NAK Stock: Northern Dynasty Minerals Climbs on Pebble Appeal

Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is having a strong start to the trading session this morning, and for good reason. The company announced that the State of Alaska plans to appeal the recent denial of the Pebble Project permit. Here’s what’s going on:

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State of Alaska to Appeal the Pebble Project Permit Denial

As mentioned above, Northern Dynasty Minerals is having a great start to the trading session this morning after the company announced that the State of Alaska will appeal the recent decision to deny the company a permit to move forward with the Pebble Project. 

In the press release, NAK said that the Office of Alaska State Governor Mike Dunleavy issued a statement late last week announcing that his administration will formally appeal the US Army Corps of Engineers’ late-November denial of a key federal permit for the Pebble Project. 

In the announcement, Governor Dunleavy said that the denial was flaund and creates a dangerous precedent that will “undoubtedly harm Alaska’s future.”

Importantly, the State of Alaska is the owner of the land and subsurface mineral estate at Pebble. As such, it has the right, along with NAK’s subsidiary, Pebble Limited Partnership, to launch an administrative appeal of the USACE’s permitting decision. 

The company said that it believes the State of Alaska will bring different perspectives and motivations in challenging a federal decision that both, the State, and Pebble, believe to be arbitrary, unprecedented, and unsupported by administrative record. 

In the release, NAK explained that the State of Alaska and Pebble must act quickly, submitting the request for appeal, or RFA, within 60 days of the USACE’s decision. As such, the parties are working together to prepare a comprehensive RFA, challenging the permitting decision. 

Nonetheless, the company said that the RFA is intended to be submitted to the USACE’s Pacific Ocean Division Engineer within two weeks. Following the receipt of the RFA, the USACE will have 30 days to notify Pebble as to whether the RFA is complete and 90 days to conclude the appeal process. 

Commentary From Alaskan Government Leadership

In a statement, the Office of Alaska Governor quoted Acting Attorney General Ed Sniffen in offering the following:

This appeal asks the Army Corps Pacific Ocean Division to remand the permit decision back to the Alaska District for a more thorough review consistent with the law. The Division ignored Corps’ long-standing guidance that required it to tailor mitigation requirements to recognize Alaska’s unique position of holding more intact wetlands than any of the lower 48 states combined. Instead, the Division is requiring mitigation measures that are simply impossible to meet in Alaska.

The above statement was followed up by Alaska Department of Natural REsources Commissioner Corri Feige with:

The Alaska District’s decision has far-reaching and ominous implications for our rights as a state to develop our resources for the benefit of all Alaskans, whether its mineral deposits like Pebble, or oil and gas on the North Slope, or other resources anywhere in the state. The Alaska Constitution specifically directs us to develop our resources in the public interest. When a federal agency arbitrarily tries to deprive us of our rights with the stroke of a bureaucrat’s pen, we simply must challenge that action.

Why NAK Investors Are Excited

Ultimately, the news released by NAK is overwhelmingly exciting. When the USACE handed down the permit denial, investors were shocked. A previous USACE Environmental Impact Statement suggested that approval would be coming down the line. 

Now, there’s yet another chance for approval to take place, and it’s not just Northern Dynasty Minerals, the Pebble Limited Partnership, and investors asking for the approval. Now, the Alaskan government is getting involved, which could help to tip the scales and set the stage for a permit approval. 

Should the permit be approved, the company will be embarking on one of the largest mines in the world, setting the stage for tremendous growth ahead. 

What Analysts Think About NAK Stock

According to TipRanks, there are currently two analysts covering NAK stock. The first has a Buy rating and the second a Hold. There are no analysts that rate the stock a Sell at the moment. 

Price targets are also pretty appealing, with a low target of $0.80 and a high of $0.90, for a consensus average of $0.85. Should the stock reach this point, it will have grown well over 100% to get there.

While it’s never a good idea to blindly follow the opinions of analysts, or any expert for that matter, it is wise to use these opinions to validate your own, and when it comes to NAK stock, analysts opinions are positive. 

Risks to Consider Before Buying NAK Stock

There’s no such thing as an investment that comes without risk, and buying Northern Dynasty Minerals is no exception to that rule. Before diving in, consider the following risks:

  • Pebble. The Pebble Project is the point of value for NAK stock. At present, permitting for the project has been denied. The goal is to overturn that decision, but if the company can’t do so, it will find itself with very little value to offer investors, leading to more significant declines. 
  • Capital Risk. Northern Dynasty Minerals doesn’t generate revenue. As such, it must survive on the money it has in the bank. If it fails to do so, it will likely sell newly issued shares to raise funds. While it’s not difficult to raise funds this way, the sale of newly issued shares will lead to dilution and significant declines should it take place. 
  • Penny Stock Risk. Northern Dynasty Minerals is a penny stock, and comes with added risk. First and foremost, the company’s business model hasn’t been proven. Moreover, NAK stock trades with heavy volatility, meaning that significant losses can happen over night. 

Final Thoughts

There’s no doubt about it, an investment in Northern Dynasty Minerals at present is a very risky proposition. However, if you can stomach the risk, there may be a massive payoff. 

If the company were to get the Pebble Project approved, it would move toward the development of one of the world’s largest mines for both precious metals and key basic materials. At full capacity, the mine could drive massive amounts of revenue, sending the stock screaming for the top. All in all, everything hinges on the appeal process at the moment, and should it go well, the stock will rocket ahead.