Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is having a relatively rough start to the trading session this morning after announcing that it has extended the deadline date surrounding a key agreement. With the delay in the agreement, investor concerns hit, leading to declines. However, is this creating an opportunity? Today, we’ll talk about:
- The extended deadline news;
- what we’re seeing from the stock as a result;
- why this could represent a strong opportunity; and
- what we’ll be watching for ahead.
NAK Extends Deadline On Key Agreement
As mentioned above, Northern Dynasty Minerals is having a rough start to the trading session this morning after announcing that it has agreed to extend the deadline date surrounding a key agreement. In a press release issued early this morning, the company announced that it has agreed to extend the deadline of the framework agreement with First Quantum Minerals Ltd. to May 31, 2018.
However, in the release, the company reminded investors that the agreement with First Quantum is by no means definitive. At the end of the day, the closing of the transaction between NAK and First Quantum is dependent on the completion of due diligence, necessary regulatory approvals being obtained, and the successful negotiation of the final form of the option agreement and associated commercial agreements. So, it’s important that investors keep in mind that there is no assurance that a transaction will take place here.
What We’re Seeing From The Stock
One of the first lessons that we learn as investors is that the news moves the market. In this particular case, the news seems somewhat concerning. With an extended deadline date surrounding a potential agreement, there may be some hurdles that stop the agreement from going into place, and investors are concerned. As a result, we’re seeing declines in the value of the stock this morning. As is usually the case, our partners at Trade Ideas were the first to alert us to the declines. At the moment (8:01), NAK is trading at $0.82 per share after a loss of $0.058 per share (6.61%) thus far today.
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This Could Be An Opportunity In The Making
At the end of the day, the concerns here are simple. Northern Dynasty Minerals needs partners on the Pebble Project, and if First Quantum falls through, the company is going to need to find another partner. Nonetheless, this could be an opportunity in the making. First and foremost, NAK has fought tooth and nail to be able to move forward with potential permitting at the Pebble Project. Now that this process is underway, the company has set its sights on developing what could become one of the world’s largest mines. Sure, a partner falling through on the project is a setback, but it’s not the end. With an opportunity to get in on what is likely to be an overwhelmingly valuable project, there are plenty of partners that could take First Quantum’s place. As a result, while we may have a set back now, these declines are likely just generating a discounted opportunity to get in on future gains.
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on NAK. In particular, we’re interested in following the story surrounding the Pebble Project and all aspects of it. Of course, we’ll continue to follow the news closely and bring it to you as it breaks!
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