Northern Dynasty Minerals Ltd. · TSX:NDM
Northern Dynasty Minerals — Investor Presentation (September 2016)
72 slides from Northern Dynasty Minerals's investor presentation, September 2016
Slide 1: The Pebble Project: The Future of U.S. Mining and Metals
v Re Northern Dynasty Minerals Ltd. THE PEBBLE PROJECT The Future of U.S. Mining and Metals September 2016
Slide 2: Cautionary & Forward Looking Information
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 development
Slide 3: Investment Highlights – A World-Class Investment Opportunity
Investment Highlights – A World-Class Investment Opportunity Resource World Class – Tier 1 by every measure – Pebble is strategic Strategic First-World Alaska USA – State land – Exploration & Development designation Advantages Location Politically stable-history of responsible resource managem
Slide 4: A World-Class Mineral Resource
A World-Class Mineral Resource Resources Measured & Inferred Indicated 6.44 B tonnes of Measured & Indicated Copper 57 B lb 25 B lb 4.46 B tonnes of Inferred 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
Slide 5: Global Ranking of Porphyry Deposits – Contained Copper and Gold
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, street research; BMO Capital Markets Note: Includes inferred resource. 1. Converted to Au Eq. at street conse
Slide 6: Pebble Project Area – Strategically Situated in Alaska, USA
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
Slide 7: Pebble – 'Multi-Prong' Strategy in Action
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
Slide 8: Bristol Bay Salmon – The Real Story
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 wat
Slide 9: Answering Important Questions with Science: Fish Habitat and Fish
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 t
Slide 10: Answering Important Questions with Science: Fish Habitat and Fish
Pebble: Answering Important Questions with Science What About the Fish Habitat and Fish? • EPA stream length estimates in the BBA Stream Length % of Affected by are a very small portion of all streams in EPA Mining Project % of Bristol Nushagak/ Scenario Bay Kvichak the watershed according to USGS d
Slide 11: Answering Important Questions with Science: What About the Water?
Pebble: Answering Important Questions with Science What About the Water? • Robust engineered water management system WATER MANAGEMENT KEY – All contact water collected and stored in SSF PRINCIPLES: for re-use and release 1. Water Management Boundary – Highly-engineered seepage management, Water will
Slide 12: Answering Important Questions with Science: What About Seismicity?
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 Mounta
Slide 13: Answering Important Questions with Science: Sand Storage Facility
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 – Str
Slide 14: The Path to a Record of Decision
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 tim
Slide 15: Pebble Project – National Economic Impact Study
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 – $109,500 average annual s
Slide 16: Copper Demand Outlook
Copper Demand Outlook China’s Shift to Consumption Supports Demand Copper intensity expected to increase in China2 • Non-OECD demand growth forecast at +3.6% per annual to 20302 • Includes Chinese demand growth +2.6% p.a. to 2030 and • OECD demand decline of 0.6% p.a. to 2030 Source: United Nations;
Slide 17: Copper – A Significant Structural Deficit is Forecast
Copper – A Significant Structural Deficit is Forecast Expecting continued Significant deficit expected to ore grade decline1 emerge later this decade1 • Peak production next year • 2% p.a. supply reduction thereafter • Grade ↓ by 19% since 2000 • Further 17% ↓ by 2025 Source: Wood Mackenzie; BHP Bil
Slide 18: Gold – Supply
Gold – Supply Supply: Peak Gold Production See Goldcorp Corporate Presentation “Together, Creating Sustainable Value” at www.goldcorp.com (1) Source: SNL Metals Economics Group (2) Source: Consensus estimates. Includes CPM Group, GFMS, and Metals Focus 18
Slide 19: Global C1 Copper Cash Costs
Global C1 Copper Cash Costs1 Pebble’s C1 copper cash costs are anticipated to be in the first decile of global primary copper mines1 C1 Cash Costs Net of By-Product Credits – US$/lb Cu The United States and the world need low cost, long-life, environmentally sound supplies of strategically important
Slide 20: Valuation Potential
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 me
Slide 21: Precedent Transactions – Extraordinary Value in Pebble/Northern Dynasty
Precedent Transactions – There is Extraordinary Value in Pebble/Northern Dynasty Northern Dynasty In-Situ Values1: US$3.28 per oz Au 23/100ths of 1 cent per lb Cu Exceptional In-Situ Value EV/Resource EV/Resource Date Acquiror Target Stage Date Acquiror Target Stage (US$/oz) (US₵/lb) Gold Developer
Slide 22: Pebble Project Milestones – Completed and Projected
Pebble Project Milestones – Completed and Projected 2015 • 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 2016 • Resolve EPA’s ‘Propos
Slide 23: Investment Conclusions – A World-Class Investment Opportunity
Investment Conclusions – A World-Class Investment Opportunity World-Class Resource US$750+ million invested Great Location Fisheries and mining can safely co-exist Strategic Advantages Very Important Economic Benefits for Alaska and USA Conclusion Pebble is a world-class deposit Re
Slide 24: Appendices
v (Re. Northern Dynasty Minerals Ltd. dl APPENDICES
Slide 25: Northern Dynasty Shares are Undervalued
Northern Dynasty Shares are Undervalued Listed NYSE MKT – NAK; TSX – NDM Shares Out (Fully Diluted) 264.6 (341.8)1 Million Average Daily Volume (LTM) 1,167,000 shares/day Management Owns (Fully Diluted) 8.6% Cash $CAD 12.1 Million (June 30, 2016) 1. Includes warrants exercisable as follows: 2,735,43
Slide 26: Pebble is Among the World's Greatest Stores of Mineral Wealth
Pebble is Among the World’s Greatest Stores of Mineral Wealth 26 26
Slide 27: Historical Mining Activity
Historical Mining Activity Historical Mine Sites in Alaska 27
Slide 28: Southwest Alaska & Bristol Bay
Southwest Alaska & Bristol Bay Access corridor as per prior studies 28 28
Slide 29: Pebble Fisheries and Mitigation
Pebble Fisheries and Mitigation 29
Slide 30: Discussion Topics
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 Gene
Slide 31: Comprehensive Multi-Disciplinary Science
Comprehensive Multi-Disciplinary Science Exhaustive data collection since 2004: Environmental Studies • Surface Water • Wildlife • Water Quality • Air Quality • Groundwater • Noise • Geochemistry • Cultural Resources • Snow Surveys • Subsistence • Analytical QA/QC • Land Use • Fish & Aquatic Resourc
Slide 32: Environmental Baseline Document (EBD) – January 2012
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 –
Slide 33: Pebble Limited Partnership Approach – Responsible Mineral Development
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 • Mi
Slide 34: Comprehensive Basin-Wide Knowledge of Hydrology
Comprehensive Basin-Wide Knowledge of Hydrology 34
Slide 35: Model Results – Weighted Usable Width (WUW)
Model Results – Weighted Usable Width (WUW) 2012 - SFK-B, Coho Spawning 30 30 Average Year Pre-Mine 25 Mine Affected 25 Difference Average WUW (feet) 20 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
Slide 36: Salmon Mitigation/Enhancement Opportunities
Salmon Mitigation/Enhancement Opportunities • Numerous Pebble/Bristol Bay streams not producing fish at full potential due to natural constraints: – beaver dams & other barriers – dewatered & relic channels – low habitat complexity – limiting water quality Early June 2004 – poor seeding due to low e
Slide 37: Alaska Fish Habitat Enhancement Projects – Agency Approved
Alaska Fish Habitat Enhancement Projects – Agency Approved 37
Slide 38: Hard Rock Mining & Salmon Do Co-Exist – Fraser River Basin, BC
Hard Rock Mining & Salmon Do Co-Exist Fraser River Basin, BC* • Fraser River basin a Mined Metals Tonnage Versus Salmon Escapement in Fraser Watershed close analogue to Bristol Bay basin • Empirical evidence shows mining activity over last 50 years had: − No negative effect on salmon populations − N
Slide 39: Highland Valley Copper Mine – Mining & Salmon in British Columbia
Highland Valley Copper Mine – Mining & Salmon in British Columbia 39
Slide 40: Highland Valley Copper Mine – Mining & Salmon in British Columbia
Highland Valley Copper Mine – Mining & Salmon in British Columbia 40
Slide 41: Gibraltar Mine, British Columbia
Gibraltar Mine, British Columbia Fraser River 41
Slide 42: Mines & Fisheries Do Co-Exist
Mines & Fisheries Do Co-Exist Gibraltar Mine, BC Seepage Collection Pond Trophy Rainbow Trout Conclusions: – We have the science to build and operate a safe mine – Fisheries and mines do co-exist 42
Slide 43: Salmon Habitat Mitigation Summary
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
Slide 44: Pebble Geology
Pebble Geology 44 iY (Re. Northern Dynasty Minerals Ltd. The Future of U.S. Mining and Metals
Slide 45: Pebble – Geology
Pebble — Geology 2002 NDM di f 1984 25,7, 38,528 2009/11 Cominco — Sharp 308 (2004) Zones 2 OO7 PLP — Discovery of Mtn Au-Ag veins; _ - 65 Zone, other regional recon Pebble Limited Partnership mineralized areas (NDM/Anglo-American plc) | TODAY e More than 1 million feet | | of core drilled 1 987 ¢ E
Slide 46: Pebble Property Captures the World's Most Extensive Mineral System
Pebble Property Captures the World’s Most Extensive Mineral System – Exploration Potential is High Induced Polarization has been the principal historical discovery method 46
Slide 47: East-West Geology Section Looking North
East-West Geology Section Looking North 47
Slide 48: Very High Grades Extend into the East Graben
Very High Grades Extend into the East Graben 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 Interval Cu % Au
Slide 49: Pebble May Host Other Major Deposits
Pebble May Host Other Major Deposits Pebble Oyu Tolgoi Mineral Chuquicamata Andina-Los Bronce-Los Alaska Trend, Mongolia Chile Sulfatos, Chile • The extent of mineralization at Pebble is comparable to: – Oyu Tolgoi – Chuquicamata – Los Bronces/Andina • Exploration potential at deposit and within reg
Slide 50: Pebble Engineering
Pebble Engineering 50 iY (Re. Northern Dynasty Minerals Ltd. The Future of U.S. Mining and Metals
Slide 51: Existing Infrastructure at Iliamna Operations Centre
Existing Infrastructure at Iliamna Operations Centre Lake Iliamna Iliamna 51 51
Slide 52: Cross Section
Cross Section A A’ Note: Metal prices used for copper equivalent (CuEQ) are same as for resource (see page 54). 52 52
Slide 53: Plan View
Plan View Note: Metal prices used for copper equivalent (CuEQ) are same as for resource (see page 54). 53 53
Slide 54: 6.44 Billion Tonnes Measured & Indicated; 4.46 Billion Tonnes Inferred
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.
Slide 55: Anticipated Relative Values by Metal
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
Slide 56: Project Power Alternatives
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
Slide 57: Probable Process Flowsheet
Probable Process Flowsheet 57
Slide 58: Preliminary Bathymetry Data – Design Vessel
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
Slide 59: Pebble and Northern Dynasty Public Affairs
Pebble and Northern Dynasty Public Affairs 59
Slide 60: Southwest Alaska & Bristol Bay
Southwest Alaska & Bristol Bay 60 60
Slide 61: Elders Forums / Elders Advisory Committee
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. – Traditiona
Slide 62: Elders Forums / Elders Advisory Committee
Elders Forums / Elders Advisory Committee 62 62
Slide 63: Business Development – Alaska
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
Slide 64: Workforce Development Plan
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 Enginee
Slide 65: Environmental Baseline Document
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
Slide 66: The Pebble Fund
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 •
Slide 67: Forecast Economic Benefits for Alaska
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
Slide 68: Forecast Economic Benefits for Southwest Alaska
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
Slide 69: Forecast Economic Benefits for the United States
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
Slide 70: Investment Highlights – A World-Class Investment Opportunity
Investment Highlights – A World-Class Investment Opportunity Resource World Class – Tier 1 by every measure – Pebble is strategic Strategic First-World Alaska USA – State land – Exploration & Development designation Advantages Location Politically stable-history of responsible resource managem
Slide 71: Northern Dynasty Directors & Management
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 Mr. Hodgson is a professional engineer with more than 40 years of experience in mineral exploration experience, is
Slide 72: Contact Information
Contact Information General Office Corporate Communications Websites 15th Floor Doug Allen │ VP, Corporate Communications www.northerndynasty.com 1040 W. Georgia Street dougallen@northerndynasty.com www.pebblepartnership.com Vancouver, BC Tel: 604.684.6365 www.pebbleresearch.com Canada V6E 4H1 TF: 8
Northern Dynasty Minerals — Investor Presentation (September 2016) on 6ix