Northern Dynasty Minerals (NYSEMKT: NAK) is a funny stock. Three days ago, shares of the "Pebble Project" gold miner sold off hard on news that the company had signed an agreement to (eventually) sell fellow gold miner First Quantum Minerals Ltd. a 50% interest in its Pebble mining project. The $1.5 billion "option" price would entail four annual payments adding up to $150 million initially, with the option to pay a further $1.35 billion afterward to seal the deal.
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Investors, perhaps worried that their potential profits from a successful Pebble project were being capped, revolted.
Today though, Northern Dynasty has just announced that the paperwork -- a U.S. Clean Water Act 404 permit with the U.S. Army Corps of Engineers -- that will be paid for with the first installment from First Quantum's investment is ready to be filed tomorrow. In response to this entirely expected "news," investors are pouring back into Northern Dynasty stock, which spiked 12% Thursday morning and is still up 6.4% as of 1:15 p.m. EST.
As I say, this was not exactly an unexpected development. Earlier this year, Northern Dynasty management told investors it had three key objectives to accomplish this year:
- Secure a settlement agreement with the EPA removing the agency's "Proposed Determination under Section 404(c) of the Clean Water Act" and permitting Pebble to apply for the aforementioned 404 permit.
- Find a new partner to help finance Pebble's development.
- And start the paperwork necessary to secure permits to develop Pebble.
With today's news, Northern Dynasty Minerals says it "will hit our mark on all three important milestones."
Management says it is "confident that Pebble as currently envisaged will secure development permits from federal, state and local regulatory agencies," and expects to be able to announce "more progress milestones ... in 2018."
With each new announcement, investors can expect to see similar pops in Northern Dynasty stock -- at least until the company starts operations, at which time the focus will shift from press releases to profit-and-loss statements. Until then, PR remains the name of the game at Northern Dynasty Minerals.
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