NDM presentation to Denver Gold Forum

In a presentation at the Denver Gold Forum Wednesday, Northern Dynasty Minerals (NDM) CEO Ron Thiessen described progress the company has made toward developing the Pebble deposit since his presentation at the same event in 2017.

Finding a partner

Finding a partner was a key goal for the Canadian developer back a year ago. After partnering with and then losing First Quantum Minerals in 2018, NDM is still on the hunt for a major investor to fund the expensive permitting process. Thiessen is optimistic. “There’s a great deal of interest, being enlivened by the Army Corps of Engineer process and upcoming election in Alaska.”

The U.S. Army Corps of Engineers (USACE) is currently in the process of developing a draft Environmental Impact Statement as part of the Pebble permitting process. That’s led by a 3rd-party company, AECOM, with its fees paid by Pebble. The election Thiessen references relates to Alaska’s choice for Governor on November 6. Two candidates – incumbent Governor Bill Walker (I) and challenger Mark Begich (D) – oppose developing the Pebble mine. Candidate Mike Dunleavy (R) says he’s waiting to see what studies say about whether it will endanger fisheries or other resources. (Developers are counting on a Dunleavy win to brighten Pebble prospects, as there are several key Alaska permits that will be needed to move the project forward.) Additionally, the November 6 ballot includes a public initiative that would have impact on the Pebble project. Proponents of Ballot Measure 1, also called “Stand for Salmon,” seek further protections for wild salmon and fish and wildlife habitat. Opponents of this initiative believe it will stymie many kinds of development projects in Alaska.

Size of the project

In describing Pebble, Thiessen said, “We are the 9thlargest copper project and the largest gold project in the world.” It is more accurate to say “deposit” instead of “project,” since the 20-year project currently being considered for permitting proposes to mine just a small portion of an estimated 11 billion ton ore deposit. But this is where the balancing act between meeting regulatory requirements andinvestor economics becomes difficult. Thiessen explained the challenge last year at Denver Gold:

“The mining industry has one view of how to assess projects. The permitting and regulatory industry has another. We look at projects as the throughput and outcome. Regulators look at footprint and impacts. As we try to grow the economic outcomes, our footprint grows and so does our impact. Those two models clash significantly. We have to find a happy accommodation to that and convince partners that’s the way we need to look at the project.”

Pebble’s overall strategy is to gain permit approvals on a small footprint and then expand later. As Thiessen noted on Wednesday:

The configuration of the ore body “provides flexibility on how we can approach the development and ultimately other mining methodologies. It seems pretty clear that open cast mining on the west end of this project, where the waste ore ratio is extremely low and keeps our footprint very small for the first number of years, is the most prudent way of approaching this, and in future years looking at either expanding that open pit operation or possibly going underground in some large-scale panel caving or block caving methodology.”

As part of the current permitting process, the USACE has said it is analyzing a 78-year life of mine, which represents a 55% ore recovery. It will look at basic engineering and what impacts would be to aquatic resources and the environment, but does not require Pebble to fully design or plan the 78-year mine scenario.

Additional notes from Thiessen’s 2018 Denver Gold Forum presentation:

  • Thiessen characterized 2002-2011 as very encouraging, followed by a “pretty dark period” when the EPA “tried to effectively take the mineral rights away from us.”
  • While the presentation was called “Advancing the Permitting Process,” Thiessen said he wouldn’t actually talk much about permitting since it’s run by the USACE and others. “It’s a multi-agency arrangement. I don’t manage it. We really just respond to it. They drive everything, they ask the questions, we provide the answers…they will determine the timelines and schedules.”
  • He compared the current project status to the 2014-2016 period, noting that a legal settlement was achieved with the EPA, that permitting is advancing and copper and gold prices have risen.
  • Pebble sees its main opponent as the National Resource Defense Council (NRDC).
  • Thiessen gave highlights of the project overview, describing the changes made to address public concerns and says that the fishery is not threatened. You can see these in the presentation slides.
  • He believes a structural deficit for copper will begin to be seen in 2019 or 2020, and Pebble is positioned to fill that need, with production possible by 2025.
  • Audience questions included:
    • “Are you economic at today’s prices?”Thiessen said Pebble won’t publish any statistics until the draft EIS is available and alternatives are identified, so that they aren’t speculating on all the different options. “We wouldn’t have gone into permitting unless we felt it was economic.”
    • What’s your timeline and what’s your risk for getting a major reversal with elections in 2 years’ time?Thiessen said that the USACE has laid out a path to a Record of Decision by April 2020, about half a year before the election. “As long as the EIS supports a positive Record of Decision, I don’t think there will be a veto.” (A veto refers to EPA’s 404(c) process to limit certain dredge and fill activities at the deposit site).

 

Watch the full presentation

Download the slide deck