Digging Value is a twice-a-week column where I deep dive into markets, mining, and whatever financial absurdity caught my attention.
If you like your investing insights (not advice!) grounded in cash flows, hard assets, and common sense—but also recognize that markets frequently ignore all three—you’ll probably enjoy this.
Let’s explore the wild world of value investing in natural resources together.
Today’s column: Joint venture drama, Pebble might get built, and the Nationally Strategic Premium is here.
“Digging for Value, One Story At A Time.”
Joint Venture Drama
Joint ventures are fun because every once in a while one of the parties decides to buy the shared asset for themselves hoping its significant other agrees.
But what happens when that decision is unsolicited? Like a surprise birthday party. But instead of cake and presents its a banner reading “Intervention” and your mom handing you a Bible earmarked to Proverbs saying, “I think it’s time we talked.”
That’s what Gold Fields did to Gold Road. Olivia Thomson from Australian Mining reports:
“Gold Road Resources has rejected an unsolicited takeover proposal from Gold Fields, its 50:50 joint venture partner for the Gruyere gold mine in Western Australia.
The offer was received on March 7 and, if accepted, would have involved Gold Fields acquiring 100 per cent of the shares on issue in Gold Road via a scheme of arrangement for $3.05 per share, valuing Gold Road at $3.3 billion.
This offer comprised $2.27 cash per share and a variable portion equal to the value of Gold Road’s shareholding in De Grey Mining. De Grey is soon set to be acquired by Northern Star Resources for $5 billion.
Gold Fields’ proposal would have consolidated its ownership of Gruyere, of which it is currently manager.”
Gold Fields made its move right after Gold Road announced lower production numbers for the quarter due to maintenance issues and conveyor belt failures at their Gruyere gold mine.
Which is a great move if you’re Gold Fields. But also kind of a slap in the face if you’re Gold Road? If you’re Gold Road, this feels like someone trying to buy your house while you’re fixing the plumbing and repairing the hole in the roof.
“Gold Road notes that the receipt of the offer coincided with a lower March 2025 quarter production due to maintenance on the primary crusher and the failure of two conveyor belts,” Gold Road said.
“The offer attributes no value at all to the potential underground expansion of the Gruyere mine. As such, the Gold Road board formed the view that it is not in the best interest of its shareholders to accept the offer and rejected the offer on March 14.”
That makes sense, but what about this underground expansion potential? Gold Road recently completed an 18,000 meter drill program to confirm that:
- Gold Field’s offer didn’t value any of the 18,000 meters of drilling because;
- The drill results were great.
Underground intercepts included:
- 146.56 meters at 1.47 g/t Au from 637.10 meters, including 101.59 meters at 1.81 g/t Au
- 48.00 meters at 1.28 g/t Au from 481.50 meters, including 23.20 meters at 1.84 g/t Au
According to DiscoveryAlert.com, successful development of the underground resource could increase Gruyere’s net present value by 30-40% above current estimates and potentially extend the mine’s life from 2032 to beyond 2045.
And here’s the best part.
Gold Road saw these results and said, “actually, now we want to buy the mine.”
“After rejecting Gold Fields’ offer, Gold Road tabled an alternative proposal to acquire the remaining interest in Gruyere. However, this counterproposal was rejected.
“Gold Road has engaged in active correspondence and dialogue with Gold Fields to consider whether Gold Fields would address the deficiencies of its offer,” Gold Road said.”
At this point it feels like a Battle of The Balance Sheets. Gold Fields is a $19B company, and Gold Roads, while not small, is only $1.7B. If Gold Fields really wants the mine, they’ll eventually get it.
Maybe Pebble (Finally) Gets Built
Northern Dynasty Minerals’ stock (NAK) is up 75% – a remarkable feat for a company whose flagship project has spent two decades mired in controversy (disc: I own some NAK and got extremely lucky on timing).
The reason? Trump’s Mining Executive Order.
I tweeted yesterday that it’s the Chips Act but for mining companies. And it’s true! Here’s one part of the order:
“Within 10 days of the date of this order, the head of each executive department and agency (agency) involved in the permitting of mineral production in the United States shall provide to the Chair of the NEDC a list of all mineral production projects for which a plan of operations, a permit application, or other application for approval has been submitted to such agency. Within 10 days of the submission of such lists, the head of each such agency shall, in coordination with the Chair of the NEDC, identify priority projects that can be immediately approved or for which permits can be immediately issued, and take all necessary or appropriate actions within the agency’s authority to expedite and issue the relevant permits or approvals.”
Now read that while listening to “Proud To Be An American” in the background.
Anyways, this is a huge deal for companies like NAK, who’s Pebble project has been stuck in environmental regulation purgatory for decades.
Despite the recent share price surge, NAK is still down 95% from its all-time highs, because, well, Pebble has never gotten close to becoming a producing mine. Which is a shame because Pebble is like the greatest deposit anyone has ever seen.
It boasts the world’s largest undeveloped copper reserve, alongside gold, molybdenum, silver, and rhenium. Over its projected 20-year lifespan, the mine could produce billions of pounds of copper and millions of ounces of gold and silver.
Some suggest that Pebble could produce 25-33% of total US copper demand. Of course all of these studies were done at much lower copper prices, so production figures are probably a lot higher today.
That’s amazing, right? How could that not be a mine? Well, unfortunately Pebble sits in Bristol Bay, home to the world’s largest sockeye salmon fishery.
I know what you’re thinking, “Brandon, isn’t salmon just as important to US National Security as copper?”
No, they’re not.
But environmentalists have long argued that mining operations would devastate this delicate ecosystem. In fact, the U.S. Environmental Protection Agency (EPA) blocked Pebble in 2023, citing concerns about mine waste storage near the watershed. Northern Dynasty has since filed complaints, claiming the EPA’s decision violates federal statutes and Alaska’s statehood rights.
(There’s a great book, Boom, Bust, Boom, that highlights the Pebble vs. Alaskan Salmon debate. You should read it.)
I don’t know. If you’re Trump, the biggest stamp you could make on history with this Executive Order is probably approving the Pebble mine.
So what would this all mean for NAK’s stock price? The stock currently sits at a $660M market cap.
I talk a lot around about in-situ valuations for mine development companies. And NAK’s in-situ value is absurd (this is just for Measured and Indicated):
- Copper: 52.99 billion lbs × $4.46/lb = $236.33 billion
- Gold: 53.82 million oz × $3,022.96/oz = $162.70 billion
- Molybdenum: 2.78 billion lbs × $25/lb = $69.50 billion
- Silver: 249.3 million oz × $42/oz = $10.47 billion
- Rhenium: 1,849,000 kg × $1,500/kg = $2.77 billion
That’s a total M&I in-situ value of $481.77 billion.
NAK trades at 0.14% of in-situ value when most development companies with any decent sized resource/jurisdiction trade at 3-5%. 3% of $481B is $14.43B.
That’s a lot more than $660M.
Now of course there are a ton of “ifs.” What if NAK still doesn’t get approved? What if initial capex soars (spoiler: it will)? What if the company dilutes another 300-500% (it probably will to finance that capex)?
However, none of that matters because the gap between current market cap and any conservative estimate of fair value is so wide.
Remember, this is mining. Things always go wrong. But I’m still excited. Why? Because the cone of possibilities is wide with NAK. And for the first time in maybe forever, there’s a possibility of a good outcome.
The “Nationally Strategic” Premium Is Real
One way I find interesting stock ideas is by screening for the best-performing stocks across various time frames: one week, one month, three months, etc.
That led to me European Metals Holdings Limited (EMH.L).
EMH owns a 49% interest in the Cinovec Lithium Project in the Czech Republic. According to the company, “Cinovec hosts a globally significant hard rock lithium deposit with a total Measured Mineral Resource of 53.3Mt at 0.48% Li2O, Indicated Mineral Resource of 360.2Mt at 0.44% Li2O and an Inferred Mineral Resource of 294.7Mt at 0.39% Li2O containing a combined 7.39 million tonnes Lithium Carbonate Equivalent.”
But here’s the interesting part. A few weeks ago, Cinovec was declared a “Nationally Strategic Deposit” by the Czech government:
“The designation of Cinovec as a “Strategic Deposit” for the purposes of the Czech Construction Code is a major step forward for the Project, enabling Geomet to obtain certain permits and take actions to secure the development of the Project without undue delay.”
The designation promised:
- Expedited approval processes
- Reduced administrative burden
- Priority environment impact assessment reviews
- Use of exceptional procedures (if you’re extra special you get more freebies)
That sounds like another recent Executive Order from another governing body. Hmmm.
EMH’s stock jumped 88% the following week, which makes sense. But then things got even better.
This morning, the EU declared the Cinovec Project “Nationally Strategic” under its EU Critical Raw Materials Act. And what did the stock do? It went up 155% (and counting!).
Here’s why this matters. These companies are telling you exactly what will happen to US mining stocks once Trump starts saying, “You, you, you, and you … you’re all nationally strategic. Get them their approvals.”
We will see stocks return 3-5x in months, maybe weeks, under this new Regime. EMH is the canary in the coal mine.
Can you think of a better time to invest in natural resources? Maybe when China went on their buying spree, I guess. But is this not just as good, if not better? What happens to mining stocks when every national government decides it needs domestic production? And to do that, must declare all domestic projects “Nationally Strategic”?
It’s going to be bananas. And I can’t wait.
