Northern Dynasty Minerals continues to face financial challenges

It’s been ten years since Anglo American withdrew from its 50/50 partnership in the Pebble project. Rio Tinto divested its 19% stake shortly thereafter. Since then, Northern Dynasty Minerals (NDM) has pursued a series of bought deals and private placements to raise cash to keep the project going. But money is tight and expenses continue to mount.

In an open letter published in September 2023, NDM’s CEO Ron Thiessen wrote that during the mining development process “one encounters joy and angst along the way,” but that he felt the project currently has “more tailwinds than headwinds.”

One of those tailwinds is an unknown investor (the “Royalty Holder”), who has been keeping the company afloat, with the possibility of a $60 million total investment over time. The first tranche of $12 million was paid in 2022, and the second tranche of $12 million has been divided into $2 million segments to allow more flexibility in paying the installments. The first of the $2 million segments was paid earlier this month.

Before that infusion, NDM was working with 1.4 million Canadian dollars in cash/cash equivalents and had a working capital deficit of 1.7 million Canadian dollars. It also incurred new fees in 2023. (It has engaged a hydrological firm to assess the effect of the Supreme Court’s May 2023 Sackett decision on the quantity of Alaska jurisdictional waters, and it has additional legal expenses.)

Thiessen said that NDM’s objective is to obtain the full $60 million investment from the Royalty Holder, which would increase the company’s financial liquidity. However, the Royalty Holder has no obligation to continue making the investments. According to NDM’s third quarter financials, the company has no arrangements in place “for any future financing or raising of funds other than through the Royalty Agreement.”

It is “continuing to evaluate the availability of long-term project financing options among mining companies, private equity firms and others, utilizing conventional asset level financing, debt, royalty and alternative financing options,” and has budgeted $1 million over the next year to pursue partnerships.

While Thiessen’s September 2023 letter said it’s conceivable that Pebble has a better chance this year of seeing “momentum related to a potential near term permit decision,” its financials point to the potential for serious trouble:

“To the extent that Northern Dynasty is unable to raise additional financing, it will have to curtail its operational activities, which will ultimately delay advancement of the Pebble Project. Northern Dynasty’s inability to obtain a positive ROD following the USACE’s remand may ultimately mean that it will be unable to proceed with the development of the Pebble Project as currently envisioned or at all. Similarly, the inability to successfully challenge the Final Determination may also ultimately mean that the Company will be unable to proceed with the development of the Pebble Project as currently envisioned or at all.”

NDM’s third quarter financials