Northern Dynasty ownership complex

Posted: Wednesday, April 06, 2005

Just who owns major blocks of shares in Northern Dynasty Minerals Ltd. and would have a measure of influence over the proposed Pebble Mine project is a bit of a moving target. Another question is who might ultimately operate the mine once development actually begins.

Recent acquisition of the land interests held by other companies have made the American company Northern Dynasty Mines Inc. the sole owner of the Pebble Mine site property. ND Mines is a wholly owned subsidiary of the publicly traded Canadian company Northern Dynasty Minerals Ltd., one of several mining companies managed by Hunter Dickinson Inc., a Canadian firm based in British Columbia.

A U.S. Security and Exchange Commission filing submitted last year by Northern Dynasty Minerals showed that by July 2003, Shambhala Gold Ltd., a private mine financing company and a wholly-owned subsidiary of London-based Galahad Gold, had acquired or had options on some 26 percent of issued shares.

Robert A. Dickinson, a director of Hunter Dickinson Group Inc. (HDGI), was listed as holding in excess of 5 percent of current issued and outstanding common shares of NDM Ltd.

Several brokerage houses and clearinghouses collectively were listed in the SEC report as controlling more than 5 percent of shares on behalf of their respective clients. Exactly who they are is not available. According to the report, NDM "does not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries."

Shares registered by intermediaries are assumed to be held by people within the country the clearinghouse was located. Of the roughly 35.2 million available shares of NDM Ltd., about 66.8 percent were said to be held by Canadian shareholders, 7.8 percent by U.S. shareholders and 25.4 percent by "others."

In the report, Northern Dynasty officials said NDM was "not directly or indirectly owned or controlled by a corporation or foreign government" to the best of their knowledge.

More recent developments have begun to change the share-hold picture.

The largest backer of NDM Ltd.'s Alaska venture is now the London-based corporation Galahad Gold. As of February, Galahad owned 34.1 percent of Northern Dynasty Minerals Ltd., making it its main asset. It has two representatives on the company's board of directors and on the project advisory committee.

Galahad was considering purchase of the 20-percent interest in NDM Ltd. held by HDGI, according to news sources. However, Northern Dynasty Mines Inc., the American company, exercised an option to make that purchase instead, and HDGI now owns 20 percent of Northern Dynasty Minerals, said Bruce Jenkins, chief operating officer of Northern Dynasty Minerals Ltd. Thus, Galahad and HDGI together own about 54 percent of Northern Dynasty Minerals Ltd.

"I just came back from London," Jenkins said. "I met with Galahad investors and gave them an update on the project, and there was no hint they were planning to buy 20 percent more."

According to Minesite.com, a Web site devoted to world mining news, the Lord Rothschild family recently purchased 7.43 percent of Galahad.

A report on Galahad Gold published by Equity Development Co., a British investment research firm, NDM Ltd.'s very favorable preliminary assessment of its Pebble property suggests "a hugely profitable mine," which should "register on the radar of acquisitive majors."

That is, major mining companies that typically eye "junior" mining companies for possible acquisition apparently like what they see in Northern Dynasty Minerals.

This is common in the mining industry. HDGI has invested $300 million (Canadian) in 10 exploration ventures since 1985, according to NDM Ltd.'s Web site. Three of those have been sold to majors for development.

Could that happen with the Pebble project?

"The bottom line is this is a large project with $1.5 billion in capital costs that probably will go higher after engineers complete the feasibility study," Jenkins said in an interview Tuesday in Kenai. "Even if one of the majors was doing this project, they would look at the option of partnering with other major mine companies to spread the financial and operations risk."

Northern Dynasty Mines will do the same thing, Jenkins said, adding the company had received inquiries from, signed some confidentiality agreements with and toured certain major mining companies who have expressed interest.

"I can tell you there is a lot of interest, particularly in response to our new measured and indicated, newly defined resource," Jenkins said. "A year ago, we had an inferred resource of 2.7 billion tons. Now it is in excess of 4 billion metric tons, and most of that is measured and indicated — the highest level of accuracy on mineralization. It's no wonder and no surprise that majors are interested."

At the appropriate time, ND Mines would consider partnering with a major, one that would "be the best fit for us to take us into construction and operation," Jenkins said.

Meanwhile, the company is working to reduce risks associated with assaying the deposits, meeting environmental requirements and other elements of the permitting process, and with respect to the projects financial feasibility and finance-ability, Jenkins said.

Ella Ede, ND Mines' environmental project manager, said promises being made by the company would become part of any agreement made with a major that might partner to run the mine.

How future investment might influence decisions to come for Northern Dynasty is anyone's guess, and could depend on who ends up with a controlling interest.



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