Sahm Adrangi hedge fund, Kerrisdale Capital, has built up expertise in the biotech and mining sectors, highlighting shares of companies that are built on overly optimistic forecasts. In other instances, Kerrisdale discovers and publicizes instances of fraud. Sahm Adrangi is known as an activist, whose activities are aimed every bit as much at engineering change as they are at providing his investors with a profit.
One sector that has been fraught with uncertainty and outright deceit is the mining sector. Northern Dynasty Minerals owns a deposit of copper and gold in Alaska’s Bristol Bay Basin that has yet to be developed. The company has spent close to $1 billion in environmental and engineering studies. Additionally, the company has spent heavily on socio-economic reports.
The development of this deposit has faced stiff opposition from all directions. Locally, the Alaska Natives and environmentalists have protested the company’s plans. Additionally, state and local governments have expressed disapproval of this projects. In response, the United States Environmental Protection Agency halted the project in 2014. Investors have been optimistic that the change in Administrations may lead to the ultimate approval of the mining project.
Notwithstanding any potential approval, Sahm Adrangi believes that the value of this mining project is close to zero. Regardless of any mineral deposits, Adrangi argues that these deposits are extraordinarily difficult to extract from a sizable amount of raw material. Accordingly, extraction costs and the corresponding capital investment necessary to bring the site into production will be prohibitive. Further, Northern Dynasty has been less than forthcoming with mining reports from the site, suppressing a less than favorable report from a former investment partner in the site. In fact, several former investment partners have halted their participation in the project, abandoning their investments.
In Sahm Adrangi’s opinion, what may be insurmountable is the local opposition to development of the project. Notwithstanding Washington D.C. politics, the opposition to the project in Alaska spans across the political spectrum, and state voters gave the legislature approval authority for sulfide mining. Andragi believes that this is what will ultimately freeze the success of the project.