Debate ramps up as Northern Dynasty’s Pebble grows

Vancouver — Northern Dynasty Minerals (NDM-V, NAK-X) says its huge Pebble project in southwestern Alaska now ranks as the world’s second-largest porphyry copper-gold deposit, and could get even larger.

“From our point of view, this is very exciting news,” says Sean Magee, a spokesman for Northern Dynasty, a 19.8%-owned affiliate of metals giant Rio Tinto (RTP-N).

Northern Dynasty said recent drilling on the property, located about 25 km north of Iliamna in the state’s salmon-rich British Bay area, has raised the level of inferred mineral resources in the Pebble East deposit to 3.4 billion tonnes.

That’s up 90% from earlier estimates and will likely make the controversial project an even bigger target for pro- and anti-mining activists who have been making their voices heard in newspaper ad campaigns, even though permitting has not yet begun.

Gail Phillips, a former speaker with the Alaska House of Representatives recently entered the debate, leading a coalition of pro-mining advocates known as The Truth About Pebble. The organization has placed an ad in the Anchorage Daily News, calling on Alaskans to “stand up for fairness and to embrace responsible development that maintains a careful oversight of the environment.”

Aiming to ensure that any future mining permit applications get a fair hearing, the campaign is also a response to high-profile opponents who are concerned about such a large project being located in the vicinity of streams that feed part of the Bristol Bay salmon run, and sports fishing area.

“We want to make sure that the permitting process is not going to be corrupted by someone who tries to buy off the opposition,” Phillips says, the co-chair of Truth about Pebble.

Phillips says the organization represents about 300 citizens and 50 businesses.

Estimates of the projects’ potential size are based on 132 core holes, and suggest that Pebble East and the adjacent Pebble West deposit constitute one of the most significant metal accumulations in the world, Northern Dynasty says.

At a 0.6% copper-equivalent cutoff, the estimated inferred mineral resource in Pebble East stands at 3.4 billion tonnes, grading 1% copper equivalent, containing 42.6 billion lbs. copper, 39.6 million oz. gold and 2.7 billion lbs. molybdenum.

At a 0.3% copper-equivalent cutoff, the estimated measured, indicated and inferred mineral resource in the adjacent Pebble West deposit stands at 4.1 billion tonnes, grading 0.5% copper equivalent, containing 24.7 billion lbs. copper, 42.1 million oz. gold and 1.3 billion lbs. molybdenum.

The two deposits combined are thought to host 82 million oz. gold and 67 billion lbs. of copper metal.

According to numbers compiled by Northern Dynasty, Pebble ranks as the world’s second-largest deposit of its kind, and is now exceeded only by Grasberg in Indonesia, which is estimated to hold 109 million oz. gold and 80 billion lbs. copper.

News of the latest estimate sent Northern Dynasty shares up 41 to $10.95 on the TSX Venture Exchange the day of the announcement.

Drilling campaign

Magee says the company will likely spend $40 million this year to conduct another 250,000 ft. of drilling in an effort to define the limits of the Pebble East deposit.

It is a move that could delay any future effort by the company to seek a mining permit for the project until the end of 2008 and possibly into 2009, Magee says.

However, that hasn’t prevented wealthy opponents such as Alaskan money manager and sport fishing lodge operator Robert Gillam from participating in a campaign to stop the project.

Last month, the Washington, D.C.-based environmental group Earthworks stepped into the campaign by paying between US$10,000 and US$20,000 to place a series of ads in the January, February, and March issues of National Jeweler Magazine.

Earthworks claims that the project is a threat to Alaska’s Bristol Bay region, an area it described as critical habitat for 43 million salmon, as well as caribou, freshwater seals, grizzly bears and trout.

Moving to counter that effort, Truth About Pebble has issued a statement saying it is opposed to two pieces of legislation pending in Juneau that are intended to stop the Pebble project before it even applies for permits under Alaskan law.

“It’s bad enough that the proposed bills would deny Alaskans the opportunity to pursue the responsible development of one of the world’s most important mineral resources,” Phillips says. “Senate Bill 67 and House Bill 134 would also foreclose economic development opportunities across millions of acres in the economically depressed Bristol Bay region.”

Senate Bill 67 aims to establish a new game refuge of over 7.7 million acres (31,160 sq. km) of state land in Bristol Bay. Phillips said it would restrict most if not all development activities, including mining, oil and gas, other energy development and even light industrial uses.

House Bill 134, she says, would expand the protection afforded to waters in the Bristol Bay Fisheries Reserve to five massive drainages encompassing 22 million additional acres (89,030 sq. km).

It would also prohibit any industrial or commercial water withdrawals, diversions, or insertions throughout the area, and restrict any alteration to stream courses or wetlands.

Meanwhile, mining officials, who are familiar with the situation in Alaska, say opposition to new projects has just become a fact of life in the U.S. state.

“I just think this is normal and you have to plan for it,” says Doug Nicholson, vice-president and general manager of Alaska Gold, a subsidiary of NovaGold Resources (NG-T, NG-X), which is developing the $72-million Rock Creek gold mine near Nome, Alaska.

Rock Creek has been affected by a lawsuit filed by a group of Nome residents, who argued that the decision to grant a permit was based on an environmental assessment rather then a more involved environmental impact statement.

“This is something that you have to expect in this day and age,” says Nicholson, adding that the lawsuit has prevented mining crews from working in the tailings impoundment area. But development is still proceeding.

“We are going ahead with normal business,” he says.

David Szumigala, a senior mineral geologist with the Alaska Department of Natural Resources says mining companies need to work harder to respond to negative attacks.

“There is a lot of disinformation out there that mining companies need to spend time countering,” he says.

Szumigala says Northern Dynasty will have to apply for about 60 individual permits, each of which will provide an opportunity for public comment.

Meanwhile, Northern Dynasty president Ron Thiessen says the company is assessing the potential merits of possible participants in a consortium that would be formed to permit, finance, construct and operate what is expected to be a long-life mine.

“We expect that this process will be achieved successfully because the discovery rate of large copper deposits has declined significantly and the shortage of important, major company-sized projects is likely to remain a critical issue for he world’s large copper miners going forward,” he says.