Finance by a Croat

Novagold turned upside down and gave a perfect illustration of company-specific risk that investors assume when selecting individual firms versus an entire industry or the commodity itself. Look at this (scary) chart:

Where do we go from here?

Reason for decline: Cancellation of a major mining project by their partner Teck Cominco

Reason for cancellation: Dramatic Cost Overruns

What changed? Labor Costs, Surging Canadian Dollar

Opportunity? For long-term risk-tolerant investors who believe that the firm will make the transition from explorer to producer. Current levels could prove an attractive entry-point, however, barring a dramatic rise in the price of gold, weakness in the rest of the North American Equities markets may continue to weigh on the stock.

Sources:

A Forbes article explains the matter in detail.

Chart courtesy of BigCharts.com