Bullish Outlook On Northern Dynasty Minerals

Raymond James analyst Tom Meyer has initiated coverage on Northern Dynasty Minerals Ltd. (NAK) with a "strong buy" rating and a whopping price target of C$25 a share, nearly double its current level. Why so bullish? First of all, the valuation. Northern Dynasty trades at a price to net asset value multiple of 0.27 times. That's a 68% discount to the peer group of development companies, he wrote in a note to clients.

He is also impressed with the company's Pebble project in Alaska, which has 434,000 tons per year of copper in concentrate and is due to be in production by early 2015. Besides the copper, it also has a great deal of gold and molybdenum, which Mr. Meyer sees as a good way to get exposure to those commodities.

Mr. Meyer also expects the company to attract a lot of interest from potential financiers because of its low cash costs and long mine life. Rio Tinto PLC already controls nearly 20% of the company.

"We believe that Rio Tinto's 19.8% interest in the project is a form of validation of the significance of Pebble to senior producers, and we anticipate further interest in the project with the expected release of the [Integrated Development Plan] in mid-2008," he wrote.

NAK 1-year chart