Replies to post #5429 on Northern Dynasty Minerals Ltd (NAK)

[slazenger7]

3. But look at those reserves!

Let's assume Pebble becomes an active, resource-producing mine. While investors today have been hypnotized by the massive mineral deposits at the site, that's the wrong metric to focus on. The metric currently reported by Northern Dynasty Minerals focuses on resource estimates, which are comprised of three types: measured, indicated, and inferred. The level of confidence that the resources exist decreases with each category.

That presents some risk to investors, especially considering that the middle category includes over 60% of the copper, gold, and silver estimates.

Mineral

Measured

Indicated

Inferred

Copper

3.83 billion pounds

53.42 billion pounds

24.55 billion pounds

Gold

5.93 million ounces

64.62 million ounces

37.25 million ounces

Molybdenum

0.21 billion pounds

3.20 billion pounds

2.18 billion pounds

Silver

28.13 million ounces

315.5 million ounces

170.5 million ounces

Data source: Northern Dynasty Minerals 2014 estimate.

Importantly, resources aren't even the metric that matters for mining companies, which are made or broken by the total number of reserves. Northern Dynasty Minerals has yet to complete additional studies to upgrade its resources to reserves, and it is careful to state that estimates "potentially support a modern, long-life mine."

Worse, the gold concentration in the ore from Pebble (measured in ounces of mineral per ton of ore) is between four and seven times lower than other profitable mines around the world. That could hike up the costs of successful development and may even threaten the mine's ability to ever turn a profit.

Long story short

A simple narrative has propelled Northern Dynasty Minerals stock in the last 12 months. Traders and investors see a company that is sitting on a large deposit of valuable minerals that has suddenly encountered fewer barriers to development. However, the more nuanced take is that there are inconvenient realities facing the company as it attempts to successfully develop Pebble. The details should serve as a warning to investors looking for a long-term payday.

https://www.fool.com/investing/2017/06/02/3-terrible-reasons-to-buy-northern-dynasty-mineral.aspx

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