Shares of Novagold Resources (AMEX:NG) plummeted 5.13% in intraday trading on Wednesday following the release of its fiscal second-quarter earnings report. The gold exploration company reported a wider-than-expected loss, disappointing investors and analysts alike.
Novagold announced a net loss of $0.15 per share for the quarter, significantly higher than the $0.04 loss reported in the same period last year. This result missed the analyst consensus estimate of a $0.03 loss per share by a wide margin. The company attributed the increased loss primarily to a non-cash, non-recurring charge of $39,607 related to warrants issued under a backstop commitment agreement.
Despite some positive developments, including an increased stake in the Donlin Gold project to 60% and the completion of a public equity offering and private placement that raised approximately $234 million, investors seemed to focus on the immediate financial performance. The company's higher expenditures at the Donlin Gold project, although in line with budget expectations, may have also contributed to market concerns about cash burn. As Novagold continues to advance its flagship Donlin Gold project without generating revenue, the wider loss appears to have sparked worries about the company's path to profitability, leading to today's sharp stock decline.
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