Skip to content

Sudden environmental agency switch improves Alaskan mine prospects

Ron Walter writes about Northern Dynasty Materials Ltd. of Vancouver
BizWorld_withRonWalter
Bizworld by Ron Walter

A controversial Alaskan open pit mining project that has been twice previously rejected by the United States Environmental Protection Agency is suddenly on the way to getting permits for development.

The Pebble deposit, 100 per cent controlled by Northern Dynasty Minerals Ltd. of Vancouver, would produce 11.5 per cent of the United States’ copper.

First discovered by Canada’s Cominco in 1985, the deposit was left until 2007 when Northern Dynasty began exploration and expanded the deposit of copper, gold, molybdenum and silver.

The measured and indicated resources are 57 billion pounds of copper, 71 million ounces of gold, 3.4 billion pounds of molybdenum and 345 million ounces of silver. Those increase by one-half with inferred resources.

Annual production would be 318 million pounds of copper, 362,000 ounces of gold, 14 million pounds of molybdenum and 1.8 million ounces of silver. That’s almost $2 billion annual value at current prices.

Opposition to the mine comes from Indigenous residents fearing damage to the Bristol Bay salmon fishery, which supplies them with food and income, and from a billionaire owner of a local private resort.

Two elections in 2018 changed project fortunes. A new Alaska governor favouring the mine replaced an anti-Pebble governor and a state-wide vote defeated an anti-Pebble referendum.

One wonders if reversal by the Environmental Protection Agency was influenced by the regulation-cutting Trump administration.

The mine will certainly change the pristine landscape, extracting 70 million tonnes of material a year for 20 years.

Infrastructure for the mine ranges from a year round port to an 82-mile road, to a 164-mile natural gas pipeline to a 270 megawatt natural gas fired power plant.

In 2011, the construction cost was estimated at $3.5 billion.

The company will pay a three per cent annual royalty on production to a local Indigenous corporation.

Northern Dynasty is looking for partners to help develop the project, spread development risk, and ease the financing process.

Two partners have walked away from the project in earlier years when Northern Dynasty was looking for investors. Mining giants Rio Tinto and Anglo American had invested millions but left when it appeared the salmon fishery opposition and the billionaire’s funding ended any prospect of mine development.

Northern Dynasty proposes obtaining the remainder of permits by 2023, with first mine production in 2026-27.

At a recent $2.10, the shares reflect optimism from a 75 cent low in the last year. The shares high of $18.34 was in 2011 over prospects that coincided with the last gold price upswing.

An investment in the company creates multiple bets: One, the mine can be financed and developed in seven years; two, prices of gold and copper will still be high; three, a different new U.S. administration will allow the mine development.

CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.

Ron Walter can be reached at ronjoy@sasktel.net

The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.  

push icon
Be the first to read breaking stories. Enable push notifications on your device. Disable anytime.
No thanks