Northern Dynasty partners with Anglo on Pebble

Vancouver – Northern Dynasty Minerals (NDM-V, NAK-X) has brought on senior miner Anglo American (AAUKD-O, AAL-L, AGL-J) as a 50:50 partner to develop its Pebble copper-gold-molybdenum porphyry deposit in southwestern Alaska.

The deal gives Anglo 50% interest in a limited partnership by making staged cash investments over several years totaling US$1.425 billion.

The market has been waiting to see what major would emerge to take a piece of the massive copper-gold deposit. Northern Dynasty had previously discussed the possible formation of a consortium to advance its project through the permit, finance and mine construction phase, all of which Anglo will now take on.

The strategic partnership has a timeline targeting completion of a pre-feasibility study by December 2008, full feasibility by 2011 and production starting by 2015.

Under its staged investment schedule, Anglo commits to expenditures of US$125 million to complete the pre-feasibility study and a further US$325 million for a feasibility study. Upon a production decision, Anglo will then commit to the next US$975 million of mine development expenditures to retain its 50% interest. Once the major has vested its US$1.425-billion obligation under the agreement, further expenditures will be shared jointly by the partners.

If Anglo does not complete the feasibility study by 2011 its overall funding requirement bumps up to US$1.5 billion.

Describing Pebble as one of the world’s largest copper-gold-molybdenum deposits, Cynthia Carroll, CEO of Anglo American stated, “the project offers Anglo a unique opportunity to be involved in a very long life, low operating cost mine.

Development of the Pebble deposits remains a contentious issue. Northern Dynasty has borne the wrath of a number of strongly funded groups opposed to any development in the Bristol Bay area, where Pebble is located; citing the importance of the regions fishing industry and salmon habitat.

Opponents include well known Alaskan investment banker Robert Gillam that has strongly lobbied and financed movements against plans for a mine at Pebble. Gillam reportedly has significant real estate holdings in the Bristol Bay region including a sports fishing lodge.

The project has even seen a cool reception from the normally pro-development Senator Ted Stevens from Alaska expressing reservations on its development.

Anglo will now bring its clout to the pro-mining table as it looks to advance the project to the pre-feasibility stage.

Interestingly Northern Dynastys largest shareholder is another major, Rio Tinto (RTP-N, RIO-L), that owns 19.8% of the company. Rio Tinto holds rights to participate in up to 50% of certain future financings however once it reaches a threshold ownership level of 19.9%, its financing participation right will be reduced to that level.

The Pebble West deposit hosts a measured and indicated resource of 3 billion tonnes grading 0.28% copper, 0.32 gram gold per tonne and 0.015% molybdenum using a 0.3% copper equivalent cut-off grade for a contained metal tally of 18.8 billion lbs. (8.5 million tonnes) copper, 31.3 million oz. gold and 993 million lbs. molybdenum. An additional 1.1 billion inferred tonnes were also reviewed at 0.25% copper, 0.3 gram gold and 0.015% molybdenum using the same cut-off grade.

The near-surface Pebble West deposit is viewed as a potential open pit operation.

The adjacent Pebble East deposit contains an inferred resource of about 3.4 billion at 0.57% copper, 0.36 gram gold and 0.036% molybdenum using a 0.6% copper equivalent cut-off grade. The zone, that remains open to the north and south, holds about 42.6 billion contained lbs. (19.6 million tonnes) copper, 39.6 million oz. gold and 2.7 billion lbs. molybdenum.

Northern Dynasty is studying potential development of Pebble East as a bulk tonnage, underground operation due to its depth.

Shares of Northern Dynasty rallied about $3.00 over the few days prior to the Anglo partnership announcement to touch a new high of $16.75 apiece. Following the news, its shares gave back most of the gain to close down 14%, or $2.22 apiece, at $13.88 per share.