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Can International Tower Hill Outshine NovaGold?

Stocks in this article: THM NG

NEW YORK ( TheStreet ) -- NovaGold (NG) is the sexy, high profile junior gold miner in Alaska, but investors shouldn't forget about its nearby competitor International Tower Hill (THM).

As the below chart shows, NovaGold and International Tower mirrored each other last year until September, when NovaGold broke out on takeover rumors that helped push the company to a 125% return for 2010. International Tower Hill, on the other hand, returned only 38%, but if it follows its peer, it should be ready for a breakout. Jeb Handwerger, editor of, thinks that THM is ready to make a move and that at "under $8 it's a steal."

If NovaGold is the sophisticated adult commanding investors' attention, it's fair to say that International Tower is the gangly teenager that has yet to be taken seriously. NovaGold has two of the largest gold and copper deposits in the world -- Donlin Creek and Galore Creek -- where it has 50/50 partnerships with Barrick Gold (ABX) and Teck Resources (TCK), respectively. While NovaGold is four to seven years away from production, its net interest in the two projects is staggering at 30 million ounces of gold, 157 million ounces of silver and 9.1 billion pounds of copper.

International Tower has 100% ownership of the Livengood gold project, which has 13 million ounces of resource, one of the biggest discoveries in the past 20 years, but still not as big as NovaGold's. International Tower doesn't have to share the gold with anyone, though, but it doesn't have big early stage funding either.

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NovaGold also has another thing going for it -- the quality of its gold.

NovaGold's Donlin Creek near Port of Bethel in Western Alaska is a 33.6 million an ounce gold deposit, according to reserve estimates, averaging 2.2 grams. The miner will be able to produce the gold for around $400 an ounce.

International Tower's grade is about 0.5 grams with rough cash costs of $490-$530 an ounce. The higher the grade of gold the more you can sell it for, but the more money it takes to refine, and vice versa for a lower grade. The only way a miner can compensate for low grade gold is by mining a lot of it as cheaply as possible.

International Tower Hill is lucky in that its deposit is so big, but it needs gold to stay above $950 an ounce for its deposit to make sense. Luckily, "no one in the business thinks gold will fall below $1,000," says John Doody, editor of

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