Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



This Massive Copper Project Still Won't See the Light of Day

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

They're building some pretty big windmills in Alaska these days.

Northern Dynasty Minerals  (NYSEMKT: NAK  )  announced Friday it had reacquired total ownership and control of the the massive Pebble copper and gold project at the headwaters of Bristol Bay, with an eye toward triggering federal and state permitting in the first quarter of 2014. Playing the role of Sancho Panza to the miner's Don Quixote, the market bid up shares of Northern Dynasty by 12% on Friday, and it was up another 11% in midday trading today, but the stock has still lost three-quarters of its value from the highs it hit earlier this year.

Drill rigs at Pebble. Source: Northern Dynasty Minerals.

Back in September, Northern Dynasty's partner Anglo American (NASDAQOTH: AAUKY  )  declared it would be withdrawing from the operation, likely seeing the writing on the wall as opposition to the project mounted at the same time it was facing internal pressure to realign its capital allocation policies. Although some $556 million had already been spent developing Pebble, the mining major has been hard put to justify the expenditures made in defense of some far-flung projects.

It ran into roadblocks obtaining permits at Minas Rio in Brazil that it purchased for $4.8 billion between 2007 and 2008 and has seen the estimates for developing the iron ore mine triple to $8.8 billion as changes to the scope of the project and higher-than-expected construction costs dragged it down. Anglo is now looking for a partner to help shoulder the expenses at the project, which is forecast to produce 26.5 million metric tons of iron ore annually. Its CEO was ousted because of the delays and cost overruns, and his replacement is taking a much sharper pencil to project expense accounts.

Last week Anglo said it would be directing capital only to priority projects in an effort to build cash flows over the next few years. Those include copper projects at Los Bronces in Chile and Quelleveco in Peru, iron ore at Sishen in South Africa, metallurgical coal in Australia, and a complete overhaul of its platinum business in the face of a weak pricing environment. It will keep its thumb in the pie of diamonds, platinum group metals, and thermal coal, but projects like Pebble, despite the rich opportunity it represents if it gets the necessary permits, are getting rationalized.

And it's not alone, as miners everywhere pull back to confront the new realities the industry faces. Goldcorp (NYSE: GG  ) recently said it was suspending all exploration activity at Cerro Negro in Argentina; Rio Tinto (NYSE: RIO  ) continues to extract itself from projects around the globe, including the just-announced closure of its alumina refinery at Gove in Australia; and most notably Barrick Gold (NYSE: ABX  ) indefinitely suspended its Pascua Lama gold project in Chile.

Anglo believes it can no longer go off on quixotic campaigns like Pebble. As commodity prices tumbled from 10-year highs, miners who pursued growth at any price policies in a bid to dominate niche markets found they had overcapitalized their assets leaving them exposed. Anglo was one of them, and now it's pulling in the reins.

Northern Dynasty doesn't have that luxury. Its future depends on getting Pebble operational, so it will be looking for a new partner for the venture. That might be a tough sell, though the lure of the copper and gold project may prove attractive for someone. The mine has the potential to produce as much as 55 billion pounds of copper, 67 million ounces of gold, and 3.3 billion pounds of molybdenum during its nearly 80-year life while producing $2.4 billion a year to the local economy and $9 billion in new state and federal tax revenues.

Standing in the way, of course, are environmentalists and villagers who are worried the open-pit mine will irreparably harm the 40 million salmon that swim into Bristol Bay every year, along with local bear, moose, and caribou populations. They've lined up a diverse list of opponents behind them, including jeweler Tiffany and gunmaker Sturm, Ruger. The EPA has already proved it's opposed to the project, and with some 67 different state and federal permits required to get through to construction, it seems Northern Dynasty is tilting at windmills with its belief it can succeed. 

Just as Cervantes' hero was left wanting, investors are likely to have similar, unrealistic dreams that will go unfulfilled.

A search for wealth
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 18, 2013, at 2:50 PM, Ontogenyrules wrote:

    You mention that Agglo's CEO was ousted and that "...his replacement is taking a much sharper pencil to project expense accounts."

    Cynthia Carroll was the ousted CEO. A brilliant woman.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2767043, ~/Articles/ArticleHandler.aspx, 9/25/2016 12:01:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
AAUKY $0.00 Down +0.00 +0.00%
Anglo American plc… CAPS Rating: **
ABX $18.11 Down -0.42 -2.27%
Barrick Gold CAPS Rating: ***
GG $16.66 Down -0.43 -2.52%
Goldcorp CAPS Rating: ***
NAK $0.79 Down -0.01 -1.25%
Northern Dynasty M… CAPS Rating: ***
RIO $32.41 Down -0.11 -0.34%
Rio Tinto CAPS Rating: ***