Northern Dynasty Minerals (NDM), which owns 100% of the Pebble Limited Partnership (PLP), has signaled investors that it is serious about moving forward with beginning the process of permitting the Pebble mine this year. Its goals for 2017 include the “Three Rs”: resolve litigation with EPA, re-partner, and re-position itself in the public debate by developing “key Alaska and Native partnerships.”
NDM announced in March that it had selected HDR Alaska, a consultant in engineering and environment, to lead permitting efforts for the mine as it looks ahead to moving beyond its problems with the U.S Environmental Protection Agency.
PLP anticipates a favorable outcome in its 3-year litigation with the EPA, which in 2014 had proposed restrictions to large-scale mining operations at the Pebble deposit. “Active discussions between all parties involved have been positive and very constructive,” said Tom Collier, CEO of the Pebble Partnership, in a a March 20 news release. According to NDM, the company and the EPA are talking directly and need more time to negotiate. Judge H. Russel Holland granted an extension on a previously issued stay of proceedings, and the two parties now have until May 4 to come up with an agreement for how to settle out of court.
Even if the EPA and PLP do not resolve litigation in 2017, a 404 permit application could still be submitted. EPA’s 404(c) process blocks the U.S. Corps of Engineers’ final issuance of a permit, but doesn’t prohibit the permit application from being submitted or processed.
There’s another hurdle to cross, however. Permitting is a costly endeavor, and the existing technical and engineering studies related to development of the mine have “very uncertain and perhaps little value at this time,” according to a recent presentation by NDM.
The company needs to attract a deep-pocketed project partner to help fund permitting (and any new technical studies) and development of the mine. It’s been looking ever since Anglo American announced its departure in 2013. In that time, NDM has employed various methods of staying afloat financially – from cutting PLP staff and selling surplus equipment to issuing common stock.
It still had a deficit of about US$301 million at the end of last year. The latest share offering, in January 2017, raised gross proceeds of about $37.4 million, which it will use to try and advance the project. It plans to allocate $1.11 million of that for further environmental studies to prepare for permitting. Aside from working capital ($11.26 million), the largest amount ($8.05 million) is set aside for “Enhanced outreach and engagement with political and regulatory offices in the Alaska state and U.S. federal government, among Alaska Native partners and broader regional and state-wide stakeholder groups.”
What this means for stakeholder groups in Bristol Bay is yet unclear. However, part of NDM’s strategy to improve local opinion for the project includes incentives for Native groups. According to Mike Heatwole, PLP’s vice president for public affairs, “After we secured funding, we presented a lot of different ideas to the board on ways to more fully demonstrate how we can share the benefit with residents of the region. We are now working on the plans and details to roll out those that were approved.”
2017 is a critical year for NDM, and it has set aggressive goals. If permits can be filed this year, the company predicts entering the construction phase by 2020. NDM’s annual financial filing puts the situation in stark terms, though, noting that it will need additional financing to move ahead with expenditures at the Pebble deposit after this year. That financing could come from additional debt equity or a project partner. But if it’s unable to raise the money, it may have to consider “reducing or curtailing its operations.”
Although the change in federal administration, both at the White House and at the EPA, have some individual investors optimistic about the long-term outlook for the Pebble project, others have raised questions and even divested entirely. A very critical report released in mid-February by Kerrisdale Capital Management caused NDM stock to fall from around $3.29 to $2.27 per share in one day. Today it’s trading at $1.43 per share. The report also spurred several class-action lawsuits against NDM on behalf of investors, seeking recovery of damages for alleged violations of federal securities laws. For its part, NDM is confident the claims are unfounded.
Read the latest news related to development of the proposed Pebble mine.
Alaska’s Pebble Mine and the Legend of Trump’s Gold, The New Yorker, March 2, 2017
Tim Sohn writes about Northern Dynasty’s recent ups and downs, including the February 14 Kerrisdale Capital Management report that negatively affected the company’s stock value. Sohn has covered Bristol Bay and the proposed Pebble mine for Outside Magazine and The New Yorker since 2009. For this article, he interviews Sean Magee (Northern Dynasty), Sahm Adrangi (Kerrisdale), as well as Tim Bristol (SalmonState) and Alannah Hurley (United Tribes of Bristol Bay).
Anti-Pebble, pro-Trump millionaire to meet with president, E&E News, March 2, 2017
An opponent of the proposed Pebble mine, Bob Gillam, is meeting with President Trump at the Mar-a-Lago Resort in Florida. Gillam, who owns a private fishing lodge in Bristol Bay, was a classmate of Trump’s in the late 1960s at Wharton school of business.
House Science Democrats ask EPA to keep 404(c) determination against Pebble, KDLG, March 1, 2017
Eddie Bernice Johnson (D-Texas) is the ranking Democrat on the House Committee on Science, Space and Technology, which has held multiple hearings on the EPA’s efforts to limit large-scale mining activity in Bristol Bay. Congresswoman Johnson supports the EPA’s efforts and delineated her points in a letter to new EPA Administrator Scott Pruitt. Committee Chair Lamar Smith (R-Texas) also sent Pruitt a letter, although his asked that proposed EPA restrictions be rescinded.
House Resources Committee hears from United Tribes of Bristol Bay about Pebble, KDLG, February 28, 2017
The House Resources Committee recently heard from representatives of the advocacy group United Tribes of Bristol Bay about its allegations that Pebble developers have not cleaned up well enough after mining exploration activities at the site of the Pebble deposit.
Scott Pruitt is less than a week into his role as Administrator of the U.S. Environmental Protection Agency, but the Pebble project has already come across his desk. Today, Lamar Smith (R-Texas), the Chairman of the Committee on Science, Space and Technology, sent Pruitt a letter congratulating him on his appointment and requesting that he rescind the EPA’s 2014 decision to use Section 404(c) of the Clean Water Act pre-emptively to seek protections for Bristol Bay.
After months of investment firms touting Northern Dynasty Minerals (NDM) stock as a good buy, Kerrisdale Capital Management bucked the trend with an in-your-face slam of Pebble stock as “worthless.” The small New York investment firm got quite a bit of attention for its report, which caused shares to fall dramatically on Tuesday before they began to move back upward. (NAK stock was around $3.29 per share on Monday morning before the report and ended Friday at $2.27, as shown in this graphic from Yahoo Finance).
Two events today might affect the stock further: NDM published a rebuttal to the article on its site, and Congress confirmed the appointment of Scott Pruitt as head of the EPA.
Pebble developers have been in litigation with EPA since 2014, after the EPA initiated a process to restrict certain mining activities at the Pebble deposit. Developers believe that administrative changes at the agency will remove these obstacles, allowing it to attract an investor and move into a permitting phase this year.
KDLG radio interviewed Kerrisdale Capital’s Sahm Adrangi, who explained that the company’s model is to find companies they believe are “overhyped or overly promotional about their prospects,” to research them and then present “contrarian views.” In doing so, their goal is to make money as the stock price dips. According to the interview, Kerrisdale Capital became interested in researching the Pebble project when NDM stock started seeing quick gains after the November 2016 election.
Allegations in the Kerrisdale report – that NDM states are unfounded – include that the company is hiding a negative project assessment that reveals the project isn’t economically viable. Since these allegations, four different law firms have filed class-action lawsuits against NDM on behalf of investors, seeking recovery of damages for alleged violations of federal securities laws. Two other firms, on behalf of NDM shareholders, are investigating whether the company adequately disclosed the commercial sustainability of the deposit.
For its part, NDM says it will do what it needs to protect the interests of its shareholders, including regulatory and legal action related to the accusations in the Kerrisdale report.
Northern Dynasty slams short-seller report as class-suit looms – Mining.com, February 17, 2017
Northern Dynasty Minerals mulls legal action against short-seller who called company ‘worthless’ – FinancialPost.com, February 17, 2017
New York Hedge Fund Slams Northern Dynasty, Pebble Mine in investor report – KDLG radio, February 16, 2017
Report: Pebble shares are ‘worthless’ – Alaskajournal.com, February 15, 2017
About Pebble Watch
Pebble Watch is an impartial, educational and fact-based initiative of the BBNC Land Department to disseminate information regarding the proposed Pebble Mine project to BBNC shareholders and interested parties.