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Northern Dynasty’s Empire Is in Painful Decline

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Ian Bezek
·4 min read
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Northern Dynasty Minerals (NYSEAMERICAN:NAK) is a junior gold mining company based out of Vancouver. Its primary gold property in Alaska. Unfortunately, it hasn’t gotten to the mining part yet. That’s because its main mineral prospect has been blocked by environmental regulators for years. As a result, NAK stock continues to lose value.

NAK stock Closeup of a large gold nugget. stocks under $10
NAK stock Closeup of a large gold nugget. stocks under $10

Source: Shutterstock

Way back in 2011, during the last gold market, NAK stock surged from the single digits up to $22 per share. It seemed like the company’s massive gold prospect might become a windfall asset. It helped matters that gold traded up to $1,900 per ounce at that time as well.

Gold slumped following 2011 and Northern Dynasty’s project ended up on the back burner. By 2015, NAK stock had fallen to less than a dollar per share.

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Setbacks with the EPA during the Obama administration didn’t help either. However, Donald Trump’s win in 2016 along with a rebound in gold, lifted NAK stock back to $3 in 2017. Soon, though, shares fell back to a $1 and lingered there for years as the proposed mine site continued to sit dormant.

Bad News Strikes

In May 2020, NAK stock finally showed a pulse again. Shares rallied to $2 that summer on hopes of an upcoming regulatory decision on the fate of Northern Dynasty’s Pebble project. With Trump still in office, it seemed like Northern Dynasty might finally get the green light to mine its massive gold deposit in southwest Alaska.

However, in November 2020, the Trump administration dropped the bad news: It officially denied the mine permit for Pebble. The U.S. Corps of Engineers said that the project’s plan to discharge fill material failed to comply with the Clean Water Act.

A main sticking point for this project was that the world’s largest salmon fishery is right near where the Pebble mine would have been. There was a perceived trade-off between the environment and salmon fishing industry on one side, and the gold mine on the other. In the end, the generally pro-mining Trump team ended up siding with the environment and fishing industry.

A Tough Path Forward

If Northern Dynasty couldn’t get the mine approved under Trump, how would it happen under President Joe Biden now? In August 2020, then-candidate Biden said bluntly about the Pebble project: “It is no place for a mine.” Elaborating on that, Biden added: “The Obama-Biden administration reached that conclusion when we ran a rigorous, science-based process in 2014, and it is still true today.”

It doesn’t get much clearer than that. Three consecutive presidential administrations in opposed the mine. There’s little chance for that to change until 2025, if not later. Meanwhile, Northern Dynasty will continue to run up the costs of keeping its overhead going and its management team paid.

Over the past three years, Northern Dynasty has averaged $50 million per year losses. Meanwhile it has generated no revenue for the past decade. With all that in mind, the company’s $323 million market capitalization is huge given that it has no revenues and no realistic path forward for many years to come.

NAK Stock Verdict

Northern Dynasty’s attempts to build a gold mine in Alaska just haven’t worked out. Regardless of whether it was Obama, Trump, or now Biden, the government just isn’t inclined to approve this mine. Notably, Alaska’s two senators also oppose the mine. Back when Trump was in office and gold was reaching $2,000 per ounce, that was the best chance Northern Dynasty had seen in years. Still, the Trump administration ultimately shot it down.

If the mine couldn’t gain approval then, it almost certainly isn’t going to happen now given the more environmentalist government now in place. That’s particularly true with Biden directly voicing opposition to the mine. The slipping price of gold now further diminishes any residual value of the property.

NAK stock also got caught in the r/WallStreetBets excitement. There was a huge short squeeze that lifted shares dramatically earlier this year. But that’s hardly reason to own the stock for anything more than a day trade.

There’s a lot of decent gold mining companies suffering in big corrections at the moment. The VanEck Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) is down 22% from its recent high, after all. Even in this correction, however, NAK stock is not one of the better options for a buy-the-dip candidate.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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