Northern Dynasty Minerals Ltd (NAK)

[deuspronobis]

If you're investing new money today, your maximum risk is $2.50 (worst case). True, you can mitigate the risk by using a stop-loss. But stop-losses don't always work with a news-driven stock like NAK. Geez, it dropped more than 30% yesterday on just the hint that the EPA may kill the mine. Suppose the stock closes at $2.50 today. After hours, the EPA issues an actual edict prohibiting mining in Bristol Bay. NAK could open for trading tomorrow under $1, and may never reach your stop price of $2.25 ever again. Anyone who owns this stock is risking a lot more than 15 cents a share. I agree that you shouldn't bet the farm on such a risky stock, that's why I have committed just one percent of my portfolio here. Risk mitigation through position sizing is 100% effective: bet small and you can stomach the loss even if the stock goes to zero.

As for upside potential, I'm not putting any time frame on my $100 projection. I agree that NAK won't get that high any time soon -- maybe not for many years. They may issue more shares along the way to fund the project, which of course dilutes the existing shareholders. But we're talking about a mineral/metals deposit worth an estimated $200-$500 billion. If these guys can't manage to wring $100 worth of shareholder equity out of $2,000 per share in assets, we're all betting on the wrong horse.

What do you all think is a reasonable price target in the next 10 years, assuming the permit is approved? I'm curious.