Name of the Project
Pebble copper/gold/molybdenum project.

Location
South-west Alaska, US.

Client
Pebble Limited Partnership (PLP), wholly owned by Northern Dynasty Minerals.

Project Description
The Pebble project is the world’s largest undeveloped copper and gold resource. The project’s tonnes, grade, metallurgy and geometry have the potential to support a modern, long-life mine.

The project’s current resource estimate includes 6.44-billion tonnes in the measured and indicated categories containing 57-billion pounds of copper, 70-million ounces of gold, 3.4-billion pounds of molybdenum and 344-million ounces of silver; and 4.46-billion tonnes in the inferred category, containing 24.5-billion pounds of copper, 37-million ounces of gold, 2.2-billion pounds of molybdenum and 170-million ounces of silver. Palladium and rhenium also occur in the deposit.

The PLP is proposing to develop the Pebble copper/gold/molybdenum porphyry deposit as an openpit mine, with associated on- and off-site infrastructure including:
• a 230 MW power plant located at the mine site;
• a 134 km transport corridor from the mine site to a port site on the west side of Cook Inlet;
• a permanent, year-round port facility near the mouth of Amakdedori Creek on Cook Inlet; and,
• a 303 km natural gas pipeline from the Kenai Peninsula to the Pebble project site.

The proposed mine will operate for about 20 years. This includes 14 years of mining using conventional drill-blast-shovel operations, followed by six years of milling material from a low-grade ore (LGO) stockpile. The mining rate will average 90-million tons a year, with 58-million tons of mineralised material being processed through the mill each year for an extremely low life-of-mine waste to ore ratio of 0.1:1.

Mine site facilities will include an openpit mine; tailings storage facilities (TSFs), an LGO stockpile, overburden stockpiles, quarry sites, water management ponds, milling and processing facilities, as well as supporting infrastructure such as the power plant, water treatment plants, camp facilities and storage facilities.

The openpit will be developed in stages and will eventually be 1 981 m long, 1 676 m wide and between 405 m and 533 m deep. A total of 1.2-billion tons of material will be mined, including 1.1-billion tons to be processed through the mill and 100-million tons of waste rock.

Nonpotentially acid-generating (non-PAG) waste rock will be used as a construction material for on-site roads and TSF embankments. 

A small amount of waste rock considered PAG will be stored in a lined LGO stockpile until mine closure, at which time it will be back-hauled to the openpit for permanent subaqueous storage.

Mineralised material will be processed using conventional froth flotation. On average, the process plant will produce about 600 000 t/y of copper/gold concentrate containing an estimated 287-million pounds of copper, 321 000 oz of gold and 1.6-million ounces of silver, and 15 000 t/y of molybdenum concentrate containing about 13-million pounds molybdenum.

A TSF located in the North Fork Koktuli drainage will store 1.1-billion tons of tailings generated over 20 years of mine operations. About 88% will be non-PAG bulk tailings; the remaining 12% will be pyritic PAG tailings, which will be stored subaqueously in a separate, fully lined cell within the TSF. Four TSF embankments, ranging from 18.3 m (east embankment) to 183 m (main embankment) in height, will be developed, with centre-line or downstream construction methods used for all external embankments. A conservative 2.6:1 (horizontal:vertical) slope is targeted to ensure safety and stability under all operating conditions, including maximum possible flood and seismic events.

Potential Job Creation
The Pebble project will directly employ about 2 000 workers during its four-year construction phase and an estimated 850 workers during its 20-year operations phase.

Net Present Value/Internal Rate of Return
Not stated.

Value
Capital expenditure on Pebble is estimated at between $6-billion and $8-billion.

Duration
Not stated.

Latest Developments
First Quantum Minerals and Northern Dynasty have announced that the companies have terminated a 2017 framework accord that envisioned the partners closing an option and partnership transaction to develop the controversial Pebble copper/gold project.

First Quantum breathed new life into the highly controversial development project in December when it signed a framework agreement with Northern Dynasty to complete due diligence and receive the required regulatory approvals before it could sign a formal option agreement.

Aside from the project’s environmental and permitting woes, Northern Dynasty – a unit of mining house Hunter Dickenson – has suffered several major setbacks in recent years, most notably Rio Tinto giving away its 19.1% holding in the company to two Alaskan charities in April 2014, following a strategic review. This was shortly after Anglo American pulled out in September 2013 as part of its plan to cut the cost of future options.

Under the terms of the December framework agreement, a subsidiary of First Quantum would have worked towards signing an option agreement with Northern Dynasty and paying $150-million, staged over four years, to acquire the option to acquire half an interest in PLP for $1.35-billion.

First Quantum would have had the choice to extend the option period for up to two years by making payments to be agreed upon, the amounts of which amounts will be offset against the $1.35-billion additional investment amount. First Quantum has paid an early option payment of $37.5-million after signing the framework agreement to Northern Dynasty.

Northern Dynasty’s TSX-listed equity benefited from market speculators early in 2017, as investors bet that the incoming administration of US President Donald Trump would provide an easier path to development under a more probusiness agenda. However, this optimism soon waned, when new Environmental Protection Agency (EPA) boss Scott Pruitt prompted a 46% sell-off of the company’s stock in January following an apparent reversal of position by the EPA regarding the Pebble project.  "It is my judgment, at this time, that any mining projects in the region likely pose a risk to the abundant natural resources that exist there," pruit has said.

The EPA suspended its process to withdraw its proposed determination under Section 404(c) of the Clean Water Act (CWA) to pre-emptively veto the project. This clears the way for Pebble to apply for a CWA 404 permit with the US Army Corps of Engineers (USACE), leaving the proposed restrictions in place while the EPA collects more information on the proposed mine's impact on the region's world-class fisheries and natural resources.

The USACE will facilitate a formal consultation and public-comment process following publication of the Pebble draft environmental impact statement – expected in 2019. The Corps' current timeline estimates the final EIS for the Pebble project to be completed within 24 months.

The Corps announced in February that it had appointed a third-party contractor to undertake the EIS.

It is unclear whether the USACE environmental process will continue, and requests for comment by Mining Weekly Online were still outstanding from a Hunter Dickenson spokesperson at the time of publication.

Nongovernmental organisation Earthworks' Northwest programme director Bonnie Gestring hailed the announcement.

"It is great news that First Quantum decided to forgo their investment in the proposed Pebble mine, in Alaska’s Bristol Bay. First Quantum is the latest in a string of investors to recognise that it’s a bad idea to put North America’s largest openpit mine in the spawning grounds of the world’s largest remaining wild sockeye salmon fishery.

“We hope First Quantum’s decision convinces EPA to follow through on its initial plan to protect the Bristol Bay watershed from industrial scale mining."

Key Contracts and Suppliers
Wardrop Engineering (preliminary assessment report).

On Budget and on Time?
The Pebble deposit has inspired intense controversy, as a broad and bipartisan coalition – including environmentalists, Alaska natives and commercial fishermen – has fought its planned development, resulting in the EPA stopping the project in 2014. The election of US President Donald Trump, however, has fuelled hopes that a more mining-friendly EPA will enable the project to progress.

Contact Details for Project Information
PLP, tel +1 907 339 2600, fax +1 877 450 2600 or email receptionist@pebblepartnership.com.