What happened

Shares of Northern Dynasty Limited (NAK -0.73%) are on a two-day bender. On July 6 the stock gained around 15%, with early trading on July 7 adding another 14% or so. That's a roughly 30% price gain in less than two trading days. Wow! The backstory here, however, is very important.

So what

Northern Dynasty Limited's primary asset is the Pebble Project, which is a large mine development with substantial gold and copper deposits. The company has been working for years to get through the permitting process so it can build a mine, but has been facing opposition from environmentalists and local residents. It's been a difficult process, to say the least, but over the past year or so it has begun to look more and more like the project will get approved.

A gold miner panning for gold

Image source: Getty Images.

That brings us to the current stock price run. On July 6, Northern Dynasty Limited announced that it had agreed with local residents to, simplifying things a bit, hire local with regard to key transportation needs. This isn't a small event: The company believes it will be able to award contracts worth as much as $20 million a year. That should go a long way to incentivize local residents to support the mine. Also, Northern Dynasty announced that it expects an update on key federal permits by the end of July, which is a further positive development. In other words, investors are reading between the lines and think that the Pebble Project has taken a big step forward. Both of these updates were more widely disseminated after trading closed on July 6, meaning that many investors didn't actually see the news until July 7.  

Now what

News flow out of would-be gold miner Northern Dynasty has been positive for a little bit and the stock has risen dramatically. However, there are still a lot of unknowns here. For example, the company still has more approvals to get and then it has to actually build a mine, which is usually a long, complicated, and expensive process. Despite impressive stock gains, this is still not a great option for risk-averse investors. In fact, it's likely that stock price volatility will remain an issue on both the upside and downside for the foreseeable future.