Northern Dynasty Minerals (NAK) Stock: Why It Fell On Great EIS News

Northern Dynasty Minerals NAK Stock News

Northern Dynasty Minerals Ltd (NYSEAMERICAN: NAK) is dipping this morning, following up on tremendous losses seen from the stock Friday. The declines caught me by surprise, as they did with many others. After all, a positive EIS was announced on Friday, which should have sent the stock for the top. So, why is it falling? Here’s the scoop:

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The Positive EIS Announcement From NAK

Before we get into the reason for the dip, it’s important that you understand why it was so surprising. Northern Dynasty Minterals’ claim to fame is an undeveloped mine known as the Pebble Project.

Should all go well with the mine, NAK will tap into one of the largest gold, silver, and other mineral mines in the world. Throughout the years, the company has been fighting with the United States Environmental Protection Agency to move forward with permitting. However, the location of the mine is in a delecate environment, and the EPA believed that there would be negative impacts on this delecate environment.

So, before the company could apply for permits, it needed a positive Environmental Impact Statement, or EIS, from the United States Army Corps of Engineers.

This key piece of the puzzle came on Friday. The EIS was positive, showing that the Pebble mine would not only have little to no effect on the surrounding environment, but also an incredibly positive impact on the local economy.

This should have sent the stock up, but NAK shares started falling in value once the EIS was released.

Why The Fall In Value

While the declines in Northern Dynasty Minerals caught me and many others by surprise, it makes sense. The fact of the matter is that the EIS was bitter sweet.

On the sweet side, the EIS opens the doors for NAK to move forward with the permitting process for the Pebble Project. So, what’s bitter about it?

Well, this is when we really start to see what the company is made of. The final key to permitting is complete, but the mine is far from it. The reality is that to build a mine the size of the Pebble Project, the company will have to shell out millions of dollars, and likely years of work.

In fact, the best course of action from here would be fore Northern Dynasty Minerals to partner with a big player in the precious metals space. This way, a partner could share in the cost and the ultimate reward.

So, while the EIS was positive, the Pebble Project is still pretty far from fruition, and I think that set in on Friday, after the stock started the day in the green, but fell to losses of more than 10% by the close.

This Could Be A Huge Opportunity

While the declines in NAK stock have been pretty painful, the action could represent a strong opportunity. With the positive EIS in place, the company has what it needs for permitting.

In the past, the company has looked for partners, but couldn’t come up with any. The problem was that the permitting issues surrounding the Pebble Project kept the big players away. However, that’s likely not the issue anymore.

The fact of the matter is that with the positive EIS, the Pebble Project will likely become a hot topic among the big players. Without the headwinds associated with environmental impact, potential partners have the opportunity to get involved in what seems to be a sure play.

As such, I’m expecting to see several catalysts ahead, starting with updates on the permitting process and a potential partnership agreement. While the mine production and completion is still pretty far off, these catalysts have the potential to send the stock through the roof.

So, buying NAK stock on the current discount may prove to be an incredibly strong long-term play.

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