JCap’s report claims that Northern Dynasty’s 100%-owned Pebble copper-gold-molybdenum-silver-rhenium project in southwest Alaska will lose money, that capital costs have been underestimated and that the project’s proposed mining plan intentionally targets low-grade portions of the deposit
Northern Dynasty Minerals Ltd. (TSX: NDM; NYSE American: NAK) (“Northern Dynasty” or the “Company”) responded today to a report issued by Beijing-based short seller J Capital Research (“JCap”) on September 9, 2020, calling it “fatuous, flimsy and fundamentally self-serving,” as well as “typical of such efforts to profit by destroying the value of honest shareholders’ investments.”
“We have heard and responded to the same baseless claims in JCap’s ‘research’ report countless times since they were initially levelled by New York-based ‘short-and-distort’ firm Kerrisdale Capital back in 2017,” said Northern Dynasty President & CEO Ron Thiessen. “Financial markets weighed and dismissed Kerrisdale’s self-serving arguments then, and we are confident they will do so even more swiftly this time with these unoriginal allegations coming out of China.”
Thiessen noted that the allegations in the Kerrisdale report formed the basis of several derivative shareholder actions against Northern Dynasty, which were ultimately dismissed by the courts for failure to state a cause of action.
JCap’s report, entitled Pretend & Extend: The No-Return Deposit, claims that Northern Dynasty’s 100%-owned Pebble copper-gold-molybdenum-silver-rhenium project in southwest Alaska will lose money, that capital costs have been underestimated and that the project’s proposed mining plan intentionally targets low-grade portions of the deposit. Less than four months ago, JCap levelled similar accusations against Alaska’s other late-stage mineral prospect – the Donlin Gold project (co-owned by Barrick and Novagold) – leading to a civil action lawsuit for defamation being brought against the firm.
“We will take an appropriate amount of time to review the report and the market’s reaction to it, if any, as well as our options for protecting the company and our shareholders from these spurious claims,” Thiessen said, noting the Company may choose to issue a comprehensive response or may simply ignore what is intrinsically a self-serving attempt to profit by creating panic in the marketplace.
Thiessen advised investors to carefully read and consider the extensive disclaimers issued by JCap, which confirm the authors have shorted Northern Dynasty stock and absolve them of any potential responsibility for the ‘opinions,’ ‘inferences’ and ‘deductions’ in the report. “We encourage our investors in the strongest possible terms not to reward this type of value destructive and irresponsible behavior,” he said.
Thiessen believes other parties engaged in market manipulation and short-selling have conspired to cost Northern Dynasty shareholders, large and small, some $500 million in recent months. He said there is little the Company can do to prosecute or counter these illegal activities other than continuing to advance the Pebble Project toward final permitting, construction and profitable operations.
“Our focus must be on continuing to advance through the rigorous, objective and science-based federal permitting process in the United States, and proving that Pebble is a project of merit that will materially benefit project stakeholders in Alaska and our shareholders in America and around the world,” Thiessen said. “That’s what we intend to do.”
Thiessen pointed to several egregious lies and misrepresentations in the JCap report as evidence of the quality of the research and the integrity of its authors:
JCap claim: “…(Northern Dynasty) management is openly saying that, once the plan is under way, they will push forward with another 58 years. Management claims they will not need any additional environmental approval to extend the life of the mine.”
Northern Dynasty response: This claim is false. No future development scenario has been proposed at Pebble. The Company has consistently stated that any proposal for subsequent phases of development must undergo rigorous federal and state permitting processes.
JCap claim: “Pebble itself in 2018 relied on its 2011 scenario to argue that the mine is economically viable. The USACE (US Army Corps of Engineers) asked Pebble for modeling on the economic viability of the proposed mine. In response, Pebble provided analysis based entirely on the 2011 scenario.”
Northern Dynasty response: JCap intentionally mischaracterizes the US Army Corps of Engineers’ request for information and the Pebble Limited Partnership’s response. In fact, Pebble was explicit when providing the 2011 data to USACE that it did not reflect current project costs. The allegation that Pebble capital costs are underestimated by Northern Dynasty is based on this mischaracterization.
JCap claim: Northern Dynasty “has claimed poverty to dodge a feasibility study, which would demonstrate economic viability.”
Northern Dynasty response: Northern Dynasty has consistently stated it does not intend to complete a Preliminary Economic Assessment or other technical study to report on the future financial performance of the proposed Pebble mine until the project design is confirmed by regulators through the granting of a positive Record of Decision. That position and its rationale has not changed.
About Northern Dynasty Minerals Ltd.
Northern Dynasty is a mineral exploration and development company based in Vancouver, Canada. Northern Dynasty’s principal asset, owned through its wholly owned Alaska-based U.S. subsidiary, Pebble Limited Partnership (“PLP”), is a 100% interest in a contiguous block of 2,402 mineral claims in southwest Alaska, including the Pebble deposit. PLP is the proponent of the Pebble Project, an initiative to develop one of the world’s most important mineral resources.