Shares of
Northern Dynasty Minerals Ltd. (
TSX: T.NDM,
Stock Forum) have lost 35% of their value in the last two trading sessions after partner
Anglo American Plc (
OTO: AAUKF,
Stock Forum) announced Monday that it is withdrawing from a large, but controversial Alaskan metals project that it shares with Northern Dynasty.
In a conference call with analysts Monday, Northern Dynasty President and CEO Ron Thiessen tried to put the situation in a positive light, saying that the company now owns 100% of the Pebble property, which is widely thought to be among the world’s richest undeveloped mining projects.
Current resource estimates include 55 billion pounds of copper, 67 million ounces of gold, and 3.3 billion pounds of molybdenum.
Given that Anglo has spent US$541 million on the project, Thiessen said Northern Dynasty is in possession of an extensive data base and project description that can be made available to anyone thinking of taking a stake the project.
Northern Dynasty is also well positioned to begin the process of trying to secure a mining permit, a challenge that could take up to four years and may cost anywhere from $30 to $50 million, he said.
Speaking to analysts in a conference call from London, England, Thiessen said he planned to hold talks with
Rio Tinto PLc (
NYSE: RIO,
Stock Forum), which owns 19% of Northern Dynasty, but added that the meeting will essentially be a courtesy call.
Thiessen said the company is not in formal negotiations with any other party regarding Pebble, which, despite its world class nature, faces major headwinds.
This is due to the remoteness of the site and public opposition due to environmental concerns,
Canaccord Genuity noted in its Morning Coffee newsletter.
Published reports say The Environmental Protection Agency is considering blocking the mine to protect Alaska’s Bristol Bay salmon, the most valuable fishery in the world. Estimates say it accounts for about half of the world’s supply of salmon.
In a recent assessment of the impact of mining, the EPA said the footprint of a mining operation could result in the loss of up to 35 kilometres of streams that are known to provide spawning or rearing habitat for salmon and Dolly Varden.
The EPA also said water from the mine site could enter streams through wastewater treatment discharges and in uncollected runoff, and via leakage of leachates from waste rock piles and tailings storage facilities.
However, in a statement, Anglo America Chief Executive Officer Mark Cutifani made no mention of environmental issues.
“Despite our belief that Pebble is a deposit of rare magnitude and quality, we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options,” Cutifani said.
“Our focus has been to prioritize capital to projects with the highest value and lowest risks within our portfolio, and reduce the capital required to sustain such projects during the pre-approval phases of development as part of a more effective, value-driven capital allocation model,’’ he said.
Anglo entered into a partnership with Northern Dynasty in 2007, with each company holding a 50% interest in the Pebble Partnership, an Alaska-based company set up to develop the project.
Anglo’s decision to withdraw from the Pebble LP leaves Northern Dynasty trading at $1.52, leaving a market cap of $144.4 million, based on 95 million shares outstanding. The 52-week range is $5.28 and $1.36.
Northern Dynasty currently has $22.5 million in cash, and is facing a monthly cash burn rate of $300,000 per month.