Quantcast

Here's Why Northern Dynasty Minerals Dropped as Much as 15.5% Today


What happened

Shares of prospective precious metals miner Northern Dynasty Minerals (NYSEMKT: NAK) fell over 15% today as investors continue to digest the surprising announcement from the U.S. Environmental Protection Agency last Friday, in which regulators appeared to reverse course on previous decisions.

The prized sockeye salmon fisheries of Bristol Bay in Alaska will now receive regulatory protection from the EPA, and any potential mining projects in the region -- including the company's Pebble Project -- would need to clear a high bar to gain approval.

As of 2:58 p.m. EST Wednesday, the stock had settled to a 14.7% loss.

A businessman holding out his hand with a bar chart showing losses on it.

Image source: Getty Images.

So what

There hasn't been any new news in the last several days, but the potential consequences for Northern Dynasty Minerals are significant. While restoring protection for the economically important ecosystems in Bristol Bay doesn't mean the Pebble Project is doomed, it adds significant uncertainty to the situation.

One source of uncertainty with the potential to stop development in its tracks: the proposed partnership with copper mining giant First Quantum Minerals . On paper, it's the perfect miner to help Northern Dynasty Minerals because the Pebble Project is projected to be one of the lowest-cost copper mines in the world -- in addition to one of the largest. The partnership has yet to be finalized, which could be bad news for investors.

Why? The Canadian miner has found itself in an uncomfortable position this week. Several large pension funds in the United States that own shares of First Quantum Minerals have sent letters to the company pleading for its management team to pull the plug on any potential partnership to develop Pebble. The regulatory, financial, and environmental risks are too great, they argue.

If First Quantum Minerals withdraws from partnering activities, then the Pebble Project could be finished -- taking Northern Dynasty Minerals down with it.

Now what

Northern Dynasty Minerals shareholders may get an answer on the partnership's uncertainty relatively soon. First Quantum Minerals will announce full-year 2017 financial results on Feb. 12. Given the new spotlight on Pebble, management will likely have to address its plans for the project on the conference call. It could make or break the smaller company's future.

10 stocks we like better than Northern Dynasty Minerals
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Northern Dynasty Minerals wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of January 2, 2018

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: NAK , FQVLF


More from Motley Fool

Subscribe






Motley Fool
Contributor:

Motley Fool

Market News, Investing








Research Brokers before you trade

Want to trade FX?