Pebble mine permit filing postponed to 2006

Northern Dynasty Minerals will defer its permit applications for the planned Pebble gold mine in southwestern Alaska until 2006, the company's chief operating officer, Bruce Jenkins, said at an Alaska Miners' Association meeting Feb. 9. Previously Northern Dynasty had been hoping to file the applications by the end of 2005, but it will wait until the feasibility study by international project management and services company AMEC is complete, Jenkins said.

AMEC will undertake the feasibility study out of its Vancouver office. Northern Dynasty itself is based in Vancouver, although for the Pebble project it has established an Anchorage office, which now employs seven people. The huge gold-copper-molybdenum deposit is located about 86 miles west of Cook Inlet, near Iliamna. "I have maintained from day one, we will not submit applications for permits for this project until we have the best-designed project we can have," Jenkins said. "And the only way I can be satisfied that we've got the best-designed project we can have is to have a feasibility study."

The project has already made the transition from exploration to development, Jenkins stressed. Northern Dynasty spent a mere $8 million on Pebble in 2002 and 2003 combined, but its investment soared to $28 million in 2004, and its proposed budget for 2005 is $36 million. "We would not be spending this kind of money on idle speculation," Jenkins said. "These are informed business decisions that are ratified by a board with senior mining executives on that board and independent directors. This is a reasoned and valid project development investment that is predicated on some sound geological and engineering information."

According to Northern Dynasty's most conservative estimates, preliminary economic assessments show that the capital cost of the mine could be paid back within a four- to five-year period, or less than that, depending on metals prices. The current high price of molybdenum shaves a year and a half off the payback period, Jenkins said.

Main deposit could lie in East Zone

Copper-gold porphyries are very common around the Pacific Ring of Fire, but even for this region Pebble's size is unusual. It is ranked about fifth in the world as a copper-gold deposit and could also contain over a billion pounds of molybdenum. As if that weren't enough, drilling in the recently discovered East Zone has shown that the main deposit may lie there, and not in the original Pebble location.

"It's causing a major rethink on the development of this project," Jenkins said. "There could be a half billion to three-quarters of a billion tons of economic ore there. That's just a guess." Northern Dynasty's board decided in February to spend $8 million on a program to drill off the East Zone to a measured and indicated category. "We can't leave that hanging," Jenkins said. Last year's East Zone results came at the end of the season and the company didn't have enough equipment to drill deep enough, but the grades there are two to three times greater than those in the west of the deposit.

Environmental considerations may trump economic factors in some aspects of the project design. For example, Northern Dynasty has ruled out Upper Talarik Creek as a location for its tailings pond because it is the most significant in terms of fisheries values and activity. "We take the fisheries issues and the sensitivity in the Bristol Bay area very, very seriously," Jenkins said. Northern Dynasty has so far looked at 23 different locations and design refinements for a tailings pond that minimizes the size of the footprint.

The proposed road to be built for the mine will bypass Pedro Bay, in response to concern from the community there. "People don't know us yet, we've only been there in earnest in the last year, and I like to tell people, only trust me once you learn who I am, what I'm doing, what the company's doing," Jenkins said. "What I ask is for people to reserve judgment on the project and wait and see what the project's like when it's designed. If we can't design the mine and protect the environment at the same time, then we don't deserve to be there."