Anglo American Withdraws from Pebble Project
To ensure an orderly ownership transition, the detailed aspects of Anglo American’s withdrawal from the Pebble project are being developed and implemented by the two companies. Anglo American expects to record an impairment charge related to the project of $300 million on a post-tax basis at year-end 2013. As of June 30, Anglo American had funded $541 million of expenditure on the project.
The Pebble project is located 200 miles southwest of Anchorage, Alaska, on state land designated for mineral exploration and development. It is situated in a region of rolling tundra, approximately 1,000 ft above sea-level, 65 miles from tidewater on Cook Inlet, and offers favorable conditions for mine-site and infrastructure development.
However, the project has drawn strong opposition from local and environmental groups based on a perceived threat to salmon and trout spawning streams in the region. This opposition has presented obstacles to permitting and has the potential to inhibit project development for at least several years.
Anglo American did not make reference to the permitting issues in its announcement of its withdrawal from the Pebble project. Anglo American Chief Executive Mark Cutifani said, “Despite our belief that Pebble is a deposit of rare magnitude and quality, we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options.
“Our focus has been to prioritize capital to projects with the highest value and lowest risks within our portfolio and to reduce the capital required to sustain such projects during the pre-approval phases of development as part of a more effective, value-driven capital allocation model.
“We wish the project well through its forthcoming permitting process and express our thanks to all those who have supported Pebble and who recognize the opportunities and benefits that such an investment may bring to Alaska.”
Northern Dynasty CEO Ron Thiessen said, “Northern Dynasty will again own 100% of one of the world’s most important copper and gold resources and will have the benefit of $541 million worth of expenditures, which opens the door to a number of exciting possibilities for Northern Dynasty and its shareholders, and the Pebble project and its stakeholders. Northern Dynasty and the Pebble Partnership have both the expertise and resources necessary to advance the Pebble project.”
The current resource estimate for the Pebble deposit includes 5.94 billion metric tons (mt) measured and indicated, containing 55 billion lb of copper, 67 million oz gold, and 3.3 billion lb molybdenum; and 4.84 billion mt inferred, containing 26 billion lb of copper, 40 million oz of gold, and 2.3 billion lb of molybdenum. Quantities of silver, palladium and rhenium also occur in the deposit.
Exploration drilling on the deposit to date has totaled about 1 million ft in about 1,200 holes.