Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is a stock that, while we have followed very closely, we haven’t covered in some time here at CNA Finance. So, we thought it would be a good idea to reopen the discussion. Today, we’ll talk about the good, the bad, and the ugly surrounding NAK.
The Good Side Of NAK
Northern Dynasty Minerals has an incredible value proposition to offer, there’s no denying that. The company is sitting on an undeveloped gold mine… literally. It’s called the Pebble Project and has become the taboo discussion of the mining arena. This is because of the rings of fire NAK has had to jump through to even get the OK to file for permits. Nonetheless, if the Pebble Project does come to fruition, it will be a massive win for the company and all involved.
The Pebble Project is thought to be the world’s most significant undeveloped source of both gold and copper in the world. However, that doesn’t even scratch the surface when it comes to the amount of material that could be in this mine. In fact, current estimates suggest that there are 6.5 billion tonnes of valuable material, including copper, gold, molybdenum, and silver. Each one of these materials comes with a price tag, and if the mine comes to fruition, it could become a massive revenue generator.
The Bad Side Of NAK
While the value proposition is there, there’s also no denying the fact that the company has a long road ahead of them with regard to realizing the dream of an active mine at Pebble. For years, the company has been in a legal battle with the United States EPA. In fact, it wasn’t until last year that Northern Dynasty Minerals finally reached an agreement that would allow it to even submit applications for permits. Of course, these applications would need to be submitted in a strict timeline and following strict guidelines agreed to by both parties.
Sure, one hurdle has been cleared, but there are plenty of them ahead. One of the biggest of these hurdles is for the company to find a partner or partners that can share in the expense of getting the mine permitted, developed, and operational. Of course, that partner would share in the spoils once this was all completed. Nonetheless, this hurdle seems to be overtaking the company, and as you’ll soon find out in “The Ugly,” NAK had a partner, that is, until the partnership didn’t actually come to fruition!
The Ugly Side Of NAK
Recently, investors cheered when Northern Dynasty Minerals announced that it was working with First Quantum Minerals to reach an agreement that would create a partnership transaction. In fact, the news was announced on December 15, 2017, as the parties reached a framework agreement. Unfortunately, however, 17 days ago, the company announced that the parties were unable to reach an agreement on the option and partnership transaction that was contemplated in the framework agreement. As a result, NAK and First Quantum decided to terminate the deal and go their separate ways.
The truth of the matter is that, without partnerships for financial backing, Pebble will likely never come to fruition. First Quantum was the closest thing the company has gotten to as a partner thus far, and, when that deal fizzled, so too did much fo the excitement surrounding NAK.
What We’re Seeing From The Stock Today
Since the announcement of the terminated framework agreement, Northern Dynasty Minerals has struggled. Unfortunately, for those that really believe in the company and the stock, it is seeing more hard times today. At the moment (8:37), NAK is trading at $0.57 per share after a loss of $0.026 per share (4.38%) 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 watching for any partnership news, as we believe that a partnership is what it will take for the company to bring the Pebble Project to fruition. We’ll also be following the story surrounding the permitting process and the company’s financial position. Nonetheless, we’ll continue to follow the news closely and bring it to you as it breaks!
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