Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is having yet another strong day int he market, following up on the 37% gain that it saw in January. However, the company hasn’t released any news. So, what is it that investors see in the stock? Today, we’ll talk about:
- The value proposition offered up by NAK;
- what we’re seeing from the stock; and
- waht we’ll be watching for ahead.
Why Investors Seem To Love NAK
If you haven’t been following Northern Dynasty Minerals, it’s big story is the Pebble Project. If the project is completed, it will be one of the world’s largest gold and copper mines in the world. With trade war tensions and other global economic concerns, commodities saw gains in January, helping investors to jump on board.
The truth of the matter is that the Pebble Project is a very attractive proposition. While it will likely take several years to come to fruition, the value of the basic materials under the soil at the proposed mine is massive for NAK investors.
Where There’s Reward, Risk Can Be Found
While the Pebble Project offers a large potential long term reward for investors, there’s also quite a bit of risk to consider here. First and foremost, with the Pebble Project being one of the largest gold and copper mining projects in the world, the value here could be incredible, but it won’t be seen for years.
Moreover, NAK is highly dependent on support from the investing community to stay afloat. In fact, in December, the company raised approximately $6.3 million through an offering to cover a legal bill that is coming due as the result of a United States Environmental Protection Agency settlement.
There’s a bit more to be concerned about here. The filing tha tthe company issued in January, provided the company a pathway to raise up to $50 million in security sales, opening the door for further dilution.
Nonetheless, a lot can be said about a company that is able to stay afloat because investors see so much long term value that they are willing to foot the short-term bill.
Finally, it’s important to point out that NAK is a very speculative investment. At the end of the day, the investment rides on high hopes that the company will be able to successfully develop the Pebble Project mine. Should investors lose faith and the company lose market support over the years that it will take for this goal to come to fruition, the company would find itself in some serious financial trouble. Nonetheless, it is hard to ignore the overwhelmingly valuable asset that the Pebble Project could become. So, for the risk tolerant investor, this could be a great move.
What We’re Seeing From The Stock
Northern Dynasty Minerals has been on a strong trend in the right direction as of late, and there is no sign that this trend is going to stop any time soon. In fact, the stock is adding to the strong gains that we saw in January with another run for the top today. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:13), NAK is trading at $0.93 per share after a gain fo $0.038 per share or 4.21% 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 company’s efforts to develop the Pebble Project. We’ll also be watching for another offering as the filing mentioned above suggests that we will see more news surrounding dilution. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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