Is Northern Dynasty Minerals A Bargain Now?

October 16th, 2008

I have to wonder if Northern Dynasty Minerals [TSX-V:NDM ($1.97); AMEX: NAK ($1.66)] is now a bargain. Back In December of 2007 I wrote an article titled, “Northern Dynasty Minerals a Take-Over Target?“. I thought it was a take-over target then! For those of you that don’t know, Northern Dynasty Minerals owns 50% the largest undeveloped (but advanced stage) copper-gold-molybdenum deposit in the world which is located in Alaska! It sold the other 50% for nearly $1.5 billion to Anglo American!

Since I wrote my last article, the Company has found more resources on the property and now has a great team together to oversee the completion of the Prefeasibility Study in the second half of 2009 and ultimately get the company ready for permitting. Permitting won’t be easy in Alaska and a great team will be needed. This is one of the major risks still associated with NAK and can become a thorn in its side if things don’t go smooth.

I believe this may be an absolute steal at less than $2 a share. Why? When I originally wrote my article about NAK being a take-over target the share price was over $12! Today with 97.6 million shares, the market capitalization of the company sits at under $200 million. Remember, the other 50% sold for $1.5 billion! But it gets better.

There are two major corporations that have acquired significant share blocks in NAK. Rio Tinto plc owns a 19.8% interest and Mitsubishi Corporation owns 9.1%. Both of these corporations were buyers back when the share price was much higher! With the stock down so much, they must be itching to grab some extra shares. I know I am.

Time will tell whether or not I’m right on this one. Just remember, I thought it was a good investment at $12 a share and now it sits at $2, so I may be wrong and I’m certainly down quite a bit so far. I’m hoping time proves me right and the permitting goes well.  I do consider this a very risky investment, but one with a potentially large upside.

Full Disclosure: At the time of writing this article I DO own shares in NDM.

Entry Filed under: Stock Watch, Mining, Investing