June 2016 - Northern Dynasty Minerals Ltd.
Transcription
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 [email protected] Tel: 604.684.6365 TF: 800.667.2114 www.northerndynasty.com www.pebblepartnership.com www.pebbleresearch.com