Getting a mining operation running is never one of your easier tasks. Having a solid reputation, however, makes the process quite a bit easier. Add in a very nice chunk of development and operations capital for a larger project, and the hassles involved with permits and construction make the journey quite a bit easier. If each of these elements are brought to bear and economic conditions permit, profit will come for a nice long time to come.
Northern Dynasty Minerals Ltd., a minerals exploration company, is working to exploit its 50% stake in a gold, molybdenum and copper property located in Alaska. The company was founded in 1983 and is based in Vancouver BC, Canada.
Even though a focus on one particular project may appear somewhat limiting, one must take a closer look at the particular project and the players involved in its development. In this case, the project in question is referred to as the Pebble deposit. It is located in the south western part of Alaska with excellent access, low elevation and community support. In many ways, this support will be critical as the size and type of deposit is such that a long-term mining opportunity exists for the company. The partnership is no less an important consideration. The 50% deal with Anglo American Ltd. to permit, construct and operate the mine indicates that there is solid financial backing to make the project work. Under terms of the agreement, Anglo American will provide $1.5 billion in staged investment to move the project forward while sharing ownership, board and general rights with Northern Dynasty. Current estimated recoverable reserves are 55 billion pounds of copper, 70 million ounces of gold and 2.3 million pounds of molybdenum (“Moly” is a steel strengthening additive.)
As the Pebble project begins to get under way, it does appear that the company is exercising restraint in its expenditures and how it is allocating its staged investment capital. Approximately $C125.00 million has been allocated for prefeasibility studies while stock has been granted in various forms to local organizations to engender long-term good faith and support. This particular aspect of the company’s program does appear to be a trend in several aspects of how the company intends to go about its operation for the long-run. Perhaps one of the more interesting aspects going forward is that the company is currently benefiting from the Canadian dollar foreign exchange rate, registering nice gains as opposed to the US dollar which has been registering as a drag for many companies. Northern Dynasty Minerals Pebble project is a long-term play and is being treated as such. If gold can hold its place and the construction markets make their return in 2012, as forecasted, this opportunity could pay off nicely.