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Northern Dynasty updates Pebble PEA, showing minimal impact of royalty financing

The area where Pebble mine would be built, 320 km southwest of Anchorage, within the Bristol Bay watershed. (Image courtesy of Northern Dynasty Minerals)

Northern Dynasty Minerals (TSX: NDM) has filed an updated preliminary economic assessment (PEA) for the proposed Pebble project in southwest Alaska. This new PEA updates the company’s September 2021 PEA to incorporate the recently announced royalty investment for up to $60 million in five tranches.

To date, the company has completed the initial tranche of $12 million, which would bring the Pebble project’s post-tax net present value (NPV) to $2.25 billion (at 7% discount rate) with an internal rate of return (IRR) of 15.6%. Should all tranches be completed, the post-tax NPV would be $2.10 billion with IRR of 15.1%. The payback periods under both cases are just under five years.

“In the updated technical report we have detailed the impact of the royalty financing on the value of the project,” CEO Ron Thiessen said in a news release.

“The results were aligned with our estimates at the time of the financing; the robust financial results of the 20-year base case are minimally impacted by the financing, which provides substantial working capital that we can use to advance the Pebble project in permitting.”

The 2022 PEA also assesses the royalty’s impact on the projected results for the three potential mine expansion scenarios and potential alternative strategies for gold recovery that were also presented in the 2021 PEA and could form the basis for future permit applications and review. The royalty was found to have a minimal impact on the results of these potential scenarios.

The report also includes updates that reflect events disclosed in the company’s public disclosure record that have occurred since the 2021 PEA was filed.

Northern Dynasty recently drew further controversy towards the Pebble project, which is already being delayed and is very much in limbo after the US Environmental Protection Agency proposed to restrict its development, for allegedly making false statements to regulators during the permitting process.

The company has been pursuing the copper-gold project for over a decade, but has faced strong opposition from conservation groups and local fishermen in its push to build the open pit mine in the world’s largest salmon habitat at Bristol Bay.

Once in production, it would be the largest mine in North America. The current resource estimate includes 6.5 billion tonnes in the measured and indicated categories containing 57 billion lb. copper, 71 million oz. gold, 3.4 billion lb. molybdenum, 345 million oz. silver and 2.6 million kg. rhenium.

Related: Pebble mine stakeholders up pressure as EPA’s final decision nears