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Shares of Northern Dynasty Minerals Crash...Again

By Tyler Crowe – Jul 27, 2020 at 4:08PM

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The speculative mining stock has received its environmental impact statement, but it still has a lot of work ahead of it.

What happened

Shares of prospective mining company Northern Dynasty Minerals (NAK 1.40%) are down 13.9% as of 3:15 p.m. EDT today. Today's slide comes after the company's shares declined 12% on Friday as well. The big drop in share price came on the heels of the company receiving an environmental impact statement for its prospective Pebble mine. 

So what

According to Northern Dynasty, the Pebble project is a mine with gold, copper, silver, and molybdenum deposits large enough to make it one of the largest deposits in the world. The project has been a bit of a political hot potato as various groups have raised concerns about the environmental impact of the mine on some of Alaska's fisheries. In a sharp reversal from the previous admininstration's decision, the Trump administration, through the Army Corps of Engineers, released an environmental impact statement for the facility. Environmental impact statements are one of the large hurdles for a major development project such as this one. 

Gold bars and a stock chart.

Image source: Getty Images.

Getting the green light for a major project like this would normally be a good thing for a company, and soaring precious metal prices should also be a boon for this stock. That hasn't been the case, though, as this is the stock's second consecutive double-digit decline since the announcement.

Now what

We could chalk it up to the old adage of "buy the rumor, sell the news," but getting over this hurdle also brings into focus the other aspects of turning a prospective mine into a profitable business. For close to two decades, Northern Dynasty has been touting this game-changing deposit, but so far all that it has produced are a few permits and some assessments that have not yet been independently verified. 

Management now estimates that it will take another 2-3 years to complete the permitting process with state and local agencies, so we're now looking at a timeline where shovels might not go into the ground until 2024. That's also before the company is able to find the financing or big-pocketed partners to make the prospective mine a reality. 

NAK Chart

NAK data by YCharts

With so many hurdles still in front of it and a timeline that might get Pebble up and running toward the end of this decade, it's really hard to see this as anything more than the most speculative of stocks. Anyone looking for a stock that's more than just a lottery ticket should look elsewhere. 

Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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