Lawsuit Concerns Proposed Pebble Mine
One shareholder of Canadian mining company Northern Dynasty was troubled by the company’s operations regarding the proposed Pebble Mine and decided to seek help from a business attorney. This resulted in a lawsuit being filed a case as Northern Dynasty Minerals Investment Scandal against Northern Dynasty for allegedly keeping information from their shareholders to artificially inflate the company’s stock prices. It is a class-action lawsuit, and plaintiffs who bought shares between December 21, 2017, and November 25, 2020, could join the plaintiffs. This period closed on February 2nd, 2021, and the lawsuit is not taking on any more new plaintiffs.
The Mine Was Promoted for a Decade
Northern Dynasty first proposed the Pebble Mine over a decade ago. It has been promoting the mine to attract investors ever since. The Pebble Mine, however, was not yet approved by the US Army Corps of Engineers. It can take years for mining companies like Northern Dynasty to get a decision on permit applications for new mines. If a permit application takes an especially long time to get a decision (as the application for the Pebble Mine did) this generally indicates an increased likelihood that the application may be denied. The US Army Corps of Engineers finally handed down their decision on the permit for the Pebble Mine in November 2020. Class Action Lawsuit: Northern Dynasty Minerals Investment Scandal.
US Army Corps of Engineers Denies Permit
In November 2020, the US Army Corps of Engineers denied Northern Dynasty’s application for a permit for the Pebble Mine. This permit was specifically for the mine’s planned water decision There were two main reasons that they denied the application. First, the plans were judged to violate the Clean Water Act. Secondly (and somewhat more subjectively) the plans were deemed to not be in the public interest.
It is important to note that the permit that was denied only covers one part of the planned mine’s operation. However, having a water discharge plan is legally required for the mine to proceed. This means that this permit denial (if it is upheld) would end the whole project.
The Area Is Environmentally & Culturally Sensitive
The proposed Pebble Mine is located in a rural area approximately 200 miles southwest of Anchorage. Only about 7,500 people live in the area. There are no settlements in the immediate area, but there are several small villages located roughly 20 miles away. The site is within the Bristol Bay watershed, which is home to the largest salmon fishery in the world. Most of the jobs in the area are directly or indirectly related to commercial salmon fishing. The local economy’s second-largest source of revenue is tourism. Most of the tourists in the area are sport fishermen who want to fish for rainbow trout and other local freshwater species. The proposed mine would also affect the recreational fishing in the area.
While the mine would create jobs, the plans state that most of the jobs would only last for the first 25 years of the mine’s existence. Understandably, the Pebble Mine plans have met with heavy opposition from local groups. Some local groups have even filed lawsuits prior to the shareholder’s lawsuits.
Two of the local groups that have sued to stop the lawsuit are connected to Alaska Native peoples. The lawsuits actually name the Alaskan state government as a defendant for allowing the Pebble Mine to even be explored. It should be noted that the culture of the Alaska Natives, which includes subsistence fishing, would be threatened by the mine’s development.
Northern Dynasty Allegedly Kept Information from Shareholders
The lawsuit alleges that Northern Dynasty kept information from shareholders in several areas. Northern Dynasty allegedly did not inform investors that their plans were in violation of the Clean Water Act and were in danger of being deemed to not be in the public interest. Furthermore, the suit alleges that Northern Dynasty kept their true plans for the future of the mine secret.
The “Pebble Tapes,” which were released by an environmentalist group, record Northern Dynasty CEO Ron Thiessen and former Pebble Mine CEO Tom Collier discussing plans to pursue a larger mine than their proposal specified. They also discussed extending the mine’s lifespan beyond the 45 years that were originally proposed.
The Securities Exchange Act of 1934
The lawsuit further alleges that Northern Dynasty violated the Securities Exchange Act of 1934 by withholding the above information from shareholders. The Securities Exchange Act of 1934. This law was passed in the midst of the Great Depression to require companies to be more transparent with their shareholders. Under this act, companies are required to disclose relevant financial information.
Alleged Withholding May Have Artificially Raised Stock Prices
Perhaps the most serious of the many allegations raised by the lawsuit is that Northern Dynasty’s withholding of information may have artificially raised stock prices. The lawsuit states that the shareholders would not have purchased the Northern Dynasty shares at the price they did (if at all) if they knew about the likelihood of the permit being denied. Northern Dynasty has refused requests from multiple media organizations to comment on these allegations.
Lawsuit Punctuates Rocky Period for Northern Dynasty
The lawsuit comes in the midst of a rocky period for Northern Dynasty. The company’s share prices had already dropped steeply in August, when the US Army Corps of Engineers announced that Pebble Mine needed a new plan that would reduce its impact on the surrounding wetlands. Northern Dynasty shares dropped by roughly 38% in the aftermath of this announcement. When the US Army Corps of Engineers denied the Pebble Mine permit in November, the company’s share prices declined by a further 50%. At this point, Northern Dynasty shares were only worth around 40 cents apiece. By mid-December, the shares had declined further, to only 34 cents each.
The Most Recent Shareholder Meeting
Class Action Lawsuit: Northern Dynasty Minerals Investment Scandal. Northern Dynasty’s most recent shareholder meeting was scheduled for December 17th. It was held in Vancouver. The minutes of the meeting is private, but shareholder meetings are held to allow shareholders to voice their concerns with the management of the company.