Once-hot Northern Dynasty mine ‘worthless’
Shares in Vancouver-based Northern Dynasty Minerals, a recent investor darling, plunged as much as 40 per cent Tuesday after a shortseller’s report said its copper-gold project is “worthless.”
It had been a hot stock, rising more than 300 per cent since the U.S. presidential election in November on assumptions President Donald Trump would loosen environmental regulations that have held back its Pebble project in Alaska.
“Mining it would require so much up-front investment that it would actually destroy value,” Kerrisdale Capital Management said in a report Tuesday. It also accused the company of hiding a negative project assessment conducted by former partners.
Environmentalists, indigenous people and fishermen have fought the mine’s development, and the Environmental Protection Agency halted the project in 2014.
“Frenzied investor enthusiasm over the benefits that Trump presidency will bring to the Pebble project overlooks the ineradicable threat of veto from either the Alaskan government or future Democratic White House,” the report said.
“Though the legal and regulatory problems that will continue to plague the Pebble project even under a Trump presidency are enormous, the project’s Achilles’ heel is more fundamental: economics.”
The company called the report “a short and distort campaign” and said it would respond to the allegations by the end of the week, promising it would “expose the many inaccuracies and outright misstatements” in the report.
“Kerrisdale cites no technical or scientific studies whatsoever and relies on many unnamed persons who were purported to have been involved with the project several years ago,” the company said.
Shares in the company gained some ground after the company issued its response, trading down 16 per cent at $3.47 in afternoon trading on the TSX.