Class action lawsuit against Northern Dynasty claims company misled shareholders

Dec 14, 2020

The lawsuit holds that the company did not disclose to its investors that the proposed mine was contrary to Clean Water Act guidelines, and that it artificially inflated its stock prices by sharing misleading information.

Members of the media walking up to an exploratory drill rig. 2012.
Credit Jason Sear/KDLG

A shareholder of Northern Dynasty Minerals is filing a class action suit against the company and its directors for allegedly misleading shareholders about the viability of the proposed Pebble Mine. People who bought stocks between Dec. 21, 2017 and Nov. 25, 2020 have until February 2, 2021 to join the lawsuit as lead plaintiffs.

Canadian-based Northern Dynasty is the parent company of the Pebble Limited Partnership, which has been promoting the mine to investors for more than a decade.

The U.S. Army Corps of Engineers last month denied Pebble a federal permit. It said that the project went against Clean Water Act guidelines, as well as the public interest. 

The lawsuit holds that the company did not disclose to its investors that the proposed mine was contrary to the guidelines and public interest. The lawsuit also cites the secretly-recorded Pebble Tapes, which the Environmental Investigation Agency, an environmental group, released in September. In the tapes, Northern Dynasty CEO Ron Thiessen and former Pebble CEO Tom Collier say that once the mine went into production, the company planned to pursue a larger mine and extend its lifespan beyond what was being proposed.

Because of that, it alleges, Northern Dynasty misled the public and violated the Securities Exchange Act of 1934. That act is aimed at promoting greater transparency and requires that companies disclose relevant financial information.

The suit claims that in doing so, Northern Dynasty artificially inflated its stock prices. It holds that had investors been aware of the situation, they would not have bought shares at that price, or at all.

Northern Dynasty declined to comment for this story.

Screengrab of the Google Finance Market Summary for Northern Dynasty Mineral (NAK) shares. Dec. 12, 2020.
Credit Google Finance

The months leading up to Pebble’s permit denial were rocky for the company, and that was reflected in its stock prices. The suit claims that that damaged investors.

When the Army Corps announced in August that Pebble needed to submit a new plan to mitigate the impacts to wetlands, the lawsuit points out the shares dropped by almost 38%, and when it denied Pebble a federal permit at the end of November, Northern Dynasty stocks dropped almost 50%, to $0.40 a share. As of Friday, they were at $0.34 a share.

The next annual Northern Dynasty shareholder meeting is on Dec. 17 in Vancouver.

Contact the author at isabelle@kdlg.org or 907-842-2200.