks, never more than 65,000 at a time and typically between 5,000 and 20,000 in any one day. According to the Nadagold website, Johnson is old pals with fellow inside salesman, CEO Rick Van Nieuwenhuyse:

Greg S. Johnson, B.Sc.
Vice President, Strategic Development
Greg joined Rick Van Nieuwenhuyse to establish NovaGold in 1998. With over 20 years of industry experience, Greg is responsible for NovaGold's marketing and communication activities, and is involved in developing strategic growth opportunities. Prior to his role at NovaGold, Greg was part of the management team responsible for overseeing the exploration and acquisition activities for Placer Dome's International Exploration Group in Africa and Eurasia. Greg also worked with Rick Van Nieuwenhuyse and Joe Piekenbrock as part of the Alaska Exploration Group for Placer Dome in the late 1980s and early 1990s, where he played a key role in the multi-million-ounce Donlin Creek discovery in 1995. Greg has been involved in all aspects of exploration and development, from grassroots discoveries to Feasibility Studies in the United States, Canada, Australia, Russia and Africa. Greg holds an Honors B.Sc. in Geology from W. Washington University.

The OSC should be crawling all over this board of directors. Well, they would be in any serious country, but as the country in question is Canada and white-collar fraud is applauded rather than punished, expect the whusses at the OSC to do nothing and this crook and all the others who turned NG into mining's finest laughing stock since BRE-X to be waltzing around PDAC next spring, pressing flesh and doing new deals.

You people make me want to vomit.

Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Nov 26/08	Nov 26/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-22,000	$0.540 USD
Nov 26/08	Nov 25/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-82,800	$0.560 USD
Nov 26/08	Nov 24/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-180,400	$0.520 USD
Nov 26/08	Nov 21/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-56,000	$1.540 USD
Nov 26/08	Nov 20/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-89,000	$1.700 USD
Nov 26/08	Nov 19/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$2.250 USD
Nov 26/08	Nov 18/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-15,066	$2.140 USD
Nov 26/08	Nov 17/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,618	$2.300 USD
Nov 26/08	Nov 14/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-2,100	$2.400 USD
Nov 26/08	Nov 13/08	Johnson, Gregory Shawn	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$2.360 USD