Benzinga | Sep 9, 2021 06:51AM EDT

Northern Dynasty: Preliminary Economic Assessment For Alaska's Pebble Project Presents Robust Projected Financial Results And Globally Significant Potential Metal Production With Excellent Optionality

Northern Dynasty Minerals Ltd. (TSX:NDM)(NYSE:NAK) ("Northern Dynasty" or the "Company") is pleased to announce the results of a 2021 Preliminary Economic Assessment ("2021 PEA") providing updated production, financial and cost estimates for its proposed Pebble Project (the "Proposed Project") in Southwest Alaska as described in the Pebble Project permit application and its amendments, which recently underwent a comprehensive review by the U.S. Army Corps of Engineers ("USACE") culminating in their publishing of a Final Environmental Impact Statement ("EIS"). In addition to the Proposed Project, the 2021 PEA examines three potential mine expansion scenarios, and potential alternative strategies for gold recovery that could form the basis for future permit applications and review. U.S. dollars and U.S. standard units are used unless otherwise indicated. All results are post-tax.

The currently proposed project detailed in the 2021 PEA is the Proposed Project, and is consistent with the Project Description in the Pebble EIS, published by the USACE in July 2020. It does not include an onsite gold plant. With the exception of the Proposed Project, all development alternatives evaluated in the 2021 PEA are presented to demonstrate the optionality inherent in the polymetallic Pebble deposit by presenting a broad range of potential pathways for future mine development. The 2021 PEA also models other options for potential development in the future, to show how the project life could be extended and metal production enhanced through an expansion at different points in time or via alternative treatment scenarios. Neither Northern Dynasty nor the Pebble Partnership has proposed or intends to propose any of these development alternatives in the near-term for regulatory approval. Any future development options beyond the Proposed Project would require extensive federal, state and local permitting processes and approvals before proceeding, which would be in addition to the initial permits and approvals required for the Proposed Project.

Summary of Key Projected Results 1

Proposed Project

* 20 years of open pit mining with a processing rate of 180,000 tons per day ("Tpd")

* At forecast long-term [2] metal prices, Internal Rate of Return ("IRR") of 15.8% and Net Present Value at 7% discount rate ("NPV 7 ") of $2.3 billion

* At prevailing [3] metal prices, IRR of 23.8% and NPV 7 of $4.8 billion

* Life-of-mine ("LOM") metal production for this scenario: 6.4 billion lb copper; 7.3 million oz gold; 300 million lb molybdenum; 37 million oz silver; and 230,000 kg rhenium

* Average annual metal production: 320 million lb copper; 363,000 oz gold; 15 million lb molybdenum; 1.8 million oz silver and 12,000 kg rhenium

Expansion Scenarios :

* 90 to 101 year mine life with a peak processing rate of up to 270,000 Tpd

* At forecast long-term metal prices, IRR of 18.2% to 21.5% and NPV 7 of $5.8 to $8.5 billion

* At prevailing metal prices, IRR of 25.8% to 29.8% and NPV 7 of $9.9 to $14.0 billion

* LOM metal production for these scenarios: 60 billion lb copper; 50 million oz gold; 2.9 billion lb molybdenum; 267 million oz silver; and 2 million kg rhenium

* Average annual metal production: 600 million lb copper; 500,000 oz gold; 29 million lb molybdenum; 2.6 million oz silver and 20,000 kg rhenium

Onsite Gold Plant :

* Addition of an onsite gold plant at Production Year 5

* Proposed Project At forecast long-term metal prices, IRR of 16.5% and NPV 7 of $2.7 billion At prevailing metal prices, IRR of 25.9% and NPV 7 of $5.4 billion LOM gold and silver production for this scenario: 9.0 million oz and 39 million oz, respectively Average annual metal production: 453,000 oz gold and 2 million oz silver

* Expansion Scenarios At forecast long-term metal prices, IRR of 18.9% to 22.7% and NPV 7 of $6.7 to $9.8 billion At prevailing metal prices, IRR of 26.3% to 30.8% and NPV 7 of $10.9 to $15.4 billion LOM gold and silver production for these scenarios: 65 million oz and 289 million oz, respectively Average annual metal production: 644,000 to 721,000 oz gold and 3.2 to 2.9 million oz silver

Low-Cost/High-Margin Production:

* Proposed Project: average co-product C1 Copper Cost of $1.65/lb CuEq and Gold Cash Cost of $753/oz; average by-product C1 Copper Cost of $0.69/lb and Gold Cash Cost of ($1,147)/oz

* Expansion Scenarios: average co-product C1 Copper Cost of $1.53/lb CuEq to $1.56/lb CuEq and Gold Cash Cost of $699/oz to $712/oz; average by-product C1 Copper Cost of $0.53/lb to $0.88/lb and Gold Cash Cost of ($2,013)/oz to ($1,979)/oz

* Proposed Project: average annual Net Smelter Return ("NSR") of $1.6 billion and LOM NSR of $32 billion

* Expansion Scenarios: average annual NSR of $2.8 to $3.2 billion and LOM NSR of $285 billion

Scheduled for release in October 2021, the 2021 Pebble Project Preliminary Economic Assessment is an update to a Technical Report completed in 2011, which included an economic analysis that was considered out of date mainly due to the revisions to the Pebble Project as submitted in its permit application and amendments. The Proposed Project is similar to the 25-year Investment Decision Case in the 2011 Technical Report, but the current open pit produces less waste rock and therefore occupies a smaller footprint. The Proposed Project does not include the secondary gold plant, which was a component of the 2011 Technical Report, although the 2021 PEA does evaluate a scenario with a gold plant for the Proposed Project. The 2021 PEA advances the waste, tailings, and water management plans, but these are rooted in similar data and concerns as were addressed in the 2011 Technical Report. Both the 2021 PEA and the 2011 Technical Report evaluate similar scale open pit expansions. Furthermore, the transportation and power infrastructure for the two reports are similar in concept.

"The 2021 PEA forecasts robust economics for the Proposed Project and also future potential developments," said Northern Dynasty President and CEO Ron Thiessen. "It is a project that can be designed, built and operated with industry-leading environmental safeguards while generating significant financial returns over multiple decades."

The 2021 PEA has been prepared within the guidelines established by National Instrument 43-101 ("NI 43-101") to disclose the current costs estimates and potential financial results for the Pebble Project. The Company is a "foreign issuer" under the U.S. Exchange Act and entitled to file continuous disclosure reports with the U.S. Securities and Exchange Commission under the MJDS between Canada and the United States, and to provide disclosure on our mineral properties, including the Pebble Project, in accordance with NI 43101 disclosure standards and CIM Definition Standards.

The 2021 PEA is based on an August 2020 mineral resource estimate (see Northern Dynasty news release dated August 20, 2020). The 2021 PEA is preliminary in nature, and includes Inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no assurance that the 2021 PEA will be realized. Mineral Resources that are not mineral reserves do not have demonstrated economic viability, and there is no assurance that the Pebble Project mineral resources will ever be upgraded to reserves. The 2021 PEA assumes that the Proposed Project will ultimately be able to obtain the required permits from the USACE and state of Alaska authorities to enable development of the Proposed Project. Neither the 2021 PEA, nor the mineral resource estimates on which the 2021 PEA is based, have been adjusted for any risk that the Pebble Partnership may not be able to successfully appeal the record of decision issued by the USACE on November 25, 2020 denying the granting of the required permit under the Clean Water Act. In addition, the 2021 PEA does not account for any additional capital or operating costs that may be necessary to obtain the required federal or state permits, should adjustments to the operating or environmental mitigation plans be required to be made in order to secure the required permits.

The financial potential of the 20-year operation described in the 2021 PEA's Proposed Project analysis is further evaluated through modeling the possible addition of a secondary gold recovery plant in Production Year 5 that uses the most efficient and permittable lixiviants available at the time any related permitting applications are made.

In addition, it evaluates three potential Expansion Scenarios, which could see increased mining and processing rates at the Pebble Project, at three different points in time (increased production starting in years 21, 10 and 5 of the mine life) and at various throughput rates. Expansion Scenarios are modelled on a mine development concept submitted by Northern Dynasty's 100%-owned U.S.-based subsidiary Pebble Limited Partnership ("Pebble Partnership") to the USACE during federal permitting in response to the federal agency's Request for Information ("RFI") about future potential mine development scenarios.

The analysis of specific expansion alternatives included in the 2021 PEA does not reflect a decision by Northern Dynasty or the Pebble Partnership to implement any of these alternatives. Rather, it is an analysis of examples of reasonable alternatives that may be initiated by Pebble Project proponents in the future. The same is true of the identified possible timing of the implementation of each alternative. As noted elsewhere, the implementation of each identified alternative would require extensive permit modifications or the application for and approval of new federal, state and local permits.

"The significant metal production forecasts and robust financial estimates we're releasing today clearly suggest that Pebble is potentially more than just one of the greatest accumulations of copper and other strategic metals ever discovered on American soil," said Mr. Thiessen. "It's also a mineral resource that has the potential to sustain an environmentally sound and financially rewarding mining operation in the near-term, and become one of America's most important metals producers for decades to come."

Thiessen said the Proposed Project evaluated in the 2021 PEA - a project the USACE determined in its Final EIS would "not have measureable effects" on fisheries in Southwest Alaska - incorporates industry-leading engineering and environmental safeguards, and substantial closure funding (>$1.4 billion after 20 years of mining). The USACE issued a negative Record of Decision for the Pebble Project based, in part, on perceived impacts to the fishery that the Company believes were not adequately substantiated.

"We believe the proactive, environmentally-driven risk reduction concepts we've incorporated are setting a new standard for the global mining sector," Thiessen said. "They are costs that must be incurred to develop safely and responsibly in America, and they are fully reflected in the positive economics from the development scenarios we're announcing today."

In addition to raising performance standards for modern mining, the proposed Pebble Project has the potential to make a significant positive contribution towards achieving the United States' economic, manufacturing, military and climate change policy goals.

As the largest undeveloped copper, gold and rhenium resource in the world, Pebble has the potential to produce considerable quantities of critical minerals and metals - including those for which the U.S. currently relies on foreign producers for a significant proportion of its needs. Copper, in particular, is considered to be critical for renewable energy and electrification technologies, including EVs.

"In order to achieve its vision for global leadership in transitioning to a low-carbon future, the U.S. simply must develop its own domestic sources of copper and other critical metals," Thiessen said. "In doing so, it should also demonstrate to the rest of the world what environmentally sound and socially responsible mining looks like. That's precisely what we've undertaken to do at Pebble, and through the project designs evaluated in this PEA."