Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is flying in the premarket hours, trading on early gains of around 30%. The gains come after the company announced that the United States Army Corps of Engineers, or USACE, has accepted the company’s appeal. Here’s what’s going on:
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- USACE Accepts Northern Dynasty Minerals’ Appeal
- Why Investors Are Excited
- What Analysts Think About NAK Stock
- Risks to Consider Before Buying NAK Stock
- Final Thoughts
USACE Accepts Northern Dynasty Minerals’ Appeal
In the press release, Northern Dynasty Minerals said that the USACE has accepted its appeal. The appeal surrounds the Record of Decision issued by the USACE Alaska District in November 2020 that essentially blocks the permitting of the company’s Pebble Project, what could become one of the world’s largest precious metals mines.
NAK reminded investors that on January 19, its subsidiary, Pebble Limited Partnership, submitted a Request for Appeal to the USACE’s Pacific Ocean Division Engineer. In a letter dated February 24, the USACE confirmed that the Pebble Partnership’s appeal is complete and meets the criteria required.
Importantly, the USACE Alaska District published an Environmental Impact Statement in July of last year, saying that the project would not have measurable effects on the fish populations or fisheries in Alaska. Regardless of the EIS, the USACE published a ROD on November 25 of last year, denying Pebble a key permit under the Clean Water Act, suggesting that the project would have an impact on migration of fish. As such, the USACE told NAK that the project would not be in the public’s interest.
NAK went on to explain that it believes the decision to block the Pebble Project permitting is contrary to law and unprecedented in Alaska. Moreover, the company said that the denial is unsupported by the administrative record.
Nonetheless, the appeal process is expected to take about 90 days. Once the appeal is complete, Northern Dynasty Minerals and its investors hope to be able to get their hands on the permit they need to move forward.
Why Investors Are Excited
There’s a good reason for the investor excitement surrounding NAK stock this morning. The acceptance of the appeal means that the company may be one step closer to receiving the permits it needs to bring the Pebble Project to fruition.
Moreover, the Pebble Project has serious potential.
Should the project come to fruition, it will provide access to one of the world’s largest stores of gold, silver, platinum, molybdenum, and several other high cost metals, giving it the potential to drive millions of dollars in revenue per year.
So, the investor excitement takes place. After all, should the appeal be approved, NAK will be able to move forward with its plans.
What Analysts Think About NAK Stock
Northern Dynasty Minerals doesn’t have much when it comes to analyst coverage. In fact, there’s only one analyst weighing in on the stock. However, what it lacks in quantity, it makes up for in quality.
The one analyst that covers NAK currently has it rated a Buy with a price target of $1.20 according to TipRanks. That price target suggests that there’s potential for the stock to grow more than 70% from yesterday’s closing price.
Risks to Consider Before Buying NAK Stock
If you’re thinking about buying NAK stock, you’re going to have to be willing to accept risk. After all, any investment you make will come with the risk of loss. When it comes to Northern Dynasty Minerals, the most significant risks to consider include:
- USACE Denial of Appeal. It’s very important that Northern Dynasty Minerals is able to move forward with the Pebble Project. If it remains blocked, the company has little to fall back on. So, quite a bit is riding on this appeal. If the appeal is denied, we can expect to see significant declines ahead.
- Capital Risk. NAK is currently operating at a loss. As a result, the company must rely on the money it has in the bank to survive. If that funding isn’t enough, the company may look to public markets as an opportunity to tap into more money, leading to the dilution of existing shareholder value and likely significant declines.
- Volatility. As a penny stock, NAK is known to experience heavy levels of volatility. This volatility makes entrance and exit decisions difficult to time and could open the door to significant declines over a very short period of time.
While there are risks to consider before diving into Northern Dynasty Minerals stock, there’s also a potentially big win here for investors. If NAK does win the appeal and is able to permit its Pebble Project, the stock will likely see significant gains as investors see a tremendous revenue opportunity ahead. As such, NAK stock is one to watch closely.