Shares in Canadian miner Northern Dynasty Minerals (TSX:NDM) fell Tuesday as much as 40% in Toronto after a short-seller’s report said its Pebble copper-gold project in Alaska was “worthless.”
While the Vancouver-based miner said the report from Kerrisdale Capital of New York was full of inaccuracies, the stock barely recovered, closing 22% down at Cdn$3.25and it was still suffering Wednesday morning, falling a further 2.15% to Cdn$3.18 as of 9::52 am ET.
Before the report, the stock had rallied about 300% since the US presidential election in November, as investors believed Donald Trump’s decision to ease environmental regulations that have Pebble stalled since 2014 would let the project quickly move forward.
“Mining [the Pebble project] would require so much upfront investment that it would actually destroy value,” Kerrisdale Capital Management said in the report. It also alleged the miner has been hiding a negative project assessment conducted by former partners.
“All this enthusiasm is misplaced. We believe Northern Dynasty is worthless,” the document said, adding the Dynasty’s former allies including Anglo American, Rio Tinto and Teck Resources, walked away from the project once they realized it was not commercially viable.
And there is also the never-ending scrutiny Pebble has faced since it was fist proposed as environmentalists, indigenous people and even the US Environmental Protection Agency (EPA) had flagged the potential risks to the area’s salmon population, one of the world’s most valuable habitats for the fish. Both Northern Dynasty and Anglo had previously said the project could be built without harming Alaska’s salmon fishing industry.