What happened

Shares of mining story stock Northern Dynasty Minerals (NYSEMKT:NAK) rocketed over 34% today after announcing that the Alaska Department of Natural Resources (DNR) has issued a notice of approval of Miscellaneous Land Use Permit (MLUP) for the company to operate on state-owned land, better known to investors as the Pebble Project. It's a small but necessary step for moving forward in the overall permitting process that will require additional approvals at the state and federal level. As of market close Wednesday, the stock had settled to a 31.88% gain. 

So what

In the grand scheme of things, today's announcement is still relatively insignificant -- and the company's press release was missing a few key details that investors should know. 

The Alaska DNR grants thousands of MLUPs each year, but this one had some special covenants. The DNR promised to increase the amount of site inspections it will conduct and added a $2 million bonding requirement that will help cover some of the cleanup costs from exploratory drilling sites should the company not survive. That was influenced by the public comment period for this very MLUP, which documented complaints from locals that past drill holes were left in an unacceptable state. The company has already provided the bonds.

A red excavator at a mineral mine.

Image source: Getty Images.

Concerns over sloppy execution also explain why the MLUP covers the minimum amount of time possible, or just one year (the maximum is five years). That means Northern Dynasty Minerals will be required to seek another when this one expires.

Also of note: The new permit does not authorize any new exploration at the Pebble Project, which the company did not request. In other words, the recent MLUP will simply allow Northern Dynasty Minerals to "prepare the project" for permitting at the federal level. That is, gaining approval for Pebble's development under the Clean Water Act and National Environmental Policy Act.

Now what

Unfortunately for investors hoping for a breakout, today's news is not all that material to the stock. Obtaining an MLUP is a relatively ho-hum event that doesn't usually warrant a press release. Then again, the approval process isn't usually opened to public comment periods, either, so management was likely just updating investors on what has been a volatile sequence of events. It's important to remember that the overall permitting process alone will cost up to $150 million and take up to four years to complete. In other words, there's a long road ahead.

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