June 2016 - Northern Dynasty Minerals Ltd.

June 2016
Cautionary & Forward Looking Information
This presentation includes certain statements that may be deemed "forward-looking statements". All statements in this presentation, other than statements of
historical facts, that address exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements.
Although the Company believes the expectations expressed in its forward-looking statements are based on reasonable assumptions, such statements should
not be in any way construed as guarantees of the ultimate size, quality or commercial feasibility of the Pebble Project or of the Company's future performance
or the outcome of litigation. Assumptions used by the Company to develop forward-looking statements include the following: the Pebble Project will obtain all
required environmental and other permits and all land use and other licenses, studies and development of the Pebble Project will continue to be positive, and
no geological or technical problems will occur. The likelihood of future mining at the Pebble Project is subject to a large number of risks and will require
achievement of a number of technical, economic and legal objectives, including obtaining necessary mining and construction permits, approvals, licenses
and title on a timely basis, delays due to third party opposition, changes in government policies regarding mining and natural resource exploration and
exploitation, the final outcome of any litigation, completion of pre-feasibility and final feasibility studies, preparation of all necessary engineering for surface or
underground mining and processing facilities as well as receipt of significant additional financing to fund these objectives as well as funding mine
construction. Such funding may not be available to the Company on acceptable terms or on any terms at all. There is no known ore at the Pebble Project and
there is no assurance that the mineralization at the Pebble Project will ever be classified as ore. The need for compliance with extensive environmental and
socio-economic rules and practices and the requirement for the Company to obtain government permitting can cause a delay or even abandonment of a
mineral project. The Company is also subject to the specific risks inherent in the mining business as well as general economic and business conditions. For
more information on the Company, Investors should review the Company's filings with the United States Securities and Exchange Commission and its home
jurisdiction filings that are available at www.sedar.com.
This presentation also uses the terms “measured resources”, "indicated resources" and "inferred resources". Although these terms are recognized and
required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange
Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be
converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and economic and legal feasibility. It
cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of
Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for a Preliminary Economic Assessment
as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
The technical information contained in this presentation has been reviewed and approved by qualified persons which are not independent of Northern
Dynasty. Information on geology, drilling and exploration potential has been reviewed by James Lang, PGeo., information on Mineral Resources by David
Gaunt, PGeo., and information related to engineering and metallurgy by Stephen Hodgson, PEng.
During the period 2007 to 2013, the Pebble Limited Partnership expended several hundred million dollars on the Pebble Project, a major portion of which was
spent on exploration programs, resource estimates, environmental data collection and technical studies, with a significant portion spent on engineering of
various possible mine development models, as well as related infrastructure, power and transportation systems. As a consequence of several factors,
including EPA Clean Water Act 404(c) action on the Pebble Project, the withdrawal of Anglo American from the project and the passage of time, technical
and engineering studies related to mine-site and infrastructure development are considered to have very uncertain and perhaps little value at this time.
2
Investment Highlights – A World-Class Investment Opportunity
Resource
First World
Location
Strategic
Advantages
Strong
Asset
Compelling
Valuation
 World-class – Tier 1 by every measure
 Alaska, USA – State land, designated for mineral exploration and development
 Politically stable – Strong rule-of-law
 National Environmental Policy Act (NEPA) permitting process well established
 Resolution with EPA is a top priority
 Very manageable water and power supplies
 Very long-life potential – Tidewater
 A permittable project driven by rigorous science
 Stakeholder benefits – Significant economic benefits to Alaska and USA
 Total US$750+ million invested in Project*
 Funding flexibility: metal streaming, royalties, off-take agreements, infrastructure
funding etc.
 EV/Resource basis – Northern Dynasty offers compelling value
 The kind of asset major mining companies covet
* Environmental Baseline Studies aside, uncertain economic value due to EPA action as further described on slide 2.
3
A World-Class Mineral Resource
Resources

6.44 B tonnes of Measured & Indicated

4.46 B tonnes of Inferred
Measured &
Indicated
Inferred
Copper
57 B lb
25 B lb
Gold
70 M oz
37 M oz
Molybdenum
3.4 B lb
2.2 B lb
Silver
344 M oz
170 M oz
* Refer to table of Measured, Indicated and Inferred
Resources in Appendix
4
Global Ranking of Porphyry Deposits1 –
Contained Copper and Contained Gold
Pebble is the World’s Largest Undeveloped Copper And Gold Resource
Source: Company filings, Metals Economics
Group; BMO Capital Markets
Note: Includes inferred resource.
1. At 0.30% Cu Eq. cut-off.
Source: Company filings, Metals Economics Group, street research;
BMO Capital Markets
Note: Includes inferred resource.
1. Converted to Au Eq. at street consensus Au price of US$1,200/oz
and Ag price of US$18.00/oz
2. At 0.30% Cu Eq. cut-off.
3. Source: World Gold Council (http://www.gold.org/history-andfacts/facts-about-gold ) says that less than 175,000 tonnes of gold
have been mined since the beginning of civilization. Pebble resource
represents 3,340 T (10,776,800,344 tonnes x 0.31 g/t = 3,340 T).
5
Pebble Project Area – Strategically Situated in Alaska, USA
Six Major Producing Mines - Alaska a Resource Development State
Alaska State Constitution (1949)
“It is the Policy of the State of Alaska to
encourage…the development of its
resources by making them available for
maximum use consistent with the public
interest”
Cook Inlet Land Exchange (1974)
•
•
Three way land swap involving Federal
government, State of Alaska and Cook
Inlet Regional Inc. (CIRI)
State of Alaska accepted land including
what is now Pebble, explicitly for its
mineral prospectivity without restriction
Bristol Bay Area Plan (2005)
“The general resource management intent
for the Pebble Copper Area is to
accommodate mineral exploration and
development…”
The Alaska Permanent Fund
•
Resource development is important
6
Pebble – ‘Multi-Prong’ Strategy in Action
•
Federal Advisory Committee Act (FACA) litigation
−
Preliminary Injunction granted
−
EPA Motion to Dismiss denied
−
Depositions ongoing
•
Freedom of Information Act litigation – a significant success
•
Cohen / DLA Piper – Highly critical, independent report – released October 2015
•
Media Strategy – Washington Post, WSJ – beginning to lay bare EPA misconduct
•
Inspector General report – Found misconduct by one EPA official
•
Congressional Activity
− Several congressional committees conducting or considering hearings
•
Objective of resolution with EPA remains top priority
7
Bristol Bay Salmon – The Real Story
The Fishery is Not Threatened
• Bristol Bay Watershed
• 41,900 sq. mi
• 9 discrete river systems
• Kvichak & Nushagak-Mulchatna
• 23,000 sq. mi
• ~20% of Bristol Bay sockeye production
• Pebble Project Area
• ~16 sq. mi (1/25th of 1% of 41,900 sq. mi)
• 2 of 9 watersheds
• N/S Fork Koktuli & Upper Talarik
• 400 sq. mi in area of deposit
• <0.5%* of Bristol Bay sockeye production
* 0.5% will be conserved and enhanced
8
Pebble: Answering Important Questions with Science
What About the Fish Habitat and Fish?
•
Extensive hydrological studies undertaken over 10 years – PLP estimates
that 5 times more surplus water will be available for treatment and release
to mitigate potential downstream effects on aquatic habitat than the Bristol
Bay Assessment (“BBA”) predicts
– Pebble’s PHABSIM* model is built upon some 10 years of site-specific stream
flow monitoring and aquatic habitat surveys in the 3 streams surrounding the
Pebble deposit. It can predict habitat availability for 4 species of salmon and 3
species of resident fish in 100’s of catalogued stream reaches at different times
of the year and for different life stages
• $150 million invested in Environmental Baseline Studies – Approximately
$75M is on fisheries and water related research
CONCLUSION:
The BBA erroneously leaves readers with the assumption that all aquatic habitat
is equal – empirically NOT correct!
9
Pebble: Answering Important Questions with Science
What About the Fish Habitat and Fish?
•
EPA stream length estimates in the BBA
are a very small portion of all streams in
the watershed according to USGS data
•
Scientifically proven mitigation
opportunities provide Pebble ample
opportunity to create more habitat in local
watersheds than will be affected by the
mine development
–
Pebble will enhance aquatic habitat,
availability and fish production
Stream Length
Affected by
EPA Mining
% of Bristol
Project
Scenario
Bay
Footprint
(USGS)
% of
Nushagak/
Kvichak
Watersheds
Pebble 0.25
20 miles
0.04%
0.07%
Pebble 2.0
49 miles
0.1%
0.17%
Pebble 6.5
70 miles
0.15%
0.24%
* The Physical Habitat Simulation (“PHABSIM”) model, originally developed more
than 30 years ago by the U.S. Geological Survey and the U.S Fish and Wildlife
Service, is one of the most scientifically advanced and widely accepted
methodologies for determining aquatic habitat versus stream flow relationships.
CONCLUSIONS:
• The BBA projected impacts on downstream water flows and fish habitat are
flawed and exaggerated
• The best science will allow Pebble to build the best mine while conserving
BB fisheries. Absolutely no net loss to the fishery!
10
Pebble: Answering Important Questions with Science
What About the Water?
•
•
•
•
Robust engineered water management
system
–
All contact water collected and stored in SSF
for re-use and release
–
Highly-engineered seepage management,
collection and monitoring systems
State of the art water treatment &
conditioning
Strategic surplus water releases under permit
–
Scientifically proven habitat modeling
(PHABSIM) to forecast flow habitat effects
–
Considers 5 salmon and 3 species of
freshwater fish
Pebble will maintain downstream water
quality and flows to safeguard fish, wildlife
and communities
WATER MANAGEMENT KEY
PRINCIPLES:
1. Water Management Boundary
Water will be restricted from entering the
mine area by diverting it to nearby creeks
and streams
2. Sand Storage Facility (SSF)
Water collected in the mine area will be
pumped to the SSF for storage, treatment
and re-use
3. Water Treatment Plant
Water from the SSF will be treated to
meet stringent water quality standards
before being released to the environment
4. Strategic Water Releases
Surplus water will be strategically
released into nearby creeks and streams
to support fish habitat productivity
11
Pebble: Answering Important Questions with Science
What About Seismicity?
•
Engineered design criteria for Pebble SSF and
other facilities are extremely conservative
•
SSF design earthquake:
•
•
–
Various earthquake scenarios studied at locations
throughout region
–
Lake Clark extension of Castle Mountain fault
(inactive for 10,000+ years)
–
Design assumes fault runs 10+ miles closer to
Pebble than USGS estimates
–
Design incorporates maximum estimated 7.5Mw
magnitude earthquake caused by rupture along
entire length of inactive fault
Modern SSF dams operate in regions with higher
seismic risk than Pebble
–
Fort Knox – Alaska – 7.9Mw earthquake in 2002
–
Los Tortolas & 3 others – Chile – 8.8Mw
earthquake in 2010
All project facilities engineered to withstand
Maximum Credible Earthquake scenarios
associated with the region
CONCLUSION: Pebble will be designed to withstand seismic events larger than could have
occurred over the last 10,000+ years and to more stringent criteria than regulations require.
12
Pebble: Answering Important Questions with Science
What About the Sand Storage Facility?
OVERALL PRINCIPLES:
• Three highly engineered embankments to provide safe, permanent storage of
1.8 billion tons of sand
–
Conservatively designed to withstand maximum forecast flood, storm, seismic events
–
Strict regulatory oversight and regular inspections by Alaska Dam Safety Program
• Conventional porphyry deposit water/solid composition
–
PAG sand (~10%) to be stored sub-aqueously and encapsulated in sand mass
–
SSF water at similar porphyry deposits support healthy fish populations
Modified Centerline Design
13
Pebble: The Path to a Record of Decision
NEPA and 404 Permit Process
•
For a project like Pebble once an application
has been filed:
– Scoping – ½ year
– Prepare Draft EIS – 1 - 1½ years
– Public Comments – ½ - 1 year
– Final EIS/ROD – 1 year
– Total = 3 – 4 years
•
History of the 404c Veto – 13 times in 43 years, but….
•
No 404c veto ever for a hard rock mine
•
Our View:
– EPA will not succeed in imposing a preemptive 404c veto or
development restrictions
– Pebble will get a 404 permit
14
Pebble Project – National Economic Impact Study1
Project like Pebble can be Economically Very Significant
•
•
•
Nationally
–
15,000 jobs
–
$2.7 billion to US GDP annually
–
Increase US copper production by 20% over decades
of production
In Alaska
–
Some 3,000 high-wage jobs
–
$109,500 average annual salary for mine workers –
more than double the state average
–
More than $1 billion in annual operating expenses
–
Pebble-related economic activity in Alaska will boost
the state's GDP by more than 3% over 2011 levels
Pebble will literally transform the regional
economy in Bristol Bay
–
Secure, high-paying jobs
–
Of 5,394 working-age residents, just 63% worked in
2011 and only 35% were employed throughout the year
–
Increase Lake and Peninsula Borough tax base by a
staggering 600% annually over 2013 levels
–
Potential for affordable power for Southwest Alaska
1 The
May 30, 2013 IHS report is intended to provide information about general economic effects/contribution of a development at Pebble to Alaska and the USA. The report should
not be used to evaluate the Pebble Project’s impact on Northern Dynasty.
15
15
Copper Demand Outlook
China’s Shift to Consumption Supports Demand
Copper intensity expected to increase in China2
•
Non-OECD demand
growth forecast at
+3.6% per annual to
20302
•
Includes Chinese
demand growth
+2.6% p.a. to 2030
and
•
OECD demand
decline of 0.6% p.a.
to 2030
Source: United Nations; Wood Mackenzie; BHP Billiton analysis.
1. Purchasing Power Parity (PPP)
2. See BHP “Copper Marketing: Attractive industry fundamentals” at http://www.bhpbilliton.com/~/media/bhp/documents/investors/news/2015/151201_coppersitetourday1.pdf?la=en
16
Copper – A Significant Structural Deficit is Forecast
Expecting continued
ore grade decline1
Significant deficit expected to
emerge later this decade1
• Peak production next year
• Grade ↓ by 19% since 2000
• 2% p.a. supply reduction thereafter
• Further 17% ↓ by 2025
Source: Wood Mackenzie; BHP Billiton analysis.
1. See BHP “Copper Marketing: Attractive industry fundamentals” at http://www.bhpbilliton.com/~/media/bhp/documents/investors/news/2015/151201_coppersitetourday1.pdf?la=en
2. Based on average grade weighted by paid copper.
17
Gold – Supply
Supply: Peak Gold Production
See Goldcorp Corporate Presentation “Together, Creating Sustainable Value” at www.goldcorp.com
(1) Source: SNL Metals Economics Group
(2) Source: Consensus estimates. Includes CPM Group, GFMS, and Metals Focus
18
Global C1 Copper Cash Costs1
C1 Cash Costs Net of By-Product Credits – US$/lb Cu
Pebble’s C1 copper cash costs are anticipated to be in the first decile of global primary copper mines1
The United States and the world need low cost, long-life,
environmentally sound supplies of strategically important copper
1 Source: Wood Mackenzie and BMO Capital Markets
Note: Based on 2016E cash cost data.
19
Valuation Potential
Current share price provides significant in-situ valuation upside relative to copper and gold
peers as the Pebble Project advances
Source: BMO Capital Markets,
Bloomberg, Public Disclosure
Assumptions: Shares of NDM: 260.1 M,
estimated cash position: US$14 M.
Copper equivalent metrics calculated
using long-term street consensus pricing
of US$2.96/lb Cu, US$1,250/oz Au and
US$8.00/lb Mo, US$17.75/oz Ag
1 Measured
and Indicated Resources
only, excludes Inferred Resources. See
appendices for details on Qualified
Persons as defined in NI 43-101
2 EV
= Enterprise Value = Market
Capitalization less cash
20
Precedent Transactions – There is Extraordinary Value
in Pebble/Northern Dynasty
Northern Dynasty In-Situ Values1:
7/100ths of 1 cent per lb Cu
US$1.01 per oz Au
Exceptional In-Situ Value
Date
Acquiror
Target
Stage
EV/Resource
(US₵/lb)
Date
Acquiror
Copper Developer Transactions
Target
Stage
EV/Resource
(US$/oz)
Gold Developer Transactions
24-Apr-16
Nevsun
Reservoir
Scoping Study
33.9₵
08-Jun-16
Fortuna Silver
Goldrock
Feas
$21
24-Apr-16
Reservoir
Timok (Freeport)
Scoping Study
8.4₵
12-May-16
Goldcorp
Kaminak
Feas
$71
27-Aug-15
Goldcorp
El Morro (30%) (New Gold)
Feas
3.6₵
04-Mar-16
Endeavour
True Gold
Construction
$53
26-May-15
Zijin
50% Kamona (IVN)
Resource Estimate
1.6₵
28-Feb-16
Perseus
Amara
Pre-Feas
03-Nov-14
Antofagasta
Duluth Metals
Pre-Feas
0.3₵
08-Sep-14
Taseko
Curis
Pre-Feas
3.0₵
12-Nov-15
Waterton
Spring Valley (70%) &
Ruby Hill (Baeeick)
Mix
13-Jul-14
Ma’aden
50% Jabal Sayid (Barrick)
Construction
06-Nov-15
Evolution Mining
Phoenix Gold
Feas
17-Jun-14
First Quantum
Lumina
Scoping Study
15-Oct-15
Alamos Gold
Carlisle Goldfields
Scoping Study
30-Jul-15
OceanaGold
Romarco
Construction
$97
17-Feb-15
Timmins
Newstrike
Scoping Study
$53
19-Jan-15
Goldcorp
Probe Mines
Resource Estimate
$96
17-Dec-14
Coeur Mining
Paramount Gold and Silver
Scoping Study
$19
21-Oct-14
Lundin Gold
Fruta del Norte (Kinross)
Resource Estimate
$24
$55
26.8₵
1.1₵
13-Apr-14
MMG-led Consortium
Las Bambas (Glencore)
Construction
09-Feb-14
HudBay
Augusta
Feas
6.9₵
24-Oct-12
Cupric Canyon Capital
Hana Mining
Scoping Study
2.1₵
11-Jul-11
Stillwater
Peregrine Metals
Resource Estimate
3.5₵
17-Apr-11
Capstone Mining
Far West Mining
Scoping Study
10-Jan-11
HudBay
Norsemont
Feas
25-Oct-10
Equinox Minerals
Citadel
Construction
22.3₵
16.5₵
8.5₵
48.6₵
18-Oct-10
First Quantum
Antares Minerals
Scoping Study
3.3₵
17-Sep-10
Jinchuan Group
Continental Minerals
Feas
4.2₵
Thompson Creek
Terrane
Construction
4.4₵
15-Jul-10
01-Mar-10
China Sci-Tech
Chariot Resources
Feas
4.2₵
07-Jan-10
Goldcorp
70% El Morro
Feas
7.1₵
28-Dec-09
CRCC - Tongling
Corriente Resources
Feas
2.0₵
23-Nov-09
First Quantum
Kiwara
Resource Estimate
0.9₵
Source: Public disclosure, Bloomberg and BMO Capital Markets.
$9
$16
$9
$5
15-Oct-14
SEMAFO
Orbis
Scoping Study
08-Sep-14
Agnico Eagle
Cayden
Exploration
03-Jun-14
B2Gold
Papillon
Pre-Feas
21-May-14
Rio Alto Mining
Sulliden Gold
Feas
18-Feb-14
Waterton
Chaparral Gold
Feas
$1
17-Dec-13
Asanko
PMI Gold
Feas
$19
n/a
$108
$57
10-Dec-13
Centamin
Ampella
Resource Estimate
$8
05-Nov-13
Argonaut Gold
San Agustin (Silver Standard)
Resource Estimate
$13
28-Oct-13
B2Gold
Volta Resources
Pre-Feas
12-Jul-13
Alamos Gold
Esperanza Resources
Scoping Study
$6
$21
1. See page 20 for in-situ values”
21
Pebble Project Milestones – Completed and Projected
2015
2016
2020
2024
•
Advance conversations regarding potential partner(s) transaction

•
Advance multi-prong strategy to deal with the ‘politics of permitting’

•
Advance land access agreements with AK Native village corporations

•
Resolve EPA’s ‘Proposed Determination’ and position Pebble to initiate permitting
unencumbered by any extraordinary development restrictions
•
Advance conversations regarding potential partner(s) transaction
•
Negotiate transportation corridor agreements with Alaska Native village corporations
•
Enhance public and political support for the Pebble Project
•
Feasibility study completed
•
Project construction commenced
•
Commercial production
* Environmental Baseline Studies aside, uncertain economic value due to EPA challenge as further described on slide 2.
22
Investment Conclusions – A World-Class Investment Opportunity
 World-Class Resource
 Great Location
 Fisheries and mining can safely co-exist
 Strategic Advantages
 Very Important Economic Benefits for Alaska and USA
 Strength of Asset
 Conclusion
 Pebble is a world-class deposit
 Resolution with EPA remains a top priority
 We believe Pebble will receive a 404 permit
 Northern Dynasty is committed to finding a strong strategic partner or
partners for this Project and Alaska
 Northern Dynasty and PLP are committed to delivering results
23
APPENDICES
Northern Dynasty Shares are Undervalued
Listed
Shares Out (Fully Diluted)
Average Daily Volume (LTM)
Management Owns (Fully Diluted)
Cash
NYSE MKT – NAK; TSX – NDM
260.1 (326.0)1 Million
325,000 shares/day
5.5%
$CAD 18.5 Million (June 15, 2016)
1. Includes warrants exercisable as follows: 2,871,697 at $CAD 3.00 to September 2017; 13,801,672 at $CAD 0.55 to July 2020; 38,000,000 at $CAD 0.65 to June 10, 2021.
25
Pebble is Among the World’s Greatest Stores of Mineral Wealth
26
26
Historical Mining Activity
Historical Mine Sites in Alaska
27
Southwest Alaska & Bristol Bay
Access corridor as
per prior studies
28
28
Pebble Fisheries and Mitigation
29
Discussion Topics
1. Pebble – A permittable project, driven by rigorous science
2. Case Studies – Validate fisheries protection and
enhancement is achieved
3. Fish Habitat Mitigation – A track record of success
4. EPA Watershed Report – A biased document under
investigation by the EPA Inspector General
30
Comprehensive Multi-Disciplinary Science
Exhaustive data collection since 2004:
Environmental Studies
•
•
•
•
•
•
•
•
•
•
•
•
•
Surface Water
Water Quality
Groundwater
Geochemistry
Snow Surveys
Analytical QA/QC
Fish & Aquatic Resources
Macro-invertebrates
Wetlands
Trace Elements
Flow Habitat Study
Iliamna Lake Study
Marine
•
•
•
•
•
•
•
•
•
Wildlife
Air Quality
Noise
Cultural Resources
Subsistence
Land Use
Recreation
Socioeconomics
Visual Aesthetics
•
Impact Assessment
& Management
•
Mine Closure
& Reclamation
31
Environmental Baseline Document (EBD) – January 2012
Scientific Integrity – Foundation for Successful Permitting
•
State/Federal permitting requires scientific rigor
•
Pebble environmental science – unprecedented
scope/rigor
•
•
–
$150 million spent on intensive multi-disciplinary
studies over 9 years – 27,000 pages
–
Data collection and other preparatory work ongoing
–
Integrity of work unassailable – World class 3rd party
scientists
Empirical knowledge used to:
–
Characterize local environmental conditions
–
Provide unique guidance to optimize engineering design
–
Assess residual effects and inform mitigation measures
–
Establish a database for long-term project monitoring
–
Facilitate effective permitting
–
Counter ill-informed negative rhetoric
Conclusions:
–
We have the science to build and operate a safe mine
–
Fisheries and mines can & do co-exist
32
Pebble Limited Partnership Approach –
Responsible Mineral Development
•
Environmentally driven design – Engineers and Scientists collaborate on optimal design
•
Avoid, minimize, mitigate and compensate
•
EBD science informs the project impacts which in turn inform mitigation response
and design
•
Mitigation possibilities include:
–
In-stream habitat improvement – Improves existing and/or creates new habitat
–
“Off channel” habitat improvement – Creates new habitat
–
Water discharge – Project will have stringent water quality standards. Pebble site has
excess water. Depending on water usage, flow at Pebble will be distributed spatially and
temporarily to maximize downstream fish habitat
• Habitat suitability modeling
• Very helpful during periods of natural water flow reduction
•
Wetlands – “in kind” and “mitigation banks”
•
Exceptional commitment to the environment – Great neighbor
•
Conclusion – No net loss of any fishery – AND enhancement possibilities abound
– Fisheries and mining do co-exist around the world
33
Comprehensive Basin-Wide Knowledge of Hydrology
34
Model Results – Weighted Usable Width (WUW)
2012 - SFK-B, Coho Spawning
30
Average WUW (feet)
25
30
Average Year
Pre-Mine
Mine Affected
Difference
20
25
20
15
15
10
10
5
5
0
0
-5
-5
-10
-10
24
25
26
27
28
29
30
31
32
33
34
River Kilometer
35
Salmon Mitigation/Enhancement Opportunities
•
Numerous Pebble/Bristol Bay streams not
producing fish at full potential due to natural
constraints:
–
–
–
–
–
•
Early June 2004
Significant opportunities exist to apply proven
techniques to remove constraints & enhance fish
production:
–
–
–
–
•
beaver dams & other barriers
dewatered & relic channels
low habitat complexity
limiting water quality
poor seeding due to low escapement
agency friendly
proven success with +50 years of fish habitat mitigation
track record
typically low technology measures
cost-effective
Strategic surplus water releases using PHABSIM*
Late July 2004
Exact same location
* The Physical Habitat Simulation (“PHABSIM”) model, originally developed more than 30 years ago by the U.S. Geological Survey and the U.S Fish and Wildlife
Service, is one of the most scientifically advanced and widely accepted methodologies for determining aquatic habitat versus stream flow relationships.
36
Alaska Fish Habitat Enhancement Projects – Agency Approved
37
Hard Rock Mining & Salmon Do Co-Exist
Fraser River Basin, BC*
•
•
Fraser River basin a close
analogue to Bristol Bay basin
Empirical evidence shows mining
activity over last 50 years had:
−
No negative effect on salmon
populations
−
No negative effect on commercial
salmon fishery
−
No large scale effects on salmon
habitat
−
No relationship to salmon price
Correlation, yes.
Scientifically
proven cause and
effect, no!
But that is exactly
the point.
* Ford, B. & J. Sarchuk, 2012 (Fraser River Salmon & Mining Review, AECOM)
38
Highland Valley Copper Mine – Mining & Salmon in British Columbia
39
Highland Valley Copper Mine – Mining & Salmon in British Columbia
40
Gibraltar Mine, British Columbia
Fraser River
41
Mines & Fisheries Do Co-Exist
Gibraltar Mine, BC
Seepage Collection Pond
Conclusions:
–
–
We have the science to build and operate a safe mine
Fisheries and mines do co-exist
42
Salmon Habitat Mitigation Summary
•
Physical/biological sciences applied to successful salmon mitigation
projects for +50 years
•
Agency approved measures
•
Successful examples include:
– Flow regulation to optimize downstream fish habitat availability
– Removal of natural barriers to improve access & fish production
– In-stream improvements to increase habitat quality/quantity & fish #’s
– Off-channel improvements to increase habitat quality/quantity
– Off-site mitigation projects to increase fish production
•
Rigorous and effective mitigation planning underway for Pebble
•
Fisheries protection and enhancement is assured
43
Pebble Geology
44
Pebble – Geology
45
Pebble Property Captures the World’s Most Extensive
Mineral System – Exploration Potential is High
Induced Polarization has been
the principal historical
discovery method
46
East-West Geology Section Looking North
47
East Graben
Very High Grades Extend into the East Graben
1000 ft
Brittle-ductile
deformation
What Happens
East of the ZG1
Fault?
•
The highest grades at Pebble are truncated by the
East Graben
•
DDH-6348 intersected 289 m grading 1.98% CuEQ
below basalts in the graben; no follow up
•
High grades & the deposit clearly extend to the east
•
Patterns west of the ZG1 may be repeated to the east
Note: CuEQ uses metal prices: $1.80/lb Cu; $800/oz Au; $10/lb Mo
Interval
(m)
289.1
Cu %
1.24
Au g/t
0.79
Mo %
0.042
CuEQ
%
1.98
Results from DDH-6348
48
Pebble May Host Other Major Deposits
Pebble
Alaska
Oyu Tolgoi Mineral
Trend, Mongolia
Chuquicamata
Chile
Andina-Los Bronce-Los
Sulfatos, Chile
• The extent of
mineralization at Pebble
is comparable to:
– Oyu Tolgoi
– Chuquicamata
– Los Bronces/Andina
• Exploration potential at
deposit and within
region is noteworthy
Each area is shown at the same scale
49
Pebble Engineering
50
Existing Infrastructure at Iliamna Operations Centre
Lake Iliamna
Iliamna
51
51
Cross Section
A
A’
Note: Metal prices used for copper equivalent (CuEQ) are same as for resource (see page 54).
52
52
Plan View
Note: Metal prices used for copper equivalent (CuEQ) are same as for resource (see page 54).
53
53
6.44 Billion Tonnes Measured & Indicated
4.46 Billion Tonnes Inferred
Notes:
David Gaunt, P.Geo., a qualified person who is
not independent of Northern Dynasty is
responsible for the estimate.
These resource estimates have been prepared
in accordance with NI 43-101 and the CIM
Definition Standards. Inferred mineral
Resources are considered to be too speculative
to allow the application of technical and
economic parameters to support mine planning
and evaluation of the economic viability of the
project. Under Canadian rules, estimates of
Inferred Mineral Resources may not form the
basis of feasibility or pre-feasibility studies, or
economic studies except for Preliminary
Economic Assessments as defined under 43101. It cannot be assumed that all or any part of
the Inferred resources will ever be upgraded to
a higher category.
Copper equivalent calculations use metal prices
of $1.85/lb for copper, $902/oz for gold and
$12.50/lb for molybdenum, and recoveries of
85% for copper 69.6% for gold, and 77.8% for
molybdenum in the Pebble West zone and
89.3% for copper, 76.8% for gold, 83.7% for
molybdenum in the Pebble East zone.
Contained metal calculations are based on
100% recoveries.
A 0.30% CuEQ cut-off is considered to be
appropriate for porphyry deposit open pit mining
operations in the Americas.
All mineral resource estimates, cut-offs and
metallurgical recoveries are subject to change
as a consequence of more detailed economic
analyses that would be required in prefeasibility and feasibility studies.
54
Anticipated Relative Values by Metal
Note: Based on Measured and Indicated Resources only, as identified on page 54. Prices assumed are current long term consensus forecasts of $USD 2.96 lb Cu;
$1,250 oz Au; $8.00 lb Mo and 17.75 oz Ag.
Source: Company data and BMO Capital Markets.
55
55
Project Power Alternatives
• Significant energy
requirement
− 400 MW
• Gas combined cycle
plant
− Several solutions
evaluated
− Located at mine site
• Gas supply
− Via pipeline from
Kenai Peninsula
• IPP opportunity
56
56
Probable Process Flowsheet
57
Preliminary Bathymetry Data – Design Vessel
•
Bathymetry data
− Minimum depth – 36 ft
− Average sea level – +8 ft
− Mean high water – +14 ft
•
HandyMax
− 20,000 to 50,000 DWT
− Draft of 41 ft
58
Pebble and Northern Dynasty Public Affairs
59
Southwest Alaska & Bristol Bay
60
60
Elders Forums / Elders Advisory Committee
•
•
Fifth annual Elders Forum held in August 2013
–
220 elders, escorts and youth representing 22 of the 31 in
region communities
–
Presentations on economics, permitting & NEPA process,
mitigation, tailings structures, workforce development, etc.
–
Traditional dances and songs performed by Elders from
Nushagak communities of New Stuyahok and Koliganek
Elders Advisory Committee (EAC)
–
10 seated members representing 8
sub-regions of Bristol Bay, and two
appointed open seats
61
61
Elders Forums / Elders Advisory Committee
62
62
Business Development – Alaska
Commercial Relationships with
Local Businesses
•
Iliamna Development Corporation
•
Pedro Bay Corporation
•
Alaska Peninsula Corporation
•
Iliamna Lake Contractors
•
Tanalian Corporation
•
Kijik Corporation
o
Food services
o
Housekeeping
o
Fuel, transportation, aviation
o
Medical
o
Bear guards
o
Housing and vehicle leasing
o
Surveying, ground clearing,
reclamation
63
63
Workforce Development Plan
• Comprehensive, long-term workforce
development strategy
• The Pebble Partnership Scholarship
Fund
• Job specific training for locals
• Partnerships with colleges & training
organizations
• Apprenticeship/internship programs
• Support for the Alaska Native Science
Engineering Program at UAA
• Core Drillers Program
64
64
Environmental Baseline Document
•
One of the most extensive
environmental databases ever
assembled for a resource
development project in America
•
Climate, water quality, wetlands, fish
and aquatic habitat, wildlife, land and
water use, socioeconomics and
subsistence
65
65
The Pebble Fund
•
Five year, $5 million commitment
established in 2008
•
Enhance sustainability of regional
fisheries and local communities; create
infrastructure
•
Over $4.7 million in grants to date,
leveraging nearly $13 million in
matching funds
•
Leveraged nearly $13 million in
matching funds
•
$500,000 awarded in 2013
66
66
Forecast Economic Benefits for Alaska
The IHS report (see page 15) is intended to provide information about general economic effects/contribution of a development at Pebble to Alaska and the USA.
The report should not be used to evaluate the Pebble Project’s impact on Northern Dynasty.
67
67
Forecast Economic Benefits for Southwest Alaska
The IHS report (see page 15) is intended to provide information about general economic effects/contribution of a development at Pebble to Alaska and the USA.
The report should not be used to evaluate the Pebble Project’s impact on Northern Dynasty.
68
68
Forecast Economic Benefits for the United States
The IHS report (see page 15) is intended to provide information about general economic effects/contribution of a development at Pebble to Alaska and the USA.
The report should not be used to evaluate the Pebble Project’s impact on Northern Dynasty.
69
69
Conclusions
Investment Highlights – A World-Class Investment Opportunity

Most important, new greenfield copper-gold-molybdenum-silver resource in the world. Well understood

Current total resource includes a Measured and Indicated Resource of 6.44 billion tonnes containing 56.8 billion lbs copper,
70.4 million oz gold, 3.4 billion lbs molybdenum and 343.6 million oz silver, and Inferred Mineral Resources of 4.46 billion
tonnes containing 24.6 billion lbs copper, 37.3 million oz gold, 2.2 billion lbs molybdenum and 170.5 million oz silver (pg 55)
Great
Location





State land, designated for mineral exploration and development
Politically stable, established mining jurisdiction
Rigorous laws and regulations, including NEPA. We believe the rule-of-law will prevail
1000 ft above sea level; gentle rolling terrain; no permafrost
Very manageable water supplies
Strategic
Advantages





Development could bring low cost power for Alaska and Southwest Alaska in particular-Stakeholder benefits
Close proximity to tidewater and Asian markets
Access to existing infrastructure
The kind of long-life, potentially low cost asset that major mining companies covet
Strong local management in Pebble Limited Partnership (PLP)

$CAD 18.5 million cash, no debt at June 15, 2016

US$750+ million invested to date in the Project*

Funding flexibility by a metal streaming, royalties, off-take agreements etc.

On an EV/Resource basis Northern Dynasty offers compelling value to investors and strategic buyers

Pebble is a world-class strategic deposit. We believe it will be reviewed under the NEPA permit process

Resolution with EPA remains top priority

Key 2016 milestones include finding a strategic partner(s)

Northern Dynasty and PLP are committed to delivering results
World-Class
Resource
Strong
Asset
Compelling
Valuation
Conclusion
* Environmental Baseline Studies aside, uncertain economic value due to EPA action as further described on slide 2.
70
Northern Dynasty Directors & Management
Robert Dickinson Executive Chairman
Stephen Hodgson Vice President, Engineering
Mr. Dickinson is an economic geologist with more than 40 years of
mineral exploration experience, is Executive Chairman of
Northern Dynasty and a director of the Pebble Limited
Partnership. Mr. Dickinson leads Northern Dynasty’s project
development activities and is Chairman of Hunter Dickinson Inc.
Mr. Hodgson is a professional engineer with more than 30 years of experience
in mine operations, mine development and project engineering. Mr. Hodgson is
Director of Engineering for the Pebble Limited Partnership and directs all
engineering activities for the Pebble Project. Mr. Hodgson is also Executive
Vice President, Engineering for Hunter Dickinson Inc.
Ronald Thiessen CEO and Director
Sean Magee Vice President, Public Affairs
Mr. Thiessen is an accredited public accountant with more than 25
years of corporate development experience, is President and
CEO of Northern Dynasty and a Director of the Pebble Limited
Partnership. Mr. Thiessen leads Northern Dynasty’s corporate
development and financing activities and is President and CEO of
Hunter Dickinson Inc.
Marchand Snyman Chief Financial Officer
Mr. Snyman is a chartered accountant with more than 18 years of
experience in corporate finance in the mining industry working on
international projects. Mr. Snyman is responsible for
financial/corporate management and financing activities at
Northern Dynasty Minerals Ltd. and is Chief Operating Officer for
Hunter Dickinson Inc.
Bruce Jenkins
Senior Vice President, Corporate Development
Mr. Jenkins is a corporate and government relations executive
with more than 35 years of experience in project and corporate
management. Mr. Jenkins oversees environmental affairs and
sustainable development for Northern Dynasty.
Mr. Magee is a corporate communication and public affairs specialist with more
than 18 years experience in natural resource and major project development
spanning the mining, energy, forestry and transportation sectors. Mr. Magee
serves on the Pebble Limited Partnership communication committee and
guides public affairs and permitting strategies for the project.
Doug Allen Vice President, Corporate Communications
Mr. Allen is an asset management industry specialist with more than 30 years
experience on both the sell-side and the buy-side of the investment industry.
His experience includes extensive investment work in the mining industry. Mr.
Allen serves as the primary liaison between the broker-dealer and asset
management industries and the company.
Trevor Thomas Company Secretary
Mr. Thomas is the company secretary to Northern Dynasty Minerals. Mr.
Thomas has practiced in the areas of corporate commercial, corporate finance,
securities and mining law since 1995, both in private practice environment as
well as in-house positions and is currently in-house General Counsel for Hunter
Dickinson Inc.
Non Executive Directors
Desmond Balakrishnan, Stephen Decker, Gordon Keep, David Laing,
Christian Milau, Ken Pickering
71
71
Contact Information
General Office
Corporate Communications
Websites
15th Floor
1040 W. Georgia Street
Vancouver, BC
Canada V6E 4H1
Doug Allen │ VP, Corporate Communications
dougallen@northerndynasty.com
Tel: 604.684.6365
TF: 800.667.2114
www.northerndynasty.com
www.pebblepartnership.com
www.pebbleresearch.com