Alaska's Pebble deposit, one of the world's largest known gold and copper resources, presents big problems for Northern Dynasty , the junior Canadian miner that wants to sell its 50 percent stake.
It's too big for all but the largest buyers, and political and environmental concerns could derail the multi-billion dollar project before it even gets under way.
I don't think anybody questions that this is an extremely valuable and important asset, said Dahlman Rose mining analyst Adam Graf. But without a 'social license', there may be question marks as to whether or not a project can be successfully permitted.
Estimated development costs of Dynasty's joint venture with Anglo American are at least $4.7 billion, limiting potential suitors to the 'A' list of diversified miners and gold majors like Rio Tinto or BHP Billiton .
And a buyer needs the stomach for a fight in a project opposed by scientists, aboriginals, environmentalists and even Hollywood celebrities. As one of the world's largest open-pit mines, Pebble would threaten a salmon fishery that also ranks as the world's largest, they say.
Set against that are the big potential gains. Dynasty released a preliminary economic study earlier this year, confirming that the deposit - which has a measured and indicated resource of 55 billion pounds of copper and 67 million ounces of gold - could produce ore for decades.
Acquisition costs have fallen too, after political concerns knocked more than half the value off the shares from February's record C$21.50. The shares were at C$9.32 on Friday.
That means a suitor could offer a healthy premium at about C$30 a share, and still pay under 40 cents per pound of recoverable copper, well below the two-year average for copper deals at $1.35 per pound, according to TD Newcrest data.
OF GOLD AND SALMON
The Pebble deposit sits some 15 miles (23 km) northwest of Iliamna, Alaska, home to about 100 people. The region's salmon fishery produced about 31 million fish last year worth more than $150 million, according to official state data, and opponents frame the project as a choice: metals or fish.
Supporters say mines and salmon can coexist, pointing to the Highland Valley and Gibraltar mines, both near Fraser River salmon fisheries in British Columbia.
But Thomas Quinn, a professor at the University of Washington, who focuses on fish ecology and has spent decades studying the salmon of Iliamna Lake, isn't so sure.
Step back and think about the magnitude of what is being contemplated, said Quinn. You're taking the most precious salmon system anywhere and you're throwing at it the largest scale project that's ever been contemplated.
If you don't draw a line in the sand here, you're basically saying there's none to be drawn.
Late last year, Canada blocked the development of the Prosperity project in British Columbia due to environmental concerns over a plan to pump tailings into a lake.
Prosperity is owned by Taseko Mines , which is part of the Hunter Dickinson group of mining companies that also includes Northern Dynasty. Taseko has submitted a new plan to regulators that it says addresses the problem.
While exact plans for Pebble have not yet been determined, a massive open-pit mine is a given for a cost-efficient development. The project will need a new road across 86 miles of mostly untouched Alaskan wilderness, a pipeline to pump the metal slurry to a deep-water port in Cook Inlet and the infrastructure to power it all.
On the other hand, the mine would employ about 2,000 people during construction and around 1,000 people once it's operational. Locals would fill half the jobs.
The project would also bring cheaper power and other infrastructure to a depressed region, and that could create a veritable gold - and copper - rush in the area.
Copper is hot. Mass adoption of electronics and green technologies, along with rapid urban growth in China and India, has demand for the red metal easily outpacing mine supply.
And it is that gap between supply and demand that makes Northern Dynasty appealing despite the political risks.
Rio Tinto already holds a 19 percent stake in the company. Other diversified miners like BHP and Vale, or an Asian consortium, are also likely suitors, said analysts.
Even top gold miners such as Barrick and Newmont Mining could be interested.
Either way, the door is open to any company willing to wait out the challenges, said Graf.
Once it is permitted, in all likelihood Northern Dynasty will be trading significantly higher, he said. You could buy it now - If you're willing to take on the risk and you have that long-term outlook.