For gold minded investors, Northern Dynasty Minerals (NYSEMKT: NAK) It has long been a story. Although the company retains 100% ownership of the Pebble deposit, which is located in southwest Alaska and has been rated by the company as “one of the largest mineral wealth stores ever discovered,” it has its share of skeptics. The project has been embroiled in controversy for a long time, caught up in litigation filed by those concerned that the potential mine could wreak environmental havoc.
However, a path forward seems to have emerged for the Pebble Project. Northern Dynasty Minerals received its long-awaited Final Environmental Impact Statement (EIS) from the U.S. Army Corps of Engineers, which presents the company with a way to develop the project in an environmentally responsible manner. Does this mean that gold investors should rush to collect shares of this miner? Let’s dig deeper to find out.
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The deets in the tank
The Pebble deposit has measured and indicated gold and copper resources of 71 million ounces and 57 billion pounds, respectively, in addition to inferred resources of 36 million ounces of gold and 25 million pounds of copper. According to the company, it is the world’s largest undeveloped copper and gold resource. While these figures, and the potential for extensive mineral production, may shine in investors’ eyes, it is critical to recognize that management’s mineral estimates have not been independently verified.
The greatness of these figures can be difficult to appreciate without some context, so let’s consider the reserve base of Newmont Goldcorp (NYSE: NEM). Earlier this year, Newmont, the largest publicly traded gold miner based on market capitalization, reported that its entire portfolio of assets included measured and indicated gold resources of 76.7 million ounces and inferred resources of 31.3 million ounces. . But the value of the Pebble deposit is not limited to gold and copper; It also includes measured and indicated resources of 3.4 billion pounds of molybdenum and 345 million ounces of silver.
According to Northern Dynasty Minerals, the Pebble Project, as envisioned at this time, will have a useful life of 20 years and will reach an average annual production of 613,000 tons of copper and gold concentrate, consisting of 318 million pounds of copper, 362,000 ounces of gold and 1.8 million ounces of silver.
What is in the final EIS?
Taking over two and a half years to complete, the Final EIS, at more than 2,000 pages, details the Pebble Project as a proposed open pit mine with mineral processing facilities. Additionally, the Final EIS describes the infrastructure for the project: an 82-mile highway plus a 164-mile natural gas pipeline from the existing infrastructure to the Pebble mine site, where a 270-megawatt natural gas power plant will sustain operations.
Addressing the impact on local fisheries and general ecology, the final EIS states: “In general, impacts on fish and wildlife would not be expected to affect harvest levels. Resources would continue to be available because it would not be anticipated. a decrease in the level of population in resources. ” And in terms of the potential benefits to locals, the report found that, “Increased job opportunities, year-round or seasonal employment, stable income and the lower cost of living described above would have a beneficial impact on the EIS analysis area, especially for communities in the LPB [Lake and Penninsula Borough], during the construction and operations of the project. “
While the final EIS had the potential to further complicate project development, the company is quite pleased with the report. According to CEO Ron Thiessen, “There is more work to be done, but the publication of the Final EIS today is a clear validation that Pebble can develop in an environmentally sound and socially responsible way, creating benefits and opportunities for the people of Bristol Bay and all the people of Alaska. “
The brilliant vision for investors
While the final EIS is good news for Northern Dynasty Minerals, investors shouldn’t expect to see gold production anytime soon because the company is still in the middle of the permitting process. According to management, it will be another two to three years before you obtain the necessary permits from the State of Alaska.
Even if the permitting process goes smoothly, the project may still be at the center of most litigation. And it’s not just potential lawsuits that pose a risk to the business. Construction of mining projects is incredibly capital intensive and is often subject to delays and unforeseen costs, especially relevant in light of the fact that the company has not secured partners to help it finance the development of the multi-billion dollar project. Furthermore, investors should appreciate the inherent risk that the Northern Dynasty, which regards the Pebble deposit as its main asset, does not have a history of successful project development from the planning phase to the production of minerals. Therefore, only gold investors with considerable risk tolerance should consider an investment at this time. Meanwhile, there are many other gold opportunities for those seeking exposure to the metal.
