Northern Dynasty’s (TSX: NDM; NYSE: NAK) shares cratered nearly 50% after the company announced Wednesday its 100%-owned, US-based subsidiary Pebble Limited Partnership received formal notification from the US Army Corps of Engineers (USACE) that its application for permits under the Clean Water Act and other federal statutes has been denied.
The lead federal regulator found Pebble’s ‘compensatory mitigation plan’ as submitted earlier this month to be ‘non-compliant’, and that the project is ‘not in the public interest’.
With resource estimates including 6.5 billion tonnes in the measured and indicated categories containing 57 billion pounds of copper and 71 million ounces of gold, 3.4 billion pounds of molybdenum and 345 million silver ounces, if permitted, Pebble would be North America’s largest mine.
But Pebble’s permitting process has been surrounded by controversy and delays. Pebble faced environmental opposition from the onset as the mine would be near the world’s largest commercial sockeye salmon-producing region.
This turn of events comes after a positive Final EIS was issued in July
The Pebble Mine project would have been one of the largest mines on earth and could have harmed or destroyed more than 100 miles of streams and 3,000 acres of wetlands, Collin O’Mara, president and CEO of the National Wildlife Federation said in a press release.
“Twenty-five tribal communities depend on Bristol Bay for their economies and way of life. The decision by the Army Corps is a significant milestone.”
This turn of events comes after a positive Final EIS was issued in July.
“The Final EIS found Pebble to be a project of merit that would fully co-exist with clean water, healthy fish and wildlife populations, and the important fisheries resources of southwest Alaska,” Northern Dynasty said in the media release.
“The Final EIS also found that Pebble would make an important, positive socioeconomic contribution to the people and villages of Bristol Bay, Alaska – where full-time jobs are scarce and people face one of the highest costs of living in the country – as well as to the State of Alaska and the United States.”
This is not the first setback for Pebble and Northern Dynasty has defended themselves from a broad range of opposition challenges including publicity campaigns, ballot initiatives, and a pre-emptive veto effort by the EPA, BMO Capital Markets analyst Andrew Mikitchook said in a research note.
“In our opinion, there could eventually be the right combination of a development plan and social acceptance to allow the project to move forward be it in the near term or later,” he said.
Northern Dynasty said it intends to launch an administrative appeal of the USACE permitting decision within the provided 60-day window.
Midday Thursday, Northern Dynasty’s shares were down 50.11% on the NYSE. Shares had been traded over 195 million times, over 12 times the average daily volume. The company has a $199.6 million market capitalization.
