Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is having an overwhelmingly strong start to the trading session in the pre-market hours, and for good reason. The company announced that it has entered into a framework agreement, causing excitement among investors and sending the stock toward the top. Today, we’ll talk about the agreement, what we’re seeing from NAK as a result, and what we’ll be watching for ahead.
NAK Announces Framework Agreement
As mentioned above, Northern Dynasty Minerals is having an incredibly strong start to the trading session in the pre-market hours this morning. The gains come after the company announced that it has entered into a framework agreement with First Quantum Minerals Ltd. Under the terms of the agreement, an affiliate of First Quantum will execute an option agreement with NAK.
Under the terms of the option agreement, an option payment of $150 million will be made over four years. This option will entitle First Quantum to acquire the right to earn a 50% interest in the Pebble Limited Partnership for a cost of $1.35 billion. In the press release, NAK said that the option period may be extended for up to 2 years by First Quantum making payments, for which amounts will be agreed upon later, that will offset the $1.35 billion additional investment amount. Upon the execution of the agreement, First Quantum will make an early option payment of $37.5 million. This payment will be applied only for the purpose of progressing the permitting of the Pebble Project. In a statement, Ron Thiessen, President and CEO at NAK, had the following to offer:
“We have made good progress in the partnering process and are very pleased to be in advanced-stage discussions with First Quantum, an industry leader in mine development and management… Just as importantly, the immediate capital contribution from First Quantum will allow Northern Dynasty to execute on its plan to move the Pebble Project forward to initiate federal and state permitting in the very near-term.”
How The Stock Is Reacting To The News
As investors, one of the first things that we learn is that the news moves the market, and that’s definitely the case for Northern Dynasty Minerals today. With the news that this partnership has been formed, investors are excited, leading to strong gains in the stock. Of course, our partners at Trade Ideas were the first to alert us to the movement. At the moment (9:18), NAK is trading at $2.39 per share after a gain of 10.65% thus far today.
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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 First Quantum partnership as well as future partnerships that are likely to be announced. After all, in the past, Northern Dynasty MInerals said that the project will be the result of a consortium of partnerships. So, this is likely just the first in line.
Another big catalyst that we’ll be watching for here is the submission of permit applications. Recent statements made by management suggested that the company is looking to close some partnerships. Once these partnerships are closed, they will be submitting their first permit applications. Considering the strong partnership news, and the management statements that suggest that the permitting process will commence this month, it seems as though the company is on the right track and that NAK will have a big catalyst coming very soon. So, we’ll keep our eyes peeled for anything on the permitting side of the equation as well. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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