More time to consider Pebble option

Northern Dynasty Minerals Ltd. April 5 reported that the deadline of the framework agreement for First Quantum Minerals Ltd. to join the Pebble Partnership has been extended from April 6 to April 30.

The framework agreement entered into last December provides First Quantum with the option to earn a 50 percent interest in the Pebble Partnership for US$1.5 billion, which includes a US$150 million initial investment, made in four equal payments of US$37.5 million, to fund permitting to develop a mine at the world-class copper-gold-molybdenum deposit in Southwest Alaska.

"This initial investment by a well-established copper mining company speaks volumes about the economic opportunity Pebble represents to Alaska," Pebble Partnership CEO Tom Collier said when the agreement was announced. "Pebble development could make a significant contribution to Alaska's economy and provide year-round jobs for Southwest Alaska. Additionally, Pebble could provide important revenue to state and local governments."

As long as the option remains in good standing, the global miner would have the option to acquire 50 percent interest in the mine project by paying the US$1.35 billion balance into the Pebble Partnership at the end of the four-year option period.

Northern Dynasty, currently the sole owner of the Pebble Partnership, would own the other half of the copper mine development company.

A week after Northern Dynasty and First Quantum entered into the framework agreement, the Pebble Partnership submitted permit applications for the Pebble Mine project to U.S. Army Corps of Engineers, the lead agency for the environmental review process under the National Environmental Policy Act.

With a 30-day public scoping and comment period starting on April 1, the Corps has already begun moving the permitting process forward.

While opposition to the Pebble project argues the 30-day period is too short for a mine project the scope of Pebble, the Corps points out that the public has had numerous opportunities to voice their concerns during pre-permitting public comment periods.

"The Pebble Project has been in the public eye for many years and there have been multiple public input and comment opportunities from other agencies. This public body of information has helped to inform the Corps' preliminary scope for the environmental impact analysis," the regulator penned in an announcement on the scoping period.

While the actual permitting process is moving ahead, permit restrictions proposed by the U.S. Environmental Protection Agency remain in place.

A federal judge ordered a stay on the implementation of EPA's proposed determination to restrict Pebble permits before they went into effect, and in May of last year the EPA agreed to allow the Pebble Partnership to enter the permitting process unencumbered by the predetermined restrictions.

"The settlement of our litigation with the Environmental Protection Agency announced last May gave us the right to fully participate in a normal, lawful permitting process under the Clean Water Act with a thorough review by the U.S. Army Corps of Engineers," said Collier.

EPA affirmed that Pebble is afforded the right to have its proposal vetted by regulators but is sending a message that the proposed plan to develop a mine at Pebble will be held to the highest standards.

"The project proponents continue to enjoy the protection of due process and the right to proceed. However, their permit application must clear a high bar, because EPA believes the risk to Bristol Bay may be unacceptable," the agency penned in a Jan. 26 statement.

This is something First Quantum is taking into consideration as it completes its due diligence on entering an option on Pebble.

Northern Dynasty expects the option agreement and associated commercial agreements to be finalized in the second quarter of this year.

UPDATE (9:22 a.m. April 6): The U.S. Army Corps of Engineers announced an extension of the public scoping period for Pebble by 60 days to June 29.

–SHANE LASLEY