Northern Dynasty (TSX: NDM; NYSE: NAK) announced this week that its 100%-owned, U.S.-based subsidiary Pebble Limited Partnership, received formal notification from the U.S. Army Corps of Engineers (USACE) that its application for permits under the Clean Water Act and other federal statutes have been denied.
The lead federal regulator found Pebble’s “compensatory mitigation plan” submitted earlier this month to be “non-compliant” and that the project is “not in the public interest.”
The Washington Post cited a statement by Colonel Damon Delarosa, commander of the U.S. Army Corps of Engineers in Alaska, who said that the proposed project did not have an adequate plan to handle waste that it produced.
Northern Dynasty called the decision “politically motivated” and intends to launch an administrative appeal of the decision within the 60-day window available to it. The company also said the decision is fundamentally unsupported by the administrative record as developed by the USACE through the Environmental Impact Statement (EIS) process for the Pebble project.
If permitted, Pebble would be North America’s largest mine, with measured and indicated resources of 6.5 billion tonnes containing 57 billion pounds of copper and 71 million ounces of gold, 3.4 billion pounds of molybdenum and 345 million silver ounces, if permitted, Pebble would be North America’s largest mine.
Pebble’s permitting process has been surrounded by controversy and delays. Pebble faced environmental opposition from the onset as the mine would be near the world’s largest commercial sockeye salmon-producing region, and doubts surrounding the project rose steadily over recent months.
News of the decision on Nov. 25 sent Northern Dynasty’s Toronto-listed shares plummeting by 51.4% or 54¢ to close at 58¢ on a trading volume of 19.3 million shares. At presstime Northern Dynasty was trading at 48¢ per share.
Andrew Mikitchook, a mining analyst at BMO Capital Markets, reiterated his ‘Outperform’ (Speculative) rating on the company and removed his target price on the stock as the company starts the appeal process. “This surprise about-turn comes after a positive Final EIS was issued in July 2020,” he wrote in a research note to clients, noting that Pebble “remains one of the largest accumulations of both copper and gold globally.”
“Northern Dynasty still has further recourse and we will monitor their progress,” he noted. “In our opinion, there could eventually be the right combination of a development plan and social acceptance to allow the project to move forward be it in the near-term or later,” he stated.
Mike Kozak of Cantor Fitzgerald noted in a research note that he has placed his target and rating on the company under review for the time being. The analyst’s previous target price was $2.50 per share and he had a ‘Speculative Buy’ rating on the company “on the expectation that the Compensatory Mitigation Plan put forth by Pebble would be acceptable to the Corps and ultimately a positive Record of Decision (ROD) would be issued, particularly given the fact that the FEIS was supportive. This has proven to be incorrect.”
Kozak also raised the question whether the U.S. presidential election had an impact on the decision. “We have long held the view that it was imperative for Northern Dynasty to receive a positive ROD ahead of the November U.S. election,” he wrote in his Nov. 27 research note. “The delay resulting from the Corps request for Compensatory Mitigation pushed the ROD beyond the election, and we note that the Biden Administration is on the record opposing the Pebble project.”
An earlier version of this article first appeared on MINING.com, part of Glacier Resource Innovation Group.