Pebble Copper - Gold Gold - Molybdenum Molybdenum Project
Alaska, USA A A First First World World & & Top Top Class Class Mining Mining Asset Asset
October 2008 1
Cautionary and Forward Looking Information Comments This presentation includes certain statements and other information that may be deemed "forward-looking". All such statements, other than statements of historical facts, that address estimated resource quantities, grades, locations, geometry and contained metals, possible future mining, exploration and development activities, are forward-looking statements. All information relating to the Preliminary Assessment is also "forward looking”, including any statements relating to the possible construction of a port, road, power generating facilities and power transmission facilities. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements should not be in any way construed as guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forwardlooking statements include market prices for metals, the conclusions of detailed feasibility and technical analyses, lower than expected grades and quantities of resources, mining rates and recovery rates and the lack of availability of necessary capital, which may not be available to the Company on terms acceptable to it or at all. The Company is subject to the specific risks inherent in the mining business as well as general economic and business conditions. For more information on the Company, Investors should review the Company's annual Form 20-F filing with the United States Securities Commission and its Canadian home jurisdiction filings that are available at www.sedar.com. This presentation also uses the terms “measured resources”, “indicated resources” and “inferred resources”. Northern Dynasty Minerals Ltd. advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, ”inferred resources” have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessments as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable. 2
Northern Dynasty and Anglo American are Developing One of the World’s Most Important Copper-Gold-Molybdenum Projects in Alaska.
3
Pebble Ranks as One of the World’s Most Important Copper-Gold Deposits.1 Contained Metal Rank
Project
Gold M oz
Copper B lbs
CuEQ2 B lbs
Au/Cu Ratio
1
Grasberg
109
80
167
1.4
2
Pebble
87
74
1843
1.2
3
Oyu Tolgoi
34
71
98
0.5
4
Los Pelambres
3
43
513
0.1
5
La Granja
4
43
46
0.1
6
Escondida Norte
6
28
33
0.2
7
Sar Cheshmeh
11
17
26
0.6
8
Salobo
15
17
29
0.9
9
Batu Hijau
17
16
30
1.0
10
Bingham Canyon
10
13
263
0.8
1. Updated after Metal Economics Group, December 2003. 2. Copper equivalent calculations use metal prices of US$1.80/lb for copper, US$800/oz for gold, and US$10.00/lb for molybdenum. Metallurgical recoveries and net smelter returns are assumed to be 100%. 3. Co-product molybdenum resource included. 4
Anglo American plc has Acquired 50% of the Pebble Project for Investing $1.425 Billion. Northern Dynasty-Anglo American Agreement PEBBLE LIMITED PARTNERSHIP
• A 50/50 Partnership with Equal Operatorship and Rights • Anglo Will Fund the Next US $1.425 Billion of Project Costs to Retain its Interest (All or None) US$ Millions Prefeasibility Study1
125
Feasibility Study
325
Construction Equity
975
Total Anglo Funding
1,425
1. Completion of Prefeasibility Study planned for 2009. Anglo has committed $US 180 million to December 31, 2008. 5
Northern Dynasty owns 50% of the Pebble Partnership.
Anglo American
Northern Dynasty
50%
50%
49.95%
Pebble Mines Corp. (General Partner)
49.95%
0.1%
100%
Pebble Project + $ 1.425 Billion in Equity Financing 6
Northern Dynasty is on a Strong Foundation to Grow. Increased Assets • 50% Equal Operator in America’s Most Important New Mine Development • $1.425 Billion Will Provide Most of Required Equity for Construction Financing • Partnership Has Assembled a World-Class Mine Development Team • NDM has $40 Million in Cash With No Commitments Diminished Liabilities • Financing, Execution, and Operating Risks Have All Been Minimized • Investments by Anglo American ($180 million) in the Project and by Rio Tinto ($200 million) and Mitsubishi Corp ($100 million) in NDM Shares Endorse the Project 7
Northern Dynasty Shares Are Undervalued.
Listed
AMEX – NAK
Shares Out – Fully Diluted
TSX – NDM 97.5 Million
Management Owns
13.0%
Rio Tinto Owns
19.8%
Mitsubishi Corp Owns Working Capital
9.1% US $ 40 Million
8
World’s Largest Mining Companies are Acquiring Interests in Pebble. Metal Companies Ranked by Market Cap1
1. Source: Capital IQ and Bloomberg; Market Capitalization as of 18-Mar-08.
9
Pebble is One of a Very Few Advanced Stage World-Class Mining Projects – and Pebble is Located on American Soil.
10
Pebble Operations Base at Iliamna.
PLP PLP Operations Operations Centre Centre
Lake Lake Iliamna Iliamna Two Two 5,000 5,000 Foot Foot Paved Paved Airstrips Airstrips
11
Pebble Property Captures the World’s Most Extensive Mineral System. An 8 Billion Tonne Copper-Gold-Molybdenum Deposit Has Been Discovered.
12
Total In-Situ Resources for the Pebble Deposit are 74B Pounds Copper, 87M Ounces Gold and 4B Pounds Molybdenum.1
Pebble West Pebble East 1. See detailed Pebble East and Pebble West resource estimates attached in Appendix. 13
Pebble West Hosts 4.1B Tonnes of Open Pit Style Mineralization. Pebble East Hosts 3.9B Tonnes of Bulk Underground Style Mineralization.
Deposit is Open to Expansion
OPEN PIT RESOURCE
UNDERGROUND RESOURCE
14
ZG
1
FA UL T
Major New Pebble East Target Identified.
? ?
NEW TARGET
A
A’
6348 15
Schematic Cross Section of Major New Target. ZG1 Fault
A
4.1 Billion Tonne Pebble West Deposit
3.9 Billion Tonne Pebble East Deposit
Drill Hole Lost in ZG1 Fault
Hole 6348
949 Feet Grading 1.92% CuEQ
NEW TARGET
A’
? 16
Pebble Project Target Schedule.
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Environment & Socioeconomic Pebble West Drilling Pebble East Drilling OP Planning Prefeasibility Project Partnership Feasibility Permitting Permit Approval Project Financing Design/Engineering Construction Production
17
Comprehensive Programs – Responsible Development Planning.
Project Expenditures US$ Millions Year
Engineering
Drilling
Environmental Socioeconomic Corporate
20022006
25
50
55
130
2007
10
48
32
90
2008
30
65
45
140
TOTAL
18
Pebble Project Will Have Important Annual Metal Production. Examples of Potential Processing Concepts at 320,000 TPD 100% Pebble West (0.30% CuEQ Cut-off)2 Grade LOWEST GRADE
Recovery (%) Production Percent of Revenue (%)1
Copper
Gold
Moly
.28%
0.32 g/t
.015%
91
60
90
600 M Lb
0.7 M oz
32 M lb
50
35
15
100% Pebble East (1.00% CuEQ Cut-off)2 Grade HIGHEST GRADE
Recovery (%) Production Percent of Revenue (%)1
.82%
0.49 g/t
.035%
93
65
94
1800 M Lb
1.2 M oz
77 M Lb
60
20
20
Pebble Blend (50% Pebble West Lowest Grade and 50% Pebble East Highest Grade) Grade AVERAGE GRADE
Recovery (%) Production Percent of Revenue (%)1
.55%
0.41 g/t
0.025%
92
63
92
1200 M lb
0.9 M oz
54 M Lb
60
25
15
1. Calculated at US$1.80/lb for copper, US$800/oz for gold, and US$10/lb for molybdenum. 2. See Appendix for detailed resource estimates. 19
Important New Copper Mine Projects Ranked by Projected Production.1
Project
Country
Projected Annual Copper Output (Million Pounds)
Pebble2
USA
1200
Oyu Tolgoi
Mongolia
1000
Andina Expansion
Chile
700
Collahausi Expansion
Chile
675
Toromocho
Peru
650
Las Bambas
Peru
550
KOV Expansion
DRC
500
Olympic Dam Expansion
Australia
500
Cananea Expansion
Mexico
420
1. Credit Suisse –Brave New World – September 2007. 2. Projected production only, using average grades for relative comparison purposes. Pebble is in the prefeasibility stage.
20
Yamal Sao Vicente Sega Buckreef C1 Santa Luz Jeronimo Bombore Bonikro Lapa Dinkidi Kittila Goldex CerroBlanco Kettle River Mercedes Cadia East Ballarat Syama Hollister Buzwagi Malomir Hidden Valley Quimsacocha Burnstone Tropicana Pinos Altos Los Filos Esquel Tongon Essakane Gualcamayo Eleonore Pioneer Blagodatnoe Cerro Corona Meadowbank Akyem Penasquito Kupol Hope Bay Minas Conga Pascua Boddington Pueblo Viejo Cerro Casale Magadan Donlin Creek
Peak Production Rate (000oz)
Forecast Production (by 2015) for New Gold Mines.1 2,000
1,500
1,000
Pebble 900,000 oz per year on average2
500
0
1. Source: BMO Capital Markets – May 2008. 2. Projected production only, using average grades for relative comparison purposes. Pebble is in the prefeasibility stage. 21
World’s Top Producers of Molybdenum.1 Producers
2006 Mo Production (Million Lbs)
Freeport/Phelps Dodge
68
Codelco
61
Pebble2
54
Rio Tinto/Kennecott
37
Thompson Creek
28
Jinduicheng
27
Grupo Mexico
25
China Moly
22
Antofagasta
22
Antamina
17
Collahuasi
7
(32-77)
1. Source: CRU molybdenum production by operator. 2. Projected production only, using average grades for relative comparison purposes. Pebble is in the prefeasibility stage. 22
Infrastructure – Port – Road – Pipeline – Power.
23
Pebble Partnership is Committed to Sustainable Development and Social Responsibility.
The Pebble Partnership is guided by five core principles: • Pebble will benefit Alaskans • Pebble will help build sustainable communities • Pebble will co-exist with healthy fish, wildlife and other valued natural resources • Pebble will apply the world’s best and most advanced science • At Pebble, we will listen before we act.
24
Alaska is a Mining Jurisdiction.
1. Source: USGS – 2005; http://ardf.wr.usgs.gov/ 25
Red Dog – The Largest Zinc Mine in the World.
26
Fort Knox – A World Class Gold Mine.
27
On State Land Designated for Mineral Exploration and Development by Approved Land Use Plans.
Finance Committee of the Alaska State Legislature Survey Question “Do you favor or oppose going forward with the environmental impact studies for the proposed Pebble Mine to determine whether or not the mine could be developed in a responsible manner?�
79% Public Support 28
Pebble is an Alaskan Project.
“In my view, the Pebble Project presents a tremendous opportunity for the people of Bristol Bay and Alaska” - John Shively, CEO
“I have faith in our regulatory standards in Alaska, and in the potential of modern engineering and environmental science to design projects that protect and even enhance natural systems.” - Ken Taylor, VP Environment 29
Policies are in Place for Local Hire in Conjunction with Workforce and Business Development.
PEBBLE PROJECT 2007 EMPLOYMENT STATISTICS
Total 2007 Workforce – 1003 Employees 30
Stakeholder Partnerships Are Being Formed with Neighbors.
“The Pebble Project is making a tremendous economic contribution to our communities today, and could make an even larger contribution in the future – one that would benefit all Bristol Bay residents.” • Alaska Peninsula Corporation • Iliamna Natives Limited • Pedro Bay Corporation
31
Extensive and Meaningful Stakeholder Consultation. 500
430 375
No. of Meetings
400
200
2004 2005 2006 2007
154 88 16
0
309
277
300
100
362
Stakeholder Relations
27
69 44
Business Groups
67 21
64
16 11
Agency Meetings
TOTAL 32
Beyond Compliance ! Actions Speak Louder Than Words. Recent New Initiatives by Pebble Partnership •
Intensive Stakeholder Engagement Process Keystone Center is commencing a multi-year program to engage project stakeholders and address any issues and concerns.
•
Independent Expert Scrutiny Panel of scientists and technical experts to scrutinize all work and commission independent research on behalf of communities and stakeholders.
•
Pebble Fund for Sustainable Bristol Bay Fisheries & Communities $5 million funded over five years to support community-led initiatives that enhance economic and social benefit of fisheries, and local economic development.
•
Pre-permitting Environmental & Socio-Economic Data Report Series Open public disclosure of all collected data over 20-month period beginning May 2008.
33
Comprehensive Environmental Studies.
• • • • • • • • • • • • • • • •
Surface Water Water Quality Groundwater Geochemistry Snow Surveys Analytical QA/QC Fish & Aquatic Resources Macroinvertebrates Wetlands Trace Elements Flow Habitat Iliamna Lake Marine Wildlife Air Quality Noise
• • • • • • • •
Cultural Resources Subsistence Land Use Recreation Socioeconomics Visual Aesthetics Impact Assessment & Management Mine Closure & Reclamation
34
Pebble Project will not Diminish Bristol Bay Salmon Fisheries.
8 Bristol Bay River Systems
35
Alaska Has a Rigorous and Transparent Permitting Process.
•
Plan to finalize Project Description and apply for major project permits in 2009 when prefeasibility study completed and project proposal defined
•
Rigorous multi-disciplinary review process – 11 federal (NEPA) and state (LMPT) agencies – 67 permits – broad public and stakeholder involvement – estimated to last three years
•
An objective, scientific permitting review process is assured
36
Valuation Metrics Show Strong Growth Potential for Northern Dynasty.
Mining Analyst Estimates Date
Recommendation
Target C$/Share
Raymond James – Tom Meyer
Jul/08
STRONG BUY
24.00
Westwind Partners – Andrew Mikitchook
Aug/07
BUY
24.00
BMO Capital Markets – Craig Miller
Feb/08
OUTPERFORM
N/A
Analyst
37
Recent Copper M&A Transactions.1 Acquiror
Target
Project
Country
Transaction Value ($ Mil)
Jinchuan
Tyler
Bahuerachi
Mexico
213
0.040
Minmetals
Northern Peru
Galeno
Peru
448
0.047
Yamana
Northern Orion
Agua Rica
Argentina
1,223
0.075
Chinalco
Peru Copper
Toromocho
Peru
872
0.040
Anglo American
Peru Government
Michiquillay
Peru
430
0.043
Teck Corp
Global Copper
Relincho
Chile
415
0.042
Average Price Paid Per Pound of Copper in the Ground
Value/lb ($/lb)
2
> 0.04
1. After Raymond James – May 2008. 2. Based on lbs of contained copper in reserves and measured, indicated and inferred resources. (i.e., not copper equivalent).
3
Copper Only
50% of Pebble
USA
$0.022
Copper Equivalent
50% of Pebble
USA
$0.012
3
3. Considers only NDM’s 50% of measured, indicated and inferred resources of Pebble deposits. No consideration of $712 Million ($1.425 Billion ÷2) of financing being provided by Anglo on behalf of NDM.
38
Appendices
39
World’s Important Porphyry Deposits.1 Rank by Contained Copper
1. After Economic Geology V100 No.5 August 2005. Giant Porphyry Deposits: Characteristics, Distribution and Tectonic Controls. 40
World’s Important Porphyry Deposits.1 Rank by Contained Gold
1. After Economic Geology V100 No.5 August 2005. Giant Porphyry Deposits: Characteristics, Distribution and Tectonic Controls. 41
Pebble Mineralization Extends 13,000 Feet by 8,000 Feet and is Open.
42
Pebble East is Bornite – Rich and High Grade.
43
Pebble West is Confirmed by Over 383 Cores Holes. Internationally Recognized Consultants have Conducted Engineering, Environmental and Socio-Economic Studies for an Open Pit Mine Plan.1,2,3,4 Measured Plus Indicated Resources
Cut-Off CuEQ %
Size
Contained Metal
Grade
Billion Copper Tonnes %
Gold g/t
Moly %
CuEQ %
Copper B lbs
Gold M oz
Moly M lbs
.30
3.0
.28
.32
.015
.57
18.8
31.3
993
.70
0.6
.46
.50
.021
.90
5.8
9.1
265
Inferred Resources
Cut-Off CuEQ %
Size
Contained Metal
Grade
Billion Copper Tonnes %
Gold g/t
Moly %
CuEQ %
Copper B lbs
Gold M oz
Moly M lbs
.30
1.1
.24
.30
.014
.51
5.9
10.8
361
.70
0.1
.40
.56
.020
.87
1.3
2.6
62
1. Estimated by Scott Wilson Roscoe Postle Associates Inc. Qualified Persons David W. Rennie, P.Eng and R Mohan Srivastava, M.Sc.,P.Geo., March 2005. 2. By prescribed definition, “Mineral Resources" do not have demonstrated economic viability. 3. Copper equivalent calculations use metal prices of US$1.80/lb for copper, US$800/oz for gold, and US$10.00/lb for molybdenum. Metallurgical recoveries and net smelter returns are assumed to be 100%. Adjustment factors to account for differences in relative metallurgical recoveries for gold, copper and molybdenum will depend upon the completion of definitive metallurgical testing. CuEQ = Cu % + (Au g/t x 25.72/39.68) + (Mo% x 220.46/39.68). 4. A 0.30% CuEQ cut-off is considered to be comparable to that used for porphyry deposit open pit mining operations in the Americas. For bulk underground mining higher cut-offs, such as 0.60% CuEQ, are typically used. All cut-offs are subject to a feasibility study.
* Pebble West Deposit only. Does not include Pebble East Deposit. 44
Pebble East is Confirmed by 162 Core Holes. It is High-Grade and One of the World’s Great Porphyry Deposits.1,2,3,4 Inferred Resources
Cut-Off CuEQ %
Grade
Size Billion Copper Tonnes %
Contained Metal
Gold g/t
Moly %
CuEQ %
Copper B lbs
Gold M oz
Moly B lbs
.60
3.9
.58
.36
.033
1.00
49
45
2.8
.70
3.1
.64
.39
.033
1.08
44
39
2.3
.80
2.4
.71
.42
.034
1.17
38
33
1.8
.90
1.9
.77
.46
.035
1.26
32
28
1.5
1.00
1.5
.82
.49
.035
1.33
27
24
1.2
1.10
1.2
.87
.53
.035
1.41
23
21
0.9
1. Estimated by Consultants to the Pebble Limited Partnership. 2. By prescribed definition, “Mineral Resources" do not have demonstrated economic viability. An Inferred Mineral Resource is that part of a mineral resource for which quantity and grade can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. 3. Copper equivalent calculations use metal prices of US$1.80/lb for copper, US$800/oz for gold, and US$10.00/lb for molybdenum. Metallurgical recoveries and net smelter returns are assumed to be 100%. Adjustment factors to account for differences in relative metallurgical recoveries for gold, copper and molybdenum will depend upon the completion of definitive metallurgical testing. CuEQ = Cu % + (Au g/t x 25.72/39.68) + (Mo% x 220.46/39.68). 4. A 0.30% CuEQ cut-off is considered to be comparable to that used for porphyry deposit open pit mining operations in the Americas. For bulk underground mining higher cut-offs, such as 0.60% CuEQ, are typically used. All cut-offs are subject to a feasibility study.
* Pebble East Deposit only. Does not include Pebble West Deposit. 45
Pebble East is an Important Block Cave Deposit. Major Block Cave Operations and Projects1 Million Tonnes
CuEQ2 %
Deposit
Location
Company
DOZ
Indonesia
Freeport / Rio Tinto
155
1.33
Grasberg
Indonesia
Freeport / Rio Tinto
874
1.47
Dom
Indonesia
Freeport / Rio Tinto
44
1.32
Kucing Liar
Indonesia
Freeport / Rio Tinto
499
2.04
Palabora
South Africa
Rio Tinto / Anglo
201
.70
Northparks
Australia
Rio Tinto
48
1.49
Henderson
Colorado
Phelps Dodge
159
1.26
Bingham Canyon
Utah
Rio Tinto
321
1.09
Resolution
Arizona
Rio Tinto / BHP
> 1,000
> 1.50
Hugo Dummett
Mongolia
Ivanhoe
1,654
1.54
Pebble East3
USA
NDM / Anglo
> 1,500
1.32
1. Source: Company reports and presentations. 2. Copper equivalent calculations use metal prices of US$1.00/lb for copper, US$400/oz for gold, and US$6.00/lb for molybdenum. Metallurgical recoveries and net smelter returns are assumed to be 100%. Adjustment factors to account for differences in relative metallurgical recoveries for gold, copper and molybdenum will depend upon the completion of definitive metallurgical testing. CuEQ = Cu % + (Au g/t x 12.86/22.06) + (Mo% x 132.28/22.05). 3. Example of current Pebble East inferred resource @ a 1.00% CuEQ cut-off. 46
World-Class Prefeasibility Study Team Fully Assembled. Base Case Assumptions Metal Prices
2008 $
Copper US$/lb
1.80
Gold US$/oz
800
Molybdenum US$/lb
10
Silver US$/oz
10
Palladium US$/oz
300
Rhenium US$/kg
3000
Smelter/Refinery Charges Copper Smelter US$/dmt
85
Copper Refining US¢/lb
8.5
Molybdenum Treatment US$/lb
1.0
Gold Refining US$/oz
10.0
Silver Refining US$/oz
1.0
47
Proposed Port, Road & Pipeline.
48
Proposed Power Infrastructure.
49
Industry Standard Processing – Excellent Metal Recoveries. METAL RECOVERY
Mines
Copper (%)
Gold (%)
Molybdenum (%)
Peer Average
88
65
60
Pebble West1
91
60
90
Pebble East2
93
65
94
1. Feasibility level metallurgical results. 2. Scoping level metallurgical results.
50
Local Governments and Communities.
51
Bristol Bay Fisheries will be Fully Protected.
Local Watersheds Support 0.5% of Regional Sockeye Production
!
52
Copper Company Comparisons.1
Company
Mkt Cap. (Million $)
CuEQ (B lbs)
CuEQ/Share (lbs)
Mkt Cap/lb CuEQ (cents/lb)
Equinox
2,734
15
27
0.181
Mercator
806
7
92
0.118
Metallica
636
6
60
0.113
Chariot
308
5
15
0.060
Quadra
1,132
20
369
0.056
Novagold
860
16
153
0.053
Ivanhoe
4,007
89
238
0.045
Taseko
788
25
178
0.032
Corriente
394
28
372
0.014
Northern Dynasty
800
67
720
0.012
1. Canaccord Adams – April 2008 53
Directors & Management. • Executive Chairman: Robert DICKINSON, an economic geologist with over 40 years of mineral exploration experience, is Executive Chairman of Northern Dynasty and a director of the Pebble Limited Partnership. Mr. Dickinson leads Northern Dynasty’s project development activities and is Chairman of Hunter Dickinson.
• CEO: Ronald THIESSEN, an accredited public accountant with over 25 years of corporate development experience, is President and CEO of Northern Dynasty and a Director of the Pebble Limited Partnership. Mr. Thiessen leads Northern Dynasty’s corporate development and financing activities and is President and CEO of Hunter Dickinson.
• Director, Environment and Sustainable Development: Bruce JENKINS is a
corporate and government relations executive with over 30 years of experience in project and corporate management. Mr. Jenkins is Vice President, Environment and Sustainable Development for Northern Dynasty and for Hunter Dickinson.
• Vice President, Engineering: Stephen HODGSON is a professional engineer with over 30 years of experience in mine operations, mine development and project engineering. Mr. Hodgson is Director of Engineering for the Pebble Limited Partnership and directs all engineering activities for the Pebble Project. Mr. Hodgson is also Vice President, Engineering for Hunter Dickinson.
• Non Executive Directors: David COPELAND, Scott COUSENS, David ELLIOTT, Gordon FRETWELL, Russell HALLBAUER, Wayne KIRK, Stephen SCOTT
54