Other Mining Stocks

Weekly Discussion
265

Weak response:

February 14, 2017

Northern Dynasty Responds To Short And Distort Campaign

February 14, 2017, Vancouver, BC - Northern Dynasty Minerals Ltd. (TSX: NDM; NYSE MKT: NAK) (“Northern Dynasty” or the “Company”) has been made aware of a short and distort campaign by Kerrisdale Capital which has recently published a negative opinion piece the central theme of which is that Northern Dynasty’s massive copper/gold project in Alaska is uneconomic. Northern Dynasty will be responding with a preliminary rebuttal which will appear on its website by the end of the week. The rebuttal will expose the many inaccuracies and outright misstatements in the Kerrisdale report. Northern Dynasty’s Pebble Project is indisputably one of the world’s largest undeveloped copper/gold deposits with a potential mine life which is measured in decades. Kerrisdale cites no technical or scientific studies whatsoever and relies on many unnamed persons who were purported to have been involved with the project several years ago. Investors should not rely on the Kerrisdale report and should await the Company’s detailed response now in progress.

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From what I see there is not a huge short position on NAK, however Kerrisdale stands to reap the rewards of today’s panic if they dumped (covered) the majority of shares short during this morning’s drop. Was it a calculated “hit job” made to distort “normal” market? There is actually a net increase in short positions taken today (or was it yesterday?). Did Kerrisdale cash out it’s short position after releasing the report?
(Below is yesterday’s stats that I found)

Northern Dynasty Minerals Limited - NAK
Short Interest (Shares Short) - 6,524,900
Short Interest Ratio (Days To Cover) - 0.5
Short Percent of Float - 3.04 %
Short % Increase / Decrease - 22 %
Short Interest (Shares Short) - Prior - 5,340,600

Shares Float - 214,584,200
Trading Volume - Today - 48,440,955
Trading Volume - Average - 11,954,000
Trading Volume - Today vs. Average - 405.23%
Shortsqueeze.com

And this short comment a couple hours ago.

Notable put buying in Northern Dynasty Monday before shares get hammered today
— 2:31 PM ET 02/14/2017
Notable put buying in Northern Dynasty Monday before shares get hammered today. More than 10.1K Feb 3 puts traded in the name yesterday, with buyers opening 5.7K contracts for 10 and 15c. Open interest at that strike increased to 20.9K and more than 20% of the aggregate OI in the name. These puts are now 54c in the money as shares, which were halted midday, tumble 72c to $2.46 on negative commentary from Kerrisdale Capital.

I have to wonder where last month’s raising of cash fits in…

Northern Dynasty Minerals Announces US$25 Million Bought Deal

VANCOUVER, BRITISH COLUMBIA–(Marketwired - Jan. 11, 2017) - Northern Dynasty Minerals Ltd. (TSX:NDM)(NYSE MKT:NAK) (“Northern Dynasty” or the “Company”) announces that it has entered into an agreement dated January 11, 2017 with Cantor Fitzgerald Canada Corporation, TD Securities Inc. and BMO Capital Markets, as co-lead underwriters and joint bookrunners, on behalf of themselves and a syndicate of underwriters (collectively, the “Underwriters”) to purchase, on a bought deal basis, 13,520,000 common shares of the Company (the “Offered Shares”) at the price of US$1.85 per Offered Share (the “Issue Price”) for aggregate gross proceeds of approximately US$25.0 million (the “Offering”).

In addition, the Company has agreed to grant to the Underwriters an over-allotment option (the “Over-Allotment Option”) exercisable, in whole or in part, in the sole discretion of the Underwriters to purchase up to an additional 2,028,000 Offered Shares at the Issue Price for a period of up to 30 days after the closing of the Offering for potential additional gross proceeds to the Company of up to approximately US$3.75 million. The Company has agreed to pay the Underwriters a cash commission equal to 5% of the gross proceeds of the Offering, including proceeds received from the exercise of the Over-Allotment Option.

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267

Dirty alright. I bought some at $2.09. Late Christmas gift. Wish I had bought more.
Marin Katusa put out a message to subscribers today tearing the release from Kerrisdale apart as I figured he would

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268

Consider the following in regards to this scenario…

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Looks like you can join a potential class action lawsuit:

Hard to say what will happen but I am now glad that I am watching from the sidelines instead of being part of it.

270

Why can nothing ever be straightforward and simple? Sigh…
I’m getting a lot more cynical in my “old age”!

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Bought Northern Dynasty at the end of last month. Averaged down yesterday, took all my money off the table this morning. Made a smooth $4 overall. Too much drama. I was thinking largest undeveloped deposit in the world would be safe/boring. Apparently not.

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272

When people behave that way then things will be that way. Don’t hold your breath, sorry to say. :frowning:

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I took the majority of my shares “off the table” the day the negative news hit also. The level of risk was no longer acceptable. I left a few “token” shares in just to keep abreast of any updates, but not a significant position. However, the Kerrisdale Capital report did mention another development stage company which I looked into and liked. I took a position in Seabridge Gold (SA). It is up nicely today on news it is to acquire a new project, FWIW, but that is not the reason I took a position. It’s KSM main project is well along with a PFS that estimates proven and probable reserves totaling 38.8 million ounces of gold and 10.2 billion pounds of copper. It is another “long term” play. Remains to be seen how “safe/boring” it is. :sweat_smile:

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Update - NAK did an official "long version " reply Feb 17:

Short Seller’s Report Based on Misstatements, Inaccuracies and “Anonymous Sources”

http://www.northerndynastyminerals.com/ndm/NewsReleases.asp?ReportID=778879
Admittedly, NAK’s response was not nearly as persuasive as the article below that clarified many of the inaccuracies and unfounded and apparent distortions presented in Kerrisdale’s hit piece. It refutes Kerrisdale Capital’s Claims quite forcefully. Well worth the read, IMO :slight_smile:

Northern Dynasty Minerals Ltd.: The Pebble Deposit IS Commercially Viable

http://seekingalpha.com/instablog/21648461-chad-jackson/4959614-northern-dynasty-minerals-ltd-pebble-deposit-commercially-viable

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But the damage was done.

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Response was pretty weak alright. Apart from addressing
The inaccuracies they should have gone after the fact that
The head of Kerrisdale recently was arrested for crashing
His car while high on Cocaine. Not relevant to the fundamentals of the stock but a decent character reference
For the firm

277

Northern Dynasty Minerals Ltd. again - Dead Cat bounce, or something else?

US Congressional Committee calls on EPA Administrator to withdraw Pebble Project veto
BY Canada NewsWire
— 5:25 PM ET 02/22/2017
VANCOUVER, Feb. 22, 2017 /CNW/ - Northern Dynasty Minerals Ltd. ( NDMWF) (“Northern Dynasty” or the “Company”) announces that the US House Committee on Science, Space and Technology has called on the new Administrator of the US Environmental Protection Agency (“EPA”) to rescind the federal agency’s 2014 regulatory action under Section 404(c) of the Clean Water Act to pre-emptively veto Alaska’s Pebble Project.
A February 22, 2017 letter to EPA Administrator Scott Pruitt from Committee Chairman Lamar Smith states: “The Committee recommends that the incoming Administration rescind the EPA’s proposed determination to use Section 404(c) in a pre-emptive fashion for the Pebble Mine in Bristol Bay, Alaska. This simple action will allow a return to the long-established Clean Water Act permitting process and stop attempts by the EPA to improperly expand its authority. Moreover, it will create regulatory certainty for future development projects that will create jobs and contribute to the American economy.”
Since 2014, Northern Dynasty and its 100%-owned subsidiary Pebble Limited Partnership (“Pebble Partnership”) have advanced a multi-prong strategy – including litigation, Congressional outreach, independent investigations, among other initiatives – to encourage EPA to withdraw its unprecedented regulatory action against Pebble. The Congressional Science, Space and Technology Committee has held several Pebble-related hearings in recent years, finding that EPA actions concerning the mineral development project in southwest Alaska were based on “a questionable scientific assessment that relied on predetermined conclusions,” and that “EPA employees colluded with Pebble Mine opponents to stop the project.”
The US House Committee on Science, Space and Technology’s letter to EPA Administrator Pruitt can be read here.
Northern Dynasty President & CEO Ron Thiessen said the Committee’s letter provides even greater impetus for EPA Administrator Pruitt to take timely action to reverse what many see as one of the leading examples of EPA over-reach, and return the Pebble Project to normal course permitting and the rule of law.
"All we have ever asked is for the opportunity to propose a comprehensive development plan for the Pebble Project, and to have it fairly and objectively reviewed against the extremely rigorous environmental standards and permitting requirements enforced in Alaska and the United States. Today, we are one step closer to earning that opportunity.
“We thank the Committee and staff for its careful and consistent scrutiny of the troubling issues that have characterized the EPA’s treatment of the Pebble Project over the years, and its commitment to the well-established federal and state permitting process under the Clean Water Act and National Environmental Policy Act.”

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WEEKLY CHARTS:

As of yesterday, silver broke through the 50 wma. looks strong. looks like there could be a cross of the 50 & 200 wma in the following weeks.

Gold had a cross of the 50 wma and 200 wma back in Dec. Gold is hovering just below the 50 wma.

Oddly gold and the USD are getting stronger simultaneously with the US $ index rising again at 101. This simultaneity suggests capital coming toward the U.S. (fleeing to the dollar) from over seas. See Rick Rule’s take [1]:

I see strength in the U.S. dollar right now, so I see gold trading sideways, although probably not down relative to the U.S. dollar.

I’ve Only Seen This Bullish Setup Twice In My 52-Year Career
We are now at an odd place in the world. It’s a place that I’ve only seen twice before in my career, where the U.S. dollar and gold are doing well simultaneously. The same clients in Europe that we talked about mentioned to me that there are about 16 trillion euros in private circulation in Europe. They said it wouldn’t surprise them if one trillion or 1.5 trillion euros migrated over the next 18 months to North America as a consequence of sort of centrifugal pressures in Europe. What that means is that the United States dollar, despite some problems in the U.S. economy and some nervousness associated with the new administration, is relatively attractive compared to other alternatives.

My suspicion is that the U.S. dollar in the 18-month time frame will begin to weaken and that gold will do well as a consequence. This will mirror what happened in the mid-1970s and again in 2002. These were both periods where gold and the dollar did well simultaneously, which presaged a bit of a decline in the dollar and a strong upward move in gold. I won’t be surprised at all to see that happen over the 18 – 24 month time frame.

Scaled Image.jpg1000×1097 250 KB

  1. http://kingworldnews.com/rick-rule-ive-seen-bullish-setup-twice-52-year-career/
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279

Thanks CHG. I’ll add my two cents sometime over the course of the weekend.

Rich

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I’ve watch gold go up but haven’t seen smaller cap gold stocks like mux go up with gold…

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Short position in silver is pretty high right now, that normally forebode a takedown. MUX is currently weighed heavier too silver. Just saying :wink:

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Why did the GDXJ went down also ?

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http://www.kitco.com/news/2017-02-27/John-Doody-Comments-on-Northern-Dynasty-Pebble-Mine.html

Newsletter editor and the man behind the Gold Stock Analyst Investor Day John Doody joins Kitco News to share his thoughts on Northern Dynasty and whether he thinks its Alaskan Pebble mine is viable. ‘Now that [President] Trump got elected, they think the permit issue will be resolved but that doesn’t solve the problem,” he said. “The problem is that it doesn’t work, the deposit doesn’t work.”

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MUX trading counter to recent moves in gold and PMs which is curious if not cautionary. Regardless, At $3.40 it might be a nice average down opportunity. Analysts recently put a 1 year target of $5.00 on it.

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