Canadian Mining Journal


COMMENT: First Quantum sniffing around Pebble project

Exploration drilling at the site of what one day may be the Pebble copper-gold mine. (Image: J. Sear/KDLG)

No one doubts that the Pebble copper-gold deposit in Alaska is one of the largest undeveloped mineral resources in the world. It contains a measured and indicated resource of 6.44 billion tonnes grading 0.40% copper and 0.34 g/t gold using an 0.3% copper equivalent cut-off. There is also an inferred resource of 4.46 billion tonnes grading 0.25% copper and 0.26 g/t gold. The measured and indicated resource by itself contains 56.8 billion lb. of copper and 70.4 million oz. of gold – plus 3.4 billion lb. of molybdenum and 344 million oz. of silver.

The project is 100% owned by Vancouver’s Northern Dynasty Minerals, but the road to development is far from straight. The project is huge, and a small company such as Northern Dynasty with a capitalization of less than C$650 million lacks the very deep pockets it will take to see Pebble through to production.

A partner is Preview (opens in a new window)the way to go. Rio Tinto, through its subsidiary Kennecott Copper, owned about 20% of Northern Dynasty before it gifted its shares to a pair of Alaskan charitable foundations in 2014. Anglo American and Northern Dynasty struck a deal to create a 50:50 joint venture in 2007. Over the next few years, Anglo spent close to US$500 million on the project, but walked away from its vested interest in December 2013, leaving the Canadian company again with sole ownership.

One problem facing the Pebble project is the stiff local opposition to developing a mine in pristine wilderness. But Northern Dynasty has persevered. Earlier this year it secured the land use permit, and it is close to working out the environmental problems with the federal government. In response to local input, the company has shrunk the potential development footprint.

Now it appears another Canadian miner, First Quantum Minerals of Toronto, is looking closely at Pebble, making the beginnings of what may amount to a US$1.35 billion investment. First Quantum will pay US$150 million over four years as permitting progresses. The period may be extended for a further two years with additional payments. If the 50% option is fully exercised, First Quantum will pay a total of US$1.35 billion. The agreement is to be finalized by Q2 2018.

Maybe this time Northern Dynasty has a partner with the staying power to see the Pebble project through to completion.

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