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Replies to post #2427 on Northern Dynasty Minerals Ltd (NAK)
01/03/17 9:43 PM
Northern Dynasty Minerals
Another gold stock that I'd strongly suggest keeping your distance from -- and which could arguably be the most dangerous precious-metal stock period -- is Northern Dynasty Minerals (NYSEMKT:NAK).
If you had bet against Northern Dynasty Minerals at the beginning of the year, you'd be crying under your pillow right about now. Shares of the company have rallied about 700% year to date, making this small cap one of the market's top performers in 2016. Higher gold prices for the year, along with strong momentum and a healthy helping of speculation, have likely pushed its share price into the stratosphere.
But there's one major issue with Northern Dynasty Minerals that its current investors are overlooking -- namely, that it doesn't even have a viable mine as of yet.
Nearly all of the company's valuation is tied to the future of the Pebble Project in Alaska. According to Northern Dynasty, the Pebble deposit contains measured and indicated resources of 70 million ounces of gold, 57 billion pounds of copper, 3.4 billion pounds of molybdenum, and 344 million ounces of silver. Yet, according to the company's third-quarter earnings report, "The Group's continuing operations and the underlying value and recoverability of the amounts shown for the Group's mineral property interests, is entirely dependent upon the existence of economically recoverable mineral reserves." In layman's terms, the company is still exploring Pebble to determine if there's an economically viable way to even recover some of these deposits. And, even if there is, Northern Dynasty has nowhere near enough capital to build out or develop a mine to make it happen.
This stock looks like pure fool's gold -- with a lowercase f -- and I would suggest keeping your distance.
