TSX-listed Northern Dynasty has updated the preliminary economic assessment (PEA) for its Pebble copper/gold project, to evaluate the impact of the recently announced royalty financing on the project.

The results of the updated study aligned with Northern Dynasty’s estimates at the time of financing, president and CEO Ron Thiessen said on Monday.

“The robust results of the 20-year base case are minimally impacted by the financing, which provides substantial working capital that we can use to advance the Pebble project in permitting.”

The 2022 PEA updates the 2021 PEA to examine the impact from the $12-million tranche of the previously completed royalty investment and the potential impact of a $60-million royalty investment if all five tranches are fully committed.

Northern Dynasty states that the 2022 PEA highlights that the project remains robust and, although the company believes the royalty has the potential to be valuable, it has minimal impact on the forecasted economics of the project while strengthening the company’s balance sheet position.

The 2022 PEA also assesses the royalty’s impact on the projected results for the three potential mine expansion scenarios and potential alternative strategies for gold recovery that were also presented in the 2021 PEA and could form the basis for future permit applications and review. The royalty was found to have a minimal impact on the results of these potential scenarios. 

Without a royalty, the PEA calculates an aftertax net present value, using a 7% discount of $2.28-billion and an internal rate of return (IRR) of 15.7%. Calculating for a 6% silver royalty, the PEA remains virtually unchanged at $2.45-billion and the IRR 15.6%. Working on a 10% gold and 30% silver royalty, the PEA is $2.01-billion and the IRR 15.1%.

The Pebble project has been seeking approval for years to extract gold, copper and molybdenum from an area that drains into Bristol Bay. The project is one of the world's biggest copper and gold deposits.