Northern Dynasty Minerals Ltd. (NAK) stock prices were up 11.17% as of market close on April 19th, 2021, settling in at USD$0.60 per share.
Pebble’s Letter to EPA
In light of the U.S. Environmental Protection Agency (EPA) having appointed a new administrator, NAK’s 100% owned subsidiary, Pebble Limited Partnership (Pebble) recently sent a letter to the EPA Administrator. In the letter, they outlined their federal permitting process that began in December 2017 and summarized the course the permitting process for Pebble took over an intensive and extensive review spanning 30 months.
July 2020 saw the publication of a Final Environmental Impact Statement (EIS) by the US Army Corps of Engineers (USACE), which NAK identifies as being the most accurate and objective assessment of the Pebble Project. The report stated that the Pebble Project would make substantial socioeconomic contributions to the locale in which it operates, with no detriment to the water and wildlife.
Negative Record of Decision
Nevertheless, in November 2020 the USACE issued a negative Record of Decision in regard to the Pebble Project. Pebble has since commenced an administrative appeal of their decision, citing the Final EIS the USACE itself had published just earlier that year. Pebble has urged the new EPA Administrator to safeguard Pebble’s rights for due process under the law and claims that the negative decision is both inconsistent with the evidence and, therefore, contrary to the law.
The crux of Pebble’s case lies in the speculative nature of the economic detriments associated with the Pebble Project, whereas the upsides documented are very likely to benefit local communities and are largely demonstrable. Furthermore, Pebble notes that the concerns raised and conclusions reached by the USACE are contrary to the observed experience of other mines in Alaska.
Definitive Pros and Uncertain Cons
The benefits associated with the project include an increase in jobs; improvements in health, education, and infrastructure; and decreased costs of living for the local communities and their residents. The USACE has insinuated that the Pebble Project could lead to diminishing subsistence activities, affect water quality and wildlife, and other post-closure detriments. NAK argues that these claims are inconsistent with EIS findings and that post-closure issues are less detriments than they are returns to baseline conditions.
The RFA submitted by Pebble has been accepted by the USACE as of February 2021, and a Review officer has been appointed to oversee the appeal process. While the process usually takes 90 days, the USACE anticipates Pebble’s appeal taking longer because of the complexity of issues and the sheer volume of relevant materials.
The Future for NAK
While the negative Record of Decision in November was devastating for NAK, the development of their appeal has instilled a modicum of confidence in investors. How the appeal unfolds will determine which way NAK stock prices will swing for the long run.