Please ensure Javascript is enabled for purposes of website accessibility

Why Northern Dynasty Minerals Ltd Stock Jumped 12% This Morning

By Rich Smith - Jul 12, 2017 at 12:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The EPA rides to the rescue.

What happened

Shares of would-be goldminer Northern Dynasty Minerals Ltd (NAK 1.71%), the company that is hoping to open up a "Pebble" goldmining project in Alaska, surged more than 12% in early Wednesday trading, before settling down to enjoy a more muted gain of 4.1% as of 11:45 p.m. EDT.

So what

On Tuesday, after close of trading, Northern Dynasty announced that the US Environmental Protection Agency has agreed to withdraw its 2014 Clean Water Act Proposed Determination.

If left in place, this determination would have restricted Northern Dynasty's ability to develop its Pebble Project. Removed, however, it now permits Northern Dynasty to proceed with obtaining a final Environmental Impact Statement for the Pebble Project from the U.S. Army Corps of Engineers. Assuming a positive finding from the Corps, Northern Dynasty will be able to proceed with obtaining a permit to begin mining, according to the "normal course" for obtaining such permits.

A car on tracks inside a gold mine.

Image source: Getty Images.

Now what

Although this is good news for Northern Dynasty, it was hardly unexpected. It has been known as far back as May that Northern Dynasty had a settlement agreement in place with the EPA that would permit this.

What remains unknown is whether the Corps will indeed give Northern Dynasty a positive environmental impact statement. And even if the Corps gives it the all clear, we also don't know whether Northern Dynasty will be able to attract the kind of funding it will need to make the Pebble Project a success. Northern Dynasty said in its statement on Tuesday that it "is now focused on qualifying and securing a new major funding partner for the Pebble Project" -- meaning it does not yet have one in hand.

For that matter, even assuming everything else works out right, there's still no guarantee Northern Dynasty will find enough gold, and be able to extract it profitably enough, to make the Pebble Project a success.

Profitless, revenue-less, and with only $42 million in cash in the bank, Northern Dynasty Minerals stock remains a speculative investment.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Northern Dynasty Minerals Ltd. Stock Quote
Northern Dynasty Minerals Ltd.
NAK
$0.33 (1.71%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.