The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - July 26, 2024
Northern Dynasty has taken to suing the EPA and USACE, alleging "factually unsupported assertions" behind politically motivated denials of mining permits.
Northern Dynasty Minerals Ltd. July 25 announced the receipt of a remaining $10 million payment, completing the second tranche of a $60 million royalty agreement to support the advancement of the Pebble project in Southwest Alaska.
Toward the end of July 2022, Northern Dynasty was pleasantly surprised by a $60 million investment from an unnamed royalty investor.
Under the terms of the agreement, this investment was structured in five tranches, beginning with an initial $12 million payment that granted the investor rights to 2% of the payable gold and 6% of the payable silver, contingent on the mine reaching production status.
This royalty is calculated after accounting for a notional payment from the investor of $1,500 per ounce of gold and $10 per oz of silver, respectively, for the life of the mine.
The second $12 million tranche, completed in six equal installments of $2 million each, increased the royalty holder's entitlement by approximately 0.33% of the payable gold and 1% of the payable silver per installment.
With the final installment received, the investor's rights now total 4% of the payable gold and 12% of the payable silver from Pebble.
The Pebble Mine advanced to the final step of the permitting process, would produce 320 million pounds of copper; 363,000 oz of gold; 15 million lb of molybdenum; 1.8 million oz of silver; and 26,000 lb of rhenium annually over the first 20 years of mining.
Given that a recent preliminary economic assessment indicates the Pebble deposit can support a mine of this scale for nearly a century, the potential royalties could be substantial.
"We are pleased that the investor has completed the second of five $12 million tranches," said Northern Dynasty President and CEO Ron Thiessen. "As a result, the expiration date has been extended for one year, by which time we could receive the additional $36 million investment from the remaining three tranches contemplated in the original royalty agreement."
Securing this crucial financing will certainly enable the company to continue navigating the significant legal and regulatory challenges it is currently facing.
Recently, Northern Dynasty filed lawsuits against the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE), asserting that both federal agencies rely on each other's "factually unsupported assertions" to support politically motivated denials of mining permits.
"We believe the EPA veto and the USACE permit denial were both undertaken entirely for political reasons and are contrary to the factual record, especially USACE's own environmental analysis, the final environmental impact statement, which only supports granting a permit and does not support issuing a veto," Thiessen said in a June announcement. "We believe both decisions will be reversed by the court, which relies on the factual record to make decisions."
Despite these legal hurdles, Northern Dynasty remains committed to advancing the Pebble project.
"Meanwhile, we will continue to advance responsibly and reasonably the Pebble project, one of the most important minerals and metals deposits in the world, with standards that assure the environment and regional fisheries are safeguarded as detailed in the USACE's Final Environmental Impact Statement and Remand Order," added Thiessen.
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