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Saturday, January 23, 2021

Northern Dynasty Minerals Ltd (NYSEMKT:NAK) Feeling the Trump Effect

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Northern Dynasty Minerals Ltd (NYSEMKT:NAK) and its shareholders are hoping for a new Alaskan Gold (and Copper) Rush. Within the minerals and mining sector, the “Trump Effect” is having a huge effect on the valuations of stocks – and nowhere is that more evident than in the optimism building around Northern Dynasty Minerals Ltd (NYSEMKT:NAK). Year to date, shares of NAK are up a staggering 52.39 percent already. And the returns are even more impressive over the past year, where the stock has turned in a head-dizzying gain of 1376.6 percent. And NAK could have more room to run.

That’s because the entire valuation of Northern Dynasty Minerals is based on the company’s future ability to develop the Pebble Project, a copper-gold-silver-molybdenum mining project in southwestern Alaska, located about 200 miles from Anchorage. Until recently, the company has been stymied from developing the project – described by the company as “one of the world’s greatest stores of mineral wealth” – by the EPA, which has made it nearly impossible for NAK to go forward with its permitting efforts.

Northern Dynasty Minerals Ltd (NYSEMKT:NAK) future could change dramatically under President Trump, who has made it known that he’s planning to reduce the high level of regulation in certain industries. So hopes are high that a move by the Trump administration could unlock the tremendous value of the Pebble Project, a once-in-a-lifetime opportunity that could have a 100-year mining future once development finally starts.

Shares of Northern Dynasty Minerals are currently trading at $3.12, giving the company a market capitalization of just under $1 billion. The current trading range for the stock is $3.02 -$3.45. Over a 52-week period, shares of NAK have traded as low as $0.25 and as high as $3.45. That means NAK is trading at a speculative level right now, even for mining stocks.

The question really becomes: Is the Pebble Project really going to move forward as hoped?

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The major strategic priority for the company is to resolve its impasse with the EPA, which is concerned that the mining project could threaten the local sockeye salmon population. Northern Dynasty Minerals, though, is adamant that “fishing and mining can co-exist.” In September and October of last year, it looked like Northern Dynasty Minerals was close to wrapping up litigation with the EPA, and with a Trump presidency now in place, the company could get over the final hurdle.

But what then? The Pebble Project is so massive that many experts project that it could take billions of dollars to develop. And that’s money that Northern Dynasty Minerals doesn’t have right now. In its last quarterly filing, the company revealed that it was down to just $6 million in cash on its balance sheet. Thus, the second major strategic priority of the company is to find new partners and raise new capital to develop the project. In its most recent corporate presentation, NAK noted that “the mining cycle has turned” and that Pebble is “a long-life asset in demand.” Both of those factors should make it easier to find a partner.

The company also noted in its corporate presentation that it has poured $750 million into the project already. Clearly, the company is committed to moving forward at this point, there’s just too much money at stake. The company plans to continue efforts to get its side of the story out in the media and to “change the face of Pebble” in the eyes of the public.

Going forward, investors will have their focus clearly turned to Washington. The Trump administration has already proven that it’s friendly to the idea of gas pipeline projects and other massive natural resource plays.

It’s not assuming too much to think that Trump will take a positive view of the Pebble Project, especially since NAK is framing this as an economic issue with national ramifications. Northern Dynasty Minerals says the development of Pebble would lead to the creation of 15,000 jobs nationally (including a lot of high-paying mining jobs in Alaska) and contribute $2.7 billion to U.S. GDP. Given projected numbers like those, it will be hard for the new administration to ignore NAK, and that could be good news for investors. For more on fast-moving penny stocks like Northern Dynasty Minerals, please subscribe to OracleDispatch.com now.

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