UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM F-10
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NORTHERN DYNASTY MINERALS
LTD.
(Exact name of
Registrant as specified in its charter)
British Columbia, Canada |
|
1040 |
|
Not Applicable |
(Province or other jurisdiction |
|
(Primary Standard Industrial |
|
(I.R.S. Employer |
of incorporation or organization) |
|
Classification Code Number) |
|
Identification Number) |
14th Floor, 1040 West
Georgia Street
Vancouver, British Columbia
Canada V6E 4H1
Tel: (604) 684-6365
(Address and
telephone number of Registrant's principal executive offices)
Pebble East Claims Corporation
2525 Gambell Street, Suite 405
Anchorage, Alaska, USA 99503
Tel: 1-877-450-2600
(Name,
address (including zip code) and telephone number (including area
code) of agent for service in the United States)
Copy
to:
Trevor Thomas,
General Counsel
Northern Dynasty Minerals Ltd.
14th Floor,
1040 West Georgia Street
Vancouver, British Columbia
Canada V6E 4H1
(604) 684-6365
|
|
Michael
Taylor
McMillan LLP
1500 - 1055
West Georgia Street
Vancouver, British Columbia
Canada V6E 4N7
(604) 689-9111
|
Approximate date of
commencement of proposed sale of the securities to the public:
From time to time after this
Registration Statement becomes effective.
Province of British Columbia,
Canada
(Principal jurisdiction regulating this offering)
It is proposed that this filing
shall become effective (check appropriate box below):
A. ☐ upon
filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the
United States and Canada).
B. ☒ at
some future date (check appropriate box below)
1. ☐ pursuant
to Rule 467(b) on (date) at (time) (designate a time
not sooner than 7 calendar days after filing).
2. ☐ pursuant
to Rule 467(b) on (date) at (time) (designate a time
7 calendar days or sooner after filing) because the securities
regulatory authority in the review jurisdiction has issued a
receipt or notification of clearance on (date).
3. ☐ pursuant
to Rule 467(b) as soon as practicable after notification of the
Commission by the Registrant or the Canadian securities regulatory
authority of the review jurisdiction that a receipt or notification
of clearance has been issued with respect hereto.
4. ☒ after
the filing of the next amendment to this Form (if preliminary
material is being filed).
If any of the securities being
registered on this form are to be offered on a delayed or
continuous basis pursuant to the home jurisdiction's shelf
prospectus offering procedures, check the following box. ☒
The Registrant hereby amends
this registration statement on such date or dates as may be
necessary to delay its effective date until the registration
statement shall become effective as provided in Rule 467 under the
U.S. Securities Act of 1933, or on such date as the Commission,
acting pursuant to Section 8(a) of the U.S. Securities Act of 1933,
may determine.
PART I
INFORMATION REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
Information contained herein is subject to
completion or amendment. A registration statement relating to these
securities has been filed with the U.S. Securities and Exchange
Commission. These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of
these securities in any U.S. state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such U.S.
state.
No securities regulatory
authority has expressed an opinion about these securities and it is
an offence to claim otherwise. This short form base shelf
prospectus constitutes a public offering of these securities only
in those jurisdictions where they may be lawfully offered for sale
and therein only by persons permitted to sell such
securities.
Information has been
incorporated by reference in this prospectus from documents filed
with securities commissions or similar authorities in Canada and
the United States. Copies of the documents incorporated
herein by reference may be obtained on request without charge from
Northern Dynasty Minerals Ltd., 14th
Floor, 1040 West Georgia Street, Vancouver, British Columbia,
V6E 4H1, Telephone: 604-684-6365 (attention: Corporate
Secretary),and are also available electronically at
www.sedar.com
and www.sec.gov.
SUBJECT TO COMPLETION, DATED DECEMBER 14,
2022
PRELIMINARY SHORT FORM BASE SHELF
PROSPECTUS
New Issue |
December 14, 2022 |

US$50,000,000
Common
Shares
Warrants
Subscription Receipts
Debt
Securities
Units
This short form base shelf
prospectus (the "Prospectus") relates to the offering for
sale of common shares (the "Common Shares"), warrants (the
"Warrants") and subscription receipts (the "Subscription
Receipts), debt securities (the "Debt Securities") or
any combination of such securities (the "Units") (all of the
foregoing, collectively, the "Securities") by Northern
Dynasty Minerals Ltd. (the "Company" or "Northern
Dynasty") from time to time, during the 25-month period that
the Prospectus, including any amendments hereto, remains effective,
in one or more series or issuances, with a total offering price of
the Securities in the aggregate, of up to US$50,000,000. The
Securities may be offered in amounts at prices to be determined
based on market conditions at the time of the sale and set forth in
an accompanying prospectus supplement (a "Prospectus
Supplement"). The consideration for any such acquisition
may consist of any of the Securities separately, a combination of
Securities or any combination of, among other things, Securities,
cash and assumption of liabilities. One or more securityholders of
the Company may also offer and sell Securities under this
Prospectus. See "The Selling Securityholders".
The Company’s outstanding Common
Shares are listed and posted for trading on the Toronto Stock
Exchange (the “TSX”) under the symbol “NDM” and on
the NYSE American under the symbol “NAK”. On
December 13, 2022, the closing price of our Common Shares as
reported on the TSX was $0.32 per share. On December
13, 2022, the closing price of our Common Shares as reported on the
NYSE American was US$0.234 per share.
Investing in the Securities of
the Company involves a high degree of risk. You should
carefully review the risks outlined in this Prospectus (together
with any Prospectus Supplement) and in the documents incorporated
by reference in this Prospectus and consider such risks in
connection with an investment in such Securities. See "Risk
Factors".
ii
This offering is made by a
Canadian issuer that is permitted, under a multijurisdictional
disclosure system adopted by the United States and Canada ("MJDS"),
to prepare this Prospectus in accordance with Canadian disclosure
requirements. Prospective investors in the United States
should be aware that such requirements are different from those of
the United States. Financial statements included or
incorporated by reference herein have been prepared in accordance
with International Financial Reporting Standards ("IFRS") as issued
by the International Accounting Standards Board ("IASB") and may
not be comparable to financial statements of United States
companies. Our financial statements are audited in accordance
with the standards of the Public Company Accounting Oversight Board
(United States) and our independent registered public accounting
firm is subject to Canadian and the United States Securities and
Exchange Commission ("SEC") independence standards.
Prospective investors should be
aware that the acquisition of the Securities described herein may
have tax consequences both in the United States and in
Canada. Such consequences for investors who are resident in,
or citizens of, the United States may not be described fully
herein. Prospective investors should read the tax discussion
contained in the applicable Prospectus Supplement with respect to a
particular offering of Securities.
The enforcement by investors of
civil liabilities under the United States federal securities laws
may be affected adversely by the fact that the Company is
incorporated under the laws of British Columbia, Canada, that the
majority of its officers and directors are residents of Canada, and
that none of the experts named in the registration statement are
residents of the United States.
NEITHER THE SEC NOR ANY STATE OR
CANADIAN SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENCE.
The specific terms of the
Securities with respect to a particular offering will be set out in
one or more Prospectus Supplements and may include, where
applicable: (i) in the case of Common Shares, the number of Common
Shares offered, the offering price and any other specific terms;
(ii) in the case of Warrants, the offering price, the designation,
number and terms of the Common Shares issuable upon exercise of the
Warrants, any procedures that will result in the adjustment of
these numbers, the exercise price, dates and periods of exercise,
the currency in which the Warrants are issued and any other
specific terms; (iii) in the case of Subscription Receipts, the
number of Subscription Receipts being offered, the offering price,
the procedures for the exchange of the Subscription Receipts for
Common Shares or Warrants, as the case may be, and any other
specific terms; (iv) in the case of Debt Securities, the specific
designation, aggregate principal amount, the currency or the
currency unit for which the Debt Securities may be purchased, the
maturity interest provisions, authorized denominations, offering
price, covenants, events of default, any terms for redemption, any
exchange or conversion terms, whether the debt is senior, senior
subordinated or subordinated, whether the debt is secured or
unsecured and any other terms specific to the Debt Securities being
offered; and (v) in the case of Units, the designation, number and
terms of the Common Shares, Warrants or Subscription Receipts or
Debt Securities comprising the Units. Where required by
statute, regulation or policy, and where Securities are offered in
currencies other than Canadian dollars, appropriate disclosure of
foreign exchange rates applicable to the Securities will be
included in the Prospectus Supplement describing the
Securities.
In addition, the Debt Securities
that may be offered may be guaranteed by certain direct and
indirect subsidiaries of the Company with respect to the payment of
the principal, premium, if any, and interest on the Debt
Securities. The Company expects that any guarantee provided in
respect of senior Debt Securities would constitute a senior and
unsecured obligation of the applicable guarantor. For a more
detailed description of the Debt Securities that may be offered,
see "Description of Securities - Debt Securities - Guarantees",
below.
All information permitted under
applicable securities legislation to be omitted from the Prospectus
will be contained in one or more Prospectus Supplement(s) that will
be delivered to purchasers together with the Prospectus, except in
cases where an exemption from such delivery requirements have been
obtained. Each Prospectus Supplement will be incorporated by
reference into the Prospectus for the purposes of applicable
securities legislation as of the date of the Prospectus Supplement
and only for the purposes of the distribution of the Securities to
which the Prospectus Supplement pertains. Investors should
read the Prospectus and any applicable Prospectus Supplement
carefully before investing in the Company's Securities.
iii
This Prospectus constitutes a
public offering of the Securities only in those jurisdictions where
they may be lawfully offered for sale and only by persons permitted
to sell the Securities in such jurisdictions. We may offer and sell
Securities to, or through, underwriters, dealers or selling
securityholders, directly to one or more other purchasers, or
through agents pursuant to exemptions from registration or
qualification under applicable securities laws. A Prospectus
Supplement relating to each issue of Securities will set forth the
names of any underwriters, dealers, agents or selling
securityholders involved in the offering and sale of the Securities
and will set forth the terms of the offering of the Securities, the
method of distribution of the Securities, including, to the extent
applicable, the proceeds to us and any fees, discounts, concessions
or other compensation payable to the underwriters, dealers or
agents, and any other material terms of the plan of
distribution.
In connection with any underwritten
offering of securities, excluding an ATM Distribution (as defined
and discussed below), the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the
securities offered. Such transactions, if commenced, may
discontinue at any time. A purchaser who acquires securities
forming part of the underwriters' over-allocation position acquires
those securities under this prospectus, regardless of whether the
over-allocation position is ultimately filled through the exercise
of the over-allotment option or secondary market purchases.
The Company's securities may be
sold pursuant to this prospectus through underwriters or dealers or
directly or through agents designated from time to time at amounts
and prices and other terms determined by us, including by way of an
"at-the-market distribution" as defined in National Instrument
44-102 - Shelf Distributions (an "ATM Distribution"). No
underwriter of an ATM Distribution, and no person or company acting
jointly or in concert with an underwriter, may, in connection with
the distribution, enter into any transaction that is intended to
stabilize or maintain the market price of the securities or
securities of the same class as the securities distributed under
the ATM Distribution prospectus, including selling an aggregate
number or principal amount of securities that would result in the
underwriter creating an over-allocation position in the securities.
See "Plan of Distribution".
No underwriter has been involved
in the preparation of the Prospectus or performed any review of the
contents of the Prospectus.
Each of Mr. Stephen Decker, a
director of the Company, and Mr. Wayne Kirk, a director of the
Company, resides outside of Canada. Each of Mr. Decker and Mr. Kirk
has appointed the Company's counsel, McMillan LLP, located at Suite
1500 - 1055 West Georgia Street, Vancouver, British Columbia, V6E
4N7, as agent for service of process. Purchasers are advised that
it may not be possible for investors to enforce judgments obtained
in Canada against any person who resides outside of Canada, even if
the party has appointed an agent for service of process.
Our head office is at
14th Floor, 1040 West Georgia Street, Vancouver, British
Columbia V6E 4H1. The registered office of the Company is
located at Suite 1500 - 1055 West Georgia Street, Vancouver,
British Columbia V6E 4N7.
TABLE OF CONTENTS
GENERAL MATTERS
In this
Prospectus, "Northern Dynasty", "we", "us" and "our" refers,
collectively, to Northern Dynasty Minerals Ltd. and our wholly
owned subsidiaries.
ABOUT THIS PROSPECTUS
We are a British Columbia company that
is a "reporting issuer" under Canadian securities laws
in each of the provinces of Canada, except
Quebec. In addition,
our common shares are registered under Section 12(b) of the United
States Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Our common shares are traded in
Canada on the TSX under the symbol "NDM" and in the United
States on the NYSE American under the symbol "NAK".
This Prospectus is a base shelf
prospectus that:
-
we have filed with the
securities commissions in each of the provinces of Canada,
except Quebec (the
"Canadian Qualifying Jurisdictions") in order to qualify the
offering of the Securities described in this Prospectus in
accordance with Canadian National Instrument 44-102-Shelf
Distributions ("NI 44-102"); and
-
forms part of a
registration statement on Form F-10 (the "Registration
Statement") that we filed with the Securities and
Exchange Commission ("SEC") under the Securities Act of
1933, as amended (the "U.S. Securities Act")
under the Multilateral
Jurisdiction Disclosure System between Canada and the United States
(the "MJDS").
Under this shelf registration process,
we may sell any combination of the Securities described in this
Prospectus in one or more offerings up to a total aggregate initial
offering price of US$50,000,000. This Prospectus provides you
with a general description of the Securities that we may offer. Each
time we sell Securities under this Prospectus we will provide a
Prospectus Supplement that will contain specific information about
the terms of that specific offering. The specific terms of
the Securities in respect of which this Prospectus is being
delivered will be set forth in the Prospectus Supplement.
Each shelf prospectus
supplement will be incorporated by reference into this Prospectus
for the purposes of securities legislation as of the date of the
Prospectus Supplement and only for the purposes of the distribution
of the securities to which the shelf Prospectus Supplement
pertains.
You should rely
only on the information contained in or incorporated by reference
into this Prospectus and in any applicable Prospectus Supplement.
The Company has not authorized anyone to provide you with different
information. The Company is not making any offer of these
Securities in any jurisdiction where the offer is not
permitted. You should not assume that the information
contained in this Prospectus and any Prospectus Supplement is
accurate as of any date other than the date on the front of those
documents or that any information contained in any document
incorporated by reference is accurate as of any date other than the
date of that document.
GLOSSARY OF TERMS
We use the
following defined terms in this Prospectus:
2021 PEA
|
The
technical report entitled "Preliminary Economic Assessment NI
43-101 Technical Report, Pebble Project, Alaska, USA",
effective date September 9, 2021, by R. Kalanchey, P.Eng., Ausenco,
Hassan Ghaffari, P.Eng., Tetra Tech, Sabry Abdel Hafez, P.Eng.,
Tetra Tech, Les Galbraith, P.Eng., P.E., Knight Piesold, J. David
Gaunt, P.Geo., Hunter Dickinson Services, Eric Titley, P.Geo.,
Hunter Dickinson Services, Stephen Hodgson, P.Eng., Hunter
Dickinson Services and James Lang, P.Geo., JM Lang Professional
Consulting, as filed under the Company's profile at www.sedar.com and www.sec.gov.
|
2022 PEA
|
The
technical report entitled "Preliminary Economic Assessment NI
43-101 Technical Report Update, Pebble Project, Alaska, USA",
effective date October 1, 2022, by R. Kalanchey, P.Eng., Ausenco,
Hassan Ghaffari, P.Eng., Tetra Tech, Sabry Abdel Hafez, P.Eng.,
Tetra Tech, Les Galbraith, P.Eng., P.E., Knight Piesold, J. David
Gaunt, P.Geo., Hunter Dickinson Services, Eric Titley, P.Geo.,
Hunter Dickinson Services, Stephen Hodgson, P.Eng., Hunter
Dickinson Services and James Lang, P.Geo., JM Lang Professional
Consulting, as filed under the Company's profile at www.sedar.com and www.sec.gov.
|
ATM Agreement
|
The
At-the-Market Offering Agreement dated between the Company and H.C.
Wainwright & Co, Inc. in respect of the establishment of the
ATM Facility
|
ATM Facility
|
Means
the "at-the-market offering" facility established under the ATM
Agreement
|
BCBCA
|
Business Corporations Act (British Columbia).
|
CMP
|
A
compensatory mitigation plan
|
CWA
|
United
States Clean Water Act
|
CWA 404 Permit
Application
|
The
permit application submitted by the Pebble Partnership to the USACE
in December 2017 under Section 404 of the CWA
|
EIS
|
Environmental Impact Statement
|
EPA
|
United
States Environment Protection Agency
|
Exchange Act
|
The
United States Securities Exchange Act of 1934, as
amended.
|
Final EIS
|
The
final EIS published by the USACE in July 2020.
|
June 2020 Revised
Permit Application
|
The
revised CWA 404 Permit Application submitted by the Pebble
Partnership to the USACE in June 2020 under Section 404 of the
CWA
|
NEPA
|
The
United States National Environmental Policy Act
|
NI
43-101
|
Canadian National Instrument 43-101 - Standards of Disclosure
for Mineral Projects, as adopted by the Canadian Securities
Administrators.
|
Original Proposed
Determination
|
The
original proposed determination of the EPA under Section 404(c) of
the CWA in respect of the Pebble Project published in July 2014
|
Pebble Partnership
|
The
Pebble Limited Partnership, an Alaskan registered limited
partnership wholly owned by the Company
|
Pebble Deposit
|
The
copper, gold, molybdenum, silver and rhenium mineral deposit
located in southwest Alaska on the mining claims and leasehold
interests of the Pebble Partnership
|
Pebble Project
|
The
development of a mine producing copper, gold, molybdenum, silver
and rhenium minerals from the Pebble Deposit
|
Project Description
|
The
production plan and corresponding project configuration for the
development of a mine at the Pebble Project, as presented in the
June 2020 Revised Permit Application and evaluated in the 2021 PEA
and the 2022 PEA
|
Proposed Project
|
The
development of the Pebble Project in accordance with the Project
Description
|
Recommended Determination
|
The
recommended determination of the Regional Administrator of EPA
Region 10 issued on December 1, 2022 further to the Revised
Proposed Determination recommending final action under Section
404(c) of the CWA in respect of the Pebble Project
|
Record of Decision
|
The
Record of Decision issued by the USACE on November 20, 2020 denying
the permit application of the Pebble Partnership under Section 404
of the CWA
|
Request for Appeal
|
The
Pebble Partnership's request for appeal of the Record of
Decision
|
Revised Proposed
Determination
|
The
revised proposed determination of the EPA under Section 404(c) of
the CWA in respect of the Pebble Project published in May 2022
|
Royalty Agreement
|
The
royalty agreement dated July 26, 2022 between the Pebble
Partnership, together with certain other wholly-owned subsidiaries
of the Pebble Partnership, and the Royalty Holder
|
Royalty Holder
|
The
royalty holder named in the Royalty Agreement
|
SEC
|
The
United States Securities and Exchange Commission.
|
USACE
|
The
United States Army Corps of Engineers
|
U.S. Securities Act
|
The
United States Securities Act of 1933, as amended.
|
DOCUMENTS INCORPORATED BY
REFERENCE
Information has
been incorporated by reference in this Prospectus from documents
filed with securities commissions or similar authorities in Canada.
Copies of the documents incorporated herein by reference may be
obtained from us upon request without charge from Northern Dynasty
Minerals Ltd., 14th Floor, 1040 West Georgia Street,
Vancouver, British Columbia V6E 4H1 (telephone 604-684-6365)
(attention: Corporate Secretary), or by accessing our disclosure
documents available through the Internet on the Canadian System for
Electronic Document Analysis and Retrieval ("SEDAR") at
www.sedar.com.
The following
documents ("documents incorporated by reference" or
"documents incorporated herein by reference") have been
filed by us with various securities commissions or similar
authorities in the provinces of Canada in which we are a reporting
issuer, are specifically incorporated herein by reference and form
an integral part of this Prospectus:
1. our
annual information form for the year ended December 31, 2021 dated
March 31, 2022 (the "2021 AIF");
2. our
audited consolidated financial statements for the financial years
ended December 31, 2021 and 2020, together with the notes thereto
and the reports of the independent registered public accounting
firm thereon;
3. our
annual management's discussion and analysis of financial condition
and operations for the financial year ended December 31, 2021 (the
"2021 MD&A");
4. our
condensed consolidated interim financial statements for the three
and nine months ended September 30, 2022 and 2021;
5. our
management's discussion and analysis of financial condition and
operations for the three and nine months ended September 30, 2022
(the "Q3 2022 MD&A")
6. our
management information circular dated May 12, 2022 prepared in
connection with the annual meeting of our shareholders held on June
23, 2022; and
7. our
material change report dated August 5, 2022 regarding the entry
into of the Royalty Agreement for proceeds of up to US$60 million
in exchange for royalties on non-core metals (gold and silver).
In addition, we
also incorporate by reference into this Prospectus any document of
the types referred to in the preceding paragraph, including all
annual information forms, all information circulars, all annual and
interim financial statements and management's discussion and
analysis relating thereto, all material change reports (excluding
confidential material change reports, if any), all business
acquisition reports, all updated earnings coverage ratio
information or of any other type required to be incorporated by
reference into a short form prospectus pursuant to National
Instrument 44- 101 - Short Form Prospectus Distributions
that are filed by us with a securities commission or similar
authority in Canada after the date of this Prospectus and prior to
the termination of the offering under any Prospectus
Supplement. As discussed below, this Prospectus may also
expressly update or revise any document incorporated by reference
and such document should be deemed so amended or updated
hereby.
In addition, the
Company may determine to incorporate into any Prospectus Supplement
to this Prospectus, including any Prospectus Supplement that it
files in respect of an "at-the-market" offering, any news release
that the Company disseminates in respect of previously undisclosed
information that, in the Company's determination, constitutes a
"material fact" (as such term is defined under applicable Canadian
securities laws). In this event, the Company will identify
such news release as a "designated news release" for the purposes
of the Prospectus in writing on the face page of the version of
such news release that the Company files on SEDAR (any such news
release, a "Designated News Release"), and any such
Designated News Release shall be deemed to be incorporated by
reference into the Prospectus Supplement for the offering in
respect to which the Prospectus Supplement relates. These documents
will be available through the internet on SEDAR.
To the extent
that any document or information incorporated by reference into the
Prospectus is included in any report on Form 6-K, Form 40-F, Form
20-F, Form 10-K, Form 10-Q or Form 8-K (or any respective successor
form) that is filed with or furnished to the SEC after the date of
the Prospectus, such document or information shall be deemed to be
incorporated by reference as an exhibit to the registration
statement of which the Prospectus forms a part. In addition,
we may incorporate by reference into the Prospectus, or the
registration statement of which it forms a part, other information
from documents that we file with or furnish to the SEC pursuant to
Section 13(a) or 15(d) of the United States Securities Exchange Act
of 1934, as amended (the "Exchange Act"), if and to the
extent expressly provided therein.
Upon a new
annual information form and related annual financial statements
being filed by us with, and where required, accepted by, the
applicable securities regulatory authority during the currency of
this Prospectus, the previous annual information form, the previous
annual financial statements and all interim financial statements,
material change reports and information circulars and all
Prospectus Supplements filed prior to the commencement of our
financial year in which a new annual information form is filed
shall be deemed no longer to be incorporated into this Prospectus
for purposes of future offers and sales of Securities hereunder.
Upon condensed consolidated interim financial statements and the
accompanying management's discussion and analysis of financial
condition and results of operations being filed by us with the
applicable Canadian securities commissions or similar regulatory
authorities during the period that this Prospectus is effective,
all condensed consolidated interim financial statements and the
accompanying management's discussion and analysis of financial
condition and results of operations filed prior to such new
condensed consolidated interim financial statements and
management's discussion and analysis of financial condition and
results of operations shall be deemed to no longer be incorporated
into this Prospectus for purposes of future offers and sales of
Securities under this Prospectus. In addition, upon a new
management information circular for an annual meeting of
shareholders being filed by us with the applicable Canadian
securities commissions or similar regulatory authorities during the
period that this Prospectus is effective, the previous management
information circular filed in respect of the prior annual meeting
of shareholders shall no longer be deemed to be incorporated into
this Prospectus for purposes of future offers and sales of
Securities under this Prospectus.
Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein will be deemed to be modified or superseded for
the purposes of the Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that
is also incorporated or is deemed to be incorporated by reference
herein modifies or supersedes such statement. The modifying
or superseding statement need not state that it has modified or
superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The
making of a modifying or superseding statement will not be deemed
an admission for any purpose that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it
was made. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part
of the Prospectus.
All information
permitted under applicable securities legislation to be omitted
from the Prospectus will be contained in one or more Prospectus
Supplements that will be delivered to purchasers together with the
Prospectus, except in cases where an exemption from such delivery
requirements has been obtained. A Prospectus Supplement
containing the specific terms of an offering of Securities will be
delivered to purchasers of such Securities together with this
Prospectus and will be deemed to be incorporated by reference into
this Prospectus as of the date of such Prospectus Supplement, but
only for the purposes of the offering of Securities covered by that
Prospectus Supplement. Investors should read the Prospectus
and any applicable Prospectus Supplement carefully before investing
in the Company's Securities.
Any template
version of any "marketing materials" (as such term is defined in NI
44-101) filed after the date of a Prospectus Supplement and before
the termination of the distribution of the Securities offered
pursuant to such Prospectus Supplement (together with this
Prospectus) is deemed to be incorporated by reference in such
Prospectus Supplement.
FORWARD-LOOKING
STATEMENTS
This Prospectus
and the documents incorporated herein by reference contain certain
forward-looking information and forward-looking statements within
the meaning of applicable Canadian securities laws and
forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements describe our future plans, strategies, expectations and
objectives, and are generally, but not always, identifiable by use
of the words "may", "will", "should", "continue", "expect",
"anticipate", "estimate", "believe", "intend", "plan" or "project"
or the negative of these words or other variations on these words
or comparable terminology.
Forward-looking
statements contained or incorporated by reference into this
Prospectus include, without limitation, statements regarding:
-
our expectations regarding the potential for securing the
necessary permitting of a mine at the Pebble Project and our
ability to establish that such a permitted mine can be economically
developed;
-
the success of our appeal of the Record of Decision issued by
the USACE denying the issuance of certain permits required for the
Pebble Project under the CWA, and the timing of a decision on this
appeal;
-
our ability to successfully apply for and obtain the federal and
state permits that we will be required to obtain for the Pebble
Project, including under the CWA and NEPA, and relevant Alaska
state legislation;
-
our ability to successfully challenge any final determination
issued pursuant to the EPA's Recommended Determination;
-
the outcome of the US government investigations involving the
Company;
-
our ability to successfully defend against purported class
action law suits that have been commenced against the Company;
-
our plan of operations, including our plans to carry out and
finance exploration and development activities;
-
our ability to raise capital for exploration, permitting and
development activities and meet our working capital
requirements;
-
our expected financial performance in future periods;
-
our expectations regarding the exploration and development
potential of the Pebble Project;
-
the outcome of the legal proceedings in which we are
engaged;
-
the contribution of the Pebble Project to the United States
federal, state and regional economies;
-
that any additional prepayment investments will be made in
connection under our gold and silver production Royalty Agreement
for the Pebble Project;
-
the uncertainties with respect to the effects of COVID-19;
-
uncertainties related to the conflict in Ukraine; and
-
factors relating to our investment decisions.
Forward-looking information is
based on the reasonable assumptions, estimates, analysis and
opinions of management made in light of its experience and its
perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant
and reasonable in the circumstances at the date that such
statements are made, but which may prove to be incorrect. We
believe that the assumptions and expectations reflected in such
forward-looking information are reasonable.
Key assumptions
upon which the Company's forward-looking information are based
include:
-
that our appeal of the Record of Decision issued by the USACE
will be successful;
-
that we will ultimately be able to demonstrate that a mine at
the Pebble Project can be developed and operated in an
environmentally sound and socially responsible manner, meeting all
relevant federal, state and local regulatory requirements so that
we will be ultimately able to obtain permits authorizing
construction of a mine at the Pebble Project;
-
that we will be able to secure sufficient capital necessary for
continued environmental assessment and permitting activities and
engineering work which must be completed prior to any potential
development of the Pebble Project which would then require
engineering and financing in order to advance to ultimate
construction;
-
that we will ultimately be able to demonstrate that a mine at
the Pebble Project will be economically feasible based on a mine
plan for which permitting can be secured;
-
the EPA's Recommended Determination process under the CWA will
not have a negative impact on the ability of the Pebble Partnership
to develop the Pebble Project;
-
that the COVID-19 outbreak will not materially impact or delay
our ability to obtain permitting for a mine at the Pebble
Project;
-
that the market prices of copper, gold, molybdenum, silver and
rhenium will not significantly decline or stay depressed for a
lengthy period of time;
-
the projected contributions of the Pebble Project to the Alaskan
and United States economies are subject to the assumptions
underlying the 2022 PEA and other assumptions as to economic
impact;
-
that our key personnel will continue their employment with us;
and
-
that we will continue to be able to secure minimal adequate
financing on acceptable terms.
Readers are
cautioned that the foregoing list is not exhaustive of all factors
and assumptions which may have been used. Forward looking
statements are also subject to risks and uncertainties facing our
business, any of which could have a material impact on our
outlook.
Some of the
risks we face and the uncertainties that could cause actual results
to differ materially from those expressed in the forward-looking
statements include:
-
we may be unsuccessful in our appeal of the Record of Decision
with respect to the decision to deny the issuance of permits which
we require to operate a mine at the Pebble Project, and the timing
of a decision on the appeal may be longer than anticipated;
-
we may be unsuccessful in challenging any final determination
issued pursuant to the EPA's Recommended Determination under the
CWA;
-
an inability to ultimately obtain permitting for a mine at the
Pebble Project;
-
an inability to establish that the Pebble Project may be
economically developed and mined or contain commercially viable
deposits of ore based on a mine plan for which government
authorities are prepared to grant permits;
-
government efforts to curtail the COVID-19 pandemic may delay
the release by the USACE of the EIS and/or the issuance of its
Record of Decision, and may delay the Company in completion of its
work relating to this permitting process;
-
the uncertainty of the outcome of current or future government
investigations and inquiries, including but not limited to, matters
before the U.S. Department of Justice, a federal grand jury in
Alaska and the SEC;
-
our ability to obtain funding for working capital and other
corporate purposes associated with advancement of the Pebble
Project
-
the Royalty Holder under our gold and silver production Royalty
Agreement may determine not to increase its investment;
-
an inability to continue to fund exploration and development
activities and other operating costs;
-
our actual operating expenses may be higher than projected;
-
the highly cyclical nature of the mineral resource exploration
business;
-
the pre-development stage economic viability and technical
uncertainties of the Pebble Project and the lack of known reserves
on the Pebble Project;
-
an inability to recover even the financial statement carrying
values of the Pebble Project if we cease to continue on a going
concern basis;
-
the potential for loss of the services of key executive
officers;
-
a history of, and expectation of further, financial losses from
operations impacting our ability to continue on a going concern
basis;
-
the volatility of copper, gold, molybdenum, silver and rhenium
prices and mining share prices;
-
uncertainty related to the conflict in Ukraine ;
-
the impact of inflation on projected costs and budgets for 2022
and beyond;
-
stock market volatility resulting from rising interest rates and
the impact on our ability to complete equity financings ;
-
the inherent risk involved in the exploration, development and
production of minerals, and the presence of unknown geological and
other physical and environmental hazards at the Pebble Project;
-
the potential for changes in, or the introduction of new,
government regulations relating to mining, including laws and
regulations relating to the protection of the environment and
project legal titles;
-
potential claims by third parties to titles or rights involving
the Pebble Project;
-
the uncertainty of the outcome of current or future litigation
including but not limited to, the appeal of the Record of Decision
denying the issuance of permits required to operate a mine at the
Pebble Project;
-
the possible inability to insure our operations against all
risks;
-
the highly competitive nature of the mining business;
-
the projected contributions of the Pebble Project to the United
States federal, state and regional economies may not be
realized;
-
the potential equity dilution to current shareholders from
future equity financings or from the exercise of outstanding share
purchase options and warrants to purchase the Company's common
shares; and
-
that we have never paid dividends and will not do so in the
foreseeable future.
While the effort
was made to list the primary risk factors, this list should not be
considered exhaustive of the factors that may affect any of our
forward-looking statements or information. Investors should refer
to the section of this Prospectus entitled "Risk Factors"
for a comprehensive discussion of the risk factors that we
face. In addition, investors should refer to the risk factors
identified in our 2021 AIF, our 2021 MD&A and our Q3 2022
MD&A. Forward-looking statements or information are
statements about the future and are inherently uncertain, and
actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the
forward-looking statements or information due to a variety of
risks, uncertainties and other factors, including, without
limitation, the risks and uncertainties described above and
otherwise contained herein.
Our
forward-looking statements and risk factors are based on the
reasonable beliefs, expectations and opinions of management on the
date of this Prospectus. Although we have attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other factors that cause results not to
be as anticipated, estimated or intended. There is no
assurance that such information will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information. Accordingly, readers should
not place undue reliance on forward-looking information. We
do not undertake to update any forward-looking information, except
as, and to the extent required by, applicable securities laws.
We qualify
all the forward looking statements contained in this Prospectus and
the documents incorporated by reference herein and therein by the
foregoing cautionary statements.
CANADIAN MINERAL PROPERTY
DISCLOSURE STANDARDS AND RESOURCE ESTIMATES
As a Canadian
issuer, we are required to comply with reporting standards in
Canada that require that we make disclosure regarding our mineral
properties, including any estimates of mineral reserves and
resources, in accordance with Canadian National Instrument 43-101
Standards of Disclosure for Mineral Projects ("NI
43-101"). NI 43-101 is a rule developed by the Canadian
Securities Administrators that establishes standards for all public
disclosure an issuer makes of scientific and technical information
concerning mineral projects. Unless otherwise indicated, all
resource estimates contained in or incorporated by reference in
this Prospectus have been prepared in accordance with NI
43-101.
This Prospectus
uses the certain technical terms presented below as they are
defined in accordance with the CIM Definition Standards on mineral
resources and reserves (the "CIM Definition Standards")
adopted by the Canadian Institute of Mining, Metallurgy and
Petroleum (the "CIM Council"), as required by NI
43-101. The following definitions are reproduced from the
latest version of the CIM Standards, which were adopted by the CIM
Council on May 10, 2014 (the "CIM Definitions"):
feasibility study
|
A
comprehensive technical and economic study of the selected
development option for a mineral project that includes
appropriately detailed assessments of applicable modifying factors
together with any other relevant operational factors and detailed
financial analysis that are necessary to demonstrate, at the time
of reporting, that extraction is reasonably justified (economically
mineable). The results of the study may reasonably serve as
the basis for a final decision by a proponent or financial
institution to proceed with, or finance, the development of the
project. The confidence level of the study will be higher
than that of a pre-feasibility study.
|
indicated mineral resource
|
That
part of a mineral resource for which quantity, grade or quality,
densities, shape and physical characteristics are estimated with
sufficient confidence to allow the application of modifying factors
in sufficient detail to support mine planning and evaluation of the
economic viability of the deposit. Geological evidence is
derived from adequately detailed and reliable exploration, sampling
and testing and is sufficient to assume geological and grade or
quality continuity between points of observation. An
indicated mineral resource has a lower level of confidence than
that applying to a measured mineral resource and may only be
converted to a probable mineral reserve.
|
inferred mineral resource
|
That
part of a mineral resource for which quantity and grade or quality
are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply but not
verify geological and grade or quality continuity. An
Inferred mineral resource has a lower level of confidence than that
applying to an Indicated mineral resource and may not be converted
to a Mineral Reserve. It is reasonably expected that the
majority of Inferred mineral resources could be upgraded to
Indicated mineral resources with continued exploration.
|
measured mineral resource
|
That
part of a mineral resource for which quantity, grade or quality,
densities, shape, and physical characteristics are estimated with
confidence sufficient to allow the application of modifying factors
to support detailed mine planning and final evaluation of the
economic viability of the deposit. Geological evidence is
derived from detailed and reliable exploration, sampling and
testing and is sufficient to confirm geological and grade or
quality continuity between points of observation. A measured
mineral resource has a higher level of confidence than that
applying to either an Indicated mineral resource or an Inferred
mineral resource. It may be converted to a proven mineral
reserve or to a Probable Mineral Reserve.
|
mineral reserve
|
The
economically mineable part of a measured and/or indicated mineral
resource. It includes diluting materials and allowances for
losses, which may occur when the material is mined or extracted and
is defined by studies at Pre-Feasibility or Feasibility level as
appropriate that include application of modifying factors.
Such studies demonstrate that, at the time of reporting, extraction
could reasonably be justified. The reference point at which
mineral reserves are defined, usually the point where the ore is
delivered to the processing plant, must be stated. It is
important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement
is included to ensure that the reader is fully informed as to what
is being reported. The public disclosure of a Mineral Reserve
must be demonstrated by a pre-feasibility study or feasibility
study.
|
mineral resource
|
A
concentration or occurrence of solid material of economic interest
in or on the Earth's crust in such form, grade or quality and
quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade or quality,
continuity and other geological characteristics of a mineral
resource are known, estimated or interpreted from specific
geological evidence and knowledge, including sampling.
|
modifying factors
|
Considerations used to convert mineral resources to mineral
reserves. These include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing,
legal, environmental, social and governmental factors.
|
pre-feasibility study
|
A
comprehensive study of a range of options for the technical and
economic viability of a mineral project that has advanced to a
stage where a preferred mining method, in the case of underground
mining, or the pit configuration, in the case of an open pit, is
established and an effective method of mineral processing is
determined. It includes a financial analysis based on
reasonable assumptions on the modifying factors and the evaluation
of any other relevant factors which are sufficient for a Qualified
Person, acting reasonably, to determine if all or part of the
mineral resource may be converted to a mineral reserve at the time
of reporting. A pre-feasibility study is at a lower
confidence level than a feasibility study.
|
probable mineral reserve
|
The
economically mineable part of an Indicated, and in some
circumstances, a measured mineral resource. The confidence in
the modifying factors applying to a Probable Mineral Reserve is
lower than that applying to a proven mineral reserve.
|
proven mineral reserve
|
The
economically mineable part of a measured mineral resource. A
proven mineral reserve implies a high degree of confidence in the
modifying factors.
|
CAUTIONARY NOTES REGARDING THE
2022 PRELIMINARY ECONOMIC ASSESSMENT
This Prospectus
also uses the term "preliminary economic assessment", which
is defined in NI 43-101 to mean a study that includes an economic
analysis of the potential viability of mineral resources, but that
does not meet the definition of either a "pre-feasibility
study" or a "feasibility study", as such terms are
defined above. Both the 2021 PEA and the 2022 PEA are
preliminary economic assessments.
The 2022 PEA is
preliminary in nature, and includes Inferred mineral resources that
are considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as mineral reserves. There is no assurance that
the 2022 PEA will be realized. Mineral Resources that are not
mineral reserves do not have demonstrated economic viability, and
there is no assurance that the Pebble Project mineral resources
will ever be upgraded to reserves. The 2022 PEA assumes that
the Proposed Project will ultimately be able to obtain the required
permits from the USACE and state of Alaska authorities to enable
development of the Proposed Project. Neither the 2022 PEA,
nor the mineral resource estimates on which the 2022 PEA is based,
have been adjusted for any risk that the Pebble Partnership may not
be able to successfully (i) appeal the Record of Decision denying
the granting of the required permit under the CWA, or (ii)
challenge any final determination issued pursuant to the
Recommended Determination published by the EPA.
The 2022 PEA
includes statements regarding:
-
the mine plan for the Pebble Project, the financial results of
the 2022 PEA, including net present value and internal rates of
return, and the ability of the Pebble Partnership to secure the
financing to proceed with the development of the Pebble Project,
including any stream financing and infrastructure outsourcing,
-
the social integration of the Pebble Project into the Bristol
Bay region and benefits for Alaska,
-
the political and public support for the permitting process
relating to the Pebble project,
-
the ability to successfully appeal the negative Record of
Decision and secure the issuance of a positive Record of Decision
by the U.S. Army Corps of Engineers and the ability of the Pebble
Project to secure all required federal and state permits,
-
the right-sizing and de-risking of the Pebble Project, including
any determination to pursue any of the expansion scenarios for the
Pebble Project or to incorporate a gold plant,
-
the design and operating parameters for the Pebble Project mine
plan, including projected capital and operating costs,
-
the exploration potential of the Pebble Project,
-
future demand for copper, gold, molybdenum, silver and rhenium
and the metals prices assumed for the financial projections
including the 2022 PEA,
-
the potential addition of partners in the Pebble Project,
-
the ability and timetable of the Company to develop the Pebble
Project and become a leading copper, gold, molybdenum, silver and
rhenium producer, and
-
the ability of the Company to successfully challenge any final
determination issued pursuant to the EPA's Recommended
Determination.
Although the
Company believes the expectations expressed in these
forward-looking statements are based on reasonable assumptions,
such statements should not be in any way be construed as guarantees
that the Pebble Project will secure all required government
permits, establish the commercial feasibility of the Pebble
Project, achieve the required financing or develop the Pebble
Project. Such forward-looking statements or information
related to this Preliminary Economic Assessment include but are not
limited to statements or information with respect to the mined and
processed material estimates; the internal rate of return; the
annual production; the net present value; the life of mine; the
capital costs, operating costs estimated for each of the Proposed
Project and three Expansion Scenarios for the Pebble Project; and
other costs and payments for the proposed infrastructure for the
Pebble Project (including how, when, where and by whom such
infrastructure will be constructed or developed); projected
metallurgical recoveries; plans for further development, and
securing the required permits and licenses for further studies to
consider expansion of the operation; and market price of precious
and base metals; or other statements that are not statement of
fact.
CAUTIONARY NOTES TO UNITED STATES
INVESTORS CONCERNING
CANADIAN MINERAL PROPERTY
DISCLOSURE STANDARDS
The SEC has
adopted amendments to its disclosure rules to modernize the mineral
property disclosure requirements for issuers whose securities are
registered with the SEC under the U.S. Exchange Act. These
amendments became effective February 25, 2019 (the "SEC
Modernization Rules") with compliance required for the first
fiscal year beginning on or after January 2, 2021. The SEC
Modernization Rules have replaced the historical property
disclosure requirements for mining registrants that were included
in SEC Industry Guide 7 ("Guide 7"), which has been
rescinded.
The SEC
Modernization Rules include the adoption of definitions of the
following terms, which are "substantially similar" to the
corresponding terms under the CIM Definition Standards that are
presented above under "Canadian Mineral Property Disclosure
Standards and Resource Estimates":
-
feasibility study;
-
indicated mineral resource;
-
inferred mineral resource;
-
measured mineral resource;
-
mineral reserve;
-
mineral resource;
-
modifying factors;
-
preliminary feasibility study (or "pre-feasibility study");
-
probable mineral resource; and
-
proven mineral reserve.
As a result of
the adoption of the SEC Modernization Rules, SEC now recognizes
estimates of "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources". In addition, the
SEC has amended its definitions of "proven mineral reserves" and
"probable mineral reserves" to be "substantially similar" to the
corresponding CIM Definitions.
We are not
required to provide disclosure on our mineral properties, including
the Pebble Project, under the SEC Modernization Rules as we are
presently a "foreign issuer" under the U.S. Exchange Act and
entitled to file continuous disclosure reports with the SEC,
including our annual report on Form 40-F, under the MJDS
between Canada and the United States. Accordingly, we anticipate
that we will be entitled to continue to provide disclosure on our
mineral properties, including the Pebble Project, in accordance
with NI 43‐101 disclosure standards and CIM Definition Standards.
However, if we either cease to be a "foreign issuer" or cease to be
entitled to file reports under the MJDS, then we will be required
to provide disclosure on our mineral properties under the SEC
Modernization Rules. Accordingly, United States investors are
cautioned that the disclosure that we provide on our mineral
properties, including the Pebble Project, in this Prospectus and
under our continuous disclosure obligations under the U.S. Exchange
Act may be different from the disclosure that we would otherwise be
required to provide as a U.S. domestic issuer or a non‐MJDS foreign
issuer under the SEC Modernization Rules.
NOTE TO UNITED STATES READERS
REGARDING DIFFERENCES BETWEEN UNITED STATES AND CANADIAN FINANCIAL
REPORTING PRACTICES
We prepare our
financial statements in accordance with IFRS, as issued by the
IASB, which differs from U.S. generally accepted accounting
principles ("U.S. GAAP") and are audited in accordance with
the standards of PCAOB. Accordingly, our financial statements
incorporated by reference in the Prospectus, and in the documents
incorporated by reference in this Prospectus, may not be comparable
to financial statements of United States companies prepared in
accordance with U.S. GAAP.
CURRENCY PRESENTATION AND
EXCHANGE RATE INFORMATION
Unless stated
otherwise or as the context otherwise requires, all references to
dollar amounts in this Prospectus are references to Canadian
dollars. References to "$" or "CDN$" are to Canadian dollars
and references to "U.S. dollars" or "US$" are to United States
dollars.
The following
were the exchange rates, based on the daily rates as published by
the Bank of Canada, for the United States dollar in terms of
Canadian dollars for each of the financial years of the Company
ended December 31, 2021, December 31, 2020 and December 31,
2019:
|
|
Year ended
December 31, 2021 |
|
|
Year ended
December 31, 2020 |
|
|
Year ended
December 31, 2019 |
|
|
|
(in Canadian Dollars) |
|
High |
|
1.2942 |
|
|
1.4496 |
|
|
1.3600 |
|
Low |
|
1.2040 |
|
|
1.2718 |
|
|
1.2988 |
|
Average |
|
1.2535 |
|
|
1.3415 |
|
|
1.3269 |
|
Rate at end of the year |
|
1.2678 |
|
|
1.2732 |
|
|
1.2988 |
|
On
December 13, 2022, the exchange rate for the United States
dollar in terms of Canadian dollars, as quoted by the Bank of
Canada, was U.S.$1.00 = $1.3547.
OUR BUSINESS
This summary
does not contain all the information about Northern Dynasty that
may be important to you. You should read the more detailed
information and financial statements and related notes that are
incorporated by reference into and are considered to be a part of
this Prospectus.
We are a mineral
exploration company incorporated under the BCBCA that is focused on
the exploration and advancement towards feasibility, permitting and
ultimately development of the Pebble Project, a
copper-gold-molybdenum-silver-rhenium mineral project located in
southwest Alaska. The Pebble Project is comprised of mineral
claims that are held by subsidiaries of the Pebble Partnership,
which is a 100% wholly-owned subsidiary of Northern Dynasty. Our
business in Alaska is operated through the Pebble Partnership.
Pebble Mines Corp., a 100% indirectly owned Alaskan subsidiary of
the Company, is the general partner of the Pebble Partnership and
responsible for its day-to-day operations.
The Pebble
Project is located in southwest Alaska, 17 miles (27 kilometers)
from the village of Iliamna, and approximately 200 miles (320
kilometers) southwest of the city of Anchorage.
In this
Prospectus, a reference to the "we", "Company" or "Northern
Dynasty" includes a reference to the Company and its wholly-owned
subsidiaries, including the Pebble Partnership, and other
consolidated interests and entities, unless the context clearly
indicates otherwise. Certain terms used herein are defined in
the text and others are included in the glossary of this
Prospectus.
Development of Our
Business
The Company
acquired a 100% interest in the Pebble Project from an Alaskan
subsidiary of Teck Resources Limited ("Teck") in a series of
transactions from October 2001 through to June 2006. Teck has
retained certain royalties in the Pebble Project, as described in
detail in our 2021 AIF.
The Pebble
Partnership was converted into a limited partnership in July 2007
in connection with a joint venture for the Pebble Project entered
into between the Company and an affiliate of Anglo American plc
("Anglo American"). From July 2007 to December 2013,
approximately US$573 million was provided to the Pebble Partnership
by the affiliate of Anglo American, largely 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 and related
infrastructure, power and transportation systems. The
technical and engineering studies that were completed during the
period prior to December 2013 relating to mine-site and
infrastructure development provide background support for
management's current understanding of the most likely development
scenarios for the Pebble Project. However, the scenarios evaluated
during that period are not considered to be current. Accordingly,
the Company is uncertain whether it can realize significant value
from this prior work. Environmental baseline studies and data, as
well as geological information from exploration, remain important
information available to the Company from this period in continuing
its advancement of the Project. Anglo American withdrew from
the Pebble Partnership effective December 10, 2013.
In February
2014, the EPA announced a pre-emptive regulatory action under
Section 404(c) of the CWA to consider restriction or a prohibition
of mining activities associated with the Pebble Deposit, referred
to as the Original Proposed Determination. From 2014-2017, Northern
Dynasty and the Pebble Partnership focused on a multi-dimensional
strategy, including legal and other initiatives to ward off the
Original Proposed Determination. These efforts were successful,
resulting in the joint settlement agreement announced on May 12,
2017, enabling the Pebble Project to move forward with state and
federal permitting. As part of the joint settlement agreement, the
EPA agreed to initiate a process that led to the withdrawal of the
Original Proposed Determination in July 2019.
The Pebble
Project has been advanced significantly since May 2017 when the
Pebble Partnership secured a legal settlement with the EPA,
enabling Pebble to enter normal course permitting under the
NEPA.
Status of Permitting
Application under CWA 404
On December 22,
2017, the Pebble Partnership filed its wetlands CWA 404 Permit
Application under Section 404 of the CWA with the USACE. The CWA
Permit Application included a project description for the Pebble
Project that was based on a smaller mine concept developed for the
Pebble Project, as discussed further below under "Project
Description". The project description in the CWA Permit
Application envisaged the project developed as an open pit mine and
processing facility with supporting infrastructure. It also
involved a development plan with a significantly smaller
development footprint than previously envisaged, and other
additional environmental safeguards. The filing of the CWA 404
Permit Application triggered the development of an Environmental
Impact Statement ("EIS") pursuant to the National
Environmental Policy Act ("NEPA"). The EIS process under
NEPA required a comprehensive "alternatives assessment" be
undertaken to consider a broad range of development
alternatives.
Significant
milestones in this permitting process are summarized below.
-
In January 2018, the Pebble Partnership received notice from
USACE that the permitting documentation for the CWA 404 Permit
Application was accepted and that an EIS would be required to
comply with its NEPA review of the Pebble Project;
-
On February 5, 2018, USACE announced the appointment of AECOM, a
leading global engineering firm, as third-party contractor for the
USACE EIS process;
-
On March 19, 2018, USACE published guidelines and timelines for
completing CWA permitting, and the associated EIS process;
-
Between April and August 2018, the Pebble Project was advanced
through the scoping phase of the EIS process administered by the
USACE, which included a 90-day public comment period. The
scoping document was released on August 31, 2018;
-
On February 20, 2019, USACE posted the draft EIS on its website,
then initiated a public comment process on the draft EIS, which was
completed on July 2, 2019;
-
In February 2020, a preliminary version of the Final EIS was
distributed for comment and review to cooperating agencies and to
tribes participating in the process;
-
In March 2020, USACE announced it had decided on a Northern
Transportation Route option as the draft Least Environmentally
Damaging Practicable Alternative ("LEDPA") for accessing the
proposed Pebble mine site, subsequent to which the Pebble
Partnership revised its proposed project description to align with
the USACE determination. The Northern Transportation Route
includes adjustments to the port site (location at Diamond Point
with off-shore lightering station) and a road and pipeline route
(located further to the north with no lake crossings or ferry
terminals);
-
In May 2020, the EPA issued a letter confirming the EPA's
decision not to pursue so-called 3(b) elevation under the CWA
404(q) guidelines;
-
In June 2020, the Pebble Partnership submitted its revised June
2020 Revised Permit Application under Section 404 of the CWA, which
included the revised mine plan for the Pebble Project described
below under "Project Description", which corresponds to the
Project Description evaluated under each of the 2021 PEA and the
2022 PEA; and
-
On July 24, 2020, the USACE posted the Final EIS on its website,
which included the Project Description included in the June 2020
Revised Permit Application.
Activities by
Northern Dynasty and the Pebble Partnership in 2018 and 2019 were
focused on providing information to support the scoping phase and
overall development of the EIS, and these activities have continued
during 2020.
The publication
of the Final EIS in July 2020 followed 2½ years of intensive review
by the USACE and eight federal cooperating agencies (including the
US Environmental Protection Agency and US Fish & Wildlife
Service), three state cooperating agencies (including Alaska
Department of Natural Resources and Alaska Department of
Environmental Conservation), the Lake & Peninsula Borough and
federally recognized tribes. At
the time of publication, the Final EIS was viewed by the Company as
positive in that it found impacts to fish and wildlife would not be
expected to affect harvest levels, there would be no measurable
change to the commercial fishing industry including prices and
there would be a number of positive socioeconomic impacts on local
communities.
The CWA 404
Permit Application submitted in December 2017, initiated the
permitting process which involved the Pebble Partnership being
actively engaged with the USACE on the evaluation of the Pebble
Project. There were numerous meetings between representatives
of the USACE and the Pebble Partnership regarding, among other
things, compensatory mitigation for the Pebble Project. The
Pebble Partnership submitted several draft compensatory mitigation
plans to the USACE, each refined to address comments from the USACE
and that the Pebble Partnership believed were consistent with
mitigation proposed and approved for other major development
projects in Alaska. In late June 2020, USACE verbally
identified the "significant degradation" of certain aquatic
resources, with the requirement of new compensatory
mitigation. The Pebble Partnership understood from these
discussions that the new compensatory mitigation plan for the
Pebble Project would include in-kind, in-watershed mitigation and
continued its work to meet these new USACE requirements.
The USACE
formally advised the Pebble Partnership by letter dated August 20,
2020, that it had made preliminary factual determinations under
Section 404(b)(1) of the CWA that the Pebble Project as proposed
would result in significant degradation to aquatic resources.
In connection with this preliminary finding of significant
degradation, the USACE formally informed the Pebble Partnership
that in-kind compensatory mitigation within the Koktuli River
watershed would be required to compensate for all direct and
indirect impacts caused by discharges into aquatic resources at the
mine site. The USACE requested the submission of a new
compensatory mitigation plan to address this finding within 90 days
of its letter.
Based on these requirements, the Pebble
Partnership developed a new CMP to align with the requirements
outlined by the USACE as conveyed to the Pebble Partnership.
This plan envisioned creation of an 112,445-acre Koktuli
Conservation Area on land belonging to the State of Alaska in the
Koktuli River watershed downstream of the Project. During the
period in which this CMP was developed, the Pebble Partnership
continued to confer with the USACE regarding its proposed approach
to mitigation. An initial draft of the CMP was submitted to
the USACE for an interim review by the USACE in September
2020. The Pebble Partnership then revised the CMP based on
the input from the USACE. The objective of the preservation
of the Koktuli Conservation Area was to allow the long-term
protection of a large and contiguous ecosystem that contains
aquatic and upland habitats. If adopted, the Koktuli
Conservation Area would preserve 31,026 acres of aquatic resources
within the Koktuli River watershed. The protected resources
were designed to address the physical, chemical, and biological
functions highlighted by the EPA and the U.S. Fish & Wildlife
Service. Preservation of the Koktuli Conservation Area was
proposed with the objective of minimizing the threat to, and
preventing the decline of, aquatic resources in the Koktuli River
watershed from potential future actions, and sustaining the fish
and wildlife species that depend on these aquatic resources, while
protecting the subsistence lifestyle of the residents of Bristol
Bay and commercial and recreational sport fisheries. The
revised plan was submitted to the USACE on November 4,
2020.
On November 25,
2020, the USACE issued the Record of Decision. The Record of Decision rejected the compensatory
mitigation plan as "non-compliant" and determined the Pebble Project would
cause "significant
degradation" and was
contrary to the public interest. Based on this
finding, the USACE rejected the CWA 404 Permit
Application.
The Pebble
Partnership submitted the Request for Appeal of the Record of
Decision to the USACE Pacific Ocean Division on January 19,
2021. The Request for Appeal reflects the Pebble
Partnership's position that the USACE's Record of Decision and
permitting decision are contrary to law, unprecedented in Alaska,
and fundamentally unsupported by the administrative record,
including the Pebble Project EIS. The specific reasons for
appeal asserted by the Pebble Partnership in the Request for Appeal
include (i) the finding of "significant degradation" by the USACE
is contrary to law and unsupported by the record, (ii) the USACE's
rejection of the Pebble Partnership's compensatory mitigation plan
is contrary to USACE regulations and guidance, including the
failure to provide the Pebble Partnership with an opportunity to
correct the alleged deficiencies, and (iii) the determination by
the USACE that the Pebble Project is not in the public interest is
contrary to law and unsupported by the public record.
On January 22,
2021, the State of Alaska, acting in its role as owner of the
Pebble lands and subsurface mineral estate, announced that it had
also filed a request for appeal. That appeal was rejected on
the basis that the State did not have standing to pursue an
administrative appeal with the USACE.
In a letter
dated February 24, 2021, the USACE confirmed the Pebble
Partnership's Request for Appeal is "complete and meets the
criteria for appeal." The USACE completed the administrative
record for the appeal and provided a copy to the Pebble Partnership
in June 2021, following which the Pebble Partnership and its legal
counsel reviewed the voluminous record for completeness and
relevance to the USACE's permitting decision, and its sufficiency
to support a fair, transparent and efficient review. In
August 2021, the USACE also informed the Pebble Partnership that a
new RO had been appointed to lead the Pebble Project appeal.
The appeal will be reviewed by the USACE based on the
administrative record and any clarifying information provided, and
the Pebble Partnership will be provided with a written decision on
the merits of the appeal at the conclusion of the process.
The appeal is governed by the policies and procedures of the USACE
administrative appeal regulations. While federal regulations
suggest the appeal should conclude within 90 days, and in no case
should extend beyond one year, the USACE has indicated the
complexity of issues and volume of materials associated with
Pebble's case means the review will take additional time. An
appeal conference was held in July 2022. The timing for the
final decision remains uncertain. There is no assurance that
the Company's appeal of the Record of Decision will be successful
or that the required permits for the Pebble Project will ultimately
be issued. The permits are required in order that the Pebble
Project can be developed as proposed by the Company. If the
Pebble Partnership's administrative appeal of the Record of
Decision is successful, then we anticipate that the permitting
decision would be remanded back to the USACE's Alaska District in
order that the permitting process would then continue based on the
administrative record and the findings and determinations made by
the USACE Pacific Division in its appeal decision. There is
no assurance that a successful appeal will ultimately result in the
issuance of a positive Record of Decision by the USACE Alaska
District. If the Pebble Partnership's administrative appeal
is not successful, the Company may seek judicial review of the
Record of Decision in the appropriate US District Court.
There is no assurance that any judicial review would be successful
in overturning an unsuccessful appellate decision.
Revised EPA Proposed
Determination and Recommended Determination
On September 9,
2021, the EPA announced it planned to re-initiate its Revised
Proposed Determination process of making a CWA Section 404(c)
determination for the waters of Bristol Bay, which would set aside
the 2019 withdrawal of the Original Proposed Determination that was
based on a 2017 settlement agreement between the EPA and Pebble
Partnership. The Company believes the results of the EIS
support the 2019 withdrawal of the Original Proposed
Determination. The 2019 withdrawal of the Original Proposed
Determination was contested by Project opponents. In that
litigation, the EPA requested the court vacate the withdrawal
decision and remand the case to the EPA, which would result in the
reinstatement of the Original Proposed Determination. The
Pebble Partnership filed a response to this request in October,
asking the Court to impose a schedule ensuring that the EPA is not
able to regulate by inaction. On October 29, 2021, the Court
granted the EPA's motion for remand and vacated the EPA's
withdrawal decision, thus reinstating the Original Proposed
Determination. The Court declined to impose a schedule on the
EPA's proceedings on remand. The EPA subsequently extended
the deadline to either withdraw the Original Proposed Determination
or to prepare a recommended determination regarding the Pebble
Project until May 31, 2022. The EPA announced that this
extended timeline would allow the EPA to consider available
information, including the substantial volume of new information
that has become available since the EPA issued the Original
Proposed Determination, to determine its next steps in the Section
404(c) process.
As part of its
review process, the EPA issued a letter dated January 27, 2022, to
the Pebble Partnership advising as to the EPA's belief that the
discharge of dredged or fill associated with mining of the Pebble
Project could result in unacceptable adverse effects on important
fishery areas and of its intent to issue a revised Proposed
Determination. The EPA's letter was also addressed to the
USACE and the State of Alaska Department of Natural
Resources. The EPA invited the Pebble Partnership, the USACE,
the State of Alaska Department of Natural Resources to submit
information "to demonstrate that no unacceptable adverse effects
to aquatic resources" would result from the Pebble
Project. The Pebble Partnership responded to the EPA on March
28, 2022 contesting both the factual claim by the EPA as to the
impact on aquatic resources and the legal basis on which the EPA
has proposed to act. Specifically, the Pebble Partnership
asserted that:
-
the EPA has failed to appropriately consider the revised smaller
footprint mine plan for the Pebble Project reflected in the Pebble
EIS, versus the original mine plan that was the subject of the
Original Proposed Determination. In addition, the EPA failed
to fully consider the mitigation measures proposed and summarized
in the Pebble EIS;
-
the EPA's authority to undertake a proposed determination under
Section 404(c) is narrowly prescribed by the CWA statute and
regulations and is only to be used as a last resort. As the
EPA still has a full opportunity to participate in the EIS and CWA
permit review processes for the Pebble Project, the EPA's use of
the veto at this stage is unwarranted and unjustified.
Rather, the EPA should only act under Section 404(c) if the USACE
proposes to issue a permit to which the EPA objects;
-
the EPA's assertion of impacts to fishery areas is not supported
and is contradictory to the conclusion in the Pebble EIS that the
Pebble Project would have no measurable impact on returning
salmon;
-
a Section 404(c) veto would violate the rights of the State of
Alaska established under the Alaska Statehood Act and would
undermine the State's legally protected interests in the
development of lands it intentionally acquired and designed for
mineral development; and
-
there is a critical need for the minerals that would be produced
by the Pebble Project which are essential to the transition to
renewable energy sources to reduce climate impacts from fossil
fuels and, accordingly, the EPA must consider the need for the
Pebble Project in light of this demand, and the environmental and
social costs that would result from a determination not to proceed
with the development of a U.S. based source of the minerals needed
to support the clean energy transition.
The State of
Alaska also responded to the EPA's letter by letter dated March 28,
2022. The State of Alaska advised the EPA of its position
that the issuance of a Section 404(c) veto would contravene the
Alaska Statehood Act, the Cook Inlet Land Exchange Act and
potentially the "takings clause" of the United States
Constitution. The State of Alaska also stated its view that
the issuance of a Section 404(c) proposed determination would
conflict with both federal and state laws and short-circuit the
longstanding, science-based and thorough processes for
environmental review and regulatory compliance under the existing
federal and state permitting processes. The State noted that
it has a comprehensive, robust and rigorous set of environmental
laws that serve to avoid and minimize impacts to lands, waters,
habitats, and resident species, and that these laws would be
bypassed were the EPA to proceed unilaterally. The State also
expressed its view that bypassing the federal and state permitting
process would deprive the EPA of the ability to fully evaluate the
protections that would be imposed on the Pebble Project and
accurately gauge the impacts of the project.
On May 25, 2022,
the EPA announced that it intended to advance its pre-emptive veto
of the Pebble Project and published the Revised Proposed
Determination. The Revised Proposed Determination proposed a
"defined area for prohibition" coextensive with the current mine
plan footprint in which the EPA would prohibit the disposal of
dredged or fill material for the Pebble Project. The Revised
Proposed Determination also proposed a 309-square-mile "defined
area for restriction." Public comments on the Revised
Proposed Determination were due on September 6, 2022. The
Company believes that there are numerous legal and factual flaws in
the Revised Proposed Determination and submitted comprehensive
comments outlining its objections in response.
On September 6,
2022, the EPA announced it was extending the time period for a
decision on the Revised Proposed Determination until December 2,
2022. In September 2022, the Pebble Partnership submitted extensive
comments on the Revised Proposed Determination, objecting to the
EPA's pre-emptive veto of the Pebble Project. The Pebble
Partnership called upon the EPA to withdraw its action and refrain
from further action against the project. A compelling letter and
comments by the State of Alaska and a second letter signed by a
total of 14 states were also submitted to the EPA, protesting
against the EPA's overreach with the Revised Proposed
Determination.
On December 1,
2022, the EPA announced that the Regional Administrator of the
EPA's Region 10 had transmitted to the Assistant Administrator of
the EPA's Office of Water a Recommended Determination under Section
404(c) to prohibit and restrict the use of certain waters in the
Bristol Bay watershed as disposal sites for certain discharges of
dredged or fill material associated with developing the Pebble
Deposit. The Recommended Determination proposes a "defined area for
prohibition" and "defined area of restriction" similar to those
proposed in the Revised Proposed Determination. The Recommended
Determination states that EPA Region 10 determined that the
discharge of dredged or fill material associated with mining at the
Pebble Deposit would be likely to result in unacceptable adverse
effects on salmon fishery areas in the South Fork Koktuli River,
North Fork Koktuli River and Upper Talarik Creek watersheds. The
Assistant Administrator for the EPA's Office of Water will review
the Recommended Determination, the administrative record and
information provided by the USACE, the owners of record and the
Pebble Partnership, as applicant, before issuing a final
determination affirming, modifying or rescinding the Recommended
Determination. The Company continues to believe that the
Revised Proposed Determination and the Recommended Determination
are based on indefensible legal and non-scientific assumptions, as
detailed in the Pebble Partnership's September 2022 comments on the
Revised Proposed Determination submitted to the EPA objecting to
the proposed pre-emptive veto of the Pebble Project. If the
EPA issues a final determination affirming the Recommended
Determination, the Company may seek judicial review of the final
determination in the appropriate US District Court. There is
no assurance that any judicial review would be successful in
overturning a final determination,
Future action by
the EPA could negatively affect the ability of the Pebble
Partnership to obtain required permitting and develop the Project,
even if the appeal of the 2020 Record of Decision is
successful. The Company will continue to monitor these
developments closely to determine the possible impacts to the
project and permitting process, as it remains the Company's
position that the withdrawal of the preemptive veto by the EPA was
sound and appropriate.
Project
Description
The Pebble
Partnership submitted its CWA 404 Permit Application in December
2017. Over the course of the subsequent 30 months, additional
engineering work completed to support the environmental assessment
process, as well as recommendations from USACE in the Final EIS,
resulted in some modifications to the plan and the Project
Description was updated accordingly.
In response to
this process, the Pebble Partnership submitted the June 2020
Revised Permit Application to the USACE which includes the revised
mine plan for the Pebble Project. The revised mine plan is
attached to the Final EIS and corresponds to the Project
Description evaluated in each of the 2021 PEA and the 2022
PEA. Details on the Project Description and associated mine
plan are included in the 2021 AIF under the heading "Item 5 -
Description of Business - B. Technical Summary".
The proposed
Pebble Project in the Project Description seeks to develop a
portion of the currently estimated Pebble mineral resources.
This does not preclude development of additional resources in other
phases of the project in the future, although any subsequent phases
of development would require extensive regulatory and permitting
review by federal, state and local regulatory agencies, including a
further comprehensive EIS review process under NEPA. During
the NEPA process, the Pebble Partnership received a Request for
Information ("RFI") from USACE for a description of a
concept for an expanded Project. The Pebble Partnership
prepared the description in response to the RFI and this response
is included in the EIS Administrative Record.
Royalty Agreement
The Pebble
Partnership, together with certain other wholly-owned subsidiaries
of the Pebble Partnership, entered into the Royalty Agreement with
the Royalty Holder on July 26, 2022 under which the Pebble
Partnership (i) received US$12 million in return for the grant to
the Royalty Holder of the right to receive a portion of the future
gold and silver production from the Pebble Project for the life of
the mine, and (ii) granted the option to the Royalty Holder to
increase its interest in the future gold and silver production from
the Pebble Project for additional purchase price increments of
US$12 million, to a maximum total investment of US$60 million.
The Royalty
Holder made an initial payment of US$12 million in exchange for the
right to receive 2% of the payable gold production and 6% of the
payable silver production from the Pebble Project, in each case
after accounting for the notional payment by the Royalty Holder of
US$1,500 per ounce of gold and US$10 per ounce of silver,
respectively, for the life of the mine. If, in the future, spot
prices exceed US$4,000 per ounce of gold or US$50 per ounce of
silver, the Company will then share in 20% of the excess price of
either metal. Additionally, the Company will retain a portion of
the metal produced for recovery rates in excess of 60% for gold and
65% for silver.
Within two years
of the date of the Royalty Agreement, the Royalty Holder has the
right to invest additional funds, in US$12 million increments for
the right to receive additional increments of 2% of gold production
and 6% silver production, to an aggregate of US$60 million for the
right to receive 10% of the payable gold and 30% of the payable
silver (in each case, in the aggregate) on the same terms as the
first tranche of the investment. The Royalty Holder is under
no obligation to invest any additional amounts to increase its
interest in the gold and silver production in the Pebble
Project.
The Pebble
Partnership has also granted to the Royalty Holder a right of first
refusal in respect of any future sale of any gold or silver
production from the Pebble Project pursuant to a streaming, royalty
or other similar transaction in exchange for an upfront
payment. The Pebble Partnership has retained a right of first
refusal should the Royalty Holder propose to sell any of its rights
under the Royalty Agreement.
2022 PEA
We completed the
2021 PEA in October 2021. The purpose of the 2021 PEA was to
present the projected economics of the production plan and a
corresponding project configuration for the Pebble Project which
aligns with the Project Description in the June 2020 Revised Permit
Application. The 2021 PEA also evaluated potential expansion
scenarios for the Pebble Project.
We completed the
preparation of the 2022 PEA in September 2022 for the purpose of
providing an update to the 2021 PEA based on events since that
report was issued. The 2022 PEA reflects the Royalty Agreement
entered into in July 2022 and provides an update on the status of
permitting of the Pebble Project and discloses a change in the
claim holdings for the Pebble Project.
Information
regarding the Pebble Project derived from the 2022 PEA is included
below under the heading "Pebble Project - Technical
Summary". The 2022 PEA supersedes the 2021 PEA and is our
current technical report under NI 43-101 for the Pebble
Project.
Business Objectives and
Milestones
Our business
objectives for 2023 are to:
-
continue with the appeal of the Record of Decision by the
USACE;
-
challenge any final determination issued pursuant to the EPA's
Recommended Determination;
-
continue with engineering, environmental, permitting and
evaluation work on the Pebble Project as required;
-
maintain an active corporate presence in Alaska to advance
relationships with political and regulatory offices of government
(both in Alaska and Washington, D.C.), Alaska Native partners and
broader stakeholder relationships;
-
contingent on a successful appeal of the Record of Decision,
initiate Alaska state permitting activities;
-
maintain the Pebble Project and Pebble claims in good
standing;
-
continue to seek potential partner(s) with greater financial
resources to further advance the Pebble Project; and
-
continue general and administrative activities in connection
with the advancement of the Pebble Project.
The key
milestone in the development of the Company's business is presently
the successful completion of an appeal of the Record of
Decision.
The USACE's
Record of Decision has had a material impact on the Company's
previously disclosed plan of operations. Accordingly, the
Company has altered its intended business activities and milestones
to be completed over the next 12 months to focus on the appeal of
the Record of Decision. In addition, the Company will
evaluate available options to challenge any final determination
issued pursuant to the EPA's Recommended Determination. The
Company's present business objectives and milestones are
anticipated to generally include the following activities over the
next 12 months:
Milestone/Business
Objective
|
Business Activity within Next 12 Months
|
Timeframe for
Completion 1
|
Anticipated
Budget during
Next 12 Months
|
Continue with engineering, environmental, permitting and
evaluation work on the Pebble Project as required
|
Work includes ongoing site maintenance to remain in compliance
with permitting and demobilization of field equipment as required,
additional engineering and evaluation of the Pebble Project
|
Ongoing through next twelve months
|
US$3,042,000
|
Maintain an active corporate presence in Alaska
|
Continue to build relationships with:
- both
federal and Alaska state governments and agencies;
- Native
Corporations and communities, an example being the establishment of
the Pebble Performance Dividend, which is intended to provide a
direct benefit to the people of Bristol Bay;
-
Right-of-Way Payments to various Native Corporations
|
Ongoing through next twelve months
|
US$3,717,000
|
Pebble claims maintenance
|
Continue to maintain the Pebble claims in good standing.
|
Ongoing through next twelve months
|
US$935,000
|
Pebble partnering process 1
|
Ongoing discussions and possible negotiations to secure a
project partner(s) with the financial resources to advance
development of the Pebble project. Management will continue
to seek suitable partner(s) with the objective to maximize
shareholder value through 2023.2
|
Ongoing through next twelve months
|
US$1,000,000
|
General corporate purposes, including appeal of the Record of
Decision by the USACE on Pebble, challenges to any final
determination issued pursuant to the EPA's Recommended
Determination, defence of Class Action Lawsuits, settlement of
historical liabilities, handling of grand jury investigation
|
Pursue appeal of the Record of Decision, challenge of any final
determination issued pursuant to the EPA's Recommended
Determination and defense of legal proceedings
|
Ongoing through next twelve months
|
US$7,815,000
|
Notes
1. Due
to the COVID-19 pandemic, some due diligence activities that a
partner may usually undertake such as site visits have been slower
than anticipated.
2. There
is no assurance that these discussions or possible negotiations
will result in any binding agreement with any partner for the
development of the Pebble Project. See "Risk Factors"
below.
The Company's
actual plan of operations and expenditures for the next twelve
months may vary depending on future developments and at the
discretion of the Company's board of directors and
management.
The Company will
require additional financing beyond its current cash and working
capital in order to carry out these further business
activities. The Company believes that its ability to obtain
additional financing has been and will continue to be negatively
impacted by the Record of Decision and its ability to successfully
appeal the Record of Decision. Other than the ATM Facility
(as described below) and potential advances under the Royalty
Agreement (as described above), the Company does not have any
arrangement in place for any future financing, and there is no
assurance that the Company will be able to achieve the required
additional financing when required. In addition, the Company
cautions that while a successful appeal of the Record of Decision
will reduce one of the significant risk factors faced by the Pebble
Project, significant risk factors will remain for the development
of the Pebble Project, as described below under "Risk
Factors" below.
In the event
that appeal of the Record of Decision is unsuccessful, the Company
will be required to re-assess its options for advancing the
development of the Pebble Project. These options may include
a re-assessment of the scope of the Pebble Project and the
submission of a revised permit application. While the Company
is unable to assess the full impact of any adverse appellate result
of the Record of Decision at this time, the Company anticipates
that such a negative result on appeal of the Record of Decision
will have a negative impact on the Company's ability to achieve
additional financing, and will most likely limit the Company's
financing options to further issuances of the Company's equity
securities.
The Company may
also attempt to reduce the amount of additional financing required
by entering into a potential joint venture or other partnership
arrangement for advancement of the Pebble Project. The
Company is continuing to evaluate the availability of long-term
project financing options among mining companies, private equity
firms and others, utilizing conventional asset level financing,
debt, royalty and alternative financing options. There is no
assurance that Northern Dynasty will be able to partner the Pebble
Project or secure additional financing when required.
To the extent
that Northern Dynasty is unable to raise additional financing, it
will have to curtail its operational activities, which will
ultimately delay advancement of the Pebble Project.
Northern
Dynasty's inability to successfully appeal the Record of Decision
may ultimately mean that it will be unable to proceed with the
development of the Pebble Project as currently envisioned or at
all. Similarly, the inability to successfully challenge any
final determination issued pursuant to the EPA's Recommended
Determination may also ultimately mean that the Company will be
unable to proceed with the development of the Pebble Project as
currently envisioned or at all.
We anticipate
that we will require additional financing in order to carry out the
above business objectives beyond 2023. As at September 30,
2022, the Company had $24.5 million in cash and cash equivalents
and working capital of $21.7 million.
Our objective is
to reduce the amount of additional financing required by entering
into a potential joint venture or other partnership arrangement for
advancement of the Pebble Project. We are continuing to evaluate
the availability of long-term project financing options among
mining companies, private equity firms and others, utilizing
conventional asset level financing, debt, royalty and alternative
financing options. There is no assurance that we will be able to
partner the Pebble Project or secure additional financing when
required. To the extent that we are unable to raise additional
financing, we will have to curtail our operational activities which
will ultimately delay our advancement of the Pebble Project.
At-The-Market-Offering
Agreement
The Company has
an ATM Agreement with H.C. Wainwright & Co. (the
"Agent"), which it entered into in June 2021 and established
the ATM Facility whereby the Company, at its sole discretion and
from time-to-time during the term of the ATM Agreement, can sell
common shares, through the Agent, as sales agent. The amount
available under the ATM Facility is currently US$13.8 million as
the Company sold 1,212,805 common shares at an average share price
of US$0.567 for gross proceeds of approximately US$0.69 million
($0.87 million) in September 2021 (more fully described in the 2021
Annual MD&A), and which to date of this MD&A are the only
sales under the ATM Facility.
Pursuant the ATM
Agreement, sales of the common shares are to be made in "at the
market distributions", as defined in National Instrument 44-102,
directly on the NYSE American stock exchange or on any other
existing trading market in the United States. No offers or
sales of Common Shares will be made under the ATM Facility in
Canada on the Toronto Stock Exchange or other trading markets in
Canada.
Under the ATM
Facility, the Company will determine, at its sole discretion, the
date, price and number of common shares to be sold. The
common shares will be distributed at market prices or prices
related to prevailing market prices from time to time. The
Company is not required to sell any common shares at any time
during the term of the ATM Facility, and there are no fees for
having established the ATM Facility. The ATM Agreement does
not restrict the Company from conducting other financings.
The Company will pay the Agent a placement fee for common shares
sold under the ATM Agreement and will reimburse certain expenses of
the Agent.
The Company
intends to use the net proceeds from the ATM Facility at the
discretion of the Company, for (i) the appeal of the Record of
Decision by the USACE and the challenge of any final determination
issued pursuant to the EPA's Recommended Determination, (ii)
continued engineering, environmental, permitting and evaluation
work on the Pebble Project, (iii) maintenance of Company's
corporate presence in Alaska, (iv) maintenance of the Pebble
Project mineral claims, (v) pursuit of the partnering process for
the Pebble Project, (vi) preparation of engineering reports on the
Pebble Project, and (vii) general corporate purposes.
The Company
plans to file a prospectus supplement to this base shelf prospectus
to be able to continue sales under the ATM Facility. No sales
of common shares may be made under the ATM Facility until this
prospectus supplement is filed.
Legal Matters
Grand Jury
Subpoena
On September 23,
2020, the Company announced that Tom Collier, the former Chief
Executive Officer of the Pebble Partnership, had submitted his
resignation in light of comments made about elected and regulatory
officials in Alaska and the Pebble Project in private conversations
covertly videotaped by an environmental activist group.
Conversations with Mr. Collier, as well as others with Ron
Thiessen, Northern Dynasty's President and Chief Executive Officer,
were secretly videotaped or audiotaped by unknown individuals
posing as representatives of a Hong Kong-based investment firm,
which represented that it was linked to a Chinese State-Owned
Enterprise (SOE). The Company understands that a Washington
DC-based environmental group, the Environmental Investigation
Agency, released portions of the recordings online after obscuring
the voices and identities of the individuals posing as
investors.
Following the
release of the recordings, the USACE issued a statement that,
following a review of the transcripts of the recordings, they had
"identified inaccuracies and falsehoods relating to the permit
process and the relationship between our regulatory leadership and
the applicant's executives". Further, the Pebble
Partnership received a letter from the Committee on Transportation
and Infrastructure of the United States House of Representatives on
November 19, 2020, stating that the comments made by Mr. Collier
and Mr. Thiessen regarding the expansion, capacity, size and
duration of the potential Pebble mine were believed to be
inconsistent with the testimony of Mr. Collier before the Committee
and demanding production of documents apparently related to the
comments. The Company has been producing documents in
response to those requests. The Company also responded to the
Committee by letter denying and refuting that there was any
inconsistency as raised in the Committee's November 19, 2020
correspondence. On October 28, 2022, the Committee Chair
released a Staff Report alleging false testimony to the Committee
and indicating a referral has been made to the U.S Attorney
General's office. The Committee released the Staff Report without
providing the Company any opportunity to respond to the allegations
contained in the Staff Report prior to its release. Nor did the
Committee publicly request or conduct any interviews of Northern
Dynasty or Pebble employees after its November 19, 2020
correspondence. The Pebble Partnership, in a press release,
responded "[w]e want to be absolutely clear, however, that to the
extent the report contains any suggestion that we tried to mislead
regulators in any way, it is categorically wrong and misinformed of
the realities of the Pebble permitting process." The Company also
stated "[w]e look forward to laying out the essential context
missing from the report."
On February 5,
2021, the Company announced that the Pebble Partnership and Tom
Collier, the former Chief Executive Officer of the Pebble
Partnership, had each been served with a subpoena issued by the
United States Attorney's Office for the District of Alaska to
produce documents in connection with a grand jury
investigation. The Company is not aware of any criminal
charges having been filed against any entity or individual in this
matter. The Company also self-reported this matter to the
SEC, and there is a related inquiry being conducted by the
enforcement staff of the SEC's San Francisco Regional Office.
The Company and the Pebble Partnership are cooperating with each of
these investigations.
Class Action Litigation
relating to the USACE'S Record of Decision
On December 4
and December 17, 2020, separate putative shareholder class action
lawsuits were filed against the Company and certain of its current
and former officers and directors in the U.S. District Court for
the Eastern District of New York regarding the drop in the price of
the Company's stock following the ROD by the USACE regarding the
Pebble Project. These cases are captioned Darish v.
Northern Dynasty Minerals Ltd. et al., Case No.
1:20-cv-05917-ENV-RLM, and Hymowitz v. Northern Dynasty Minerals
Ltd. et al., Case No. 1:20-cv-06126-PKC-RLM. Each of the
complaints was filed on behalf of a purported class of investors
who purchased shares of the Company's stock from December 21, 2017,
through November 25, 2020, the date the USACE announced its
decision, and seeks damages allegedly caused by violations of the
federal securities laws. On March 17, 2021, the two cases
were consolidated and a lead plaintiff and counsel were
appointed. A consolidated and amended complaint was filed in
June 2021, naming the Company, the Company's CEO and the Pebble
Partnership's former CEO as defendants. The Company intends
to defend itself vigorously and has filed a motion to dismiss the
complaint on behalf of all defendants.
On December 3,
2020, a putative shareholder class action lawsuit was filed against
the Company, certain of its current and former officers and
directors, and one of its underwriters in the Supreme Court of
British Columbia regarding the decrease in the price of the
Company's stock following the USACE's November 25, 2020 decision
regarding the Pebble Project. The case is captioned Haddad
v. Northern Dynasty Minerals Ltd. et al., Case No.
VLC-S-S-2012849. The claim was filed on behalf of a purported
class of investors, wherever they may reside, who acquired common
shares of the Company's stock between December 21, 2017 and
November 25, 2020, and seeks damages for (i) alleged
misrepresentations in the Company's primary market offering
documents and continuous disclosure documents, and (ii) allegedly
oppressive conduct. The Company has been served the claim and
intends to defend itself vigorously. The underwriter has
asserted contractual rights of indemnification against the Company
for any loss that the underwriter may incur in connection with the
lawsuit.
On February 17,
2021, a putative shareholder class action lawsuit was filed against
the Company, certain of its current and former officers and
directors, and certain of its underwriters in the Supreme Court of
British Columbia regarding the decrease in the price of the
Company's stock following (i) the USACE's August 24, 2020
announcement that the Pebble Project could not be permitted as
proposed, and (ii) the USACE's November 25, 2020 decision regarding
the Pebble Project. The case is captioned Woo v. Northern
Dynasty Minerals Ltd. et al., Case No. VLC-S-S-211530.
The claim was filed on behalf of a purported class of investors,
wherever they may reside, who purchased securities of the Company
between June 25, 2020 and November 25, 2020, and seeks damages for
(i) alleged misrepresentations in the Company's primary market
offering documents and continuous disclosure documents, (ii)
allegedly oppressive conduct, (iii) alleged unjust enrichment, and
(iv) negligence. The Company has been served and intends to
defend itself vigorously. The underwriters have asserted
contractual rights of indemnification against the Company for any
loss that they may incur in connection with the lawsuit.
On March 5,
2021, a putative shareholder class action lawsuit was filed against
the Company, certain of its current and former officers and
directors, and certain of its underwriters in the Ontario Superior
Court of Justice regarding the decrease in the price of the
Company's stock following the USACE's November 25, 2020 decision
regarding the Pebble Project. The case is captioned
Pirzada v. Northern Dynasty Minerals Ltd. et al., Case No.
CV-21-00658284-00CP. The claim was filed on behalf of a
purported class of investors, wherever they may reside, who
acquired securities of the Company between June 25, 2020 and
November 25, 2020, and seeks damages for (i) alleged
misrepresentations in the Company's primary market offering
documents and continuous disclosure documents, (ii) allegedly
oppressive conduct, and (iii) alleged negligence. On March
30, 2022, the plaintiff made a motion to discontinue the claim
without costs and the court granted the discontinuance in April
2022.
Indemnification
Obligations
We are subject
to certain indemnification obligations to both present and former
officers and directors, including Mr. Collier, in respect to the
legal proceedings described above. These indemnification
obligations will be subject to limitations prescribed by law and
the articles of the Company, and may also be subject to contractual
limitations.
PEBBLE PROJECT - TECHNICAL
INFORMATION
The following
technical information on the Pebble Project is derived from the
2022 PEA. The currency of the 2022 PEA is United States
dollars (US$).
The disclosure
regarding the Pebble Project that is included in the following
sections of our 2021 AIF is confirmed by the 2022 PEA.
Accordingly, this Prospectus does not include any updates to this
information and readers are referred to our 2021 AIF for our
current disclosure regarding these matters.
Matter
|
Page
of 2021 AIF
|
|
25
|
-
Geological Setting, Mineralization and Deposit Types
|
26
|
|
27
|
-
Drilling, Sampling and Data Verification
|
27
|
-
Metallurgical Testing and Mineral Processing
|
29
|
-
Mineral Resource Estimates
|
31
|
|
32
|
|
34
|
-
Environment and Permitting (as supplemented by the disclosure below
as to permitting)
|
42
|
-
Community Consultation and Stakeholder Relations
|
44
|
The following
technical information derived from the 2022 PEA supersedes the
disclosure in the corresponding section of our 2021 AIF:
Project Description, Location
and Access
The Pebble deposit is located in
southwest Alaska, approximately 200 miles southwest of Anchorage,
17 miles northwest of the village of Iliamna, 100 miles northeast
of Bristol Bay, and approximately 60 miles west of Cook Inlet, as
illustrated in the figure below.

Mineral Tenure
Northern Dynasty holds indirectly
through Pebble East Claims Corporation and Pebble West Claims
Corporation, wholly-owned subsidiaries of the wholly-owned Pebble
Partnership, a 100% interest in a contiguous block of 1,840
administratively active mining claims and leasehold locations
covering approximately 274 mi2 (which includes the
Pebble deposit).
State mineral claims in Alaska are
kept in good standing by performing annual assessment work or in
lieu of assessment work by paying US$100 per year per 40 acre
mineral claim, and by paying annual escalating State rental fees
each year. Assessment work is due annually by noon of September 1.
However, credit for excess assessment work can be banked for a
maximum of four years after work is performed and can be applied as
necessary to continue to hold the claims in good standing. The
Project claims have a variable amount of assessment work credit
available that can be applied in this way. Annual assessment work
obligations for the Project total US$442,900 and are due each year
on September 1. The 2022 annual Affidavit of Labor on the
claims was registered with the Alaska Department of Natural
Resources (ADNR) on August 18, 2022. Annual State rentals for
2022 are approximately US$912,260 and are payable no later than 90
days after the assessment work is due (approximately December
1).
Royalty and Other
Agreements
On July 27, 2022, Northern Dynasty
announced that the Pebble Partnership, together with certain other
wholly-owned subsidiaries of the Pebble Partnership, had entered
into the Royalty Agreement with the Royalty Holder to receive up to
US$60 million over the next two years, in return for the right to
receive a portion of the future gold and silver production from the
proposed Pebble Project for the life of the mine. The Pebble
Partnership received an initial payment of US$12 million from the
Royalty Holder concurrently with execution of the Royalty Agreement
and granted the option to the Royalty Holder to increase its
investment to US$60 million, in aggregate. The Pebble Partnership
retained the right to 100% of the copper production from the Pebble
Project.
Per the terms of the Royalty
Agreement, the Royalty Holder made the initial payment of US$12
million in exchange for the right to receive 2% of the payable gold
production and 6% of the payable silver production from the Pebble
Project, in each case after accounting for a notional payment by
the Royalty Holder of US$1,500 per ounce of gold and US$10 per
ounce of silver, respectively, for the life of the mine. If, in the
future, spot prices exceed US$4,000 per ounce of gold or US$50 per
ounce of silver, then the Pebble Partnership will share in 20% of
the excess price for either metal. Additionally, the Pebble
Partnership will retain a portion of the metal produced for
recovery rates in excess of 60% for gold and 65% for silver, and so
is incentivized to continually improve operations over the life of
the mine. Within two years of the date of the Royalty
Agreement, the Royalty Holder has the right to invest additional
funds, in US$12 million increments for the right to receive
additional increments of 2% of gold production and 6% silver
production, to an aggregate total of US$60 million, in return for
the right to receive 10% of the payable gold and 30% of the payable
silver (in each case, in the aggregate) on the same terms as the
first tranche of the investment. The Royalty Holder is under no
obligation to invest additional amounts to increase its interest in
the gold and silver production in the Pebble Project.
The Pebble Partnership has also
granted to the Royalty Holder a right of first refusal in respect
of the sale of any gold or silver production from the Pebble
Project pursuant to a streaming, royalty or other similar
transaction in exchange for an upfront payment. The Royalty Holder
has granted to the Pebble Partnership a right of first refusal
should it propose to sell any of its rights under the Royalty
Agreement.
Subject to certain conditions, the
Royalty Agreement does not restrict Northern Dynasty's ability to
form partnerships to assist in the development of the Proposed
Project, for example (but not restricted to) other mining companies
or Alaska Native Corporations.
Teck Resources Limited (Teck) holds
a 4% pre-payback net profits interest (after debt service),
followed by a 5% after-payback net profits interest in any mine
production from the Exploration Lands, which are shown in the
figure below:
.
In June 2020, the Pebble
Partnership established the Pebble Performance Dividend LLP to
distribute a 3% net profits royalty interest in the Pebble Project
to adult residents of Bristol Bay villages that have subscribed as
participants. The Pebble Performance Dividend will distribute a
guaranteed minimum annual payment of US$3 million each year the
Pebble mine operates, beginning at the outset of Project
construction.
Surface Rights
Northern Dynasty currently does not
own any surface rights associated with the mineral claims that
comprise the Pebble property. All lands are held by the State of
Alaska, and surface rights may be acquired from the State
government once areas required for mine development have been
determined and permits awarded.
The access corridor is owned by a
number of landowners, including the State of Alaska, Alaska Native
Village Corporations, and private individuals. Pebble
Partnership has completed access agreements with two Native Village
Corporations and a private individual. Negotiations have
advanced with other Native Village Corporations and individuals,
but no agreements are in place. In June 2021, one of the
Native Village Corporations announced they had signed an agreement
whereby a fund has obtained an option to buy portions of their land
to create a conservation easement. The fund must exercise its
option by the end of 2022. If the fund closes this agreement
with the Native Village Corporation, the Pebble Partnership would
be required to identify an alternate route to the proposed marine
terminal on Cook Inlet.
Environmental
Liabilities
The Pebble Partnership currently
maintains 471 monitoring wells that are periodically used to
collect piezometric and water quality data across the project area.
The Pebble Partnership did retain a small year-round field facility
and two satellite facilities at the deposit site to store materials
and equipment used to support maintenance activities.
However, most of these facilities were destroyed in a regional
tundra fire that swept through the deposit area during the summer
of 2022. The Pebble Partnership removed most of the damaged
material from the fire aftermath in September 2022 and will
complete this clean up in 2023. The environmental liabilities
associated with the Pebble Project include completion of the fire
cleanup, removal of any additional remaining temporary structures
and field equipment, closure of monitoring wells, and removal of
piezometers. The State of Alaska holds a US$2 million
reclamation security associated with removal and reclamation of
these liabilities.
Permits
Permits necessary for exploration
drilling and other field programs associated with pre-development
assessment of the Pebble Project are applied for as required each
year. Additional information on permitting is provided below under
"Permitting".
Comments in the 2022 PEA on
the Revised Proposed Determination
The 2022 PEA notes that on
September 9, 2021, the EPA announced it planned to re-initiate the
process of making the Revised Proposed Determination. On May 25,
2022, the EPA published the Revised Proposed Determination that
would, if effective, establish a "defined area for prohibition"
coextensive with the current mine plan footprint in which the EPA
would prohibit the disposal of dredged or fill material for the
Pebble Project. The Revised Proposed Determination would also
establish a 309-square-mile "defined area for restriction"
that encompasses the area of the Pebble Project. If effective, the
Proposed Project could not proceed. The Pebble Partnership
plans to challenge any final determination issued pursuant to the
Revised Proposed Determination and Recommended Determination but
there is no assurance that its challenge will be successful.
The 2022 PEA further noted that, to
the extent known to the authors, there are no other significant
factors and risks that may affect access, title, or the right or
ability to perform work on the Project that have not been discussed
in this Report.
Capital and Operating
Costs
Capital Cost
Estimates
The total initial capital cost for
the design, construction, installation, and commissioning of the
Proposed Project is estimated to be US$6.05 billion, as outlined
below, which includes all direct, indirect, and Owner's costs, as
well as a contingency. Northern Dynasty believes it is most
likely that, if approved, the Proposed Project would be developed
with partners who will provide the primary infrastructure (marine
terminal, access road, natural gas pipeline, mine site power plant)
in return for lease payments or tolls at rates which provide a
return on investment to the providers of the infrastructure.
The capital cost of this infrastructure which may be provided by
third parties is estimated at US$1.68 billion, which reduces the
cash outlay required for construction. In addition, precious
metal streaming is considered a viable project financing
alternative and the 2022 PEA assumes US$1.14 billion would be
available to the Proposed Project in the form of various streaming
agreements. The combination of third-party infrastructure
financing and precious metal streaming would reduce the required
capital investment for the Proposed Project to US$3.44 billion;
this scenario was evaluated in the economic model as the Base
Case. A Full Capital Case, without the benefit of the
precious metal stream financing and third-party infrastructure
participation, was also evaluated.
Sustaining capital investment in
the Proposed Project over the 20-year mine life is limited to TSF
improvements, and replacement of mobile equipment for mining and
road maintenance. These life cycle costs are applied in the
financial model on a year-by-year basis, with a cumulative total of
US$1.52 billion including indirect and Owner's costs as well as
contingency costs.
Initial reclamation trust funding
and letter of credit premiums during construction would total
US$179 million. The remaining mine closure and reclamation
costs are not included in the capital or operating costs but are
factored into the financial model to account for long term closure
and water treatment plant requirements. A reclamation fund of
US$1,396 million would be accumulated over the mine life comprising
US$831 million in contributions and US$565 million in accrued
interest.
Pebble Proposed Project - Initial
Capital
Description
|
Cost (US$M)
|
Mining
|
321
|
Process
|
736
|
Other Infrastructure
|
345
|
Tailings
|
1,278
|
Pipelines
|
189
|
Access Road
|
296
|
Port Infrastructure
|
246
|
Power Generation
|
779
|
Indirect Costs
|
1,182
|
Contingency
|
678
|
Total Capital Cost Estimate
|
6,049
|
Add: Reclamation and other funding during construction
|
211
|
Initial Capital Investment - Full Capital Case
|
6,259
|
Less: Outsourced Infrastructure
|
(1,680)
|
Less: Pre-production proceeds from gold stream partners
|
(1,142)
|
Initial Capital Investment - Base Case
|
3,439
|
Operating Cost
Estimates
The average life of mine operating
costs for the Proposed Project Base Case, based on the 180,000
ton/day plant capacity, and both 2% Gold / 6% Silver Royalty and
10% Gold / 30% Silver Royalty tranches, are as shown in the table
below.
Summary of Annual Average
Operating Cost Estimate
Operating Area
|
2% Gold
/ 6% Silver Royalty
|
10% Gold
/ 30% Silver Royalty
|
Annual
Cost
(US$M)
|
Unit
Cost
(US$/ton milled)
|
Annual
Cost
(US$M)
|
Unit
Cost
(US$/ton milled)
|
General & Administrative
|
56.8
|
0.88
|
56.8
|
0.88
|
Open Pit Mining
|
112.7
|
1.75
|
112.7
|
1.75
|
Mineralized Material Handling & Process Plant
|
269.0
|
4.17
|
269.0
|
4.17
|
Tailings Operation & Maintenance
|
10.0
|
0.16
|
10.0
|
0.16
|
Water Treatment Plant
|
21.5
|
0.33
|
21.5
|
0.33
|
Concentrate Pipeline
|
1.9
|
0.03
|
1.9
|
0.03
|
Marine Terminal
|
15.7
|
0.24
|
15.7
|
0.24
|
External Access Roads
|
27.8
|
0.45
|
26.9
|
0.44
|
Consumables Freight Costs
|
10.2
|
0.16
|
10.2
|
0.16
|
Infrastructure Leases
|
180.8
|
2.80
|
180.8
|
2.80
|
Total
|
706.4
|
10.97
|
705.5
|
10.96
|
Economic Analysis and
Sensitivities
An economic model was developed to
estimate annual pre-tax and post-tax cash flows and sensitivities
of the Proposed Project based on a 7% discount rate. By convention,
a discount rate of 8% is typically applied to copper and other base
metal projects, while 5% is applied to gold and other precious
metal projects. Given the polymetallic nature of the Pebble deposit
and the large contribution of gold to total revenues, a 7% blended
discount rate was selected and is considered appropriate for the
purposes of discounted cash flow analyses. The net present
value (NPV) is calculated by discounting cash flows to start of
construction. The combination of third-party infrastructure
financing and precious metal streaming was evaluated in the
economic model as the Base Case. A Full Capital Case, without
the benefit of the precious metal stream financing and third-party
infrastructure participation, was also evaluated.
Calendar years used in the economic
analysis are provided for conceptual purposes only. Permits still
must be obtained in support of operations and approval to proceed
is still required from Northern Dynasty's Board of Directors.
The Proposed Project and the
potential alternative scenarios in Section 1.20 in the 2022 PEA are
preliminary in nature and include Inferred Mineral Resources that
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as Mineral Reserves. There is no certainty that
the 2022 PEA results will be realized. Mineral Resources that are
not Mineral Reserves do not have demonstrated economic
viability.
The results were estimated with the
forecast long-term prices shown in the table below.
Long-term Metal Price
Forecast
Metal
|
Unit
|
Long-term (US$)
|
Copper
|
lb
|
3.50
|
Gold
|
Oz
|
1,600
|
Molybdenum
|
lb
|
10
|
Silver
|
Oz
|
22
|
Rhenium
|
kg
|
1,500
|
The cost and taxes summary for the
Proposed Project, both Base Case and Full Capital Case, are shown
in the table below.
Proposed Project Cost and Tax
Summary
Description
|
Unit
|
Base
Case
|
Full
Capital
|
2%
Gold/6%
Silver Royalty
|
10%
Gold/30%
Silver Royalty
|
2%
Gold/6%
Silver Royalty
|
10%
Gold/30%
Silver Royalty
|
Costs
|
Total Initial Capital Cost
|
US$B
|
6.05
|
6.05
|
6.05
|
6.05
|
Infrastructure Lease
|
US$B
|
1.68
|
1.68
|
-
|
-
|
Net Initial Capital Cost
|
US$B
|
4.37
|
4.37
|
6.05
|
6.05
|
Sustaining Capital Cost
|
US$B
|
1.52
|
1.52
|
1.54
|
1.54
|
Life of Mine Operating Cost1
|
US$/ton
|
10.98
|
10.96
|
8.31
|
8.29
|
Copper C1 Cost2
|
US$/lb
CuEq
|
1.65
|
1.67
|
1.33
|
1.34
|
AISC (Co-Product Basis)
|
US$/lb
CuEq
|
1.889
|
1.92
|
1.57
|
1.59
|
Gold C1 Cost
|
US$/oz
AuEq
|
755
|
765
|
607
|
615
|
Closure Funding
|
Annual Contribution
|
US$M/yr
|
34
|
34
|
34
|
34
|
Life of Mine Contribution
|
US$B
|
0.83
|
0.83
|
0.83
|
0.83
|
Life of Mine Bond Premium
|
US$B
|
0.16
|
0.16
|
0.16
|
0.16
|
Closure Fund3
|
US$B
|
1.4
|
1.4
|
1.4
|
1.4
|
Life of Mine Taxes4
|
Alaska Mining License
|
US$B
|
0.68
|
0.65
|
0.75
|
0.72
|
Alaska Royalty
|
US$B
|
0.30
|
0.29
|
0.33
|
0.32
|
Alaska Income Tax
|
US$B
|
0.754
|
0.70
|
0.87
|
0.83
|
Borough Severance & Tax
|
US$B
|
0.49
|
0.48
|
0.52
|
0.51
|
Federal Income Tax
|
US$B
|
1.386
|
1.29
|
1.59
|
1.52
|
Annual Taxes5
|
Alaska Mining License
|
US$M
|
34
|
33
|
37
|
36
|
Alaska Royalty
|
US$M
|
15
|
14
|
17
|
16
|
Alaska Income Tax
|
US$M
|
37
|
35
|
43
|
41
|
Borough Severance & Tax
|
US$M
|
24
|
24
|
26
|
26
|
Federal Income Tax
|
US$M
|
68
|
64
|
80
|
76
|
Note:
1. Includes
cost of infrastructure lease - US$2.80/ton milled
2. C1
costs calculated on co product basis
3. Maximum
value of closure fund during life of mine based on 4% compound
interest
4. Estimated
based on current Alaskan statutes
5. Life
of mine taxes ÷ life of mine years
The results of the economic
analysis are shown in the tables below:
Proposed Project Forecast
Financial Results
Description
|
Unit
|
Base
Case
|
Full
Capital
|
2%
Gold/6%
Silver Royalty
|
10%
Gold/30%
Silver Royalty
|
2%
Gold/6%
Silver Royalty
|
10%
Gold/30%
Silver Royalty
|
Revenue1
|
Annual Gross Revenue
|
US$M
|
1,700
|
1,700
|
1,800
|
1,800
|
Life of Mine Gross Revenue
|
US$M
|
35,000
|
34,000
|
37,000
|
36,000
|
Realization Charges
|
Annual Charges
|
US$M
|
150
|
150
|
150
|
150
|
Life of Mine Charges
|
US$M
|
2,900
|
2,900
|
2,900
|
2,900
|
Net
Smelter Return
|
Annual NSR
|
US$M
|
1,600
|
1,600
|
1,700
|
1,700
|
Life of Mine NSR
|
US$M
|
32,000
|
31,000
|
34,000
|
33,000
|
Financial Model Results
|
Post Tax IRR
|
%
|
15.6
|
15.1%
|
11.1
|
10.8
|
Post Tax NPV7
|
US$M
|
2,200
|
2,100
|
2,000
|
1,800
|
Payback
|
Years
|
4.8
|
4.9
|
6.2
|
6.3
|
Note:
1. Revenue
values do not include a gold plant contribution.
Potential Expansion
Scenarios
The Proposed Project evaluated in
the 2022 PEA would extract only a small portion of the total
Mineral Resources estimated at Pebble. To evaluate the possible
extent of opportunities for the Project, seven potential expansion
scenarios were identified for consideration. Six of these potential
expansion scenarios contemplate an expansion of the open pit mine
and increased mill throughput over a significantly longer mine
life. These scenarios were modeled on an expanded scenario
outlined in a response to a Request for Information from USACE
during the EIS process and which is incorporated in the EIS
administrative record. Three of these six scenarios consider
the addition of an onsite gold plant. The seventh potential
expansion scenario contemplates the addition of the onsite gold
plant to the Proposed Project without changes to its throughput or
mine life. Each of the potential expansion scenarios would
require additional permitting and environmental regulatory review,
and there is no certainty that any of the potential expansion
scenarios could be pursued. The potential expansion scenarios
are designated by the year in which the contemplated expanded
process plant would commence operation. They utilize the same
life of mine open pit design, with variations based on the year of
the expansion and the expanded throughput rate. The Year 21
scenario is based on the scenario outlined in the EIS, with the
plant expanded to 250,000 tons per day. The expanded rate in
the other two scenarios is 270,000 tons per day.
The following table provides the
production information from these potential expansion scenarios and
compares them to the Proposed Project.
Summary Potential Expansion Case
Scenario Production Information
Description
|
Unit
|
Proposed Project
|
Potential Expansion Scenarios
|
Year
21
|
Year
10
|
Year
5
|
Mineralized Material
|
B
tons
|
1.3
|
8.6
|
8.6
|
8.6
|
CuEq1
|
%
|
0.57
|
0.72
|
0.72
|
0.72
|
Copper
|
%
|
0.29
|
0.39
|
0.39
|
0.39
|
Gold
|
oz/ton
|
0.009
|
0.01
|
0.01
|
0.01
|
Molybdenum
|
ppm
|
154
|
208
|
208
|
208
|
Silver
|
oz/ton
|
0.042
|
0.047
|
0.046
|
0.046
|
Rhenium
|
ppm
|
0.28
|
0.36
|
0.36
|
0.36
|
Waste
|
B
tons
|
0.2
|
14.4
|
14.4
|
14.4
|
Open
Pit Strip Ratio
|
|
0.12
|
1.67
|
1.67
|
1.67
|
Open
Pit Life
|
Years
|
20
|
78
|
73
|
68
|
Life of
Mine
|
Years
|
20
|
101
|
91
|
90
|
Metal
Production (LOM)
|
|
|
|
|
|
Copper
|
M
lb
|
6,400
|
60,400
|
60,400
|
60,400
|
Gold
(in Cu Concentrate)
|
k
oz
|
7,300
|
50,400
|
50,500
|
50,500
|
Silver
(in Cu Concentrate)
|
k
oz
|
37,000
|
267,000
|
267,000
|
267,000
|
Gold
(in Gravity Concentrate)
|
k
oz
|
110
|
782
|
783
|
782
|
Molybdenum
|
M
lb
|
300
|
2,900
|
2,900
|
2,900
|
Rhenium
|
k
kg
|
200
|
2,000
|
2,000
|
2,000
|
Metal
Production (Annual2)
|
|
|
|
|
|
Copper
|
M
lb
|
320
|
600
|
660
|
670
|
Copper
Concentrate
|
k
tonne
|
559
|
1,000
|
1,200
|
1,200
|
Gold
(in Cu Concentrate)
|
k
oz
|
363
|
500
|
560
|
560
|
Silver
(in Cu Concentrate)
|
k
oz
|
1,800
|
2,600
|
2,900
|
3,000
|
Molybdenum
|
M
lb
|
15
|
29
|
32
|
32
|
Molybdenum Concentrate
|
k
tonnes
|
14
|
26
|
29
|
29
|
Rhenium
|
k
kg
|
12
|
20
|
22
|
22
|
Note:
1. CuEQ
calculations use metal prices: US$1.85/lb for Cu, US$902/oz for Au
and US$12.50/lb for Mo, and recoveries: 85% Cu, 69.6% Au, and 77.8%
Mo (Pebble West zone) and 89.3% Cu, 76.8% Au, 83.7% Mo (Pebble East
zone).
2. Life
of mine volumes ÷ life of mine years.
The estimated costs for the
potential expansion scenarios are shown in the table
below.
Potential Expansion Scenarios
Estimated Costs
Description
|
Unit
|
Potential Expansion Scenarios
|
Year
21
|
Year
10
|
Year
5
|
2%
Gold /
6% Silver
Royalty
|
10%
Gold /
30% Silver
Royalty
|
2%
Gold /
6% Silver
Royalty
|
10%
Gold /
30% Silver
Royalty
|
2%
Gold /
6% Silver
Royalty
|
10%
Gold /
30% Silver
Royalty
|
Costs
|
Total
Initial Capital Cost
|
US$B
|
6.05
|
6.05
|
6.05
|
6.05
|
6.05
|
6.05
|
Infrastructure Lease
|
US$B
|
1.68
|
1.68
|
1.68
|
1.68
|
1.68
|
1.68
|
Net
Initial Capital Cost
|
US$B
|
4.37
|
4.37
|
4.37
|
4.37
|
4.37
|
4.37
|
Sustaining Capital Cost
|
US$B
|
16.9
|
16.9
|
17.0
|
17.0
|
17.2
|
17.2
|
Life of
Mine Operating Cost1
|
US$/ton
|
12.46
|
12.44
|
12.14
|
12.12
|
12.20
|
12.18
|
Copper
C1 Cost2
|
US$/lb
CuEq
|
1.56
|
1.58
|
1.53
|
1.56
|
1.54
|
1.56
|
AISC
(Co-Product Basis)
|
US$/lb
CuEq
|
1.77
|
1.80
|
1.74
|
1.77
|
1.75
|
1.77
|
Gold C1
Cost8
|
US$/oz
AuEq
|
714
|
724
|
702
|
711
|
704
|
714
|
Closure
Funding
|
Annual
Contribution
|
US$M/yr
|
9
|
9
|
10
|
10
|
11
|
11
|
Life of
Mine Contribution
|
US$B
|
1.00
|
1.00
|
0.97
|
0.97
|
1.01
|
1.01
|
Life of
Mine Bond Premium
|
US$B
|
1.14
|
1.14
|
0.78
|
0.78
|
0.85
|
0.85
|
Closure
Fund3
|
US$B
|
3.2
|
3.2
|
3.3
|
3.3
|
3.1
|
3.1
|
Life of
Mine Taxes4
|
Alaska
Mining License
|
US$B
|
8.09
|
7.80
|
8.26
|
7.98
|
8.25
|
7.97
|
Alaska
Royalty
|
US$B
|
3.57
|
3.45
|
3.65
|
3.53
|
3.65
|
3.52
|
Alaska
Income Tax
|
US$B
|
10.11
|
9.73
|
10.37
|
9.99
|
10.31
|
9.94
|
Borough
Severance & Tax
|
US$B
|
4.32
|
4.24
|
4.31
|
4.23
|
4.32
|
4.24
|
Federal
Income Tax
|
US$B
|
18.76
|
18.05
|
19.25
|
18.55
|
19.13
|
18.44
|
Annual
Taxes5
|
Alaska
Mining License
|
US$M
|
80
|
77
|
91
|
88
|
92
|
89
|
Alaska
Royalty
|
US$M
|
35
|
34
|
40
|
39
|
41
|
39
|
Alaska
Income Tax
|
US$M
|
100
|
96
|
114
|
110
|
115
|
110
|
Borough
Severance & Tax
|
US$M
|
43
|
42
|
47
|
47
|
48
|
47
|
Federal
Income Tax
|
US$M
|
186
|
179
|
211
|
204
|
213
|
205
|
Note:
1. Includes
cost of infrastructure lease:
Year
21 Expansion - US$0.54/ton milled
Year
10 Expansion - US$0.53/ton milled
Year
5 Expansion - US$0.53/ton milled
2. C1
costs calculated on co product basis.
3. Maximum
value of closure fund during life of mine based on 4% compound
interest.
4. Estimated
based on current Alaskan statutes.
5. Life
of mine taxes ÷ life of mine years.
The economic analysis for all
potential expansion scenarios included third party infrastructure
and precious metal streaming partners. The results are shown
the tables below for a 5, 10 and 20 year expansion,based on
long-term metal prices.
Potential Expansion Scenarios
Financial Results1 (Year 5
Expansion)
Description
|
Unit
|
Potential Expansion Scenarios
|
Year
5
|
No
Royalty
|
2%
Gold/6% Silver
Royalty
|
10%
Gold/30% Silver
Royalty
|
Revenue2
|
Annual
Gross Revenue
|
US$M
|
3,500
|
3,500
|
3,400
|
Life of
Mine Gross Revenue
|
US$M
|
312,000
|
311,000
|
306,000
|
Realization Charges
|
Annual
Charges
|
US$M
|
310
|
310
|
310
|
Life of
Mine Charges
|
US$M
|
28,000
|
28,000
|
28,000
|
Net
Smelter Return
|
Annual
NSR
|
US$M
|
3,200
|
3,200
|
3,100
|
Life of
Mine NSR
|
US$M
|
285,000
|
284,000
|
278,000
|
Financial Model Results
|
Post
Tax IRR
|
%
|
21.5
|
21.4
|
20.9
|
Post
Tax NPV7
|
US$M
|
8,500
|
8,400
|
8,000
|
Payback
|
Years
|
5.0
|
5.0
|
5.1
|
Note:
1. Includes
infrastructure partners and precious metal streaming.
2. Revenue
values do not include a gold plant contribution.
Potential Expansion Scenarios
Financial Results1 (Year 10
Expansion)
Description
|
Unit
|
Potential Expansion Scenarios
|
Year
10
|
No
Royalty
|
2%
Gold/6% Silver
Royalty
|
10%
Gold/30% Silver
Royalty
|
Revenue2
|
Annual
Gross Revenue
|
US$M
|
3,400
|
3,100
|
3,000
|
Life of
Mine Gross Revenue
|
US$M
|
312,000
|
311,000
|
306,000
|
Realization Charges
|
Annual
Charges
|
US$M
|
300
|
300
|
300
|
Life of
Mine Charges
|
US$M
|
28,000
|
28,000
|
28,000
|
Net
Smelter Return
|
Annual
NSR
|
US$M
|
3,100
|
3,100
|
3,100
|
Life of
Mine NSR
|
US$M
|
285,000
|
283,000
|
278,000
|
Financial Model Results
|
Post
Tax IRR
|
%
|
19.5
|
19.4
|
18.9
|
Post
Tax NPV7
|
US$M
|
7,300
|
7,200
|
6,900
|
Payback
|
Years
|
4.4
|
4.4
|
4.5
|
Note:
1. Includes
infrastructure partners and precious metal streaming.
2. Revenue
values do not include a gold plant contribution.
Potential Expansion Scenarios
Financial Results1 (Year 21
Expansion)
Description
|
Unit
|
Potential Expansion Scenarios
|
Year
21
|
No
Royalty
|
2%
Gold/6% Silver
Royalty
|
10%
Gold/30% Silver
Royalty
|
Revenue2
|
Annual
Gross Revenue
|
US$M
|
3,100
|
3,100
|
3,000
|
Life of
Mine Gross Revenue
|
US$M
|
312,000
|
311,000
|
306,000
|
Realization Charges
|
Annual
Charges
|
US$M
|
270
|
270
|
270
|
Life of
Mine Charges
|
US$M
|
28,000
|
28,000
|
28,000
|
Net
Smelter Return
|
Annual
NSR
|
US$M
|
2,800
|
2,800
|
2,800
|
Life of
Mine NSR
|
US$M
|
285,000
|
283,000
|
278,000
|
Financial Model Results
|
Post
Tax IRR
|
%
|
18.1
|
18.0
|
17.5
|
Post
Tax NPV7
|
US$M
|
5,700
|
5,700
|
5,400
|
Payback
|
Years
|
4.4
|
4.5
|
4.6
|
Note:
1. Includes
infrastructure partners and precious metal streaming.
2. Revenue
values do not include a gold plant contribution.
The gold plant included in the
potential expansion scenarios was based of metallurgical testwork
results for a specific gold recovery technology. However,
other technologies may be applicable for the Pebble deposit.
Further, the addition of a gold plant under any scenario will
require additional testwork and engineering and will require the
receipt of pertinent Federal and State permits prior to
implementation.
The onsite gold plant would process
the pyrite concentrate in conjunction with the gravity concentrate
to produce a precious metal doré. In all but the Year 5
scenario, the gold plant capacity would match the 180,000 tons per
day process plant capacity. In the Year 5 scenario, it would
match the expanded plant capacity while in the Year 10 and Year 21
scenarios, it would be expanded with the process plant.
The following table provides the
total metal production from these scenarios.
Summary Gold Plant Potential
Expansion Scenarios Information
Description
|
Unit
|
Proposed Project
|
Expansion Scenarios
|
Year
21
|
Year
10
|
Year
5
|
Concentrate (LOM)
|
Copper
|
M lb
|
6,500
|
61,200
|
61,200
|
61,200
|
Gold
(in Cu Concentrate)
|
k oz
|
7,300
|
50,400
|
50,500
|
50,500
|
Silver
(in Cu Concentrate)
|
k oz
|
37,000
|
267,000
|
267,000
|
267,000
|
Molybdenum
|
M lb
|
300
|
2,900
|
2,900
|
2,900
|
Rhenium
|
k kg
|
200
|
2,000
|
2,000
|
2,000
|
Gold
Plant (LOM)
|
Gold
(as Doré)
|
k oz
|
1,800
|
14,500
|
14,500
|
14,400
|
Silver
(as Doré)
|
k oz
|
2,600
|
22,600
|
22,600
|
22,500
|
Total
Production (LOM)
|
Gold
|
k oz
|
9,000
|
65,000
|
65,100
|
64,900
|
Silver
|
k oz
|
39,000
|
289,000
|
289,000
|
289,000
|
Potential Gold Plant Scenario
Financial Results1
Description
|
Unit
|
Proposed Project
|
Expansion Scenarios
|
Year
21
|
Year
10
|
Year
5
|
2%
Gold/6%
Silver
Royalty
|
10%
Gold/30%
Silver
Royalty
|
2%
Gold/6%
Silver
Royalty
|
10%
Gold/30%
Silver
Royalty
|
2%
Gold/6%
Silver
Royalty
|
10%
Gold/30%
Silver
Royalty
|
2%
Gold/6%
Silver
Royalty
|
10%
Gold/30%
Silver
Royalty
|
IRR
|
%
|
16.3
|
15.8
|
18.7
|
18.2
|
20.2
|
19.7
|
22.5
|
22.0
|
NPV7
|
US$M
|
2,600
|
2,500
|
6,500
|
6,200
|
8,300
|
7.900
|
9,600
|
9,200
|
Payback
|
Years
|
4.9
|
5.0
|
4.6
|
4.7
|
4.5
|
4.6
|
5.0
|
5.1
|
Note:
1. Proposed
Project and Potential Expansion Scenarios include infrastructure
partners and precious metal streaming.
Permitting
The 2022 PEA further noted
that:
-
On September 9, 2021, the EPA announced they planned to
reinitiate the process of making a CWA Section 404(c) determination
for the waters of Bristol Bay, which would set aside the 2019
withdrawal of that action that was based on a 2017 settlement
agreement between the EPA and Pebble Partnership. On May 25,
2022, the EPA issued its draft Proposed Determination (PD) for
public comment.
-
The Revised Proposed Determination would establish a "defined
area for prohibition" coextensive with the current mine plan
footprint in which the EPA would prohibit the disposal of dredged
or fill material for the Pebble Project and would also establish a
309-square-mile "defined area for restriction". Such EPA activity
could negatively affect the ability of the Pebble Partnership to
obtain required permitting and develop the Project, even if the
appeal of the 2020 ROD is successful. There is no assurance that
any challenge by the Company to the EPA's Revised Proposed
Determination will be successful. The inability to successfully
challenge the EPA's Revised Proposed Determination may ultimately
mean that the Pebble Partnership will be unable to proceed
with the development of the Pebble Project as currently envisioned
or at all.
In addition to the permits issued
by USACE, the Pebble Project must receive an array of additional
Federal permits from the US Coast Guard, the Bureau of Safety and
Environmental Enforcement, as well as authorizations from NOAA
Fisheries, the US Fish and Wildlife Service, and several other
federal agencies.
Numerous environmental permits and
plans will also be required by various State and local agencies.
The State of Alaska utilizes a process for permitting mines through
its large mine permitting team, with involvement from all State
agencies required to issue permits for mine construction and
operation. The Pebble Partnership will work with applicable
permitting agencies and the large mine permitting team to provide
complete permit applications in an orderly manner. The 2022
PEA includes a comprehensive list of the types of permits that are
expected to be required for the Pebble Project. Multiple permits of
certain types may have to be applied for to accommodate the full
scope of facilities.
Risks
A number of risks are identified
throughout the 2022 PEA. The following list highlights
several of these risks but is not an exhaustive list nor a summary
of those contained in the body of the 2022 PEA:
Resource
-
Inferred Mineral Resources. The 2022 PEA includes the use
of Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves.
There is no certainty that the 2022 PEA results will be
realized.
-
The Mineral resources estimates may ultimately be affected by a
broad range of environmental, permitting, legal, title,
socio-economic, marketing and political factors pertaining to the
specific characteristics of the Pebble deposit (including its
scale, location, orientation and polymetallic nature) as well as
its setting (from a natural, social, jurisdictional and political
perspective).
- Factors that may affect the
Mineral Resource estimate include:
-
- changes to the geological,
geotechnical and geometallurgical models as a result of additional
drilling or new studies;
- the discovery of extensions to
known mineralization as a result of additional drilling;
- changes to the Re:Mo correlation
coefficients and resultant regression equation due to additional
drilling;
- changes to commodity prices
resulting in changes to the test for reasonable prospects for
eventual economic extraction; and
- changes to the metallurgical
recoveries resulting in changes to the test for reasonable
prospects for eventual economic extraction.
- Mineral Resources that are not
Mineral Reserves do not have demonstrated economic viability.
- The Mineral Resource estimates
contained have not been adjusted for any risk that the required
environmental permits may not be obtained for the Project.
The uncertainty associated with the ability of the Project to
obtain required environmental permits is a risk to the reasonable
prospects for eventual economic extraction of the mineralisation
and the classification of the estimate as a Mineral Resource.
Mining
- Pit wall slopes: The pit
wall slope assessments were completed to a prefeasibility level of
confidence. Additional field work and analysis are required
to confirm these designs for operations.
Process
- Process recoveries: The
metallurgical testwork completed on the Pebble deposit has been
extensive but additional work is required to complete a feasibility
study and design.
- Deleterious elements: The
metallurgical testwork highlighted the low levels of impurity
elements in the Project feed materials and correspondingly low
deportment to saleable products, and likewise the process plant
design incorporated no special treatment steps to manage impurities
in the feed. There is a risk that pockets of the Pebble deposit
will contain elevated levels of deleterious elements that could
report to the concentrates products at levels which could incur
penalty charges or adversely influence the saleability of the
products. Operational controls could avoid these potential
impacts.
Project Execution
- Weather: Adverse weather
conditions and other factors such as pandemics could impact on the
construction schedule.
- Labour: The construction
schedule and operations performance require deployment of
sufficient numbers of adequately trained and experienced
personnel. Inability to realize this deployment could impact
the construction schedule and operational results.
Tailings and Water Management
- Tailings structures designs:
The tailings and water management pond structures designs have been
completed to a preliminary level. Significant additional
field data and design are required to prepare these structures for
construction.
- Alaska dam permitting: The
tailings and water management structures will be subject to an
extensive design review and permitting process in Alaska. The
process may result in changes to the designs.
- Groundwater: Additional
field work and analysis are required to confirm specific design
criteria for open pit wall and tailings structures.
Social Issues
- Land tenure: While the
Pebble deposit lies within claims on State land, for which there is
an identified path forward to gaining tenure, the transportation
corridor crosses land belonging to Native Village Corporations and
private individuals and agreements have not been reached with
several of these entities. One of the Native Village
Corporations has signed an agreement whereby a fund has obtained an
option to buy portions of their land to create a conservation
easement. The fund must exercise its option by the end of
2022. If the fund closes this agreement with the Native
Village Corporation, the Pebble Partnership would be required to
identify an alternate route to the proposed marine terminal on Cook
Inlet.
- Project opposition: The
Project is the subject of significant public opposition in Alaska
and elsewhere in the United States.
Legal
- Legal actions. Northern
Dynasty is party to several class action legal complaints and
Pebble Partnership is subject to a government investigation
regarding public statements made regarding the project. While
these matters do not directly affect the development of the
Project, they could negatively impact Northern Dynasty's and the
Pebble Partnership's ability to finance the development of the
Project or the ability to obtain required permitting.
- EPA. On May 25, 2022, the EPA has
announced that it intended to advance its pre-emptive veto of the
Pebble Project and proceed with the Revised Proposed Determination.
The Revised Proposed Determination would establish a "defined area for
prohibition" coextensive with the
current mine plan footprint in which the EPA would prohibit the
disposal of dredged or fill material for the Pebble Project. The
Revised Proposed Determination would also establish a
309-square-mile "defined area for restriction" that encompasses the
area of the Pebble Project. The Pebble Partnership believes that
there are numerous legal and factual flaws in the Revised Proposed
Determination and plans to submit comprehensive comments outlining
its objections in response. If finalized, the Revised Proposed
Determination would negatively affect the ability of the Pebble
Partnership to obtain required permitting and develop the Proposed
Project even if the appeal of the 2020 Record of Decision is
successful. There is no assurance that any challenge by the Pebble
Partnership to the EPA's Revised Proposed Determination will be
successful.
Permitting
- USACE Record of Decision. In
November 2020, USACE denied Pebble Partnership's permit
application. That decision is currently under appeal.
The Proposed Project cannot proceed unless and until the ROD is
overturned and all necessary permits, including the CWA 404 Permit,
are obtained. There is no certainty that these permits will
be obtained.
- Bristol Bay Forever. Bristol
Bay Forever was a public initiative approved by Alaskan voters in
November 2014. Based on that initiative, development of the
Proposed Project requires legislative approval upon securing all
other permits and authorizations.
Financial Results
- Cost estimates: The cost
estimates contained in the 2022 PEA are completed to a preliminary
level. Additional analysis and engineering are required to
confirm these results.
- Metal prices and realization
costs: Metal prices and realization costs are subject to
significant fluctuation, particularly over the periods identified
for the Proposed Project and potential expansion scenarios.
These fluctuations could have a significant impact on the financial
results of future studies and the actual results achieved by an
operating mine.
- Taxation: The Proposed
Project is subject to taxation at three government levels (local,
State, and Federal). These tax regimes may change over time,
resulting in different results than those identified in the 2022
PEA.
THE SELLING
SECURITYHOLDERS
Securities may
be sold under this Prospectus by way of secondary offering by or
for the account of certain of our securityholders. The Prospectus
Supplement that we will file in connection with any offering of
Securities by selling securityholders will include the following
information:
• the
names of the selling securityholders;
• the
number or amount of Securities owned, controlled or directed of the
class being distributed by each selling securityholder;
• the
number or amount of Securities of the class being distributed for
the account of each selling securityholder;
• the
number or amount of Securities of any class to be owned, controlled
or directed by the selling securityholders after the distribution
and the percentage that number or amount represents of the total
number of our outstanding Securities;
• whether
the Securities are owned by the selling securityholders both of
record and beneficially, of record only, or beneficially only;
and
• all
other information that is required to be included in the applicable
Prospectus Supplement.
USE OF PROCEEDS
Unless otherwise
specified in a Prospectus Supplement, the net proceeds from the
sale of the Securities will be used to advance the exploration and
pursue the development of the Pebble Project and for general
corporate purposes. Each Prospectus Supplement will contain
specific information concerning the use of proceeds from that sale
of Securities.
The Company will
not receive any proceeds from any sale of any Securities by any
selling securityholders.
All expenses
relating to an offering of Securities and any compensation paid to
underwriters, dealers or agents, as the case may be, will be paid
out of our general funds, unless otherwise stated in the applicable
Prospectus Supplement.
We experienced
negative cash flow from operations for the fiscal year ended
December 31, 2021 and the three and nine months ended September 30,
2022. In addition, we anticipate incurring negative cash flow
from operations for the balance of our 2022 fiscal year, and for
our 2023 fiscal year and beyond, as a result of the fact that we
currently have no revenues. In addition, as a result of our
business plans for the development of the Pebble Project, we expect
cash flow from operations to be negative until revenues from
production at the Pebble Project begin to offset our operating
expenditures. Accordingly, our cash flow from operations will be
negative for the foreseeable future as a result of expenses to be
incurred by us in connection with the Pebble Project. As a
consequence, any net proceeds from any offering of Securities
pursuant to this Prospectus may be used to offset negative
operating cash flow. If we plan to use the proceeds of any offering
of Securities pursuant to this Prospectus to offset negative
operating cash flow, we will include this fact in the Prospectus
Supplement for the offering of Securities together with additional
detail as to the use of proceeds from the offering. See
"Risk Factors".
EARNINGS COVERAGE RATIO
Earnings
coverage ratios will be provided as required in the applicable
Prospectus Supplement(s) with respect to the issuance of Debt
Securities pursuant to this Prospectus.
CONSOLIDATED
CAPITALIZATION
There have been
no material changes in our share and debt capital, on a
consolidated basis, since September 30, 2022, being the date of our
most recently filed unaudited consolidated financial statements
incorporated by reference in this Prospectus.
PLAN OF DISTRIBUTION
We may offer and
sell Securities directly to one or more purchasers, through agents,
or through underwriters or dealers designated by us from time to
time. We may distribute the Securities from time to time in one or
more transactions at fixed prices (which may be changed from time
to time), at market prices prevailing at the times of sale, at
varying prices determined at the time of sale, at prices related to
prevailing market prices or at negotiated prices. The
Securities may be sold in transactions that are deemed to be
"at-the-market distributions" as defined in National Instrument
44-102-Shelf Distributions, including sales made directly on the
TSX, NYSE American or other existing trading markets for the
Securities. A description of such manner of sale and pricing will
be disclosed in the applicable Prospectus Supplement. We may offer
different classes of Securities in the same offering, or we may
offer different classes of Securities in separate offerings.
This Prospectus
may also, from time to time, relate to the offering of our
Securities by certain selling securityholders. The selling
securityholders may sell all or a portion of our Securities
beneficially owned by them and offered thereby from time to time
directly or through one or more underwriters, broker-dealers or
agents. Our Securities may be sold by the selling securityholders
in one or more transactions at fixed prices (which may be changed
from time to time), at market prices prevailing at the time of the
sale, at varying prices determined at the time of sale, at prices
related to prevailing market prices or at negotiated prices.
A Prospectus
Supplement will describe the terms of each specific offering of
Securities, including: (i) the terms of the Securities to which the
Prospectus Supplement relates, including the type of Security being
offered; (ii) the name or names of any agents, underwriters or
dealers involved in such offering of Securities; (iii) the name or
names of any selling securityholders; (iv) the purchase price of
the Securities offered thereby and the proceeds to, and the portion
of expenses borne by, the Company from the sale of such Securities;
(v) any agents' commission, underwriting discounts and other items
constituting compensation payable to agents, underwriters or
dealers; and (vi) any discounts or concessions allowed or
re-allowed or paid to agents, underwriters or dealers.
If underwriters
are used in an offering, the Securities offered thereby will be
acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The obligations of
the underwriters to purchase Securities will be subject to the
conditions precedent agreed upon by the parties and the
underwriters will be obligated to purchase all Securities under
that offering if any are purchased. Any public offering price and
any discounts or concessions allowed or re-allowed or paid to
agents, underwriters or dealers may be changed from time to
time.
Underwriters,
dealers and agents who participate in the distribution of the
Securities may be entitled under agreements to be entered into with
the Company to indemnification by the Company against certain
liabilities, including liabilities under the U.S. Securities Act
and Canadian securities legislation, or to contribution with
respect to payments which such underwriters, dealers or agents may
be required to make in respect thereof. Such underwriters,
dealers and agents may be customers of, engage in transactions
with, or perform services for, the Company in the ordinary course
of business.
In connection
with any offering of Securities, other than an "at-the-market
distribution", the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the
Securities offered at a level above that which might otherwise
prevail in the open market. Such transactions, if commenced,
may be discontinued at any time. No underwriter or dealer involved
in an "at-the-market-distribution" as defined under applicable
Canadian securities legislation, no affiliate of such underwriter
or dealer and no person acting jointly or in concert with such
underwriter or dealer has over-allotted, or will over allot, our
securities in connection with an "at the market distribution" or
effect any other transactions that are intended to stabilize the
market price of our securities.
The Securities
may also be sold: (i) directly by the Company or the selling
securityholders at such prices and upon such terms as agreed to; or
(ii) through agents designated by the Company or the selling
securityholders from time to time. Any agent involved in the
offering and sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable
by the Company and/or selling securityholder to such agent will be
set forth, in the Prospectus Supplement. Unless otherwise indicated
in the Prospectus Supplement, any agent is acting on a "best
efforts" basis for the period of its appointment.
No underwriter
or dealer involved in an ATM Distribution, no affiliate of such
underwriter or dealer and no person acting jointly or in concert
with such underwriter or dealer has over-allotted, or will over
allot, our securities in connection with an ATM Distribution of our
securities or effect any other transactions that are intended to
stabilize the market price of our securities during an ATM
Distribution. In connection with any offering of our securities
other than in an ATM Distribution, the underwriters may over-allot
or effect transactions which stabilize or maintain the market price
of our securities offered at a level above that which might
otherwise prevail in the open market. Such transactions, if
commenced, may be discontinued at any time.
We and/or the
selling securityholders may agree to pay the underwriters a
commission for various services relating to the issue and sale of
any Securities offered under any Prospectus Supplement. Agents,
underwriters or dealers who participate in the distribution of the
Securities may be entitled under agreements to be entered into with
the Company and/or the selling securityholders to indemnification
by the Company and/or the selling securityholders against certain
liabilities, including liabilities under securities legislation, or
to contribution with respect to payments which such underwriters,
dealers or agents may be required to make in respect thereof.
Each class or
series of Warrants, Subscription Receipts, Debt Securities and
Units will be a new issue of Securities with no established trading
market. Unless otherwise specified in the applicable Prospectus
Supplement, Warrants, Subscription Receipts, Debt Securities or
Units will not be listed on any securities or stock exchange.
Unless otherwise specified in the applicable Prospectus Supplement,
there is no market through which the Warrants, Subscription
Receipts, Debt Securities or Units may be sold and purchasers may
not be able to resell Warrants, Subscription Receipts, Debt
Securities or Units purchased under this Prospectus or any
Prospectus Supplement. This may affect the pricing of the Warrants,
Subscription Receipts, Debt Securities or Units in the secondary
market, the transparency and availability of trading prices, the
liquidity of the Securities, and the extent of issuer regulation.
Subject to applicable laws, certain dealers may make a market in
the Warrants, Subscription Receipts, Debt Securities or Units, as
applicable, but will not be obligated to do so and may discontinue
any market making at any time without notice. No assurance can be
given that any dealer will make a market in the Warrants,
Subscription Receipts, Debt Securities or Units or as to the
liquidity of the trading market, if any, for the Warrants,
Subscription Receipts, Debt Securities or Units.
DESCRIPTION OF SECURITIES BEING
DISTRIBUTED
The Securities
may be offered under this Prospectus in amounts and at prices to be
determined based on market conditions at the time of the sale and
such amounts and prices will be set forth in the accompanying
Prospectus Supplement. The Securities may be issued alone or
in combination and for such consideration determined by our board
of directors.
Common Shares
The authorized
share capital of the Company consists of an unlimited number of
Common Shares without par value, of which 529,779,388 shares were
issued and outstanding as at December 13, 2022.
The holders of
Common Shares are entitled to receive notice of any meeting of the
shareholders of the Company and to attend and vote thereat, except
those meetings at which only the holders shares of another class or
of a particular series are entitled to vote. Each Common
Share entitles its holder to one vote. The holders of Common
Shares are entitled to receive on a pro-rata basis such dividends
as the board of directors may declare out of funds legally
available therefor. In the event of the dissolution,
liquidation, winding-up or other distribution of our assets, such
holders are entitled to receive on a pro-rata basis all of assets
of the Company remaining after payment of all of liabilities.
The Common Shares carry no pre-emptive or conversion rights.
Warrants
This section
describes the general terms that will apply to any Warrants for the
purchase of Common Shares that we may offer under this Prospectus
by way of a Prospectus Supplement. To the extent required
under applicable law, we will not offer Warrants for sale unless
the applicable Prospectus Supplement containing the specific terms
of the Warrants to be offered separately is first approved, in
accordance with applicable laws, for filing by the securities
commissions or similar regulatory authorities in each of the
jurisdictions where the Warrants will be offered for.
Subject to the
foregoing, we may issue Warrants independently or together with
other Securities, and Warrants sold with other securities may be
attached to or separate from the other Securities. Warrants
may be issued directly by us to the purchasers thereof or under one
or more warrant indentures or warrant agency agreements to be
entered into by us and one or more banks or trust companies acting
as warrant agent. Warrants, like other Securities that may be sold,
may be listed on a securities exchange subject to exchange listing
requirements and applicable legal requirements.
This summary of
some of the provisions of the Warrants is not complete. Any
statements made in the Prospectus relating to any warrant agreement
or indenture and Warrants to be issued under the Prospectus are
summaries of certain anticipated provisions thereof and do not
purport to be complete and are subject to, and are qualified in
their entirety by reference to, all provisions of the applicable
warrant agreement. Investors should refer to the warrant
indenture or warrant agency agreement relating to the specific
Warrants being offered for the complete terms of the
Warrants. A copy of any warrant indenture or warrant agency
agreement relating to an offering of Warrants will be filed by us
with the applicable securities regulatory authorities in Canada
following its execution.
The particular
terms of each issue of Warrants will be described in the applicable
Prospectus Supplement. This description will include, where
applicable:
• the
designation and aggregate number of Warrants;
• the
price at which the Warrants will be offered;
• the
currency or currencies in which the Warrants will be offered;
• the
date on which the right to exercise the Warrants will commence and
the date on which the right will expire;
• if
applicable, the identity of the Warrant agent;
• whether
the Warrants will be listed on any securities exchange;
• any
minimum or maximum subscription amount;
• the
number of Common Shares that may be purchased upon exercise of each
Warrant and the price at which and currency or currencies in which
the Common Shares may be purchased upon exercise of each
Warrant;
• the
designation and terms of any securities with which the Warrants
will be offered, if any, and the number of the Warrants that will
be offered with each security;
• the
date or dates, if any, on or after which the Warrants and the
related securities will be transferable separately;
• whether
the Warrants will be subject to redemption and, if so, the terms of
such redemption provisions;
• whether
the Warrants are to be issued in registered form, "book-entry only"
form, non-certificated inventory system form, bearer form or in the
form of temporary or permanent global securities and the basis of
exchange, transfer and ownership thereof;
• any
material risk factors relating to such Warrants and the Common
Shares to be issued upon exercise of the Warrants;
• any
other rights, privileges, restrictions and conditions attaching to
the Warrants and the Common Shares to be issued upon exercise of
the Warrants;
• material
Canadian and United States federal income tax consequences of
owning and exercising the Warrants; and
• any
other material terms or conditions of the Warrants and the
Securities to be issued upon exercise of the Warrants.
The terms and
provisions of any Warrants offered under a Prospectus Supplement
may differ from the terms described above, and may not be subject
to or contain any or all of the terms described above.
Prior to the
exercise of any Warrants, holders of Warrants will not have any of
the rights of holders of the Common Shares purchasable upon such
exercise, including the right to receive payments of dividends or
the right to vote such underlying securities.
Subscription Receipts
This section
describes the general terms that will apply to any Subscription
Receipts that may be offered by us pursuant this Prospectus by way
of a Prospectus Supplement. Subscription Receipts may be offered
separately or together with Common Shares or Warrants, as the case
may be. The Subscription Receipts will be issued under a
Subscription Receipt agreement.
The applicable
Prospectus Supplement will include details of the Subscription
Receipt agreement covering the Subscription Receipts being
offered. A copy of the Subscription Receipt agreement
relating to an offering of Subscription Receipts will be filed by
us with the applicable securities regulatory authorities after it
has been entered into by us. The specific terms of the
Subscription Receipts, and the extent to which the general terms
described in this section apply to those Subscription Receipts,
will be set forth in the applicable Prospectus Supplement.
This description will include, where applicable:
• the
number of Subscription Receipts;
• the
price at which the Subscription Receipts will be offered;
• the
currency at which the Subscription Receipts will be offered and
whether the price is payable in installments;
• the
procedures for the exchange of the Subscription Receipts into
Common Shares, Warrants or Units;
• the
number of Common Shares, Warrants or Units that may be issued upon
exercise or deemed conversion of each Subscription Receipt;
• the
designation and terms of any other Securities with which the
Subscription Receipts will be offered, if any, and the number of
Subscription Receipts that will be offered with each Security;
• conditions
to the conversion or exchange of Subscription Receipts into other
Securities and the consequences of such conditions not being
satisfied;
• terms
applicable to the gross or net proceeds from the sale of the
Subscription Receipts plus any interest earned thereon;
• the
dates or periods during which the Subscription Receipts may be
converted or exchanged;
• the
circumstances, if any, which will cause the Subscription Receipts
to be deemed to be automatically converted or exchanged;
• provisions
applicable to any escrow of the gross or net proceeds from the sale
of the Subscription Receipts plus any interest or income earned
thereon, and for the release of such proceeds from such escrow;
• if
applicable, the identity of the Subscription Receipt agent;
• whether
the Subscription Receipts will be listed on any securities
exchange;
• whether
the Subscription Receipts will be issued with any other Securities
and, if so, the amount and terms of these Securities;
• any
minimum or maximum subscription amount;
• whether
the Subscription Receipts are to be issued in registered form,
"book-entry only" form, non-certificated inventory system form,
bearer form or in the form of temporary or permanent global
securities and the basis of exchange, transfer and ownership
thereof;
• any
material risk factors relating to such Subscription Receipts and
the Securities to be issued upon conversion or exchange of the
Subscription Receipts;
• any
other rights, privileges, restrictions and conditions attaching to
the Subscription Receipts and the Securities to be issued upon
exchange of the Subscription Receipts;
• material
Canadian and United States income tax consequences of owning or
converting or exchanging the Subscription Receipts; and
• any
other material terms and conditions of the Subscription Receipts
and the Securities to be issued upon the exchange of the
Subscription Receipts.
The terms and
provisions of any Subscription Receipts offered under a Prospectus
Supplement may differ from the terms described above, and may not
be subject to or contain any or all of the terms described
above.
Prior to the
exchange of any Subscription Receipts, holders of such Subscription
Receipts will not have any of the rights of holders of the
Securities for which the Subscription Receipts may be exchanged,
including the right to receive payments of dividends or the right
to vote such underlying securities.
Description of Debt
Securities
We may issue
Debt Securities in one or more series under an indenture (the
"Indenture"), to be entered into among the Company and a
trustee. To the extent applicable, the Indenture will be subject to
and governed by the United States Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). A copy of the form of
the Indenture will be filed with the SEC as an exhibit to the
Registration Statement of which this Prospectus forms a part. The
following description sets forth certain general material terms and
provisions of the Debt Securities. If Debt Securities are issued,
we will describe in the applicable Prospectus Supplement the
particular material terms and provisions of any series of the Debt
Securities and a description of how the general material terms and
provisions described below may apply to that series of the Debt
Securities. Prospective investors should read both the Prospectus
and the Prospectus Supplement for a complete summary of all
material terms relating to a particular series of Debt Securities.
Prospective investors should be aware that information in the
applicable Prospectus Supplement may update and supersede the
following information regarding the general material terms and
provisions of the Debt Securities. Prospective investors also
should refer to the Indenture, as it may be supplemented by any
supplemental indenture, for a complete description of all terms
relating to the Debt Securities. We will file as an exhibit
to the Registration Statement, of which this Prospectus is a part,
or will incorporate by reference from a report on Form 6-K that the
Company furnishes to the SEC, any supplemental indenture describing
the terms and conditions of Debt Securities that we are offering
before the issuance of such Debt Securities. We will also
file the final Indenture, including any supplemental indenture, for
any offering of Debt Securities on SEDAR.
We may issue
Debt Securities and incur additional indebtedness other than
through the offering of Debt Securities pursuant to this
Prospectus.
General
The Indenture
will not limit the aggregate principal amount of Debt Securities
that we may issue under the Indenture and will not limit the amount
of other indebtedness that we may incur. The Indenture will provide
that we may issue Debt Securities from time to time in one or more
series and may be denominated and payable in U.S. dollars, Canadian
dollars or any foreign currency. Unless otherwise indicated in the
applicable Prospectus Supplement, the Debt Securities will be
unsecured obligations of the Company. The Indenture will also
permit us to increase the principal amount of any series of the
Debt Securities previously issued and to issue that increased
principal amount.
The applicable
Prospectus Supplement for any series of Debt Securities that we
offer will describe the specific terms of the Debt Securities and
may include, but is not limited to, any of the following:
• the
title of the Debt Securities;
• any
limit on the aggregate principal amount of the Debt Securities and,
if no limit is specified, the Company will have the right to
re-open such series for the issuance of additional Debt Securities
from time to time;
• the
extent and manner, if any, to which payment on or in respect of the
Debt Securities of the series will be senior or will be
subordinated to the prior payment of other liabilities and
obligations;
• whether
or not the Debt Securities will be secured or unsecured, and the
terms of any secured debt including a general description of the
collateral and the material terms of any related security, pledge
or other agreement;
• whether
payment of the Debt Securities will be guaranteed by any other
person;
• the
date or dates, or the method by which such date or dates will be
determined or extended, on which the principal (and premium, if
any) of the Debt Securities of the series is payable;
• the
rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall
be determined, whether such interest shall be payable in cash or
additional Securities of the same series or shall accrue and
increase the aggregate principal amount outstanding of such series,
the date or dates from which such interest shall accrue, or the
method by which such date or dates shall be determined;
• the
place or places we will pay principal, premium and interest, if
any, and the place or places where Debt Securities can be presented
for registration of transfer, exchange or conversion;
• whether
and under what circumstances we will be required to pay any
additional amounts for withholding or deduction for Canadian taxes
with respect to the Debt Securities, and whether and on what terms
we will have the option to redeem the Debt Securities rather than
pay the additional amounts;
• whether
we will be obligated to redeem, repay or repurchase the Debt
Securities pursuant to any sinking or other provision, or at the
option of a holder and the terms and conditions of such redemption,
repayment or repurchase;
• whether
we may redeem the Debt Securities, in whole or in part, prior to
maturity and the terms and conditions of any such redemption;
• the
denominations in which we will issue any registered Debt
Securities, if other than denominations of $2,000 and any multiple
of $1,000 and, if other than denominations of $5,000, the
denominations in which any unregistered Debt Security shall be
issuable;
• whether
we will make payments on the Debt Securities in a currency other
than U.S. dollars;
• whether
payments on the Debt Securities will be payable with reference to
any index, formula or other method;
• whether
we will issue the Debt Securities as global securities and, if so,
the identity of the depositary for the global securities;
• whether
we will issue the Debt Securities as unregistered securities,
registered securities or both;
• any
changes or additions to, or deletions of, events of default or
covenants whether or not such events of default or covenants are
consistent with the events of default or covenants in the
Indenture;
• the
applicability of, and any changes or additions to, the provisions
for defeasance described under "Defeasance" below;
• whether
the holders of any series of Debt Securities have special rights if
specified events occur;
• the
terms, if any, for any conversion or exchange of the Debt
Securities for any other securities of the Company;
• provisions
as to modification, amendment or variation of any rights or terms
attaching to the Debt Securities; and
• any
other terms, conditions, rights and preferences (or limitations on
such rights and preferences).
Unless stated
otherwise in the applicable Prospectus Supplement, no holder of
Debt Securities will have the right to require us to repurchase the
Debt Securities and there will be no increase in the interest rate
if we become involved in a highly leveraged transaction or if we
have a change of control.
We may issue
Debt Securities bearing no interest or interest at a rate below the
prevailing market rate at the time of issuance, and may offer and
sell the Debt Securities at a discount below their stated principal
amount. We may also sell any of the Debt Securities for a foreign
currency or currency unit, and payments on the Debt Securities may
be payable in a foreign currency or currency unit. In any of these
cases, we will describe certain Canadian federal and U.S. federal
income tax consequences and other special considerations in the
applicable Prospectus Supplement.
We may issue
Debt Securities with terms different from those of Debt Securities
previously issued and, without the consent of the holders thereof,
we may reopen a previous issue of a series of Debt Securities and
issue additional Debt Securities of such series (unless the
reopening was restricted when such series was created).
Guarantees
Our payment
obligations under any series of Debt Securities may be guaranteed
by certain of our direct or indirect subsidiaries. In order to
comply with certain registration statement form requirements under
U.S. law, these guarantees may in turn be guaranteed by the
Company. The terms of such guarantees will be set forth in the
applicable Prospectus Supplement.
Ranking and Other
Indebtedness
Unless otherwise
indicated in an applicable Prospectus Supplement, and except to the
extent prescribed by law, each series of Debt Securities shall be
senior, unsubordinated and unsecured obligations of the Company and
shall rank pari passu and ratably without preference among
themselves and pari passu with all other senior, unsubordinated and
unsecured obligations of the Company.
Our Board of
Directors may establish the extent and manner, if any, to which
payment on or in respect of a series of Debt Securities will be
senior, senior subordinated or will be subordinated to the prior
payment of the Company's other liabilities and obligations, and
whether the payment of principal, premium, if any, and interest, if
any, will be guaranteed by any other person and the nature and
priority of any security.
Debt Securities in Global
Form
The Depositary and
Book-Entry
Unless otherwise
specified in the applicable Prospectus Supplement, a series of the
Debt Securities may be issued in whole or in part in global form as
a "global security" and will be registered in the name of or issued
in bearer form and be deposited with a depositary, or its nominee,
each of which will be identified in the applicable Prospectus
Supplement relating to that series. Unless and until exchanged, in
whole or in part, for the Debt Securities in definitive registered
form, a global security may not be transferred except as a whole by
the depositary for such global security to a nominee of the
depositary, by a nominee of the depositary to the depositary or
another nominee of the depositary or by the depositary or any such
nominee to a successor of the depositary or a nominee of the
successor.
The specific
terms of the depositary arrangement with respect to any portion of
a particular series of the Debt Securities to be represented by a
global security will be described in the applicable Prospectus
Supplement relating to such series. The Company anticipates that
the provisions described in this section will apply to all
depositary arrangements.
Upon the
issuance of a global security, the depositary therefor or its
nominee will credit, on its book entry and registration system, the
respective principal amounts of the Debt Securities represented by
the global security to the accounts of such persons, designated as
"participants", having accounts with such depositary or its
nominee. Such accounts shall be designated by the underwriters,
dealers or agents participating in the distribution of the Debt
Securities or by the Company if such Debt Securities are offered
and sold directly by the Company. Ownership of beneficial interests
in a global security will be limited to participants or persons
that may hold beneficial interests through participants. Ownership
of beneficial interests in a global security will be shown on, and
the transfer of that ownership will be effected only through,
records maintained by the depositary therefor or its nominee (with
respect to interests of participants) or by participants or persons
that hold through participants (with respect to interests of
persons other than participants). The laws of some states in the
United States may require that certain purchasers of securities
take physical delivery of such securities in definitive form.
So long as the
depositary for a global security or its nominee is the registered
owner of the global security or holder of a global security in
bearer form, such depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities
represented by the global security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests
in a global security will not be entitled to have a series of the
Debt Securities represented by the global security registered in
their names, will not receive or be entitled to receive physical
delivery of such series of the Debt Securities in definitive form
and will not be considered the owners or holders thereof under the
Indenture.
Any payments of
principal, premium, if any, and interest, if any, on global
securities registered in the name of a depositary or securities
registrar will be made to the depositary or its nominee, as the
case may be, as the registered owner of the global security
representing such Debt Securities. None of the Company, any trustee
or any paying agent for the Debt Securities represented by the
global securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of
beneficial ownership interests of the global security or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company
expects that the depositary for a global security or its nominee,
upon receipt of any payment of principal, premium, if any, or
interest, if any, will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests
in the principal amount of the global security as shown on the
records of such depositary or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in
a global security held through such participants will be governed
by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered
in "street name", and will be the responsibility of such
participants.
Discontinuance of Depositary's
Services
If a depositary
for a global security representing a particular series of the Debt
Securities is at any time unwilling or unable to continue as
depositary or, if at any time the depositary for such series shall
no longer be registered or in good standing under the Exchange Act,
and a successor depositary is not appointed by us within 90 days,
the Company will issue such series of the Debt Securities in
definitive form in exchange for a global security representing such
series of the Debt Securities. If an event of default under the
Indenture has occurred and is continuing, Debt Securities in
definitive form will be printed and delivered upon written request
by the holder to the appropriate trustee. In addition, the Company
may at any time and in the Company's sole discretion determine not
to have a series of the Debt Securities represented by a global
security and, in such event, will issue a series of the Debt
Securities in definitive form in exchange for all of the global
securities representing that series of Debt Securities.
Debt Securities in Definitive
Form
A series of the
Debt Securities may be issued in definitive form, solely as
registered securities, solely as unregistered securities or as both
registered securities and unregistered securities. Registered
securities will be issuable in denominations of $2,000 and integral
multiples of $1,000 and unregistered securities will be issuable in
denominations of $5,000 and integral multiples of $5,000 or, in
each case, in such other denominations as may be set out in the
terms of the Debt Securities of any particular series. Unless
otherwise indicated in the applicable Prospectus Supplement,
unregistered securities will have interest coupons attached.
Unless otherwise
indicated in the applicable Prospectus Supplement, payment of
principal, premium, if any, and interest, if any, on the Debt
Securities in definitive form will be made at the office or agency
designated by the Company, or at the Company's option the Company
can pay principal, interest, if any, and premium, if any, by check
mailed to the address of the person entitled at the address
appearing in the security register of the trustee or electronic
funds wire transfer to an account of persons who meet certain
thresholds set out in the Indenture who are entitled to receive
payments by wire transfer. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of interest, if any, will
be made to the persons in whose name the Debt Securities are
registered at the close of business on the day or days specified by
the Company.
At the option of
the holder of Debt Securities, registered securities of any series
will be exchangeable for other registered securities of the same
series, of any authorized denomination and of a like aggregate
principal amount. If, but only if, provided in an applicable
Prospectus Supplement, unregistered securities (with all unmatured
coupons, except as provided below, and all matured coupons in
default) of any series may be exchanged for registered securities
of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor. In such event, unregistered
securities surrendered in a permitted exchange for registered
securities between a regular record date or a special record date
and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable on such date for payment of
interest in respect of the registered security issued in exchange
for such unregistered security, but will be payable only to the
holder of such coupon when due in accordance with the terms of the
Indenture. Unless otherwise specified in an applicable Prospectus
Supplement, unregistered securities will not be issued in exchange
for registered securities.
The applicable
Prospectus Supplement may indicate the places to register a
transfer of the Debt Securities in definitive form. Service charges
may be payable by the holder for any registration of transfer or
exchange of the Debt Securities in definitive form, and the Company
may, in certain instances, require a sum sufficient to cover any
tax or other governmental charges payable in connection with these
transactions.
We shall not be
required to:
-
issue, register the transfer of or exchange any series of the
Debt Securities in definitive form during a period beginning at the
opening of 15 days before any selection of securities of that
series of the Debt Securities to be redeemed and ending on the
relevant date of notice of such redemption, as provided in the
Indenture;
-
register the transfer of or exchange any registered security in
definitive form, or portion thereof, called for redemption, except
the unredeemed portion of any registered security being redeemed in
part;
-
exchange any unregistered security called for redemption except
to the extent that such unregistered security may be exchanged for
a registered security of that series and like tenor; provided that
such registered security will be simultaneously surrendered for
redemption; or
-
issue, register the transfer of or exchange any of the Debt
Securities in definitive form which have been surrendered for
repayment at the option of the holder, except the portion, if any,
of such Debt Securities not to be so repaid.
Provision of Financial
Information
To the extent
the Indenture is governed by the Trust Indenture Act, the Company
will file with the trustee within 15 days after the Company files
the same with the SEC, (i) copies of the annual reports containing
audited financial statements and copies of quarterly reports
containing unaudited financial statements and (ii) copies of the
information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be
required to file with or furnish to the SEC pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934.
In the event
that the Company is not required to remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, or
otherwise report on an annual and quarterly basis on forms provided
for such annual and quarterly reporting pursuant to rules and
regulations promulgated by the SEC, continue to file with the SEC
and provide the trustee:
-
within 140 days after the end of each fiscal year, annual
reports on Form 20-F, 40-F or Form 10-K, as applicable (or any
successor form), containing audited financial statements and the
other financial information required to be contained therein (or
required in such successor form); and
-
within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, reports on Form 6-K or Form 10-Q (or
any successor form), containing unaudited financial statements and
the other financial information which, regardless of applicable
requirements shall, at a minimum, contain such information required
to be provided in quarterly reports under the laws of Canada or any
province thereof to security holders of a corporation with
securities listed on the Toronto Stock Exchange, whether or not the
Company has any of its securities so listed.
Events of Default
Unless otherwise
specified in the applicable Prospectus Supplement relating to a
particular series of Debt Securities, the following is a summary of
events which will, with respect to any series of the Debt
Securities, constitute an event of default under the Indenture with
respect to the Debt Securities of that series:
-
the Company fails to pay principal of, or any premium on any
Debt Security of that series when it is due and payable;
-
the Company fails to pay interest payable on any Debt Security
of that series when it becomes due and payable, and such default
continues for 30 days;
-
the Company fails to make any required sinking fund or analogous
payment when due for that series of Debt Securities;
-
the Company fails to observe or perform any of its covenants or
agreements in the Indenture that affect or are applicable to the
Debt Securities of that series for 90 days after written notice to
the Company by the trustees or to the Company and the trustees by
holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series;
-
certain events involving the Company's bankruptcy, insolvency or
reorganization; and
-
any other event of default provided for in that series of Debt
Securities.
A default under
one series of Debt Securities will not necessarily be a default
under another series. A trustee may withhold notice to the holders
of the Debt Securities of any default, except in the payment of
principal or premium, if any, or interest, if any, if in good faith
it considers it in the interests of the holders to do so and so
advises the Company in writing.
If an event of
default for any series of Debt Securities occurs and continues, a
trustee or the holders of at least 25% in aggregate principal
amount of the Debt Securities of that series may require the
Company to repay immediately:
-
the entire principal and interest of the Debt Securities of the
series; or
- if
the Debt Securities are discounted securities, that portion of the
principal as described in the applicable Prospectus
Supplement.
If an event of
default relates to events involving the Company's bankruptcy,
insolvency or reorganization, the principal of all Debt Securities
will become immediately due and payable without any action by the
trustee or any holder.
Subject to
certain conditions, the holders of a majority of the aggregate
principal amount of the Debt Securities of the affected series can
rescind and annul an accelerated payment requirement. If Debt
Securities are discounted securities, the applicable Prospectus
Supplement will contain provisions relating to the acceleration of
maturity of a portion of the principal amount of the discounted
securities upon the occurrence or continuance of an event of
default.
Other than its
duties in case of a default, a trustee is not obligated to exercise
any of the rights or powers that it will have under the Indenture
at the request or direction of any holders, unless the holders
offer the trustee reasonable security or indemnity. If they provide
this reasonable security or indemnity, the holders of a majority in
aggregate principal amount of any series of Debt Securities may,
subject to certain limitations, direct the time, method and place
of conducting any proceeding for any remedy available to a trustee,
or exercising any trust or power conferred upon a trustee, for any
series of Debt Securities.
The Company will
be required to furnish to the trustees a statement annually as to
its compliance with all conditions and covenants under the
Indenture and, if the Company is not in compliance, the Company
must specify any defaults. The Company will also be required to
notify the trustees as soon as practicable upon becoming aware of
any event of default.
No holder of a
Debt Security of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of
a receiver or a trustee, or for any other remedy, unless:
-
the holder has previously given to the trustees written notice
of a continuing event of default with respect to the Debt
Securities of the affected series;
-
the holders of at least 25% in principal amount of the
outstanding Debt Securities of the series affected by an event of
default have made a written request, and the holders have offered
reasonable indemnity, to the trustees to institute a proceeding as
trustees; and
-
the trustees have failed to institute a proceeding, and have not
received from the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of the series affected
(or in the case of bankruptcy, insolvency or reorganization, all
series outstanding) by an event of default a direction inconsistent
with the request, within 60 days after receipt of the holders'
notice, request and offer of indemnity.
However, such
above-mentioned limitations do not apply to a suit instituted by
the holder of a Debt Security for the enforcement of payment of the
principal of or any premium, if any, or interest on such Debt
Security on or after the applicable due date specified in such Debt
Security.
Defeasance
When the Company
uses the term "defeasance", it means discharge from its obligations
with respect to any Debt Securities of or within a series under the
Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, if the Company deposits with a trustee cash, government
securities or a combination thereof sufficient to pay the
principal, interest, if any, premium, if any, and any other sums
due to the stated maturity date or a redemption date of the Debt
Securities of a series, then at the Company's option:
-
the Company will be discharged from the obligations with respect to
the Debt Securities of that series; or
-
the Company will no longer be under any obligation to comply with
certain restrictive covenants under the Indenture and certain
events of default will no longer apply to the Company.
If this happens,
the holders of the Debt Securities of the affected series will not
be entitled to the benefits of the Indenture except for
registration of transfer and exchange of Debt Securities and the
replacement of lost, stolen, destroyed or mutilated Debt
Securities. These holders may look only to the deposited fund for
payment on their Debt Securities.
To exercise the
defeasance option, the Company must deliver to the trustees:
-
an opinion of counsel in the United States to the effect that
the holders of the outstanding Debt Securities of the affected
series will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of a defeasance and will be subject
to U.S. federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if the defeasance
had not occurred;
-
an opinion of counsel in Canada or a ruling from the Canada
Revenue Agency to the effect that the holders of the outstanding
Debt Securities of the affected series will not recognize income,
gain or loss for Canadian federal, provincial or territorial income
or other tax purposes as a result of a defeasance and will be
subject to Canadian federal, provincial or territorial income tax
and other tax on the same amounts, in the same manner and at the
same times as would have been the case had the defeasance not
occurred; and
-
a certificate of one of the Company's officers and an opinion of
counsel, each stating that all conditions precedent provided for
relating to defeasance have been complied with.
If the Company
is to be discharged from its obligations with respect to the Debt
Securities and not just from the Company's covenants, the U.S.
opinion must be based upon a ruling from or published by the United
States Internal Revenue Service or a change in law to that
effect.
In addition to
the delivery of the opinions described above, the following
conditions must be met before the Company may exercise its
defeasance option:
-
no event of default or event that, with the passing of time or
the giving of notice, or both, shall constitute an event of default
shall have occurred and be continuing for the Debt Securities of
the affected series;
-
the Company is not an "insolvent person" within the meaning of
applicable bankruptcy and insolvency legislation; and
-
other customary conditions precedent are satisfied.
Modification and
Waiver
Modifications
and amendments of the Indenture may be made by the Company and the
trustees pursuant to one or more Supplemental Indentures (a
"Supplemental Indenture") with the consent of the holders of
at least a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by the
modification. However, without the consent of each holder affected,
no such modification may:
-
change the stated maturity of the principal of, premium, if any,
or any instalment of interest, if any, on any Debt Security;
-
reduce the principal, premium, if any, or rate of interest, if
any, or change any obligation of the Company to pay any additional
amounts;
-
reduce the amount of principal of a debt security payable upon
acceleration of its maturity or the amount provable in
bankruptcy;
-
change the place or currency of any payment;
-
affect the holder's right to require the Company to repurchase
the Debt Securities at the holder's option;
-
impair the right of the holders to institute a suit to enforce
their rights to payment;
-
adversely affect any conversion or exchange right related to a
series of Debt Securities;
-
reduce the percentage of Debt Securities required to modify the
Indenture or to waive compliance with certain provisions of the
Indenture; or
-
reduce the percentage in principal amount of outstanding Debt
Securities necessary to take certain actions.
The holders of
at least a majority in principal amount of outstanding Debt
Securities of any series may on behalf of the holders of all Debt
Securities of that series waive, insofar as only that series is
concerned, past defaults under the Indenture and compliance by the
Company with certain restrictive provisions of the Indenture.
However, these holders may not waive a default in any payment of
principal, premium, if any, or interest on any Debt Security or
compliance with a provision that cannot be modified without the
consent of each holder affected.
The Company may
modify the Indenture pursuant to a Supplemental Indenture without
the consent of any holders to:
-
evidence its successor under the Indenture;
-
add covenants of the Company or surrender any right or power of
the Company for the benefit of holders;
-
add events of default;
-
provide for unregistered securities to become registered
securities under the Indenture and make other such changes to
unregistered securities that in each case do not materially and
adversely affect the interests of holders of outstanding Debt
Securities;
-
establish the forms of the Debt Securities;
-
appoint a successor trustee under the Indenture;
-
add provisions to permit or facilitate the defeasance and
discharge of the Debt Securities as long as there is no material
adverse effect on the holders;
-
cure any ambiguity, correct or supplement any defective or
inconsistent provision or make any other provisions in each case
that would not materially and adversely affect the interests of
holders of outstanding Debt Securities, if any; or
-
change or eliminate any provisions of the Indenture where such
change takes effect when there are no Debt Securities outstanding
which are entitled to the benefit of those provisions under the
Indenture.
Governing Law
To the extent
the Indenture is governed by the Trust Indenture Act, the Indenture
and the Debt Securities will be governed and construed in
accordance with the laws of the State of New York.
The Trustee
The Trustee
under the Indenture or its affiliates may provide banking and other
services to the Company in the ordinary course of their
business.
The Indenture
will contain certain limitations on the rights of the Trustee, as
long as it or any of its affiliates remains the Company's creditor,
to obtain payment of claims in certain cases or to realize on
certain property received on any claim as security or otherwise.
The Trustee and its affiliates will be permitted to engage in other
transactions with the Company. If the Trustee or any affiliate
acquires any conflicting interest and a default occurs with respect
to the Debt Securities, the Trustee must eliminate the conflict or
resign.
Resignation and Removal of
Trustee
A trustee may
resign or be removed with respect to one or more series of the Debt
Securities and a successor trustee may be appointed to act with
respect to such series.
Consent to Jurisdiction and
Service
Under the
Indenture and to the extent the Indenture is governed by the Trust
Indenture Act, the Company will irrevocably appoint an authorized
agent upon which process may be served in any suit, action or
proceeding arising out of or relating to the Debt Securities or the
Indenture that may be instituted in any United States federal or
New York state court located in The City of New York, and will
submit to such non-exclusive jurisdiction.
Units
We may issue
Units comprised of one or more of the other Securities described in
the Prospectus in any combination, as described in the applicable
Prospectus Supplement. Each Unit will be issued so that the
holder of the Unit is also the holder of each of the Securities
included in the Unit. Thus, the holder of a Unit will have
the rights and obligations of a holder of each included
Security. The unit agreement, if any, under which a Unit is
issued may provide that the Securities included in the Unit may not
be held or transferred separately, at any time or at any time
before a specified date.
The particular
terms and provisions of Units offered by any Prospectus Supplement,
and the extent to which the general terms and provisions described
below may apply thereto, will be described in the Prospectus
Supplement filed in respect of such Units. This description will
include, where applicable:
• the
number of Units offered;
• the
price or prices, if any, at which the Units will be issued;
• the
currency at which the Units will be offered;
• the
Securities comprising the Units;
• whether
the Units will be issued with any other Securities and, if so, the
amount and terms of these Securities;
• any
minimum or maximum subscription amount;
• whether
the Units and the Securities comprising the Units are to be issued
in registered form, "book-entry only" form, non-certificated
inventory system form, bearer form or in the form of temporary or
permanent global securities and the basis of exchange, transfer and
ownership thereof;
• any
material risk factors relating to such Units or the Securities
comprising the Units;
• any
other rights, privileges, restrictions and conditions attaching to
the Units or the Securities comprising the Units; and
• any
other material terms or conditions of the Units or the Securities
comprising the Units, including whether and under what
circumstances the Securities comprising the Units may be held or
transferred separately.
The terms and
provisions of any Units offered under a Prospectus Supplement may
differ from the terms described above, and may not be subject to or
contain any or all of the terms described above.
PRIOR SALES
During the
12-month period before the date of this Prospectus, we have issued
Common Shares and securities convertible into Common Shares as
follows:
Common Shares
Date
of Issuance
|
|
Aggregate Number and Type of
Securities Issued
|
|
Price
per Security
|
December 10, 2021
|
|
37,600 Common Shares
|
|
$0.37
per share
|
Notes:
(1) Common
Shares issued on payout of vested restricted share units.
(2) Common
Shares issued pursuant to the May 2020 Public Offering and the May
2020 Private Placement.
Stock Options
Date
of Issuance
|
|
Aggregate Number and Type of
Securities Issued
|
|
Exercise Price per Security
|
August
18, 2022
|
|
11,254,000
|
|
$0.41
|
Note:
(1) Options
have a five year term, with 50% of the options granted vested on
the date of grant, with balance to vest 12 months from the date of
grant.
TRADING PRICE AND VOLUME
Our Common
Shares are listed on the TSX under the trading symbol "NDM" and on
the NYSE American under the trading symbol "NAK".
The following
table sets forth the reported high and low sale prices in Canadian
dollars for the Common Shares on the TSX for the monthly periods
indicated.
Month
|
|
TSX
Price Range ($)
|
|
Total
Volume
|
High
|
|
Low
|
|
November 2021
|
|
0.5400
|
|
0.4800
|
|
3,337,232
|
December 2021
|
|
0.5000
|
|
0.4100
|
|
4,363,551
|
January
2022
|
|
0.4500
|
|
0.3700
|
|
3,293,058
|
February 2021
|
|
0.4500
|
|
0.3750
|
|
2,242,367
|
March
2022
|
|
0.6500
|
|
0.4300
|
|
8,478,513
|
April
2022
|
|
0.5700
|
|
0.4330
|
|
3,797,525
|
May
2022
|
|
0.4600
|
|
0.3700
|
|
3,254,654
|
June
2022
|
|
0.4000
|
|
0.3200
|
|
2,052,604
|
July
2022
|
|
0.4600
|
|
0.3200
|
|
1,699,714
|
August
2022
|
|
0.4300
|
|
0.3700
|
|
1,373,868
|
September 2022
|
|
0.3900
|
|
0.3100
|
|
2,050,207
|
October
2022
|
|
0.3400
|
|
0.3150
|
|
768,413
|
November 2022
|
|
0.3750
|
|
0.3200
|
|
1,414,579
|
December 1 to 13, 2022
|
|
0.3500
|
|
0.3150
|
|
562,338
|
The following
table sets forth the reported high and low sale prices in United
States dollars for the Common Shares on the NYSE American for the
monthly periods indicated.
Month
|
|
NYSE
American Price Range (US$)
|
|
Total
Volume
|
High
(US$)
|
|
Low
(US$)
|
|
November 2021
|
|
0.4371
|
|
0.3800
|
|
91,892,983
|
December 2021
|
|
0.4200
|
|
0.3240
|
|
80,568,003
|
January
2022
|
|
0.3560
|
|
0.2927
|
|
52,837,291
|
February 2021
|
|
0.3598
|
|
0.2900
|
|
48,230,328
|
March
2022
|
|
0.5100
|
|
0.3351
|
|
232,089,081
|
April
2022
|
|
0.4591
|
|
0.3304
|
|
59,128,264
|
May
2022
|
|
0.3623
|
|
0.2819
|
|
45,160,969
|
June
2022
|
|
0.3179
|
|
0.2533
|
|
36,216,481
|
July
2022
|
|
0.3619
|
|
0.2500
|
|
42,301,330
|
August
2022
|
|
0.3400
|
|
0.2830
|
|
27,162,054
|
September 2022
|
|
0.2975
|
|
0.2260
|
|
30,262,625
|
October
2022
|
|
0.2530
|
|
0.2281
|
|
26,404,536
|
November 2022
|
|
0.2845
|
|
0.2326
|
|
24,103,127
|
December 1 to 13, 2022
|
|
0.2600
|
|
0.2310
|
|
8,167,223
|
On
December 13, 2022, the closing price of our Common Shares as
reported on the TSX was $0.32 per share and the closing price of
our Common Shares as reported on the NYSE American was US$0.234 per
share.
RISK FACTORS
Investing in
securities of the Company involves a significant degree of risk and
must be considered speculative due to the high-risk nature of our
business. Investors should carefully consider the information
included or incorporated herein by reference in this Prospectus
(including subsequently filed documents incorporated by reference)
and the Company's historical consolidated financial statements and
related notes thereto before making an investment decision
concerning the Securities. There are various risks that could
have a material adverse effect on, among other things, the
operating results, earnings, properties, business and condition
(financial or otherwise) of the Company. These risk factors,
together with all of the other information included, or
incorporated by reference in this Prospectus, including information
contained in the section entitled "Forward-Looking Statements"
should be carefully reviewed and considered before a decision to
invest in the Securities is made. Additional risks and
uncertainties not currently known to the Company, or that the
Company currently deems immaterial, may also materially and
adversely affect its business. In addition, risks relating to a
particular offering of Securities will be set out in a Prospectus
Supplement relating to such offering.
Risks Relating to the Business
of the Company
We May be Unsuccessful in
Appealing the Record of Decision and Challenging Any Final
Determination Issued Pursuant to the EPA's Recommended
Determination and may ultimately not be able to Obtain the Required
Environmental Permits for the Pebble Project.
The USACE's
Record of Decision issued on November 25, 2020, has denied Northern
Dynasty's environmental permit for development of the Pebble
Project under the CWA. This environmental permit is required
for Northern Dynasty to proceed with the development of the Pebble
Project. While the Pebble Partnership is appealing the Record
of Decision, there is no assurance that the appeal of the Record of
Decision will be successful. Even if the appeal is
successful, there is no assurance that a positive Record of
Decision will ultimately be obtained by the Pebble Partnership or
that the required environmental permit will be obtained. An
inability to successfully appeal the Record of Decision will mean
that Northern Dynasty cannot proceed with the development of the
Pebble Project as presently envisioned. There is no assurance
that Northern Dynasty will be able to redesign the Pebble Project
in a manner that addresses the "significant degradation" finding
reached by the USACE or ultimately develop any compensatory
mitigation plan that the USACE accepts as appropriately addressing
the "significant degradation" determination or that will change the
USACE's position that environmental permitting of the Pebble
Project under the CWA is against the public interest.
Northern Dynasty's inability to address these issues may mean that
the Company is ultimately not able to secure the environmental
permits that are required to develop the Pebble Project.
Accordingly, there is no assurance that Northern Dynasty will ever
be able to proceed with the development of the Pebble Project and
that investors will be able to recover their investment in the
Company.
In addition, the
EPA has re-initiated the CWA Section 404(c) process, and has issued
the Recommended Determination for the waters of Bristol Bay. The
Recommended Determination proposes a "defined area for
prohibition" coextensive with the current mine plan footprint
in which the EPA would prohibit the disposal of dredged or fill
material for the Pebble Project and would also establish a
309-square-mile "defined area for restriction." Such
EPA activity could negatively affect the ability of the Pebble
Partnership to obtain required permitting and develop the Project,
even if the appeal of the 2020 Record of Decision is successful.
The Pebble Partnership may challenge any final determination issued
pursuant to the Revised Proposed Determination and Recommended
Determination but there is no assurance that its challenge will be
successful. The inability to successfully challenge any final
determination issued pursuant to the EPA's Recommended
Determination may ultimately mean that the Company will not be able
to secure the environmental permits that are required to develop
the Pebble Project or proceed with the development of the Pebble
Project as currently envisioned or at all.
We May Ultimately be Unable
to Achieve Mine Permitting and Build a Mine at the Pebble
Project.
We may
ultimately be unable to secure the necessary permits under United
States federal and Alaskan State laws to build and operate a mine
at the Pebble Project. The EPA has undertaken regulatory
action to restrict the Pebble Project through its initiation of the
Revised Proposed Determination and the issuance of the Recommended
Determination, and the EPA may take further regulatory action to
impede or restrict the Pebble Project beyond its Recommended
Determination. In addition, there are prominent and
well-organized opponents of the Pebble Project and we may be
unable, even if we present solid scientific and technical evidence
of risk mitigation, to overcome such opposition and convince
governmental authorities that a mine should be permitted at the
Pebble Project. In addition, we face not only the permitting
and regulatory issues typical of companies seeking to build a mine,
but additional public and regulatory scrutiny due to our location
and potential size. Accordingly, there is no assurance that
we will obtain the required permits.
We, through the
Pebble Partnership, filed a CWA 404 permit application with the
USACE, which triggered an EIS process under NEPA and ultimately
resulted in the issuance by the USACE of the Record of
Decision. As discussed in this Prospectus and in our Q3 2022
MD&A and in our 2021 AIF, 2021 Annual MD&A, our permit
application has been denied by the USACE and there is no assurance
that we will be able to successfully appeal this decision or
ultimately be able to advance with development of a mine at the
Pebble Project. The uncertainty of the USACE appeal process
and the EPA Recommended Determination process casts doubt as to
whether we will ever be able to obtain these permits for the Pebble
Project as currently planned or within the timeline
envisioned.
If we are
ultimately able to secure all permits required to begin
construction, a number of additional years would be required to
finance and build a mine and commence operations and there is no
certainty as to this time frame. During these periods, we
would likely have no income and will accordingly require additional
financing to continue its operations. There is no assurance
that this financing will be available to the Company. Unless
and until the Company builds a mine at the Pebble Project, it will
be unable to achieve revenues from operations and may not be able
to sell or otherwise recover its investment in the Pebble Project,
which would have a material adverse effect on the Company and an
investment in the Company's common shares.
The Current Mine Plan for the
Pebble Project in the 2022 PEA is Not Evaluated by Any Preliminary
or Final Feasibility Study.
The current mine
plan that is included in the Project Description for the
development of the Pebble Project is evaluated by the 2022 PEA but
has not been evaluated by any preliminary or final feasibility
study. Accordingly, there are substantial risks that we will
not be able to proceed with the development of the Pebble Project,
that the Pebble Project cannot be economically mined or that
shareholders will not be able to recover their investment in the
Company. The 2022 PEA is preliminary in nature and includes
Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorized as Mineral Reserves.
There is no certainty that the 2022 PEA results will be realized.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability, and there is no assurance that the
Pebble Project mineral resources will ever be upgraded to mineral
reserves. The 2022 PEA assumes that the Proposed Project will
ultimately be able to obtain the required permits from the USACE
and state of Alaska authorities to enable development of the
Proposed Project, however there is no assurance that these permits
will be obtained. Neither the 2022 PEA, nor the mineral resource
estimates on which the 2022 PEA is based, have been adjusted for
any risks that (i) the Pebble Partnership may not be able to
successfully appeal the Record of Decision denying the granting of
the required permit under the CWA, or (ii) the Pebble Partnership
may not be able to successfully challenge any final determination
issued pursuant to the Recommended Determination, each of which
could adversely impact the ability of the Proposed Project to
proceed. In addition, the 2022 PEA does not account for any
additional capital or operating costs that may be necessary to
obtain the required federal or state permits, should adjustments to
the operating or environmental mitigation plans be required to be
made in order to secure the required permits. In addition,
recent inflationary pressures may adversely impact estimated
capital and operating costs in the PEA. Further, the net present
value calculations in the PEA are based on assumed discount rates
which may not account for future increases in interest rates. For
these reasons, there is significant risk that the economics for the
Pebble Project indicated in the PEA, including production
forecasts, capital costs, operating costs, revenues from
operations, net present values and internal rates of return, will
not be achieved should the Pebble Project be developed. The 2022
PEA should be viewed in this context and should not be considered a
substitute for a preliminary or final feasibility study.
If We are Unable to Defend
the Proposed Class Action Lawsuits Against Us, There is No
Assurance that We will not be Subject to Judgements for Damages
against Us.
We are the
subject of proposed class action lawsuits against it that assert
liability against us on behalf of a purported class of shareholders
under securities laws, both in Canada and in the United
States. While we intend to vigorously defend these claims,
there is no assurance that we will be successful in defending all
claims made against us. Should we not be successful in
defending these claims, we may be subject to judgements against us
and be required to pay substantial amounts in damages to the
plaintiffs under these judgements. These damages could result
in a material and adverse impairment to our financial condition and
capital resources, and may further impair its ability to pursue the
development of the Pebble Project.
In addition, we
are required under the terms of the indemnification agreements that
we have entered into with underwriters in connection with our
public financings to indemnify the underwriters for any losses that
they incur. As certain of our underwriters have been named as
defendants in certain of these class action lawsuits, we may be
required to indemnify and pay monies to the underwriters for any
losses that they suffer and expenses that they incur. In
addition, we may be required to indemnify certain of our officers
and directors for any losses that they suffer or expenses that they
incur.
There is no
assurance that our existing insurance policies will respond and be
sufficient to cover any amounts that we may be required to pay to
the plaintiffs in these class action lawsuits, or the underwriters
under our indemnification obligations. We may also be
required to indemnify certain of our officers and directors who
have been named as party to these lawsuits. These damages
could result in a material and adverse impairment to our financial
condition and capital resources, and may further impair our ability
to raise additional financing and pursue the development of the
Pebble Project.
Grand Jury Investigation and
Related Matters.
We are
cooperating with a grand jury investigation involving the United
States Attorney's Office for the District of Alaska, and an SEC
inquiry, as described above under Legal Matters. We are
not able to provide investors with guidance as to the outcome of
the grand jury investigation or SEC inquiry, or whether either of
them will result in any charges or other claims against the
Company, the Pebble Partnership or their associated
individuals. The Company does anticipate, however, that it
will incur substantial expenses in connection with the grand jury
and SEC matters, including legal fees and expenses related to the
collection, review, and production of documents, among other
things. Any adverse civil or criminal proceedings could have
a material adverse impact on Northern Dynasty's prospects and
ability to advance development of the Pebble Mine project.
In addition,
Northern Dynasty and the Pebble Partnership may face ongoing and
further inquiries, demands or allegations concerning future plans
for the Pebble Project from the U.S. Congress' House Committee on
Transportation and Infrastructure. Again, any adverse civil
or criminal proceedings relating to the Committee's investigation
could have a material adverse impact on Northern Dynasty's
prospects and ability to advance development of the Pebble Project.
In addition, these inquiries or any possible resulting civil or
criminal proceedings could erode any existing political support for
the Pebble Project, which may reduce the likelihood of the Pebble
Project obtaining the required environmental permitting.
The Record of Decision has
had an Ongoing Adverse Impact on Northern Dynasty's Ability to
Finance the Pebble Project.
We believe that
the USACE's Record of Decision has had a material adverse impact on
our ability to finance our operations and will continue to
adversely impact our financing options for so long as the Record of
Decision remains outstanding. In addition, the EPA's Recommended
Determination is also anticipated to adversely impact our ability
to complete future financings. Appealing the Record of Decision in
any future litigation and challenging any final determination
issued pursuant to the EPA's Recommended Determination will require
a substantial amount of our current cash and financial
resources. As we do not have any revenues, and does not
anticipate revenues in the foreseeable future, we will require
additional financing to continue our operations. If we are
unsuccessful in its appeal of the Record of Decision or challenge
any final determination issued pursuant to of the EPA's Recommended
Determination, our financing options may be substantially limited
and it may not be able to generate the necessary financing to
enable continued operations without a substantial reduction or
restructuring of the Pebble Project. Our inability to secure
this additional required financing will negatively impact the
ability of shareholders to recover their investment in the
Company.
Risks
associated with the Novel Coronavirus ("COVID-19")
The current
outbreak of COVID-19, and any future emergence and spread of
similar pathogens, could have a material adverse effect on global
and local economic and business conditions, which may adversely
impact Northern Dynasty's business and results of operations and
the operations of contractors and service providers. The
extent to which the COVID-19 impacts our operations will depend on
future developments, which are highly uncertain and cannot be
predicted with confidence, including the duration of the outbreak,
new information that may emerge concerning its severity and the
actions taken to contain the virus or treat its impact, among
others. The adverse effects on the economy, the stock market
and Northern Dynasty's share price could adversely impact its
ability to raise capital, with the result that our ability to
pursue development of the Pebble Project could be adversely
impacted, both through delays and through increased costs.
Any of these developments, and others, could have a material
adverse effect on the Company's business and results of operations
and could delay its plans for development of the Pebble
Project.
Inability
to Ultimately Achieve Mine Permitting and Build a Mine at the
Pebble Project.
We may
ultimately be unable to secure the necessary permits under United
States Federal and Alaskan State laws to build and operate a mine
at the Pebble Project. There is no assurance that the EPA will not
seek to undertake future regulatory action to impede or restrict
the Pebble Project. In addition, there are prominent and
well-organized opponents of the Pebble Project and the Company may
be unable, even if we present solid scientific and technical
evidence of risk mitigation, to overcome such opposition and
convince governmental authorities that a mine should be permitted
at the Pebble Project. The Company faces not only the permitting
and regulatory issues typical of companies seeking to build a mine,
but additional public and regulatory scrutiny due to its location
and potential size. Accordingly, there is no assurance that the
Company will obtain the required permits. The Company has filed a
CWA 404 permit application with the USACE, which has triggered an
EIS process under NEPA. The EIS process under NEPA, and the
requirement for the Company to secure a broad range of other
permits and authorizations from multiple federal and state
regulatory agencies will take several years. After all permits
necessary to begin construction are in hand, a number of years
would be required to finance and build a mine and commence
operations. During these periods, the Company would likely have no
income and so would require additional financing to continue its
operations. Unless and until we build a mine at the Pebble Project
we will be unable to achieve revenues from operations and may not
be able to sell or otherwise recover our investment in the Pebble
Project, which would have a material adverse effect on the Company
and an investment in the Company's common shares. The current mine
plan that is included in the Project Description for the
development of the Pebble Project is not supported by any any
preliminary or final feasibility study.
Northern
Dynasty Will Require Additional Funding to Meet the Development
Objectives of the Pebble Project.
We will need to
raise additional financing (which may include share issuances, debt
or asset level partnering, or any combination thereof) in order to
continue our operations and to achieve permitting and development
of the Pebble Project. In addition, a positive production decision
at the Pebble Project would require significant capital for project
engineering and construction. Accordingly, the continuing
permitting and development of the Pebble Project will depend upon
our ability to obtain financing through debt financing, equity
financing, the joint venturing of the project, or other means.
There can be no assurance that we will be successful in obtaining
the required financing, or that it will be able to raise the funds
on terms that do not result in high levels of dilution to
shareholders. Further, there can be no assurance that the Royalty
Holder will exercise its rights under the Royalty Agreement to make
further investments to increase its share of gold and silver
production. If we are unable to raise the necessary capital
resources, we may at some point have to reduce or curtail our
operations, which would have a material adverse effect on our
ability to pursue the permitting and development of the Pebble
Project.
While we may
attempt to reduce the amount of additional financing required by
entering into a potential joint venture or other partnership
arrangement for advancement of the Pebble Project, there is no
assurance that we may be able to conclude any such agreements. In
addition, any joint venture or other form of partnership
arrangement for the Pebble Project is anticipated to result in a
dilution in our ownership interest in the Pebble Project.
There is also no
assurance that we will be successful in securing any long-term
project financing utilizing conventional asset level financing,
debt, royalty and alternative financing options, such as stream
financing. Any project debt financing that we may obtain the
future will require future repayments of principal and interest
from cash flows generated by the Pebble Project. Likewise,
any potential sale of royalty interests in minerals produced from
the Pebble Project would require future payments of royalties from
cash flows generated by the Pebble Project. If we enter into
any streaming arrangements for the Pebble Project, it is
anticipated that we would be required to sell minerals produced
from the Pebble Project at preferential rates as consideration for
up-front funding provided by the party providing the stream
financing. As a result, any of these financing options are
anticipated to impact on the cash flows from the Pebble Project
that would be available to the Company should the Pebble Project
proceed to development. Our board of directors has not made
any determination as to whether to proceed with any of the above
forms of financing and there is no assurance that these financing
options will be available to advance development of the Pebble
Project.
Negative
Operating Cash Flow
The Company
currently has a negative operating cash flow and will continue to
have that for the foreseeable future. Accordingly, the
Company will require substantial additional capital in order to
fund its future exploration and development activities. The Company
does not have any arrangements in place for this funding and there
is no assurance that such funding will be achieved when required.
Any failure to obtain additional financing or failure to achieve
profitability and positive operating cash flows will have a
material adverse effect on its financial condition and results of
operations.
Risk of
Secure Title or Property Interest
There can be no
certainty that title to any property interest acquired by the
Company or any of its subsidiaries is without defects. Although the
Company has taken reasonable precautions to ensure that legal title
to its properties is properly documented, there can be no assurance
that its property interests may not be challenged or impugned. Such
property interests may be subject to prior unregistered agreements
or transfers or other land claims, and title may be affected by
undetected defects and adverse laws and regulations.
The Pebble
Partnership's mineral concessions at Pebble are located on State of
Alaska lands specifically designated for mineral exploration and
development. Alaska is a stable jurisdiction with a
well-developed regulatory and legal framework for resource
development and public lands management, a strong commitment to the
rule of law and lengthy track record for encouraging investment in
the development if its land and natural resources.
The Pebble
Project is Subject to Political, Environmental and Regulatory
Opposition
As is typical
for a large scale mining project, the Pebble Project faces
organized opposition from certain individuals and organizations who
are motivated to preclude any possible mining in the Bristol Bay
Watershed (the "BBW"). The BBW is an important
wildlife and salmon habitat area. Accordingly, one of the
greatest risks to the Pebble Project is seen to be
political/permitting risk which may ultimately preclude
construction of a mine at the Pebble Project. Opposition may
include legal challenges to exploration and development permits,
which may delay or halt development. Other tactics may also
be employed by opposition groups to delay or frustrate development
at Pebble, included political and public advocacy, electoral
strategies, media and public outreach campaigns, attempting to
purchase intervening land rights and protest activity. These
efforts could materially increase the cost and time for development
of the Pebble Project and the related infrastructure, or require
changes to development plans, which could adversely impact project
economics.
The Pebble
Partnership's Mineral Property Interests Do Not Contain Any Mineral
Reserves or Any Known Body of Economic Mineralization
Although there
are known bodies of mineralization on the Pebble Project, and the
Pebble Partnership has completed core drilling programs within, and
adjacent to, the deposits to determine measured and indicated
resources, there are currently no known reserves (either proven
reserves or probable reserves) or body of commercially viable ore
and the Pebble Project must be considered an exploration and
feasibility evaluation project only. Extensive additional
work is required before Northern Dynasty or the Pebble Partnership
can ascertain if any mineralization may be economic and hence
constitute "ore".
Northern Dynasty
has not completed any feasibility study or pre-feasibility study on
the Pebble Project to date. The 2022 PEA is the current
"preliminary economic assessment" on the Pebble Project and
supersedes both the 2021 PEA and the preliminary economic
assessment completed by the Company on the Pebble Project in 2011,
neither of which are current. The 2022 PEA does not contain the
level of mine plan or costing detail that would be included in
either a preliminary feasibility study or a final feasibility study
that would be necessary to make a determination of the existent of
mineral reserves or for a production decision for the Pebble
Project..
Mineral
resources Disclosed by Northern Dynasty or the Pebble Partnership
for the Pebble Project are Estimates Only
Northern Dynasty
has included disclosure regarding the Pebble Project and mineral
resource estimates that have been made in accordance with NI
43-101. These resource estimates are classified as "measured
resources", "indicated resources" and "inferred resources".
Northern Dynasty advises United States investors that although with
the adoption of the SEC Modernization Rules, the SEC now recognizes
estimates of "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources", there is no assurance
any mineral resources that Northern Dynasty may report as "measured
mineral resources", "indicated mineral resources" and "inferred
mineral resources" under NI 43-101 would be the same had Northern
Dynasty prepared the resource estimates under the standards adopted
under the SEC Modernization Rules. Investors are cautioned not to
assume that any part or all of mineral deposits classified as
"measured resources" or "indicated resources" will ever be
converted into "mineral reserves. Further, "inferred resources"
have a great amount of uncertainty as to their economic and legal
feasibility.
All amounts of
mineral resources are estimates only, and Northern Dynasty cannot
be certain that any specified level of recovery of metals from the
mineralized material will in fact be realized or that the Pebble
Project or any other identified mineral deposit will ever qualify
as a commercially mineable (or viable) ore body that can be
economically exploited. Mineralized material which is not
mineral reserves does not have demonstrated economic viability. In
addition, the quantity of mineral reserves and mineral resources
may vary depending on, among other things, metal prices and actual
results of mining. There can be no assurance that any future
economic or technical assessments undertaken by the Company with
respect to the Pebble Project will demonstrate positive economics
or feasibility.
The mineral
resource estimates contained herein and incorporated herein by
reference have not been adjusted for any risk that the required
environmental permits may not be obtained for the Pebble
Project. The risk associated with the ability of the Pebble
Project to obtain required environmental permits is a risk to the
reasonable prospects for eventual economic extraction of the
mineralization and their definition as a mineral resource.
There is
no assurance that we will be able to partner the Pebble
Project.
One of our
business objectives is to enter into a joint venture or other
partnership arrangement with a third-party partner to fund the
advancement of the development of the Pebble Project. There
is no assurance that we will be able to enter into an arrangement
with a partner for the development of the Pebble Project. To
the extent that we do not enter into any agreement to partner the
Pebble Project, we will continue to be required to fund all
exploration and other related expenses for advancement of the
Pebble Project.
Northern
Dynasty has no history of earnings and no foreseeable earnings, and
may never achieve profitability or pay dividends
Northern Dynasty
has only had losses since inception and there can be no assurance
that Northern Dynasty will ever be profitable. Northern Dynasty has
paid no dividends on its shares since incorporation. Northern
Dynasty presently has no ability to generate earnings as its
mineral properties are in the pre-development stage.
Northern
Dynasty's consolidated financial statements have been prepared
assuming Northern Dynasty will continue on a going concern
basis
Northern
Dynasty's consolidated financial statements have been prepared on
the basis that Northern Dynasty will continue as a going
concern. Northern Dynasty's continuing operations and the
underlying value and recoverability of the amounts shown for
mineral property interest are entirely dependent upon the existence
of economically recoverable mineral reserves at the Pebble Project,
the ability of the Company to finance the completion of the
exploration and development of the Pebble Project, the Pebble
Partnership obtaining the necessary permits to mine, and on future
profitable production at the Pebble Project. Furthermore, failure
to continue as a going concern would require that Northern
Dynasty's assets and liabilities be restated on a liquidation
basis, which would likely differ significantly from their going
concern assumption carrying values.
Northern
Dynasty has a history of negative cash flow from operations which
is anticipated to continue for the foreseeable future
Northern Dynasty
experienced negative cash flow from operations for the fiscal years
ended December 31, 2021 and 2020 and anticipates incurring negative
cash flow from operations for the balance of its 2022 fiscal year,
and for its 2023 fiscal year and beyond as a result of the fact
that it has no revenues from mining or any other activities. In
addition, as a result of Northern Dynasty's business plans for the
development of the Pebble Project, Northern Dynasty expects cash
flow from operations to continue to be negative until revenues from
production at the Pebble Project begin to offset operating
expenditures, of which there is no assurance. Accordingly, Northern
Dynasty's cash flow from operations will be negative for the
foreseeable future as a result of expenses to be incurred s in
connection with advancement of the Pebble Project. As a
consequence, the net proceeds from the Offering to be used as
working capital will be used to offset negative operating cash
flow.
Ability to continue on a going concern basis
Our management
continues to identify a material uncertainty that raises
substantial doubt about the Company's ability to continue as a
going concern. The Company will need to raise additional funding in
order to continue as a going concern and the Company cannot provide
any assurance that it will be successful in doing so. If the
Company is unable to improve its liquidity position when required
the Company may not be able to continue as a going concern.
As
the Pebble Project is Northern Dynasty's only mineral property
interest, the failure to establish that the Pebble Project
possesses commercially viable and legally mineable deposits of ore
may cause a significant decline in the trading price of Northern
Dynasty's common shares and reduce its ability to obtain new
financing
The Pebble
Project is, through the Pebble Partnership, Northern Dynasty's only
mineral property interest. Northern Dynasty's principal
business objective is to carry out further exploration and related
activities to establish whether the Pebble Project possesses
commercially viable deposits of ore. If Northern Dynasty is
not successful in its plan of operations, Northern Dynasty may have
to seek a new mineral property to explore or acquire an interest in
a new mineral property or project. Northern Dynasty
anticipates that such an outcome would possibly result in further
declines in the trading price of Northern Dynasty's common
shares. Furthermore, Northern Dynasty anticipates that its
ability to raise additional financing to fund exploration of a new
property or the acquisition of a new property or project would be
impaired as a result of the failure to establish commercial
viability of the Pebble Project.
If prices
for copper, gold, molybdenum, silver and rhenium decline, Northern
Dynasty may not be able to raise the additional financing required
to fund expenditures for the Pebble Project
The ability of
Northern Dynasty to raise financing to fund the Pebble Project,
will be significantly affected by changes in the market price of
the metals for which it explores. The prices of copper, gold,
molybdenum, silver and rhenium are volatile, and are affected by
numerous factors beyond Northern Dynasty's control. The level
of interest rates, the rate of inflation, the world supplies of and
demands for copper, gold, molybdenum, silver and rhenium and the
stability of exchange rates can all cause fluctuations in these
prices. Such external economic factors are influenced by changes in
international investment patterns and monetary systems and
political developments. The prices of copper, gold,
molybdenum, silver and rhenium have fluctuated in recent years, and
future significant price declines could cause investors to be
unprepared to finance exploration of copper, gold, molybdenum,
silver and rhenium, with the result that Northern Dynasty may not
have sufficient financing with which to fund its exploration
activities.
Mining has
inherent risks and is subject to conditions or events beyond the
Company's control, the occurrence of which could have a material
adverse effect on the Company's business
Hazards such as
fire, explosion, floods, structural collapses, industrial
accidents, unusual or unexpected geological conditions, ground
control problems, power outages, inclement weather, seismic
activity, cave-ins and mechanical equipment failure are inherent
risks in the Company's exploration, development and mining
operations. These and other hazards may cause injuries or
death to employees, contractors or other persons at the Company's
mineral properties, severe damage to and destruction of the
Company's property, plant and equipment and mineral properties, and
contamination of, or damage to, the environment, and may result in
the suspension of the Company's exploration and development
activities and any future production activities. Safety
measures implemented by the Company may not be successful in
preventing or mitigating future accidents.
Northern
Dynasty competes with larger, better capitalized competitors in the
mining industry
The mining
industry is competitive in all of its phases, including financing,
technical resources, personnel and property acquisition. It
requires significant capital, technical resources, personnel and
operational experience to effectively compete in the mining
industry. Because of the high costs associated with
exploration, the expertise required to analyze a project's
potential and the capital required to develop a mine, larger
companies with significant resources may have a competitive
advantage over Northern Dynasty. Northern Dynasty faces
strong competition from other mining companies, some with greater
financial resources, operational experience and technical
capabilities than Northern Dynasty possesses. As a result of
this competition, Northern Dynasty may be unable to maintain or
acquire financing, personnel, technical resources or attractive
mining properties on terms Northern Dynasty considers acceptable or
at all.
Compliance
with environmental requirements will take considerable resources
and changes to these requirements could significantly increase the
costs of developing the Pebble Project and could delay these
activities
The Pebble
Partnership and Northern Dynasty must comply with stringent
environmental legislation in carrying out work on the Pebble
Project. Environmental legislation is evolving in a manner
that will require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers,
directors and employees. Changes in environmental legislation
could increase the cost to the Pebble Partnership of carrying out
its exploration and, if warranted, development of the Pebble
Project. Further, compliance with new or additional
environmental legislation may result in delays to the exploration
and, if warranted, development activities.
Changes in
government regulations or the application thereof and the presence
of unknown environmental hazards on Northern Dynasty's mineral
properties may result in significant unanticipated compliance and
reclamation costs
Government
regulations relating to mineral rights tenure, permission to
disturb areas and the right to operate can adversely affect
Northern Dynasty. Northern Dynasty and the Pebble Partnership
may not be able to obtain all necessary licenses and permits that
may be required to carry out exploration at our projects.
Obtaining the necessary governmental permits is a complex,
time-consuming and costly process. The duration and success of
efforts to obtain permits are contingent upon many variables not
within our control. Obtaining environmental permits may
increase costs and cause delays depending on the nature of the
activity to be permitted and the interpretation of applicable
requirements implemented by the permitting authority. There
can be no assurance that all necessary approvals and permits will
be obtained and, if obtained, that the costs involved will not
exceed those that we previously estimated. It is possible
that the costs and delays associated with the compliance with such
standards and regulations could become such that we would not
proceed with the development or operation of a mine at the Pebble
Project. Refer to further discussion our 2021 AIF and in
other filings incorporated by reference herein.
Litigation
The Company is,
and may in future be subject to legal proceedings, including with
regard to matters described in Item 12 of our 2021 AIF in the
pursuit of its Pebble Project. Given the uncertain nature of these
actions and litigation generally, the Company cannot reasonably
predict the outcome thereof. If the Company is unable to resolve
these matters favorably it will likely have a material adverse
effect on the Company.
Northern
Dynasty is subject to many risks that are not insurable and, as a
result, Northern Dynasty will not be able to recover losses through
insurance should such certain events occur
Hazards such as
unusual or unexpected geological formations and other conditions
are involved in mineral exploration and development. Northern
Dynasty may become subject to liability for pollution, cave-ins or
hazards against which it cannot insure. The payment of such
liabilities could result in increase in Northern Dynasty's
operating expenses which could, in turn, have a material adverse
effect on Northern Dynasty's financial position and its results of
operations. Although Northern Dynasty and the Pebble
Partnership maintain liability insurance in an amount which we
consider adequate, the nature of these risks is such that the
liabilities might exceed policy limits, the liabilities and hazards
might not be insurable against, or Northern Dynasty and the Pebble
Partnership might elect not to insure itself against such
liabilities due to high premium costs or other reasons, in which
event Northern Dynasty could incur significant liabilities and
costs that could materially increase Northern Dynasty's operating
expenses.
If
Northern Dynasty loses the services of the key personnel that it
engages to undertake its activities, then Northern Dynasty's plan
of operations may be delayed or be more expensive to undertake than
anticipated
Northern
Dynasty's success depends to a significant extent on the
performance and continued service of certain independent
contractors, including Hunter Dickinson Services Inc.
("HDSI"). The Company has access to the full resources
of HDSI, an experienced exploration and development firm with
in-house geologists, engineers and environmental specialists, to
assist in its technical review of the Pebble Project. There
can be no assurance that the services of all necessary key
personnel will be available when required or if obtained, that the
costs involved will not exceed those that we previously
estimated. It is possible that the costs and delays
associated with the loss of services of key personnel could become
such that we would not proceed with the development or operation of
a mine at the Pebble Project.
Other Risks and
Uncertainties
You may
lose your entire investment
An investment in
the Securities of the Company is speculative and may result in the
loss of your entire investment. Only potential investors who are
experienced in high-risk investments and who can afford to lose
their entire investment should consider purchasing the Securities
of the Company, as there is no assurance that we will ever build a
mine at the Pebble Project, commence operations or achieve
revenues.
The market
price for Common Shares may be volatile and subject to wide
fluctuations in response to numerous factors, many of which are
beyond our control
Financial
markets have recently experienced significant price and volume
fluctuations that have particularly affected the market prices of
equity securities of public entities. Accordingly, the market price
of the Common Shares may decline even if our asset values or
prospects have not changed. Additionally, these factors, as well as
other related factors, may cause decreases in asset values that are
deemed to be other than temporary, which may result in impairment
losses. As well, certain institutional investors may base their
investment decisions on consideration of our environmental,
governance and social practices and performance against such
institutions' respective investment guidelines and criteria, and
failure to meet such criteria may result in a limited or no
investment in the Common Shares by those institutions, which could
materially adversely affect the trading price of the Common Shares.
There can be no assurance that continuing fluctuations in price and
volume will not occur. If such increased levels of volatility and
market turmoil continue for a protracted period of time, the
trading price of the Common Shares may be materially adversely
affected.
The
Volatility of Northern Dynasty's Common Shares Can Expose Northern
Dynasty to the Risk of Litigation.
Our common
shares are listed on the TSX and NYSE American. Securities of
mining companies have experienced substantial volatility in the
past, often based on factors unrelated to the financial performance
or prospects of the companies involved (see previous risk).
These factors include macroeconomic developments in North America
and globally, currency fluctuations and market perceptions of the
attractiveness of particular industries. The price of
Northern Dynasty's common shares is also likely to be significantly
affected by short-term changes in copper, gold, molybdenum, silver
and rhenium prices or in Northern Dynasty's financial condition or
results of operations as reflected in quarterly earnings
reports.
As a result of
any of these factors, the market price of Northern Dynasty's common
shares at any given point in time may not accurately reflect their
long-term value. Securities class action litigation often has
been brought against companies following periods of volatility in
the market price of their securities. Northern Dynasty is,
and may in the future be the target of similar litigation.
Securities litigation could result in substantial costs and damages
and divert management's attention and resources.
Likely
PFIC status has possible adverse U.S. federal income tax
consequences for U.S. investors.
The Company was
likely a "passive foreign investment company" (a "PFIC")
within the meaning of the U.S. Internal Revenue Code in one or more
prior tax years, expects to be a PFIC for the current tax
year, and may also be a PFIC in subsequent years. A non-U.S.
corporation is a PFIC for any tax year in which (i) 75% or more of
its gross income is passive income (as defined for U.S. federal
income tax purposes) or (ii) on average for such tax year, 50% or
more (by value) of its assets either produces or is held for the
production of passive income, and thereafter unless certain
elections are made.
If the Company
is a PFIC for any year during a U.S. taxpayer's holding period,
such taxpayer may be required to treat any gain recognized upon a
sale or disposition of certain Securities of the Company as
ordinary income (rather than capital gain), and any resulting U.S.
federal income tax may be increased by an interest charge.
Rules similar to those applicable to dispositions will generally
apply to certain "excess distributions" in respect of certain
Securities of the Company. A U.S. taxpayer may generally avoid
these unfavorable tax consequences by making a timely and effective
"qualified electing fund" ("QEF") election or
"mark-to-market" election with respect to certain securities of the
Company. A U.S. taxpayer who makes a timely and effective QEF
election must generally report on a current basis its share of the
Company's net capital gain and ordinary earnings for any year in
which the Company is a PFIC, whether or not the Company makes any
distributions to shareholders in such year. A U.S. taxpayer
who makes a timely and effective mark-to-market election must, in
general, include as ordinary income, in each year in which the
Company is a PFIC, the excess of the fair market value of certain
Securities of the Company over the taxpayer's adjusted cost basis
in such shares.
The
Company is a Canadian company and shareholder protections differ
from shareholder protections in the United States and
elsewhere.
We are organized
and exist under the laws of British Columbia, Canada and,
accordingly, are governed by the Business Corporations Act
(British Columbia) (the "BCBCA"). This BCBCA differs
in certain material respects from laws generally applicable to
United States corporations and shareholders, including the
provisions relating to interested directors, mergers and similar
arrangements, takeovers, shareholders' suits, indemnification of
directors and inspection of corporation records.
The
Company is a foreign private issuer within the meaning of the rules
under the Exchange Act, and as such is exempt from certain
provisions applicable to United States domestic public
companies.
Because we are a
"foreign private issuer" under the U.S. Exchange Act, we are exempt
from certain provisions of the securities rules and regulations in
the United States that are applicable to U.S. domestic issuers,
including:
-
the rules under the U.S. Exchange Act requiring the filing of
quarterly reports on Form 10-Q or current reports on Form 8-K with
the SEC;
-
the sections of the U.S. Exchange Act regulating the
solicitation of proxies, consents or authorizations in respect of a
security registered under the U.S. Exchange Act;
-
the sections of the U.S. Exchange Act requiring insiders to file
public reports of their stock ownership and trading activities and
liability for insiders who profit from trades made in a short
period of time; and
-
the selective disclosure rules by issuers of material non-public
information under Regulation FD.
We are required
to file an annual report on Form 40-F with the United States
Securities and Exchange Commission within three months of the end
of each fiscal year. We do not intend to voluntarily file
annual reports on Form 10-K and quarterly reports on Form 10-Q in
lieu of Form 40-F requirements. For so long as we choose to
only comply with foreign private issuer requirements, the
information we are required to file with or furnish to the SEC will
be less extensive and less timely compared to that required to be
filed with the SEC by U.S. domestic issuers. As a result, you
may not be afforded the same protections or information which would
be made available to you if you were investing in a U.S. domestic
issuer.
CERTAIN INCOME TAX
CONSIDERATIONS
The applicable
Prospectus Supplement will describe certain Canadian federal income
tax consequences to investors described therein of acquiring
Securities.
The applicable
Prospectus Supplement will also describe certain United States
federal income tax consequences of the acquisition, ownership and
disposition of Securities by an initial investor who is a "U.S.
person" (within the meaning of the United States Internal Revenue
Code), if applicable, including, to the extent applicable, any such
consequences relating to Securities payable in a currency other
than the United States dollar, issued at an original issue discount
for United States federal income tax purposes or other special
terms.
LEGAL MATTERS
Certain legal
matters relating to the Securities offered by this Prospectus will
be passed upon for us by McMillan LLP, Vancouver, B.C., with
respect to matters of Canadian and United States securities
laws.
INTEREST OF EXPERTS
Information
relating to the Pebble Project in this Prospectus Supplement has
been derived from the 2022 PEA, which has been prepared by the
qualified persons named below and this information has been
included in reliance on the expertise of these qualified persons,
each of whom co-authored the 2022 PEA:
-
Robin Kalanchey, P.Eng., an independent Qualified Person
-
J. David Gaunt, P.Geo., a non-independent Qualified Person;
-
James Lang, P.Geo., a non-independent Qualified Person;
-
Eric Titley, P.Geo., a non-independent Qualified Person;
-
Hassan Ghaffari, P.Eng., an independent Qualified Person;
-
Sabry Abdel Hafez, P.Eng., an independent Qualified
Person;
-
Les Galbraith, P.Eng., P.E, an independent Qualified Person
and
-
Stephen Hodgson, P.Eng., a non-independent Qualified Person.
Based on
information provided by the relevant persons, and except as
otherwise disclosed in this Prospectus, none of the persons or
companies referred to above has received or will receive any direct
or indirect interests in the Company's property or the property of
an associated party or an affiliate of the Company or have any
beneficial ownership, direct or indirect, of the Company's
securities or of an associated party or an affiliate of the
Company. The Company understands that, after reasonable
inquiry and as at the date hereof, the experts listed above as a
group, beneficially own, directly or indirectly, less than one
percent of the outstanding Common Shares of the Company
AUDITOR
The auditors of
the Company are Deloitte LLP, Chartered Professional Accountants,
of Vancouver, British Columbia. Deloitte LLP is independent
with respect to the Company within the meaning of the Rules of
Professional Conduct of the Chartered Professional Accountants of
British Columbia, and within the meaning of the U.S. Securities Act
and the applicable rules and regulations adopted by the SEC and the
Public Company Accounting Oversight Board (United
States).
TRANSFER AGENT AND
REGISTRAR
Computershare
Investor Services Inc., at its Vancouver office located at 3rd
Floor, 510 Burrard Street, Vancouver, BC, V6C 3B9, is the transfer
agent and registrar for the Common Shares.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
This Prospectus
is part of the Registration Statement on Form F-10 that we have
filed with the SEC. This Prospectus does not contain all of
the information contained in the Registration Statement, certain
items of which are contained in the exhibits to the registration
statement as permitted by the rules and regulations of the
SEC. Statements included or incorporated by reference in this
Prospectus about the contents of any contract, agreement or other
documents referred to are not necessarily complete, and in each
instance you should refer to the exhibits for a more complete
description of the matter involved. Each such statement is
qualified in its entirety by such reference. You should refer
to the Registration Statement and the exhibits thereto for further
information with respect to us and our securities.
The Company is
subject to the information requirements of the U.S. Exchange Act
and applicable Canadian securities legislation and, in accordance
therewith, files reports and other information with the SEC and
with the securities regulators in Canada. Under MJDS adopted
by the United States and Canada, documents and other information
that the Company files with the SEC may be prepared in accordance
with the disclosure requirements of Canada, which are different
from those of the United States. As a foreign private issuer
within the meaning of rules made under the U.S. Exchange Act, the
Company is exempt from the rules under the U.S. Exchange Act
prescribing the furnishing and content of proxy statements, and the
Company's officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions
contained in Section 16 of the U.S. Exchange Act. In
addition, the Company is not required to publish financial
statements as promptly as United States companies.
You may read any
document that the Company has filed with the SEC at the SEC's
public reference room in Washington, D.C. You may also obtain
copies of those documents from the public reference room of the SEC
at 100 F Street, N.E., Washington, D.C. 20549 by paying a
fee. You should call the SEC at 1-800-SEC-0330 or access its
website at www.sec.gov for further information about the
public reference rooms. You may read and download some of the
documents that the Company has filed with the SEC's EDGAR system at
www.sec.gov. You may read and download any public document
that the Company has filed with the Canadian securities regulatory
authorities under the Company's profile on the SEDAR website at
www.sedar.com.
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT
In addition to
the documents specified in this Prospectus under "Documents
Incorporated by Reference", the following documents have been
or will be filed with the SEC as part of the registration statement
of which this Prospectus forms a part:
1. the
documents set out under the heading "Documents Incorporate by
Reference";
2. the
consents of the Company's auditor, legal counsel and technical
report authors;
3. the
powers of attorney from the directors and certain officers of the
Company; and
4. the
form of debt indenture.
A copy of the
form of any warrant indenture or subscription receipt agreements,
as applicable, will be filed by post-effective amendment or by
incorporation by reference to documents filed or furnished with or
furnished to the SEC under the U.S. Exchange Act.
ENFORCEABILITY OF CIVIL
LIABILITIES BY U.S. INVESTORS
The Company is a
corporation existing under the Business Corporations Act
(British Columbia). The majority of its directors, all of its
officers, and all of the experts named in the Prospectus, are
residents of Canada or otherwise reside outside the United States,
and all or a substantial portion of their assets are located
outside the United States. We have appointed an agent for
service of process in the United States, but it may be difficult
for holders of the Securities who reside in the United States to
effect service within the United States upon those directors,
officers and experts who are not residents of the United States. It
may also be difficult for holders of the Securities who reside in
the United States to realize upon judgments of courts of the United
States predicated upon the Company's civil liability and the civil
liability of its directors, officers and experts under the United
States federal securities laws.
We have been
advised by our Canadian legal counsel, McMillan LLP, that a
judgement of a United States court predicated solely upon civil
liability under United States federal securities laws would
probably be enforceable in Canada if the United States court in
which the judgement was obtained has a basis for jurisdiction in
the matter that would be recognized by a Canadian court for the
same purposes. We have also been advised by McMillan LLP, however,
that there is substantial doubt that whether an action could be
brought in Canada in the first instance on the basis of liability
predicated solely upon United States federal securities laws.
We have filed
with the SEC, concurrently with our registration statement on Form
F-10, an appointment of agent for service of process on Form
F-X. Under the Form F-X, we appointed Pebble East Claims
Corporation as our agent for service of process in the United
States in connection with any investigation or administrative
proceeding conducted by the SEC, and any civil suit or action
brought against or involving the Company in a United States court
arising out of, related to, or concerning the offering of the
securities under the Prospectus.
CONTRACTUAL RIGHTS OF
RECISSION
In addition to
statutory rights of withdrawal and rescission, original purchasers
of warrants (if offered separately from other Securities) and
Subscription Receipts will have a contractual right of rescission
against the Company in respect of the exercise of such warrant or
subscription receipt, as the case may be.
The contractual
right of rescission will entitle such original purchasers to
receive, in addition to the amount paid on original purchase of the
warrant or subscription receipt (or units comprised partly
thereof), as the case may be, the amount paid upon exercise upon
surrender of the underlying securities gained thereby, in the event
that this prospectus (as supplemented or amended) contains a
misrepresentation, provided that: (i) the conversion, exchange or
exercise takes place within 180 days of the date of the purchase of
the warrant or subscription receipt under this prospectus; and (ii)
the right of rescission is exercised within 180 days of the date of
purchase of the warrant or subscription receipt under this
prospectus. This contractual right of rescission will be
consistent with the statutory right of rescission described under
section 131 of the Securities Act (British Columbia), and is in
addition to any other right or remedy available to original
purchasers under section 131 of the Securities Act (British
Columbia) or otherwise at law.
Original
purchasers are further advised that in certain provinces the
statutory right of action for damages in connection with a
prospectus misrepresentation is limited to the amount paid for the
security that was purchased under a prospectus, and therefore a
further payment at the time of exercise may not be recoverable in a
statutory action for damages. The purchaser should refer to
any applicable provisions of the securities legislation of the
purchaser's province for the particulars of these rights, or
consult with a legal advisor.
In addition, to
the extent that we file a Prospectus Supplement to qualify the
Underlying Shares issuable upon conversion of any special warrants
that we may in the future issue ("Special Warrants"), we
will grant to each holder of a Special Warrant a contractual right
of rescission of the prospectus-exempt transaction under which the
Special Warrant was initially acquired. The contractual right of
rescission will provide that if a holder of a Special Warrant who
acquires Common Shares of the Company on exercise of the Special
Warrant as provided for in this Prospectus is, or becomes, entitled
under the securities legislation of a jurisdiction to the remedy of
rescission because of the Prospectus or an amendment to the
Prospectus containing a misrepresentation, (a) the holder is
entitled to rescission of both the holder's exercise of its Special
Warrant and the private placement transaction under which the
Special Warrant was initially acquired, (b) the holder is entitled
in connection with the rescission to a full refund of all
consideration paid to the agent or Company, as the case may be, on
the acquisition of the Special Warrant, and (c) if the holder is a
permitted assignee of the interest of the original Special Warrant
subscriber, the holder is entitled to exercise the rights of
rescission and refund as if the holder was the original
subscriber.
PART II
INFORMATION NOT REQUIRED TO BE
DELIVERED TO
OFFEREES OR PURCHASERS
Indemnification of Directors and
Officers.
The
Registrant is subject to the provisions of the Business
Corporations Act (British Columbia) (the "Act") and the
articles of the Registrant (the "Articles") regarding
indemnification of the Registrant's directors and officers.
Indemnification under the Act
Under
Section 160(a) of the Act, and subject to Section 163 of the Act,
the Registrant may indemnify any eligible party (as defined in the
Act) against all eligible penalties (as defined in the Act) to
which the eligible party is or may be liable. Section 160(b) of the
Act permits the Registrant to pay the expenses (as defined in the
Act) actually and reasonably incurred by an eligible party after
the final disposition of the eligible proceeding (as defined in the
Act).
Under
Section 159 of the Act:
-
an "eligible party" means an individual who:
-
is or was a director or officer of the Registrant,
-
is or was a director or officer of another corporation (i) at a
time when the corporation is or was an affiliate of the Registrant,
or (ii) at the request of the Registrant, or
-
at the request of the Registrant, is or was, or holds or held a
position equivalent to that of, a director or officer of a
partnership, trust, joint venture or other unincorporated
entity,
and includes, except in the definition of "eligible proceeding" and
except in sections 163(1)(c) and (d) and 165 of the Act, the heirs
and personal or other legal representatives of that individual;
-
an "eligible penalty" is defined as a judgment, penalty or
fine awarded or imposed in, or an amount paid in settlement of, an
eligible proceeding;
-
an "eligible proceeding" means a proceeding (as defined
herein) in which an eligible party or any of the heirs and personal
or other legal representatives of the eligible party, by reason of
the eligible party being or having been a director or officer of,
or holding or having held a position equivalent to that of a
director or officer of, the Registrant or an associated
corporation:
-
is or may be joined as a party, or
-
is or may be liable for or in respect of a judgment, penalty or
fine in, or expenses related to, the proceeding;
-
"expenses" are defined to include costs, charges and
expenses, including legal and other fees, but does not include
judgments, penalties, fines or amounts paid in settlement of any
proceeding; and
-
a "proceeding" includes any legal proceeding or
investigative action, whether current, threatened, pending or
completed.
Under Section 161 of the Act, the
Registrant must, after the final disposition of an eligible
proceeding, pay the expenses actually and reasonably incurred by
the eligible party in respect of that proceeding if the eligible
party (a) has not been reimbursed for those expenses, and (b) is
wholly successful, on the merits or otherwise, in the outcome of
the proceeding or is substantially successful on the merits in the
outcome of the proceeding.
Under Section 162 of the Act, the
Registrant may pay, as they are incurred in advance of the final
disposition of an eligible proceeding, the expenses actually and
reasonably incurred by an eligible party in respect of that
proceeding; provided the Registrant must not make such payments
unless it first receives from the eligible party a written
undertaking that, if it is ultimately determined that the payment
of expenses is prohibited by Section 163, the eligible party will
repay the amounts advanced.
Under Section 163 of the Act, the
Registrant must not indemnify an eligible party against eligible
penalties to which the eligible party is or may be liable or pay
the expenses of an eligible party in respect of that proceeding
under Sections 160, 161 or 162 of the Act, as the case may be, if
any of the following circumstances apply:
-
if the indemnity or payment is made under an earlier agreement to
indemnify or pay expenses and, at the time that the agreement to
indemnify or pay expenses was made, the Registrant was prohibited
from giving the indemnity or paying the expenses by its memorandum
or articles;
-
if the indemnity or payment is made otherwise than under an earlier
agreement to indemnify or pay expenses and, at the time that the
indemnity or payment is made, the Registrant is prohibited from
giving the indemnity or paying the expenses by its memorandum or
articles;
-
if, in relation to the subject matter of the eligible proceeding,
the eligible party did not act honestly and in good faith with a
view to the best interests of the Registrant or the associated
corporation, as the case may be; or
-
in the case of an eligible proceeding other than a civil
proceeding, if the eligible party did not have reasonable grounds
for believing that the eligible party's conduct in respect of which
the proceeding was brought was lawful.
Under Section 163(2) of the Act, if
an eligible proceeding is brought against an eligible party by or
on behalf of the Registrant or by or on behalf of an associated
corporation, the Registrant must not either indemnify the eligible
party against eligible penalties to which the eligible party is or
may be liable in respect of the proceeding, or, after the final
disposition of an eligible proceeding, pay the expenses of the
eligible party under Sections 160(b), 161 or 162 of the Act in
respect of the proceeding.
Under
Section 164 of the Act, despite any other provision of Division
5-Indemnification of Directors and Officers and Payment of
Expenses under the Act and whether or not payment of expenses
or indemnification has been sought, authorized or declined under
such Division, the Supreme Court of British Columbia may, on
application of the Registrant or an eligible party, may:
-
order the Registrant to indemnify an eligible party against any
liability incurred by the eligible party in respect of an eligible
proceeding;
-
order the Registrant to pay some or all of the expenses incurred by
an eligible party in respect of an eligible proceeding;
-
order the enforcement of, or any payment under, an agreement of
indemnification entered into by the Registrant;
-
order the Registrant to pay some or all of the expenses actually
and reasonably incurred by any person in obtaining an order under
this section; or
-
make any other order the Court considers appropriate.
Indemnification under the Articles
The
articles of a company may affect its power or obligation to give an
indemnity or pay expenses. As indicated above, this is subject to
the overriding power of the Court under Section 164 of the Act.
Under
Article 21.2 of the Articles, the Registrant must indemnify a
director, former director of the Registrant and his or her heirs
and legal personal representatives against all eligible penalties
to which such person is or may be liable, and the Registrant must,
after the final disposition of an eligible proceeding, pay the
expenses actually and reasonably incurred by such person in respect
of that proceeding. Each director or officer is deemed to have
contracted with the Registrant on the terms of the indemnity
contained in Article 21.2 of the Articles.
Under
Article 21.3 of the Articles and subject to any restrictions in the
Act, the Registrant may indemnify any person, including any
eligible party, against eligible penalties and pay expenses
incurred in connection with the performance of services by that
person for the Company.
Under
Article 21.4 of the Articles the Registrant is permitted to advance
expenses to an eligible party to the extent permitted by and in
accordance with the Act.
Subject
to the Act, under Article 21.5 of the Articles, the failure of an
eligible party of the Registrant to comply with the Act or the
Articles does not invalidate any indemnity to which he or she is
entitled under the Article 21 of the Articles which governs
indemnification of eligible parties.
Under
the Articles, the Registrant may purchase and maintain insurance
for the benefit of any eligible party (or his or her heirs or legal
personal representatives) against any liability incurred by him or
her as an eligible party.
For the
purposes of the Articles, the terms "eligible party", "eligible
penalty", "eligible proceeding", "expenses and "proceeding" have
the meanings set forth in the Act, as summarized above.
Indemnification under the U.S. Securities Act
Insofar as indemnification for liabilities arising under the
U.S. Securities Act may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that in the opinion of
the U.S. Securities and Exchange Commission such indemnification is
against public policy as expressed in the U.S. Securities Act and
is therefore unenforceable.
EXHIBIT INDEX
Exhibit No. |
Description |
|
4.1 |
Annual information form of the Registrant for the year ended
December 31, 2021 dated March 31, 2022 (incorporated by reference
to Exhibit 99.7 of the Registrant's Form 40-F filed with the
Commission on April 4, 2022) |
4.2 |
Audited consolidated financial statements of the Registrant for the
years ended December 31, 2021 and 2020, together with the notes
thereto and the report of the independent registered public
accounting firm thereon (incorporated by reference to Exhibit 99.5
to the Registrant's Form 40-F filed with the Commission on April 4,
2022) |
4.3 |
Management's discussion and analysis of consolidated results of
operations and financial condition of the Registrant for the year
ended December 31, 2021 (incorporated by reference to Exhibit 99.6
to the Registrant's Form 40-F filed with the Commission on April 4,
2022) |
4.4 |
Condensed consolidated interim financial statements of the
Registrant for the three and nine months ended September 30, 2022
and 2021 (incorporated by reference to the Registrant's Form 6-K
furnished to the Commission on November 15, 2022) |
4.5 |
Management's discussion and analysis of financial condition and
operations of the Registrant for the three and nine months ended
September 30, 2022 and 2021 (incorporated by reference to the
Registrant's Form 6-K furnished to the Commission on November 15,
2022) |
4.6 |
Management information circular dated May 12, 2022 (incorporated by
reference to the Registrant's Form 6-K furnished to the Commission
on May 20, 2022) |
4.7 |
Material change report of the Registrant dated August 5, 2022
(incorporated by reference to the Registrant's Form 6-K furnished
to the Commission on December 14, 2022) |
5.1 |
Consent of Deloitte LLP,
Independent Registered Public Accounting Firm.
(1) |
5.2 |
Consent of David Gaunt,
P.Geo. (1) |
5.3 |
Consent of James Lang, P.Geo.
(1) |
5.4 |
Consent of Eric Titley,
P.Geo. (1) |
5.5 |
Consent of Robin Kalanchey,
P.Eng. (1) |
5.6 |
Consent of Stephen Hodgson,
P.Eng. (1) |
5.7 |
Consent of Hassan Ghaffari,
P.Geo. (1) |
5.8 |
Consent of Sabry Abdel Hafez,
P.Eng. (1) |
5.9 |
Consent of Lee Galbraith,
P.Eng., P.E. (1) |
6.1 |
Powers of Attorney
(included on the signature page in Part III of this Registration
Statement) |
7.1 |
Form of Trust
Indenture(1) |
107 |
Filing Fee
Table |
(1)
Filed as an exhibit to this registration statement on Form
F-10.
PART III
UNDERTAKING AND CONSENT TO
SERVICE OF PROCESS
Item 1. Undertaking.
The Registrant undertakes to make
available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly,
when requested to do so by the Commission staff, information
relating to the securities registered pursuant to this Form F-10 or
to transactions in said securities.
Item 2. Consent
to Service of Process.
(a) Concurrently
with the filing of this Registration Statement on Form F-10, the
Registrant is filing with the Commission a written irrevocable
consent and power of attorney on Form F-X.
(b) Any
change to the name or address of the agent for service of the
Registrant will be communicated promptly to the Commission by
amendment to Form F-X referencing the file number of this
Registration Statement.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements
for filing on Form F-10 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British
Columbia, Country of Canada, on December 14, 2022.
NORTHERN
DYNASTY MINERALS LTD.
By: /s/ Ronald
Thiessen
__________________________________________
Name: Ronald
Thiessen
Title: Chief
Executive Officer
POWERS OF ATTORNEY
Each person whose signature appears
below constitutes and appoints Ronald Thiessen and Mark Peters, and
each of them, either of whom may act without the joinder of the
other, as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this
Registration Statement and registration statements filed pursuant
to Rule 429 under the U.S. Securities Act, and to file the same,
with all exhibits thereto and other documents in connection
therewith, with the U.S. Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each
acting alone, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the
U.S. Securities Act, this Registration Statement has been signed by
or on behalf of the following persons in the capacities indicated
on December 14, 2022.
Signature |
|
Title |
/s/
Ronald Thiessen |
|
|
|
|
Chief Executive Officer and Director (Principal
Executive Officer) |
Ronald
Thiessen |
|
|
|
|
/s/ Mark
Peters |
|
|
|
|
Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer) |
Mark Peters |
|
|
|
|
|
|
|
/s/ Robert A.
Dickinson |
|
|
|
|
|
Robert A.
Dickinson |
|
Director and Executive
Chairman |
|
|
|
/s/ Desmond M.
Balakrishnan |
|
|
|
|
|
Desmond
M. Balakrishnan |
|
Director |
/s/
Christian Milau
|
|
|
|
|
|
|
|
Director |
Christian
Milau |
|
|
/s/
Steven A. Decker
|
|
|
|
|
|
Steven A.
Decker |
|
Director |
|
|
|
/s/ Kenneth W. Pickering
|
|
|
|
|
|
Kenneth W.
Pickering |
|
Director |
|
|
|
/s/ Gordon B. Keep
|
|
|
|
|
|
Gordon
B. Keep
|
|
Director |
|
|
|
/s/ David C.
Laing |
|
|
|
|
|
David C. Laing |
|
Director |
|
|
|
/s/ Wayne Kirk |
|
|
|
|
|
Wayne Kirk |
|
Director |
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of
Section 6(a) of the Securities Act of 1933, as amended, the
undersigned has signed this Registration Statement, solely in its
capacity as the duly authorized representative of the Registrant in
the United States, on December 14, 2022.
PEBBLE EAST
CLAIMS CORPORATION
By: /s/ Ronald
Thiessen
__________________________________________________
Name: Ronald
Thiessen
Title: Director
Northern Dynasty Minerals (AMEX:NAK)
Graphique Historique de l'Action
De Fév 2023 à Mar 2023
Northern Dynasty Minerals (AMEX:NAK)
Graphique Historique de l'Action
De Mar 2022 à Mar 2023