Northern Dynasty (NAK US, NDM TO): Hail Mary Pass
Initiation Report: September 9, 2020
J Capital Research ("J Cap") is a stock-research company. J Cap has analyzed the U.S.-listed company Northern Dynasty Minerals Inc. (“NAK”) and is hereby publishing the outcome and the conclusions of our analysis, based on publicly available information. We may be short shares of NAK and, for this reason, there might be a conflict of interest.
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We believe Northern Dynasty (NAK US, NDM TO) has crafted a money-losing mining plan to achieve government approvals.
Since management is bonused on lobbying success instead of for producing minerals, NAK has no reason to care that the new plan is irrational: we think it will lose money, leave investors with a stranded asset, and be canceled anyway if Joe Biden is elected. So why has NAK twisted itself into this knot? The CEO of Pebble Partners, the operating entity for NAK’s low-concentration gold and copper deposit, will receive $4.4 mln of the promised $12.5 mln bonus for winning a green light just to start the permitting process. We believe that the deposit cannot be mined profitably and that mining majors Anglo American (AAL L) and Rio Tinto (RIO US) know that. AAL withdrew from its partnership in the mine in 2013 after spending $500 mln. Rio gifted its 19.1% stake in NAK to two Alaskan charities. One of those, the Bristol Bay Native Corporation, benefitting people in the impacted Bristol Bay area, promptly sold off the shares. The local people clearly don’t believe in the mine. What’s more, NAK has claimed poverty to dodge a feasibility study, which would demonstrate economic viability. Pebble CEO Tom Collier said they did not have the money to pay for one despite the fact they have spent $1 bln and such a study would cost $80 mln at most. 
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