Things That Make Us Go Hmm... Northern Dynasty

I recently set up an alert for Pebble Mine parent Northern Dynasty via Seeking Alpha, a platform for investment research which covers stocks and investment strategy. It didn't take long for the question of whether to invest in Northern Dynasty to land in the inbox.

Some say it might be just the right time to invest in Northern Dynasty.

Why, then, does the company have a valuation of just $190 million? The answer is that environmental groups worldwide vehemently oppose the project. They are concerned that the mine will disrupt the salmon fishing industry to a point of devastation, and that it will pollute Iliamna Lake and Bristol Bay. As a result investors have become fairly convinced that the Pebble Beach mine will not be built, and the stock is down 90% from its 2011 peak.

But a longer-term chart of Northern Dynasty Minerals suggests that a contrarian position might be warranted: the stock failed to make a new low recently, having bounced without breaching the 2008 trough.

Others call bullshit on that theory.

We contend that the analysis is flawed and apparently governed by poor understanding of underlying fundamentals and sloppy research; combined with an evaluation method that borders on the ridiculous. We would like to suggest that copper bulls are well advised to look for investment opportunities elsewhere. And check back with Northern Dynasty around 2020, provided the company is still around by then.