Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
Canada’s Northern Dynasty Minerals (TSX:NDM) (NYSEMKT:NAK), the company behind a vast, but stalled copper-gold project in Alaska, slammed Friday a short-seller’s report that claims the firm lied about the value of its proposed Pebble mine.
Kerrisdale Capital of New York said Tuesday the project was not commercially viable and that it really is a low-grade deposit that would require too much upfront investment to ever generate profits.
The report also alleged that Northern Dynasty has been hiding a negative project assessment conducted by former partners, which proves the miner has made false and misleading statements about the value of Pebble.
But the Vancouver-based company came back in full force Friday, putting under the microscope each and every claim made by Kerrisdale Capital in an attempt to probe the short-seller’s report is riddled with inaccuracies.
Here some highlights:
Claim: Project needs a $13 billion-investment to become a reality
ND: “Contrary to the Short Seller’s report, no mine planning scenario with a US$13 billion capital estimate was ever finalized, approved or adopted by Northern Dynasty or Anglo American as its 50% partner in the Pebble Limited Partnership (“Pebble Partnership”).
“Further, a review of a preliminary draft US$13 billion mine planning scenario by an independent engineering firm commissioned by Northern Dynasty identified issues with that study and identified savings that reduced the preliminary capital estimate by US$4 billion.”
Claim: Anglo American walked away from the project once it realized it was not commercially viable.
ND: “During the 2013 mining downturn, Anglo American announced that it was reconsidering its development project pipeline in light of market conditions and was unwilling to invest another $900 million to earn a 50% interest in the Pebble Project and therefore terminated its earn-in option.
“Even after its decision to withdraw from the project, Anglo American maintained a positive outlook on Pebble.
“The Short Seller also claims that the Pebble Project was “pushing the boundaries” of engineering. That is simply untrue. “
Claim: Pebble is opposed by locals
ND: “Every mining project has opponents. However, Pebble enjoys considerable support for its efforts to advance the Pebble Project in Alaska today, including among elected officials, business interests, and regional and Alaska Native communities. The Short Seller tries to focus attention on the project’s opponents while deliberately neglecting to mention the significant support the Pebble Project has had in Alaska.”
It also said that Kerrisdale, which holds a short position in the company, stands to benefit if shares fall, adding that the short-seller has a history of conducting similar activist campaigns: betting against a certain stock and then making their case public.
Northern Dynasty’s move comes as the company was hit Wednesday with a proposed class action in California federal court over potential federal securities violations. The miner is currently the target of an investigation lead by Rosen Law Firm on behalf of its shareholders, Market Exclusive reported.
Since first proposed, Pebble mine has faced never-ending scrutiny from environmentalists, indigenous people and even the US Environmental Protection Agency (EPA). They have all flagged the potential risks the project would pose to the area’s salmon population, one of the world’s most valuable habitats for the fish. But Northern Dynasty and some of its former partners in the venture, including Anglo American, had previously said the project could be built without harming Alaska’s salmon fishing industry.
Northern Dynasty’s shares have fallen more than 28% since Tuesday, when the report was released. They closed Thursday at Cdn$2.98 in Toronto, but were up 4.42% Friday in pre-market trading in New York to $2.26.
3 Comments
Anon-Y-Mous-e
Short report is flawed: What Kerrisdale hasn’t considered is that the Pebble mine sits unencumbered, ready for open-pit mining. The deposit’s low grade would make it impossible to mine if it was buried a mile under the earth’s surface. That’s not the case.
ASIDE: Also I urge you to familiarise yourself with Thermal Fragmentation mining process, its new and you will see several miners adopt it for chasing narrow veins of gold laden quartz — the mining process does NOT use blasting, the harder quartz is spalled (surgically removed) out via intense heat from a burner and all that is left is waste rock — the Company that invented it is a serious buy with low market cap and going places… see mining journal article on this at http://miningmarketwatch.net/nip.htm online.
Andrew H.
Pebble will never be built. The short report, while flawed and biased, states the obvious arguments made over the past years that only serve to remind investors as to why they should run as fast as possible from this money pit (pun intended). One PEA in decades…seriously? After all the sunk capital thus far and the expected capital in the future, what’s the true economic return going to be for a project such as this? They cite sell side research as independent analysts…really? Really? Feel free to give them your hard earned capital…..they need to cover that G&A somehow.
Ian Bitcoin
interesting Andrew H no longer has an account here? Can you say troll? Or maybe he has a large short position on the advice of the hucksters that released the report. I don’t know why Kerrisdale and their pump and dump kool aid drinkers are complaining, they did manage to whack the share price and make a fortune in the effort. What a bunch of crooks!