Peter Grandich:
The announcement of a “true” 50/50 partnership with Anglo American (AA) has set the stage
for the target I’ve had for the share price since the stock was around $5. I do
believe in my heart of hearts that $25 is not only legitimate, but it may now
be only the half-way point if NDM gets to remain independent for the next
12-24 months.
Before I share why I believe this, let me once again note two important factors:
1 - I still have most of my NDM shares. The only ones I sold were so I
could buy a big position in Formation Capital (FCO-TSE) (a client of Grandich
Publications).
2- The Hunter-Dickinson Group is the finest group of people in the mining
and exploration business today – bar none. I know much of what they have
done for NDM shareholders and I will stand in front of the world and shout
how much they care for all shareholders (and don’t forget that they own 13%
of the shares).
Okay, why do I believe the best is yet to come?
Up until this deal, one could still have in the back of their mind major concerns
about the ability to move this project forward. Like any mammoth project,
NDM was facing lots of hurdles and getting there alone would have been a
challenge even HD could have struggled with. So a major coming in was, if
you will, a necessary evil. But here’s where I’m so honored to know HD
management: HD made an unprecedented joint venture (JV) deal!!!
Unlike most JV’s, the major (AA) didn’t end up taking control. AA and NDM
are truly 50/50 in all aspects. AA is not the Operator, Pebble Mines Corp.
is, and each will control 50% of it. AA receives no management fees and
no priority paybacks! All cash distributions/earnings are 50/50 from
day one. NDM is literally financed to production! It’s also unique and
benefitting to HD in that AA must spend the entire $1.425 – 1.5 Billion to
vest, anything less and they get nothing. To borrow a phrase from a hit TV
show, it’s “Deal, or no deal!” Best of all, I believe NDM is now truly a
takeover target.
The “buy the rumor, sell the news” was exacerbated yesterday by conditions
in the overall financial markets and apparently one big seller, which if true,
would be a fund since HD believes its major shareholder RTZ was not a seller.
Not only do I assume them to be correct, but it’s not in RTZ’s best interest to
turn around and sell. They have already spoken of Pebble in corporate
presentations as part of their future production http://www.smh.com.au/
articles/2007/08/01/1185647978801.html. My personal opinion is they
should end up deciding to get the other 50% of Pebble and use the nearly
20% stake in NDM itself as the way. If I were RTZ, I would also try and get
a board seat on NDM thanks to their stake. Now, I also feel NDM must realize
this and while they’re in no need of further major capital, having another
significant player take a stake in their shares would be a good thing.
I’m certain some holders are disappointed that NDM wasn’t taken over and
that in itself may have contributed to the sell-off, but as far as this shareholder
is concerned, the company I own a lot of shares in is far better off this week
than it was last week. Already I’m reading analysts’ comments ( see http://
www.cbc.ca/cp/business/070801/b0801148A.html) and hearing from astute
mining experts who agree that NDM has made a great deal and the shares
are all but certain to take back the drop of yesterday and then some.
Let me conclude by saying something I shall never grow tired of, “NDM is
the single best mining and exploration stock to own today in my humble but
extremely biased opinion.”
Canada Press
Published: Wednesday, August 1, 2007 | 6:05 PM ET
Canadian Press: BRENDA BOUW
TORONTO (CP) - Analysts who follow Northern Dynasty Minerals Ltd. (TSXV:NDM) shook their heads and the CEO was keeping a stiff upper lip Wednesday after the Vancouver company's shares plunged nearly 14 per cent after news that Anglo American plc will invest US$1.4 billion to become a 50 per cent partner in the Canadian junior's Alaskan mining project.
Northern Dynasty stock closed down $2.22 to $13.88 on the TSX Venture Exchange on Wednesday despite analysts' praise of the deal and the company's confidence of its unprecedented terms.
"I think it's a great deal and I don't know why the shares are down," said Craig Miller, a mining analyst and vice-president at BMO Capital Markets.
While the mining sector was down 2.6 per cent on a dismal day for Toronto's stock markets, Northern Dynasty's drop was much steeper at 13.8 per cent.
"The only thing I can think of is that people see giving up 50 per cent of a project as something negative, but in reality they (Northern Dynasty) needed a partner and they needed the funding," Miller said.
Northern Dynasty's largest shareholder, British mining giant Rio Tinto, owns nearly 20 per cent of the company and there is some speculation on the street that investors believe Rio Tinto lost out to Anglo American for the partnership.
Continue Article
Another analyst, who didn't want to be named, said some investors are simply frustrated Northern Dynasty wasn't taken over altogether. That said, the analyst is also surprised at the negative reaction to the Anglo American deal.
"The reality is it's a very good deal for Northern Dynasty," said the analyst, adding the value of the deal is about $2.9 billion, well above Dynasty's market capital of $1.4 billion after markets closed Tuesday, when the deal was announced.
Ron Thiessen, president and CEO of Northern Dynasty, chalked up the stock's drop to overall negative market sentiment Wednesday.
"It's a bit like the tide, the tide is moving out, but I expect the tide to return," said Thiessen in a telephone interview from Alaska where he was meeting with key project stakeholders.
Thiessen dismissed speculation that Rio Tinto was excluded from the pact, and said he is unaware of any potential takeovers of his company at this time.
As for the deal's terms, Thiessen said his company told the market more than a year ago it was seeking a 50-50 partner to advance the metals project.
He also said the deal is unprecedented since it has no operator, no management fees and no veto rights.
"I am sure we'll be rewarded eventually, projects like these are long term projects, we'll get there," Thiessen said.
Northern Dynasty announced its Anglo American partnership late Tuesday, adding that the South African company will engineer, permit and construct a copper, gold and molybdenum mine that will begin production by 2015.
Anglo's investment starts with a US$125 million commitment to complete a pre-feasibility study targeted by the end of next year and spend another US$325 million for another study by 2011.
"This is expected to take the partnership to a production decision," Northern Dynasty said.
If a mine is to go ahead at that stage, Anglo would spend another US$975 million to help the mine into production.
After that, Northern Dynasty said the mine costs would be split 50-50 between the two companies.
If the feasibility study is completed after 2011, Anglo's overall funding requirement increases to US$1.5 billion.
Northern Dynasty said it will assess its share of any project debt financing when a production decision is made.
The partnership agreement provides for equal project control rights with no operator's fees payable to either party.
The Pebble project's key assets are the near surface, 4.1 billion tonne, open pit style Pebble West deposit and the deeper and higher grade 3.4 billion tonne Pebble East deposit that is amenable to underground bulk mining methods.
Northern Dynasty bought an 80 per cent interest in the Pebble project in November 2004 and exercised its right to buy the remaining 20 per cent in March 2005.
Northern Dynasty is part of the Hunter Dickinson group of companies that provides services to publicly traded companies involved in mineral exploration, development and production.
Anglo American is one of the world's largest mining and natural resource groups with operations in 45 countries across Africa, Europe, Australia, South and North America, and Asia.
Northern Dynasty & Anglo American Partner Up on Pebble
By Jon A. Nones
01 Aug 2007 at 06:48 PM GMT-04:00
St. LOUIS (Resourceinvestor.com) -- Northern Dynasty Minerals Ltd. [AMEX:NAK; TSX-V:NDM] announced late yesterday that Anglo American [Nasdaq:AAUK; LSE:AAL] will pay $1.425 billion for a 50% ownership in the massive Pebble copper-gold-molybdenum project in Alaska. NDM shareholders less than applauded the deal, sending stock prices down 13%.
Shares had gained 16% in last three days leading up to the news, posting a new 52-week high of $15.61 yesterday. But shareholders sold hard on Wednesday, perhaps let down that there wasn’t a full takeover in the works.
Frank Holmes, CEO of US Global Investors, which holds about a 2.4% stake in NDM, told RI that investors were disappointed in just that. But he added that some shareholders may have been concerned about the timeline of the development schedule as well.
According to the agreement, Anglo must first commit $125 million to complete a pre-feasibility study by the end of 2008, and then commit a further $325 million for a feasibility study by 2011. Upon the decision to develop a mine, Anglo must pay $975 million for a total of $1.425 billion to retain its 50% interest.
If the feasibility study is completed after 2011, Anglo's overall funding requirement increases to US$1.5 billion. Any further expenditure will be funded on a 50-50 basis, and NDM will assess its 50% share of any project debt financing when a production decision is made.
Holmes said the deal is financially rewarding for the company, but “people don’t like the uncertainty” that comes with of adding more time to the schedule. The company previously estimated construction to begin in 2011 and production in 2013.
The Pebble property is massive, totalling 153 square miles in southern
Bruce W. Jenkins, COO of Northern Dynasty Minerals told RI that the company had previously estimated Pebble West to cost around $2 billion to develop, but halted the pre-feasibility study to include Pebble East. He could not yet estimate the total capex for the entire project, but said it would be “in the billions.”
Jenkins said in six years of exploration and development, the company has spent about $200 million on the project, with $96 million slated for this year alone.
At Pebble West, drilling to date has revealed total in-situ resources of 24.7 billion pounds of copper, 42.1 million ounces of gold and 1.35 billion pounds of molybdenum at a 0.30% copper equivalent cut-off grade. Pebble East is estimated to host 42.9 billion pounds of copper, 39.6 million ounces of gold and 2.7 billion pounds of molybdenum at a 0.60% cut-off grade.
Even at conservative estimates of 49 billion pounds of copper, 64 million ounces of gold and 2.9 billion pounds of molybdenum, Pebble is the world’s second largest copper-gold deposit.
Despite shareholder unrest today, NDM has always hinted that it might need help to develop so a big project. Therefore, analysts have long noted Pebble as an acquisition target, both in part and as a whole.
Lawrence Roulston, editor of Resource Opportunities, said back in 2004 that mining majors need big plays like Pebble to have a meaningful impact.
“It is almost a foregone conclusion that a project as attractive as Pebble will ultimately be acquired by a major. It is just a matter of when,” he said.
This is now the second major mining firm to concurrently endorse Pebble. Last year, Rio Tinto acquired about a 20% stake by buying about half of Galahad Gold’s 21% interest. The rest of Galahad's stake was subsequently sold into the market.
Peter Grandich, editor of The Grandich Letter, and long-time shareholder of NDM, has often said NDM would be fully taken out or some sort of partnership would be done. He said no fewer than 16 companies had signed confidentially agreements with NDM prior to the deal with Anglo.
“While it’s early, it wouldn’t come as a surprise to me to later learn that NDM has hired bankers to explore the sale of their remaining ownership, especially once new drill results are released,” said Grandich in an e-mailed update today.
He said a consortium “still can’t be ruled out,” and
“For far too long, NDM was an orphan among the institutional community but with Anglo as a partner and
But even Grandich admitted that the deal by “no means makes NDM a slam-dunk or without risk.” The company must still overcome strong environmental opposition, which has plagued the project since its inception.
Local stakeholders and environmentalists are concerned, amongst other things, about its potential impact on salmon fishing in the
Ron Thiessen, President and CEO of Northern Dynasty, noted in a statement today that
“Northern Dynasty's experienced, largely Alaskan based, mine development team has been undertaking thorough and balanced technical, environmental and social assessments to ensure that the Pebble project is developed in a manner that protects the environment and traditional ways of life,” he said.
He said the mine would bring direct benefits to the local communities and serve as a catalyst for sustainable economic development in the region and across the State.
NDM has continued with its extensive environmental programme; out of a total investment of $56 million this year 38% of it ($21 million) has been on environmental and socioeconomic projects.
Shares of Northern Dynasty fell $2.04 or 13.4% to close at $13.13 on AMEX on heavy volume of more than 2 million shares. But despite the selloff today, NDM stock is up more than 77% so far this year.
Holmes concluded in saying he like the deal going forward as a shareholder, and August is historically a very good time to buy gold shares.
“3.4 billion tonnes grading 1.00% copper equivalent, containing 42.6 billion pounds of copper, 39.6 million ounces of gold, and 2.7 billion pounds of molybdenum.” This is just a tremendous amount of minerals and has a value of over $200 billion using today’s metal prices. NAK estimates it will have low project costs of $0.3/lb of copper and $50/oz of gold which would make this company extremely profitable. This immense amount of minerals will and has already seen huge interest from the majors. This mine is world class because of its large mineral deposit, its long estimated life, and NAK’s low project costs of $0.3/lb of copper and $50/oz of gold. Rio Tinto , a $80 Billion mining and exploration company has taken a 19.9% stake in the company that values NAK at around $900 million. Production is slated to begin sometime in 2010 with construction of the mine starting in 2008. The main risk with this company is getting regulatory approval to mine. There is currently heavy opposition to this Mine, mostly from the wildlife associations that want to protect the environment. A good description of whose for and whose against this mine can be found on Wikipedia, by going here: http://en.wikipedia.org/wiki/Pebble_Mine Although there is heavy opposition, this mine would supply the United States for decades and in times where natural resources are extremely scare and getting increasingly expensive. Rio Tinto is definitely interested in taking NAK out but that might not happen. Tinto might not be able to take them out cheaply due to the shareholder rights plan NAK has instated: http://biz.yahoo.com/iw/061212/0193989.html NAK currently has no debt and is being fed liquidity from Rio Tinto. This mine is a world class asset and I believe it will definitely be mined starting in the beginning of the next decade. NAK’s current market capitalization of $815 million doesn’t fully take into account the immense potential that this mine offers. Renowned options trader Phil Davis makes a good comparison of NAK to AUY here: http://gold.seekingalpha.com/article/11693 Overall, NAK looks like a good value play that can deliver profits to its shareholders for many decades into the future. It is also a good play on the increasing price of gold and copper.
I am sure many of us did, but I can guarantee the people who have owned Northern Dynasty (NAK), has had nothing but a big smile on their face. Northern Dynasty Minerals is a Canadian based mineral company who engages in exploration of copper, gold, and molybdenum in Alaska. The company has ‘The Pebble Project’ which has not been fully explored but continues to confirm ‘that it is potentially amenable to high volume, underground mining.’
With that said, Rio Tinto, a 92.24 billion dollar mineral company based on its market cap, has positioned themselves the max amount in Northern Dynasty due to legal agreement threshold. Now, why would a company position themselves into a small mineral company like Northern Dynasty?
Well, I have two explanations behind this:
- Potential buy-out
- Stock is priced cheaper than its true value
For starters, Rio Tinto taking an approximately 20% stake into Northern Dynasty proves the validity behind Northern Dynasty exploration within the Pebbles region and the true value with their minerals.
Now, some may look at their balance sheet and say what is the underlying value? Their underlying value lies in the minerals that they own.
- 18.8 billion pounds of copper @ $0.05/lb (conservatively) = $94 million
- 31.3 million ounces of gold @ $80/oz (conservatively) = $2.5 billion
- 993 million pounds of molybdenum @ $0.02/lb (conservatively) = $19.86 million
The combined value of this is approximately $3.6 billion and the market cap is $1.39 billion value. Without even including the implied resources which has not been discovered as they are still exploring, the company is worth way more than their market value. With a $3.6 billion approximately true value / 99.3 million shares outstanding calculates into an approximate $39 dollar stock price. At the current price of about $15 dollars that is about a 160% increase if it is held long term. Now, let us say it is bought out at what people are speculating, $25. It still leaves you with a nifty profit.
Update: Northern Dynasty Minerals has about a $60 million in liabilities. Therefore the “true value” (I am using this term loosely, as I think it is valued higher) is 3.54 billion / 99.3 million, which is approximately $35 dollar stock priceFP Trading Desk submits: Raymond James analyst Tom Meyer has initiated coverage on Northern Dynasty Minerals Ltd. (NAK) with a "strong buy" rating and a whopping price target of C$25 a share, nearly double its current level. Why so bullish? First of all, the valuation. Northern Dynasty trades at a price to net asset value multiple of 0.27 times. That's a 68% discount to the peer group of development companies, he wrote in a note to clients.
He is also impressed with the company's Pebble project in Alaska, which has 434,000 tons per year of copper in concentrate and is due to be in production by early 2015. Besides the copper, it also has a great deal of gold and molybdenum, which Mr. Meyer sees as a good way to get exposure to those commodities.
Mr. Meyer also expects the company to attract a lot of interest from potential financiers because of its low cash costs and long mine life. Rio Tinto PLC already controls nearly 20% of the company.
"We believe that Rio Tinto's 19.8% interest in the project is a form of validation of the significance of Pebble to senior producers, and we anticipate further interest in the project with the expected release of the [Integrated Development Plan] in mid-2008," he wrote.
NAK 1-year chart
im Iacono submits: How does a gold exploration company move their share price 50 percent higher in just six months without issuing a press release?
Keep finding gold and make others work to find out just how much gold you are finding.
That seems to be the story at Northern Dynasty Minerals...
[Note: This is a slightly edited version of a company update that went out to subscribers at Iacono Research just a few days ago - shares of Northern Dynasty were added to the model portfolio late last year with additional shares purchased yesterday. If you are interested in investing in the great natural resources bull market of the early 21st century, you might want to sign up for a Free Trial to see what it's all about.]
Northern Dynasty Minerals (AMEX:NAK) is one of the best-positioned companies in the gold mining industry to benefit from rising metal prices either by building a mine or by being acquired - the company's Pebble West Project is huge, but the Pebble East Project looks like it will be even bigger.
Share price have risen dramatically in recent months after an updated resource estimate for Pebble East in February but, since that time, the company has been virtually silent about what's going on with their 2007 drill program.
Recall that after some very promising initial exploration in 2005 at Pebble East, company priorities were realigned resulting in increased exploration in 2006 and an initial estimate in February of 2007 indicating a near doubling of the inferred resource from 22 million ounces of gold to 40 million ounces. A larger drill program is now underway with the intention of further defining the resource and moving as much of the gold as possible from the Inferred category (fewer samples, wider spacing) to Measured and Indicated (more samples closer together).
According to recent accounts, with eight drill rigs operating this summer, the ore body boundaries at Pebble East have yet to be found - both laterally and at depth - and non-disclosure agreements have been signed with as many as eighteen other mining companies as a prelude to possibly forming a consortium to build and operate what will probably be the world's largest gold and copper mine. What was planned as a 2007 drill program at Pebble East will likely turn into a multi-year exploration effort to discover just how big the deposit really is - only then can planning for the construction of a mine really begin. The 31 million ounce Pebble West Project is now being de-emphasized by management, the current thinking being that an open-pit mine will extract just the higher grade ore, as a multi-generational life for an underground mine at Pebble East is pondered.
So, if you've been wondering how a company boosts their stock price by 50 percent in six months without issuing a press release, now you know. You do it by having the goods which is what more and more investors realize Northern Dynasty has mid-way through 2007. (As it turns out, you don't even have to update the resource estimate on your website if you have what Northern Dynasty seems to have in Pebble East - their resource page still doesn't reflect the resource doubling that was announced in February.)
While higher share prices for Northern Dynasty seem to be all but a sure thing, remember that there is still a fair amount of environmental opposition to the Pebble Project by some well-connected environmentalists who live nearby. But, simply due to the enormous mineral content and the clout that comes with increasing involvement by much larger mining concerns in what is generally a very mining-friendly state, this appears to be a project that is just too big to stop.
At times such as this, making an additional purchase comes only after great deal of deliberation. Even after the recent run-up in the share price Northern Dynasty is still undervalued by a very wide margin - simply comparing their current gold resource and market capitalization to that of Alaskan neighbor NovaGold Resources (AMEX:NG) makes this point abundantly clear.
Background:
Vancouver-based Northern Dynasty Minerals is developing one of the world's most significant advanced stage copper-gold-molybdenum projects in southwestern Alaska. This is very much a copper and gold project, however, the amount of gold that has already been confirmed through extensive drill programs ranks among the largest deposits in the world, making this resource a prime take-over target in the years ahead.
The company's Pebble West Project was discovered by Teck Cominco in 1988 who then proceeded to explore the property until 1997, ultimately agreeing to option 80 percent of the resource to Northern Dynasty in 2001. After three years, Northern Dynasty earned its 80 percent interest from Teck Cominco and a year later exercised its right for the remaining 20 percent from the Hunter Dickinson Group and gained control of the entire property.
Drill programs for Pebble West were conducted from 2002 through 2005 and mine planning was initiated, however, an eastward expansion in exploration during 2005 resulted in a substantial new discovery of higher grade copper-gold-molybdenum mineralization that came to be known as Pebble East. Much of the work over the past year has been focused on defining the resource at Pebble East, leading to a huge increase in inferred resources announced in February of 2007. Exploration continues at Pebble East during the summer of 2007.
With a total of almost 80 million resource ounces of gold, of which 31.3 million ounces are already in the Measured and Indicated category, the company is a prime target for acquisition in the ongoing mining industry consolidation where large producers seek to purchase smaller exploration companies with confirmed mineral resources. Mining giant Rio Tinto owns almost 20 percent of Northern Dynasty shares and, due to the sheer size of the project, a mining consortium is being considered to more efficiently develop mining operations at Pebble.
Full Disclosure: Long NAK and NG at time of writing.
Josh Corn submits: Northern Dynasty Minerals (NAK) is a Canadian mineral exploration company primarily focused on its Pebble Mine in Alaska. It currently has a 100% stake in the mine. The Pebble Mine in Alaska is regarded as a “world class mine” of gold-copper-molybdenum that is split up into Pebble East and Pebble West. For this article, we will disregard the whole Pebble West Mine and focus on the Pebble East Mine.
NAK recently put out a press release that truly signifies the importance of the Pebble East mine. It describes the inferred resources contained in the mine.
3.4 billion tonnes grading 1.00% copper equivalent, containing 42.6 billion pounds of copper, 39.6 million ounces of gold, and 2.7 billion pounds of molybdenum.
This is just a tremendous amount of minerals and has a value of over $200 billion using today’s metal prices. NAK estimates it will have low project costs of $0.3/lb of copper and $50/oz of gold, which would make this company extremely profitable. This immense amount of minerals will and already has seen huge interest from the majors.
This mine is world class because of its large mineral deposit, its long estimated life and NAK’s low project costs of $0.3/lb of copper and $50/oz of gold. Rio Tinto (RTP), a $80 Billion mining and exploration company, has taken a 19.9% stake in the company that values NAK at around $900 million. Production is slated to begin sometime in 2010 with construction of the mine starting in 2008.
The main risk with this company is getting regulatory approval to mine. There is currently heavy opposition to this Mine, mostly from the wildlife associations that want to protect the environment. A good description of who's for and who's against this mine can be found on Wikipedia.
Although there is heavy opposition, this mine would supply the United States for decades; most importantly in times where natural resources are extremely scarce and getting increasingly expensive.
Rio Tinto is definitely interested in taking NAK out but that might not happen. Tinto might not be able to take them out cheaply due to the shareholder rights plan NAK has instated.
NAK currently has no debt and is being fed liquidity from Rio Tinto. This mine is a world class asset and I believe it will definitely be mined starting in the beginning of the next decade. NAK’s current market capitalization of $815 million doesn’t fully take into account the immense potential that this mine offers.
Renowned options trader Phil Davis makes a good comparison of NAK to Yamana Gold (AUY) here.
Overall, NAK looks like a good value play that can deliver profits to its shareholders for many decades into the future. It is also a good play on the increasing price of gold and copper.
Disclosure: Author has a long position in NAKJuly 27th
Thomas Tan submits: After almost a month of a very good run, the gold and mining sector has been under some correction this week. After gold hit $640 bottom on June 27th, gold has been up only $40-$50 at the peak, but the mining sector has been up almost twice as much percentage wise.
Yesterday was an ugly day, but one stock in my portfolio bucked the downtrend of the mining sector - Northern Dynasty Minerals (NAK). I purchased this stock at $6.2 back in February 2006, near the bottom, but it was not the best timing, since you could purchase at the same price again in October 2006. However, the stock has been doubled since then.
It seems to me that NAK bucking the trend yesterday has something to do with a very bullish report from Raymond James Analyst Tom Meyer Wednesday. The report has captured all the positive elements about this company and most of the elements I have discussed in my HUI vs. Gold posts last month, to summarize them as follows:
1) NAK has a great quality on its large reserve. This is the main reason why I purchased the company initially. It is very rare to find a company with such large and good reserve.
2) On the same token, it has a low cost structure and long mine life, all a very rare combination these days among mining companies.
3) It has a large exposure to the copper, gold and moly market which I consider to be bullish long term. Tom Meyer's target of C$25 is only 50% of NAV of the Company (C$50.5) which is only based on copper at $1.8, gold at $605 and moly at $10. By the production time, I expect NAK can realize much better price for profit.
4) At my HUI vs. Gold posts, I have discussed that most of the junior miners will probably be acquired and/or merge with other large ones. The fact that Rio Tinto (RTP) already holds almost 20% of outstanding shares of NAK is definitely a big plus for it becoming a potential target in the future. We all know what happened to Alcan (AL) with the $101 tender offer from Rio Tinto.
By Margot RooseveltLos Angeles Times Staff Writer
September 1, 2007
NONDALTON, ALASKA — Fly overhead in a bush plane -- there are no roads between native villages -- and marvel: Eight giant rivers braid across hundreds of miles of wetlands, carving cobalt ribbons through snow-coned mountains before emptying into Bristol Bay.
For more than a century, the wealth of this southwest Alaska watershed has sprung from the astonishing volume of salmon nurtured by those wild rivers. Bank-to-bank, gill-to-gill, tens of millions of silver-hued fish thrash upstream to spawn each year, unrestrained by dams, untainted by pollution.
It is the largest sockeye run in the world, accounting for more than a quarter of wild salmon harvested in the United States, feeding millions at a time when fisheries are dwindling across the globe.
But if fish have made the region's past and present fortune, the future sparkles with the promise of precious metal. Beneath the rolling tundra, straddling the headwaters of two of the watershed's most productive rivers, a Canadian company has discovered North America's biggest deposits of gold and copper, worth about $300 billion in today's soaring commodities markets.
The dilemma is whether Alaskans will have to choose between the two -- and whether the watershed, its fish and a host of other wildlife will be casualties of what could probably be one of the world's biggest mines. The project would entail five earthen dams, of which two would be bigger than China's Three Gorges Dam.
Fueled by daily pro and con advertising on Alaska television, the debate is engaging state and federal politicians, commercial fishermen, Eskimo and Indian villages, the international sportfishing community, environmental groups, major foundations and multinational conglomerates in a state that rarely turns down a major mine permit.
Northern Dynasty Minerals Ltd. of Vancouver, Canada, and partly owned by London-based Rio Tinto, has already drilled hundreds of exploratory holes, some more than a mile deep, on state-owned land in what's known as the Pebble claim. London-based Anglo American, one of the world's largest mining companies, announced this summer that it would spend $1.4 billion for a 50% partnership to mine the metal.
Opponents say a proposed Pebble mine would destroy one of the planet's last sustainable fisheries, dry up spawning streams, and poison lakes and groundwater with acid runoff. Biologists have found that salmon's genetic radar, which enable the fish to return from the bay to the very streams where they were spawned, can be ruined by microscopic particles of copper dust.
And Bristol Bay's other wildlife -- including one of the world's largest brown bear populations, a 45,000-head Mulchatna caribou herd, moose, wolverines, beavers and eagles -- also depends on clean water.
Northern Dynasty officials scoff at what they call an alarmist campaign. "We know Bristol Bay is a sensitive area," said Sean Magee, vice president for public affairs. "But there've been tremendous changes in the mining industry in the past 25 years. These projects can be done safely now: Mining and fishing can coexist."
What is clear is that the mine -- wedged between Lake Clark and Katmai national parks -- would entail a staggering scale of industrialization.
If the full resource were developed, as much as 12 billion tons of earth would be excavated and milled to extract the tiny flecks of metal: about 82 million ounces of gold, 67 billion pounds of copper and 4 billion pounds of molybdenum.
Ten square miles of impoundments would fill two valleys, to store in perpetuity more than 2.5 billion tons of waste rock and toxic residue.
And to transport equipment and ore, a new 104-mile road would cut through undeveloped forest and wetlands, skirting Lake Iliamna, Alaska's largest body of fresh water. The lake is host to rare freshwater seals and is a primary spawning bed for sockeye, the red-fleshed salmon that are among the world's most prized eating fish.
And Pebble may be just the beginning.
Northern Dynasty's exploration has sparked a surge of claim-staking, with eight other companies asserting rights over more than 700 square miles nearby.This month, the U.S. Bureau of Land Management will make a final decision on whether to allow hard-rock drilling on 3,300 square miles of federal land in the area.
"A massive mining district would carve the heart out of the watershed," said Richard Jameson, president of the Renewable Resources Coalition, a statewide anti-Pebble group, which is backing legislation and ballot measures to stop the mine.
Northern Dynasty's environmental studies won't be ready until 2009, and obtaining the 67 required state and federal permits could take three more years. But already, Magee said, "Debate is at fever pitch."
Opponents are waging an uphill struggle. Because Pebble is on state land, the key decisions will come from the Alaska Department of Natural Resources whose commissioner, Tom Irwin, is a former mining executive and whose mission is to promote development.
"It's the fox guarding the chicken coop," said Norman Van Vactor, Bristol Bay manager for Peter Pan Seafoods, which operates the area's oldest cannery.
In the state capital this year, Northern Dynasty lobbyists beat back legislation that would have created a game refuge overlapping the mine site and would have barred polluting or diverting water from salmon streams. But the bills will be revived next year.
So far, Republican Gov. Sarah Palin has remained neutral. She has fished in Bristol Bay herself, and her husband fishes commercially. They named one of their daughters Bristol.
The outcome may hinge less on environmental values than on which economic resource Alaskans value most.
"You can't eat gold," says Robin Samuelsen, a commercial fisherman and chief of the Curyung Tribal Council in Dillingham, the region's principal town.
Bristol Bay's fishery, with $450 million in annual economic benefits, employs 10,000 people in seasonal jobs, including 6,800 fishermen. And it could grow in value: Because contaminants in farmed seafood have come to light, consumers are increasingly turning to wild salmon for health benefits and its superior taste.
This time of year, the rivers that feed Bristol Bay are bedecked with racks of drying salmon, ready to be stored for the winter. In an area where imported food is prohibitively expensive, several thousand Athabaskan Indians and Yupik Eskimos depend on fish, moose, caribou, wild greens and berries.
"I'd rather eat porcupine than hamburger," says Jack Hobson, tribal council president of Nondalton, the village closest to the proposed mine. An Athabaskan outpost of about 220 residents, with its homes of weathered clapboard and corrugated steel, scattered along a dirt road, is plastered with anti-Pebble signs.
Hobson has been a vocal opponent of the mine since the Renewable Resources Coalition flew him and other native leaders to see mines in Nevada. There, he said, they saw landscape that looked like it had been "bombed" -- huge pits, contaminated water and depleted aquifers that have forced a local Indian tribe to truck in drinking water.
Northern Dynasty's helicopters, he said, have scared away caribou for the last two years, depriving villagers of a diet staple. Once the mine is built, he added, "dust will blow all over the plants and the animals will eat this stuff, and -- oh boy!"
The region's 50 commercial lodges are also threatened. The international sportfishing mecca attracts anglers who pay as much as $8,000 a week to fly in and cast for rainbow trout that measure up to 3 feet.
But mining would mean high-paying, steady jobs at a time when fish prices remain volatile and the North Slope oil that has buoyed the economy is dwindling.
Pebble would run for 50 to 80 years, said Bruce Jenkins, Northern Dynasty's chief operating officer, and "go a long way toward eradicating poverty in southwest Alaska forever."
In the last two years, Northern Dynasty has mounted a massive public relations campaign, helicoptering in nearly 1,000 politicians, business leaders, teachers and other influential Alaskans to the site.
The company has staged 800 presentations, in remote villages as well as in Anchorage, offering residents expense-paid trips. Tribal leaders have been hired as "community outreach people," and more than 120 local residents are on Northern Dynasty's payroll as $17-an-hour drill assistants, bear guards and other mine-related jobs.
Opponents accuse the company of buying influence, but Magee replies: "We don't apologize for hiring local people."
And opponents also have deep-pocket patrons, including Anchorage investor Robert B. Gillam, head of McKinley Capital Management Inc., who has a private lodge 24 miles from the Pebble claim. The foundation of another wealthy angler, Intel Corp. pioneer Gordon Moore, has awarded $5 million to local conservationists, including Earthworks, a Washington-based group organizing jewelers to boycott Pebble gold.
In Newhalen, a village of 120 on a windy promontory above Lake Iliamna, Ray Wassillie, the local tribal chief, has a part-time job as a fish observer, and his three sons are also employed by Northern Dynasty.
"No one else is offering our kids the opportunity to work," said Wassillie. Fewer young people in the village "are going to jail when they're doing nothing. Drugs and alcohol become a big part of life," he said.
Home heating fuel costs Wassillie $6,000 yearly, and gas to run his four-wheelers for subsistence hunting runs more than $5 a gallon. The bay's six-week fishing season "doesn't generate enough income for my living standards," he said.
Beyond the local economy, Northern Dynasty says, the mine will bring benefits to the nation. While critics say that gold -- 75% of which is used in jewelry -- is an unnecessary luxury, the company says the copper to be produced by the mine is "a strategic metal." U.S. copper imports are growing as voracious economies in China and India compete for metal.
But environmentalists, citing the web of interconnected streams, ponds and groundwater, say the risk is unacceptable. Salmon is the region's keystone species, food for bears, eagles -- and people. And as the fish decompose after spawning, their carcasses fertilize plants that nourish caribou and other wildlife.
Despite a rash of negative publicity, the company declines to rule out the use of cyanide, a toxin that helps extract metal from ore and has contaminated watersheds throughout the West.
The region is one of the most earthquake-prone areas on the globe, but Northern Dynasty counters that its dams would be engineered to withstand a 7.8-level quake.
"Most Americans will never get to Bristol Bay," said Brian Kraft, who owns a local fishing lodge and works for the conservation group Trout Unlimited. "But they see our bears playing in waterfalls on the Discovery Channel. They can experience the taste of wild salmon.
"They know that we can destroy places like this, but we can't create them."
