Northern Dynasty Minerals Ltd. [NDM-TSX; NAK-NYSE AMERICAN] is moving to deliver on a recent promise to line up a new joint venture partner for its giant Pebble Project in Alaska. On Monday, First Quantum Minerals Ltd. [FM-TSX] – the company that is developing a huge open-pit copper project in Panama – said it had entered into a framework agreement with Northern Dynasty.
Under the deal, an affiliate of First Quantum will executive a four-year option agreement requiring the affiliate to pay US $150 million in separate installments, including an initial US $37.5 million. That money that will be applied towards the cost of advancing the permitting process for development of the Pebble Project. The option agreement will entitle the First Quantum affiliate to earn a 50% interest in a partnership which owns the Pebble Project, by investing US $1.35 billion.
First Quantum said its participation in the option agreement is subject to due diligence and necessary regulatory approvals being secured. As a result, final execution of the option deal is not expected to occur until the second quarter of2018.
“The option agreement is an important opportunity to carry out a detailed assessment of the Pebble Project, which is widely acknowledged to be one of the outstanding unmined copper projects in the world, estimated to contain some 26 million tonnes of copper, 70 million ounces of gold and 1.5 million tonnes of molybdenum in measured and indicated resources at a 0.3% copper equivalent cut-off,’’ said First Quantum Chairman Philip Pascall.
“We are very aware of the environmental and social sensitivity of this project and will utilize the lengthy option period to apply our extensive project development and operating experience to ensure that this project can be developed with the support of stakeholders,’’ he said.
First discovered in 1989, The Pebble deposit has been described as one of the greatest stores of mineral wealth on the planet. However, the project has been a lightning rod for global environmentalists who expressed concerns about the impact of such a large mining operation on local salmon runs.
The Monday December 18 announcement by First Quantum comes just weeks after Northern Dynasty President and CEO Ronald Thiessen told a gold and silver mining conference in San Francisco that his company is taking a fresh approach in a renewed attempt to gain a mining permit. A key component of that strategy, he said, is finding a new partner to replace Anglo American, which had the right to earn a 50% interest in Pebble, but withdrew from the partnership in September 2013 after investing US $541 million. In a speech to the Cambridge House International Silver & Gold Summit in November, Thiessen said the company’s new strategy includes advancing a proposed mine that is smaller and more responsive to stakeholder concerns.
Northern Dynasty has indicated that a new mining plan will feature a smaller footprint and will be filed with the U.S. Army Corps of Engineers before the end of 2017.