Northern Dynasty Minerals (NYSE: NAK) appears to be the mining small-cap gift that keeps on giving, after rising 15% this week. NAK is a Canadian mining company that explores mineral properties in pebbles, gold, copper, and many more within the United States and Canada. The recent surge is causing the bulls to rally behind Northern Dynasty. However this Friday, an environmental report will assess whether the mine’s construction threatens the safety of Salmon in the area. The uncertainty around Friday’s event is making investors apprehensive about whether they should invest. Because, if the company receives the red light on Friday, then the stock could fall significantly.
Table of contents 1. Why is Northern Dynasty surging? 2. Environmental assessment on Friday. 3. What you need to know before investing in NAK.
Why is NAK up 37% this week?
On Friday, NAK will receive its final environmental impact statement (EIS). The statement will outline whether NAK’s pebble mine is harmful or harm free to Alaska’s salmon industry. Despite the decision being a few days away, investors are already beginning to pour money into NAK. Ultimately, suggesting that investors are expecting the green light. However, YIG would like to point out that the bullish activity is likely speculation, and investors should not use the hype as an indicator of Friday’s outcome. A similar comparison can be drawn with the anticipation before a companies earnings. Nonetheless, if NAK receives the green EIS light, than the stock will be poised for growth. Because if “The Pebble Mine would, if built, produce 70 million tons of gold, molybdenum and copper ore a year.”
Also, NAK is up 35% and recently crossed its 20-day simple moving average, which implies a strong bullish sentiment (opinion not advice). Thus the combination of strong technicals and the acceptance of a significant mining opportunity is causing NAK to climb higher.
Why is Friday’s Environmental announcement important?
The future of NAK’s Pebble mine was pessimistic. Because the Obama administration in 2014 prevented the Army Corps from issuing a wetlands permit for the mine’s construction because of potential impacts to the Salmon Industry. The environmental concern stems from toxic waste destroying the salmon ecosystem and, thus the industry. While that is the environmental theory the Environmental Protection Authority (EPA) shed light on the potential side effects in a scientific assessment. The study found that if the Pebble Mine was built it would produce up to 10 billion tons of toxic waste near Bristol Bay.
However, the Trump Administration, which initially shared Obama’s view, lifted the Army Corps permit bans in 2019. The Trump administration removed the bans on the basis that “the limits were based on hypothetical scenarios different from Northern Dynasty’s submitted permit application.” Since the bans were lifted, the United Tribes of Bristol Bay, the area in which the Salmon are most vulnerable, urged the officials to block the mine. The US Army Corps of Engineers looks to give the green light to the mine this week. The final EIS report will come out on Friday. A positive announcement would mark a remarkable two-year turnaround since Obama’s rejection.
Here is everything you need to know before making a NAK investment
Before I begin, I am obliged to remind our viewers that this Is not financial advice rather financial commentary from our extensive research
Riding the NAK anticipation
Some investors might read Friday’s potential outcome and think I am ready to invest. The result is still uncertain, no matter how much buying takes place. However, what is certain is that people expect the announcement to be positive. Thus, investing with the intention to pull out on Thursday afternoon could be smart (opinion not advice). Because you mitigate the risk of a negative announcement and could make a nice gain off the hype leading into Friday.
Long-term investors are always looking for opportunities to snap up discounted shares. While short-term investors inflate the share price, they also often provide long-term investors opportunities. If the announcement on Friday is positive, many short-term investors will likely sell their shares they bought earlier this week. Because they have no attachment to the company. Thus, allowing long-term investors to cement their position during the sell-off. However, if the announcement turns sour, then NAK’s growth prospects would not look promising. If this is the case, long-term investors must ask themselves do they see growth before blindly purchasing more so-called “discounted shares”.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by First name Last name, position in YIG e.g Associate of YIG.