Why Northern Dynasty Minerals Stock Just Jumped 25%

By Rich Smith Markets Fool.com

What happened

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After plunging 33% in trading last week, shares of Northern Dynasty Minerals (NYSEMKT: NAK) stock turned sharply upwards in Thursday trading, passing the 25% mark as of 11:15 a.m. EST.

So what

In late-breaking news on Wednesday, Northern Dynasty published a press release advising that the U.S. House of Representatives' Committee on Science, Space and Technology "has called on the new Administrator of the US Environmental Protection Agency ('EPA') to rescind the federal agency's 2014 regulatory action under Section 404(c) of theClean Water Actto pre-emptively veto Alaska's Pebble Project."

Did Congress just hand Northern Dynasty investors a golden opportunity? Image source: Getty Images.

Now what

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Now, investors are quite understandably getting excited over the news. Still, it's important to remember, firstly, that just because the SST committee has asked EPA administrator Scott Pruitt to lift the band, and just because Pruitt is believed to be a foe of EPA overreach, a positive decision in this matter is not foreordained.

Even Northern Dynasty admits that a favorable response from the EPA will only "return the Pebble Project to normal course permitting" and allow Northern Dynasty "to propose a comprehensive development plan for the Pebble Project, and to have it fairly and objectively reviewed." It wouldn't guarantee approval of the project, or guarantee that Pebble will ever earn Northern Dynasty any profits.

Questions resolving that eventual profitability, which were behind the sell-off of Northern Dynasty stock last week, will remain open. So unless you're convinced that Pebble will earn a profit, and that the short-sellers are wrong on this one, it's probably still best to stay away. After today's jump, the short-term profits have probably already been made.

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Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.