Exploration drilling at Northern Dynasty’s Pebble deposit. Northern Dynasty says the mine could be developed safely, and would boost Alaska’s economy with about 1,000 jobs through its operating life.
Northern Dynasty Minerals Ltd., a Vancouver miner with an undeveloped copper-gold deposit in Alaska, was walloped on Tuesday by a short-seller's report that argued its key project is not commercially viable.
The miner said the report from Kerrisdale Capital of New York was riddled with inaccuracies and promised a detailed rebuttal by the end of the week. However, its stock plunged by a third in early trading before staging a modest recovery.
Northern Dynasty's shares had been trading around $1 in the run-up to the U.S. election in November. They tripled after Donald Trump's surprise victory on hopes the new administration would approve the company's Pebble project in Alaska.
Pebble has been stalled since 2014, when the U.S. Environmental Protection Agency blocked it from applying for a permit because of the danger it posed to Alaska's large sockeye salmon fishery.
The new administration may soften that hard line. It is widely expected to adopt a friendlier tone toward miners in general.
Ronald Thiessen, chief executive of Northern Dynasty, told Bloomberg News in late January that the Trump administration wanted to permit the Pebble project. He predicted a resolution within 100 days.
In contrast, Kerrisdale argues that Pebble is a low-grade deposit that would require too much upfront investment to ever generate profits.
It asserted that several large miners, including Teck, Rio Tinto and Anglo American, put money into Pebble years ago but abandoned the project when they realized its ugly economics.
Northern Dynasty retorted in a release that "Kerrisdale cites no technical or scientific studies whatsoever and relies on many unnamed persons who were purported to have been involved with the project several years ago. Investors should not rely on the Kerrisdale report."
Northern Dynasty shares closed in Toronto on Tuesday at $3.25, down 91 cents, or almost 22 per cent.
Ian McGugan