One Canadian mining company has come under scrutiny for supposedly lying to investors about its controversial mining project in Alaska.
Northern Dynasty Minerals (TSX: NDM), which planned to develop a gold and copper mine near Bristol Bay, has come under fire from environmental groups which claimed the company deceived investors both about the potential size of the project’s mineral deposits as well as the environmental impact.
Northern Dynasty used to be one of the darlings in the mining sector among gurus and investment newsletters. The company promoted their Pebble Mine project as being a “world class” resource site with 11 billion tonnes for extraction alongside additional expansion opportunities. However, the company has quickly lost favor among investors and today’s accusations could be the nail in the coffin for this firm.
In the past, Canadian regulators have warned mining companies to be cautious about over promoting their future operations.
As many small, exploration-based outfits are prone to going overboard when it comes to potential discoveries, the Canadian Securities Administrators have warned repeatedly about companies using this kind of language when it’s not justified.
Official documents from Northern Dynasty show that, in reality, the company is seeking approval for a mining plan that would provide on 1.4 billion over a 20-year lifecycle, a far cry from what was initially promised to investors.
Besides notifying Canadian regulators, Earthworks reached out to the U.S. Securities Exchange Commission (SEC) as well, claiming that not only had the company mislead investors but that the company’s mining plan would result in excess waste rock and water buildup.
Referencing various geology experts’ opinions on the proposed plan, the environmentalists claim that the project will ultimately prove unfruitful as well as environmentally damaging.
Earthworks went on to say that Northern Dynasty called the Pebble mine “one of the greatest stores of mineral wealth ever discovered, and the world’s largest undeveloped copper and gold resource.” Another investor presentation in April described the project as a “world class” opportunity, adding that it represented a “generational opportunity” and was a “world class” resource site.
The small Vancouver-based miner, whose only exploration project is the Pebble mine near Bristol Bay, previously had a market value of around $2 billion back in 2011 before shares tumbled drastically as partners Rio Tinto and Anglo American abandoned the project.
When U.S. regulatory issues reared up as well to slow down progress, the project was more or less left for dead.
However, under the new administration, the prospect of this mining project came back to life as shares saw a 500 percent increase between October 2016 and February 2017.
Fueled by speculation that President Trump would approve the Alaskan mine, a number of stock newsletters began to list Northern Dynasty as one of their top niche picks in the commodities market. Since the late 2016 craze, shares of the company dropped over 80 percent from its previous highs.
Northern Dynasty representatives denied the claims, going so far as to say that their permit is being evaluated by the US Army Corps of Engineers, adding that these claims were meant only to damage the company’s reputation.
Currently sitting at C$0.77 per share and well within the penny stock range, shares of Northern Dynasty shot up 10 percent today in response to the news, relatively unfazed by the accusations.