New Pebble funder, possible partner by 2022
Northern Dynasty Minerals (NDM) has needed a new partner, or partners, since Anglo American left the project four years ago. The company has blamed its slow progress on a few things, including EPA's actions to try and place restrictions on certain mining activities at the Pebble deposit. NDM did promise it would sign a partner and submit permitting docs by the end of 2017.
Early this week First Quantum Minerals Ltd. (FQM) announced its interest in the project, with a lot of caveats. First, NDM needs to complete due diligence, and acquire some regulatory approvals before an "affiliate" of FQM will sign an "Option Agreement." The two entities must also negotiate details over the commercial interests of the project. At the earliest, it would be 2022 before FQM would decide to enter a 50% partnership on the Pebble project.
- FQM expects to sign the Option Agreement by the beginning of 2nd quarter 2018.
- After that, a four-year term begins, during which FQM will try to get stakeholders on board. During the term, it will pay a total of $150 million in equal $37.5 million increments.
- When the four-year term is up, FQM can opt for a 2-year extension.
- At the end of the 4 or 6-year term, FQM can decide to buy a 50% stake in the project. Or not.
The framework announced this week, and the first details released from the future Option Agreement, illustrate the difficulties of finding a new partner. FQM shows interest, but also business savvy, by taking its time to get into the project and allowing enough slack to extricate later if it chooses. For its part, NDM delivered on its promise of announcing a deal in 2017 – just barely.