VANCOUVER — Northern Dynasty Minerals (TSX: NDM; NYSE-MKT: NAK) and the U.S. Environmental Protection Agency (EPA) have ended their longstanding dispute over the federal agency’s decision to block development of the company’s Pebble copper-gold deposit, 321 km southwest of Anchorage, Alaska.
The settlement allows the Pebble Ltd. Partnership, a subsidiary of Northern Dynasty, to restart the permitting process, but it does not guarantee that any proposed mine (which is located at the headwaters of the world’s largest sockeye salmon fishery) would win approval.
In return, Northern Dynasty would withdraw its two lawsuits against the EPA, saving the agency from “time-consuming and costly litigation,” Scott Pruitt, the Trump-appointed administrator of the EPA, said in a recent press release.
For Northern Dynasty’s president and CEO, Ron Thiessen, the resolution is a “spectacular achievement.”
“This agreement provides us the runway to an environmental impact study, and that’s the document everyone needs to make a rational decision on whether to proceed with development,” he tells The Northern Miner during a phone interview. “By the end of the year, we expect to submit the initial documentation needed and have a partner standing by our side.”
The project has been stuck in legal limbo since February 2014, when the EPA enacted subsection 404c of the Clean Water Act, claiming that mining at Pebble would cause “significant near- and long-term risk to salmon, wildlife and Native cultures of Alaska.”
The agency’s decision was based on data presented in its Bristol Bay Watershed Assessment (BBWA) — a US$5-million report that contemplated a number of mining scenarios — rather than Northern Dynasty’s US$115-million, peer-reviewed environmental baseline study.
“The EPA’s report assumed a mining design that was not of our making, and assumed maximum environmental damage,” Thiessen argues. “If an anti-aircraft group designed an airplane and accused Boeing of wanting to build one, it wouldn’t be fair if the Federal Aviation Administration prohibited Boeing from building airplanes. We believe that’s what happened to us. All we’re after is a fair permitting process built on our own design.”
Thiessen says the company may propose a smaller operation than the ones initially presented in the project’s 2011 preliminary economic assessment (PEA).
That PEA contemplated a 200,000-tonne-per-day operation over 25-, 45- and 75-year mine lives, each with US$4.7 billion in capital expenses. The 75-year mining scenario would result in the mining of 5.9 billion tonnes of ore grading 0.5% copper, 0.31 gram gold per tonne and 0.024% molybdenum, and have a US$6.8-billion pre-tax net present value, and a 14.5% pre-tax internal rate of return.
“Our PEA was never meant to be final engineering,” Thiessen continues. “The great thing about Pebble is — given its size, scale and location — it has a lot of optionality. At the west end of the deposit you can mine for a dozen years without hardly any waste, whereas in the east, you can sink a shaft and take 1–2% copper equivalent out, and there will be no waste. We’ll be looking at a smaller footprint, and we’ll have far more environmental safeguards than what was presented in the EPA’s report.”
As per the agreement, Northern Dynasty must file permit applications in the next 30 months, and the U.S. Army Corps has four years to file their environmental impact statement (EIS) on the project.
The EPA would then decide whether Pebble should proceed with development using the results of the EIS, and not the BBWA.
Thiessen says his company is now in discussions “with a number of potential partners,” and could form a consortium to develop the mine.
One-time partners Rio Tinto (NYSE: RIO; LON: RIO) and Anglo American (US-OTC: AAUKF; LON: AAL) each backed out of the controversial project several years ago.
“We’re completely financed for this year, but we aren’t financed for permitting, and that’s why we’re looking for a partner,” Thiessen says. “We have a lot of potential partners looking at a number of different mining alternatives at Pebble, and any of them could come on at any moment.”