Initial Pebble economics look good for Northern Dynasty

Vancouver – A positive preliminary assessment on Northern Dynasty’s (NDM-V) Pebble gold-copper-molybdenum project in southwestern Alaska, will see the company proceeding to feasibility stage.

The independent study on the porphyry mega-deposit has shown encouraging initial forecasts and estimates on its proposed development.

The Northern Dynasty commissioned report outlined three production rate scenarios at Pebble: a 100,000 tonnes per day, a 200,000 tonnes per day and a phased expansion from 100,000 to 200,000 tonnes daily (whereby the mining rate doubles in year 6). The Case 1 parameter, with a 100,000 tpd mining rate, would see a 62 year mine life on a 2.1 billion tonne resource, with life of mine production of 276,000 ounces of gold, 199 million pounds of copper, 1.1 million ounces of silver and 7 million pounds of molybdenum at an estimated cash production cost of US$0.42 per pound of copper (net of gold, silver and molybdenum credits).

Economies of scale factors in with the increased production rates of Case 2 and 3 (200,000 tpd and the 100,000-200,000 tpd ramp-up, respectively). A mining life of 31 and 33 years respectively were estimated in Cases 2 and 3 on the same 2.1 billion tonne resource. Life of mine annual production estimates under Case 2 shows 543,000 ounces of gold, 392 million pounds copper 2.1 million ounces of silver and 14 million pounds molybdenum, while Case 3 sees 510,000 ounces gold, 368 million pounds copper, 1.9 million ounces silver and 13 million pounds of molybdenum. Cash production costs for copper (net of all other credits) are US$0.29 and US$0.30 per pound, respectively.

A key production parameter in the study is the remarkably low stripping ratio of 0.23:1 at Pebble, well below industry averages in large-scale open-pit operations.

An inferred mineral resource at Pebble was calculated earlier this year, showing 2.74 billion tonnes grading 0.3 grams gold per tonne, 0.27% copper, and 0.015% molybdenum (giving a 0.55% copper equivalent).

The preliminary assessment outlines development by large-scale open pit methods in four stages. Anticipated processing of mill feed would produce a flotation copper sulphide concentrate with gold and silver values as well as a separate molybdenum concentrate. Metal recoveries are estimated at 88% for copper, 76% for gold and silver, and 60% for the molybdenum. The study assumes a concentrate pipeline transporting the slurry to a tidewater port facility.

Total construction capital costs are estimated at US$1 billion for Case 1 and US$1.5 billion for Case 2. Estimated operating costs are US$5.06 and US$4.36 per tonne of mill feed respectively, in the two cases.

A preliminary financial analysis shows internal rates of return (IRRs) of 15.3% and 20.3%, with net present values (NPVs), discounted at 5%, of US$1.05 billion and US$2.09 billion respectively in the Case 1 and 2 scenarios. Metal values of US$0.95 per pound of copper, US$395 per ounce of gold, US$5.00 per ounce of silver and US$5.00 per pound of molybdenum were used in these calculations.

Northern Dynasty is planning the completion of a bankable feasibility study in 2005 as well as fulfilling Environmental Impact Statement requirements.