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Pebble potentially blocked (again) by EPA move

The US Environmental Protection Agency has taken legal action which could effectively once again veto Northern Dynasty Minerals’ controversial, proposed massive-scale Pebble project in Alaska.
Pebble potentially blocked (again) by EPA move Pebble potentially blocked (again) by EPA move Pebble potentially blocked (again) by EPA move Pebble potentially blocked (again) by EPA move Pebble potentially blocked (again) by EPA move

EPA administrator Michael Regan

Staff reporter

The filing came the same day the company released a preliminary economic assessment foreshadowing expansion options to take minelife to 101 years, based on Pebble's existing resource.

The Justice Department on Thursday filed EPA's intent to request that its 2019 withdrawal notice be remanded and vacated, in a move designed to protect the Bristol Bay waters and fisheries.

If the court grants the motion, remand and vacatur would automatically reinitiate EPA's 404(c) review process and the agency would announce a schedule for resuming a process to protect certain waters in the Bristol Bay watershed, the EPA said.

"The Bristol Bay Watershed is an Alaskan treasure that underscores the critical value of clean water in America," EPA administrator Michael Regan said last week.

The 2019 decision under the Trump administration withdrew an Obama-era 2014 proposed determination under the Clean Water Act Section 404(c), ending the review process and allowing Pebble to progress down the permitting path.

However soon after Joe Biden's election as president in November, the US Army Corps of Engineers issued a negative Record of Decision for Pebble, which Northern Dynasty is appealing.

"Here we go again," Northern Dynasty president and CEO Ron Thiessen said on Friday.

"We fought and won against former president Obama's heavy-handed political attempts to kill the project, and we will do the same again."

Pebble PEA

Northern Dynasty had released a PEA on Thursday for the proposed 20-year polymetallic mine, plus three expansion scenarios taking mine life up to 101 years and the possible addition of a gold plant from year five.

The PEA put initial capex for the proposed 20-year project, which does not include an on-site gold plant, at US$6 billion.

It estimated average annual metal production of 320 million pounds of copper, 363,000 ounces of gold, 15Mlb molybdenum, 1.8Moz silver and 12,000kg rhenium.

The PEA put the after-tax NPV7 at $2.7 billion and IRR at 16.5% using forecast long-term metal prices, of $3.50/lb copper, $1,600/oz gold, $10/lb molybdenum, $22/oz silver and $1,500/kg rhenium.

It said the addition of a gold plant in year five would boost the NPV to $2.7 billion and IRR to 16.5% and boost the 20-year output from 7.3Moz of gold and 37Moz of silver to 9Moz and 39Moz respectively.

The expansion scenarios - done in either year 21, 10 or five - could boost average annual production to 600Mlb copper, 500,000oz gold, 29Mlb molybdenum; 2.6Moz silver and 20,000kg rhenium.

The addition of a gold plant would take the expanded life-of-mine gold and silver production from 50Moz and 267Moz to 65Moz and 289Moz respectively.

The expansion would process 8.6 billion tonnes of material, up from 1.3Bt in the 20-year plan, and would increase processing from 180,000tpd to either 250,000 or 270,000tpd.

All-in sustaining costs would fall from $1.88/lb copper-equivalent on a co-product basis to $1.73-$1.76/lb Cu-eq under the three scenarios, according to the PEA.

Northern Dynasty shares (TSX: NDM) have spanned C38.5-$1.67 over the past year and closed at 61c on Friday, valuing it at $322 million (US$254 million).