Northern Dynasty Minerals : Fourth Quarter Financial Report for the period ending December 31, 2024
NDM.TO
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
(Expressed in thousands of Canadian Dollars)
Northern Dynasty Minerals Ltd.
Consolidated Financial Statements
Table of Contents
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1208)
Opinion on the Financial Statements
1-4
Opinion on Internal Control over Financial Reporting
5-6
Consolidated Statements of Financial Position
7
Consolidated Statements of Comprehensive Loss
8
Consolidated Statements of Cash Flows
9
Consolidated Statements of Changes in Equity
10
Notes to the Consolidated Financial Statements
11-43
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Northern Dynasty Minerals Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Northern Dynasty Minerals Ltd. and subsidiaries (the "Company") as at December 31, 2024 and 2023, the related consolidated statements of comprehensive loss, cash flows, and changes in equity, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2024 and 2023, and its financial performance and its cash flows for each of the two years in the period ended December 31, 2024, in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 27, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a consolidated net loss of $33 million during the year ended December 31, 2024, and, as of that date, the Company's consolidated deficit was $729 million. These conditions, along with other matters set forth in Note 1, raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Mineral property, plant and equipment - Assessment of Whether Indicators of Impairment Exist - Refer to Notes 1 and 2(r) to the financial statements
Critical Audit Matter Description
At the end of each reporting period, the carrying amounts of the Company's non-financial assets are reviewed to determine whether there is any indication that these assets are impaired. The Company holds the rights to the Pebble exploration stage mineral property (the "Pebble Project"). In 2020, the US Army Corps of Engineers ("USACE") issued a negative Record of Decision (the "ROD") on the Pebble Partnership's permit application for the Pebble Project. The Company submitted its request for appeal of the ROD with the USACE Pacific Ocean Division on January 19, 2021, which was remanded back to USACE Alaska District on April 24, 2023. On January 30, 2023, the Environment Protection Agency ("EPA") issued its final determination imposing limitations on the use of certain waters in the Bristol Bay watershed as disposal sites for certain discharges of dredged or fill material associated with development of a mine at the Pebble deposit (the "Final Determination"). On March 15, 2024, the Company announced that it had filed two separate actions in the US federal courts challenging the Final Determination, including the EPA case and the takings case. In April 2024, the USACE Alaska District (the "District") determined not to engage in the remand process and issued a further record of decision to deny the permit. On August 19, 2024, USACE was added as another defendant to the EPA case. Taking into consideration the outcome of the Final Determination challenge, the Company's options in the event the ROD appeal is successful or unsuccessful, and the Company's market capitalization as at December 31, 2024, the Company concluded there were no indicators of impairment on the Pebble Project as at December 31, 2024.
While there are several factors that must be considered to determine whether or not an indicator of impairment exists for the Pebble Project, the judgments associated with the Company's ability to develop the Pebble Project including the options to obtain federal and state permits, the outcome of the Final Determination challenge and the considerations of the Company's market capitalization excess are the most subjective factors. Auditing these judgments required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assessment of management's assessment of indicators of impairment of whether there were events or change in circumstances that may suggest that the carrying amount of the Pebble Project is impaired included the following, among others:
• Evaluated the effectiveness of controls over management's assessment of indicators of impairment relating to the Pebble Project, including the identification of events or changes in circumstances that may suggest that the carrying amount of the Pebble Project is impaired.
• Evaluated the reasonableness of the Company's ability and options to obtain federal and state permits to develop the Pebble Project, including consideration of the outcome of the Final Determination challenge by:
o Evaluating regulatory developments relating to federal and state permitting processes and the impact on the Company's ability to continue to explore and develop the Pebble Project.
o Evaluating the reasonableness of management's assessment of potential alternatives for the future permitting and development of the Pebble Project by having discussions with the Company's internal legal counsel and reviewing legal opinion provided by the Company's external counsel.
o Read internal communications to management and the board of directors, external communications by management to analysts and investors, and other publicly available information to evaluate whether there was evidence of indicators of impairment that contradicted management's assessment.
• Evaluated the reasonableness of management's considerations of the excess of the Company's market capitalization compared to its asset carrying value in its assessment of impairment indicators.
Convertible Notes - Valuation of Embedded Conversion Features - Refer to Notes 1, 2(r) and 7 to the financial statements
Critical Audit Matter Description
The Company has convertible notes which in addition to the host notes contain a conversion feature, a change of control option and a redemption option that are recorded as derivatives (the "derivative on convertible notes"). Management used a binomial option pricing model with formulae based on the Cox-Ross-Rubenstein approach with consideration of the intrinsic value (the "valuation model") to estimate the fair value of derivative on convertible notes.
Auditing the fair value of the derivative on convertible notes, including the selection of an appropriate valuation model, required an increased extent of audit effort including the involvement of fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value of the derivative on convertible notes, including the selection of an appropriate valuation model, included the following, among others:
• With the assistance of fair value specialists, assessed the valuation model selected to determine the fair value of the derivative on convertible notes was appropriate and developed an independent estimate of the derivative on convertible notes and compared it to the fair value recorded.
/s/ Deloitte LLP
Chartered Professional Accountants Vancouver, Canada
March 27, 2025
We have served as the Company's auditor since 2009.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Northern Dynasty Minerals Ltd.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Northern Dynasty Minerals Ltd. and subsidiaries (the "Company") as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control
- Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as at and for the year ended December 31, 2024 of the Company and our report dated March 27, 2025 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte LLP
Chartered Professional Accountants Vancouver, Canada
March 27, 2025
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian Dollars)
ASSETS Non-current assets
Restricted Cash
Mineral property, plant and equipment
Total non-current assets
Current assets
Receivable from related party
Amounts receivable and prepaid expenses Cash and cash equivalents
Total current assets
Total Assets
EQUITY
Capital and reserves
Share capital Reserves Deficit
Total equity
LIABILITIES
Non-current liabilities
Trade and other payables Total non-current liabilities
Current liabilities
Convertible notes liability Derivative on convertible notes Payables to related parties Trade and other payables
Total current liabilities
Total liabilities
Total Equity and Liabilities
Notes
5(b) 3
8 4 5(a)
6 $ 6
9
7 7 8 9
December 31 2024
$
984 118,126 119,110
18,050
$
137,160
(732,870)
97,197
548
39,415 39,963
$
137,160
December 31 2023
$
872 121,851 122,723
- 17
1,908 2,908
16,142 18,200
21,125
$
143,848
702,755 $ 702,950
127,312 117,292
(696,958) 123,284
338
548 338
2,750 2,197
35,305 16,687
267 287
1,093 1,055
20,226 20,564
$
143,848
Nature and continuance of operations (note 1)
Commitments and contingencies (note 15)
Events after the reporting period (note 16)
The accompanying notes are an integral part of these consolidated financial statements.
These consolidated financial statements are signed on the Company's behalf by:
/s/ Ronald W. Thiessen
/s/ Christian Milau
Ronald W. Thiessen
Christian Milau
Director
Director
Consolidated Statements of Comprehensive Loss
(Expressed in thousands of Canadian Dollars, except for share information)
Year ended December 31
Expenses
Exploration and evaluation expenses General and administrative expenses Legal, accounting and audit Share-based compensation Loss from operating activities
Foreign exchange (gain) loss Interest income
Finance expense Other income
Loss (gain) on change in fair value of convertible notes derivative Net loss before tax
Income tax expense (recovery)
Net loss
Other comprehensive (income) loss
Items that may be subsequently reclassified to net loss
Foreign exchange translation difference
Other comprehensive (income) loss
Total comprehensive loss
Basic and diluted loss per share
10, 11 10, 11 10 6(d),(e)
Notes
6(f)
12
7
2024
$
18,618
$
36,084 65
$
36,149
(10,012)
$ $
(10,012)
26,137
$
0.07
2023
5,650 $ 7,729
9,192 10,161
3,469 3,389
27 1,068
18,338 22,347
(836) 149
(860) (270)
824 81
- (22)
$
(1,179) 21,106
(110)
$
20,996
2,858
$ $
2,858
23,854
$
0.04
The accompanying notes are an integral part of these consolidated financial statements.
Disclaimer
Northern Dynasty Minerals Ltd. published this content on March 28, 2025, and is solely responsible for the information contained herein. Distributed via , unedited and unaltered, on March 28, 2025 at 15:57 UTC .