Northern Dynasty Minerals Ltd. (NYSEAMERICAN: NAK) is screaming for the top in the market this morning, following up on the more than 10% gains seen in the market yesterday. The gains come after the company announced a request for appeal surrounding the decision with regard to its Pebble Project. Here’s what’s going on:
Skip to What You Want to Read
- Northern Dynasty Minerals Requests Appeal
- Management Commentary
- What Is the Pebble Project?
- Will the Appeal Work?
- What Analysts Think About NAK Stock
- Risks to Consider Before Buying NAK Stock
- Final Thoughts
Northern Dynasty Minerals Requests Appeal
As mentioned above, Northern Dynasty Minerals stock is headed up for the second consecutive session after announcing that its subsidiary, Pebble Limited Partnership, has filed a request for appeal, or RFA, of the US Army Corps of Engineers recent issuance of a negative Record of Decision for the company’s Pebble Project.
With the negative Record of Decision, NAK and its subsidiary will not be able to obtain the permits to move forward with the development of the Pebble Project.
In a statement, Ron Thiessen, President and CEO at NAK, had the following to offer:
There are some very compelling arguments persuasively presented in the Pebble Partnership’s RFA, and we encourage all our shareholders and others interested in responsible resource development in Alaska and the United States to review them carefully.
We believe our submission clearly demonstrates the USACE’s Record of Decision for the Pebble Project is contrary to law, unprecedented in Alaska and fundamentally unsupported by the administrative record. These are matters not only of concern to Northern Dynasty and its investors, but to all Alaskans.
What Is the Pebble Project?
The Pebble Project, once developed, will be one of the world’s largest mines for precious metals. The problem is that the mine is proposed in one of the most delicate environments in the United States.
Should the Pebble Project come to fruition, NAK and its investors will have access to billions of dollars of gold, silver, rhodium, and several other precious metals. So, it’s well worth the fight to bring this mine to fruition. The only question is…
Will the Appeal Work?
This is a tough one to call. With the recent change of guard in Washington D.C., chances are slimmer than they had been in the past, but it’s not impossible for the mine to come to fruition either.
So, what ground does NAK stand on?
The US Army Corps of Engineers issued an Environmental Impact Statement, suggesting that the Pebble Project would not have a measurable effect on the fish populations associated with fisheries in Alaska. Moreover, the Statement suggested that the mine would have a positive economic impact on the region.
However, in the final Record of Decision, the US Army Corps of Engineers seem to have walked-back statements in the EIS. This time, the opinion was that the mine would have a negative effect on the surrounding environment and should not be approved.
As a result, NAK believes that the decision was made in error, and many investors believe that it was based on politics, rather than environmental facts.
Who’s to say whether the appeal will go through, but NAK does have a strong argument here.
What Analysts Think About NAK Stock
Analysts seem to have a relatively moderate view of Northern Dynasty Minerals stock. According to TipRanks, there are two analysts covering the stock at the moment, one with a Buy rating and one with a Hold.
Price targets range from $0.80 to $0.89 per share with a median of $0.85 per share, which suggests that there’s potential for extreme gains ahead for NAK stock.
Risks to Consider Before Buying NAK Stock
Any investment you make comes with risk, but given the current state of Northern Dynasty Minerals, an investment in the company would be incredibly risky. Before diving in, consider the following:
- Succeed or Die Trying. NAK is currently running on the succeed or die trying mentality. The company knows that without Pebble, it has nothing. So, it’s spending all of its resources working toward permitting. As a result, it has become a binary play. Either Pebble comes to fruition or investors lose their shirts.
- Profitability. Even if the Pebble Project does receive permits, it will take years for the mine to come to fruition. Without the mine, the company isn’t making any money. As a result, it has to survive on the money it has in the bank. Should it be unable to do so, an offering of newly-issued common stock is likely ahead, which will dilute shareholder value and result in declines.
- Volatility & Speculation. Northern Dynasty Minerals is fueled by speculation and a target for volatility. Stocks with heavy volatility make buying and selling decisions difficult. Moreover, speculative stocks, like NAK, only add to the level of risk and increased volatility.
I’ve been all for Northern Dynasty Minerals bringing the Pebble Project to fruition since I started following the company. However, it’s not my opinion that matters, it’s the opinion of those that approve or decline the permits.
All in all, things aren’t looking good. NAK is throwing a hail mary pass, hoping for the best, and for their sake and the sakes of their investors, I hope it’s not intercepted. Nonetheless, the stock is much too risky for my blood.