April 18, 2024
StreetWise Reports: Idaho Gold Project Could Produce One-Third of Critical Antimony for US
Perpetua Resources Corp.’s Stibnite gold project in Idaho is also expected to provide as much as 35% of the United States annual demand for the critical metal antimony. Find out why analysts are recommending this developer.
Perpetua Resources Corp.’s Stibnite gold project in Idaho is also expected to provide the United States with as much as 35% of its needs for the critical metal antimony, a sector which is currently dominated by China, Russia, and Tajikistan, which control 90% of the supply chain, new President and Chief Executive Officer Jon Cherry said.
Antimony is important to national defense as a key material used in munitions, but no domestic supply is currently mined.
Cherry, who has 33 years of industry experience, told analysts and shareholders during a webinar Wednesday that Stibnite is a “very unique American opportunity.”
The gold drives the project’s economics, “but to be honest with you, it’s really the antimony angle” that attracted him to Perpetua and Stibnite, Cherry said. “This is a really important project for the U.S.”
Analyst Mike Niehuser of Roth Capital Partners noted in a March 14 research note that Cherry’s experience “may provide PPTA with the necessary leadership to advance the project to operation and meet unexpected challenges.”
According to the company’s most recent investor presentation, Perpetua expects to finalize an environmental impact statement (EIS) in Q2 of 2024 and reach a Final Record of Decision for Stibnite in Q4 of 2024.
Additionally, the company expects to receive ancillary permits and project financing in early 2025 and reach a construction decision later in 2025. Perpetua intends to achieve commercial operations in 2028 based on the current timeline.
“We’re also expecting a valuation re-rate, as Perpetua continues to be significantly undervalued relative to our peer group,” Cherry said. “Permitted projects trade at a premium in our industry, and we expect our valuation to improve as we continue through this process. So, there is an opportunity today for new investors.”
Niehuser, who increased his target price to US$10.00 per share and maintained his Buy rating on the stock in a more recent note, wrote that Cherry’s appointment ahead of the Record of Decision “demonstrates PPTA’s confidence in receiving permits.”
The Catalyst: Facing Up to China, Russia, Tajikistan
Stibnite is one of the highest-grade, open-pit gold deposits in the U.S., according to the company, which is working to restore the abandoned mine site and produce gold and the only antimony in the U.S. The strategic critical mineral is used in many military applications, including armor-piercing bullets, night vision goggles, and laser sighting, Forbes reported.
“It is the key element in the creation of tungsten steel and the hardening of lead bullets, two of its most crucial applications during WWII,” David Blackmon wrote for the publication.
The historic Stibnite mine “was able to step up production of the antimony that is an element in the mine’s ore and helped fill the void.”
“The Stibnite mine ended up producing fully 90% of America’s demand for antimony for the duration of the War and was key to producing 40% of the tungsten steel needed for the military effort,” Blackmon wrote. “Following the War, output from the Stibnite mine gradually declined, and its operations were shut down entirely in 1997.”
The company also has two other competitive advantages at Stibnite, Cherry said Wednesday. First, its all-in-sustaining costs profile positions it in “the lowest quartile of the global cost curve.” Also, he said the preferred plan for the mine is expected to deliver environmental benefits to the area, such as improving water quality and restoring fish passages.
“Restoring brownfield sites is also one of the key pillars of Perpetua’s vision,” Cherry said. “As an environmental engineer by training, I understand the complexities of developing an asset like we have while also protecting and restoring the environment.”
Cherry most recently served as chairman, president, and chief executive officer of PolyMet Mining. The company’s NorthMet project received the highest rating the Environmental Protection Agency (EPA) has ever given to a mining project, Perpetua said.
Export-Import Bank Interest
Earlier this month, Perpetua announced it had received a Letter of Interest (LI) from the Export-Import Bank (EXIM) of the United States for up to US$1.8 billion financing for Stibnite. The loan would be offered through EXIM’s “Make More in America” and “China and Transformational Exports Program” initiatives, noted analyst Mike Kozak of Cantor Fitzgerald in a research note.
Perpetua’s stock rose 44% on the news.
“According to PPTA, the LI indicated that the potential US$1.8 (billion) in supportive debt financing may also be eligible for special consideration under Section 402 of EXIM’s reauthorization that directs it to take steps to mitigate the competitive impact of export support provided by the People’s Republic of China,” wrote Kozak, who rated the stock a Speculative Buy with a CA$16.50 target price.
Kozak continued, “The potential US$1.8 (billion) of EXIM project financing support directly relates to the antimony by-product (critical for munitions) that will be produced at PPTA’s Stibnite open-pit gold project (Idaho).”
The company said it expects to submit a formal application to the bank this year, upon which EXIM will conduct due diligence to determine if a final commitment can be issued.
Cherry said that as PPTA continues to hit its milestones and goals, he expects more upside to the company’s share price.
“I came here thinking that this project was really going to be a home run,” Cherry said. “But after I’ve been here and kind of kicked the tires and got into a bit more details, I actually think instead of a home run, this is actually going to be a Grand Slam.”
Ownership and Share Structure
Refinitiv reports that management and insiders own approximately 0.38% of the company.
According to Refinitiv, Director Christopher James Robinson owns 0.09% of the company, while CFO Jessica Marie Largent owns 0.13%, former President and CEO Laurel Sayer owns 0.14%, Vice President of Permitting Alan Douglas Haslam owns 0.09%, David L. Deisley owns 0.02%, General Counsel L. Michael Bogert owns 0.05%, Vice President of External Affairs Mckinsey Margaret Lyon owns 0.05%, Director Robert Alan Dean owns 0.01%, and Human Resources Manager Tanya Dawn Nelson owns 0.01%.
A strategic investor, Paulson & Co. Inc., owns 38.63% of the company. According to Refinitiv, institutions own approximately 26.66% of the company, as Kopernik Global Investors, L.L.C. owns 8.19%, Sun Valley Gold, L.L.C. owns 7.28%, Krilogy Financial L.L.C. owns 2.6%, BlackRock Institutional Trust Company, N.A., owns 2.77%, B. Riley Financial Inc. owns 2.32%, Eidelman Virant Capital owns 1.49%,, Franklin Advisors Inc. owns 0.85%, Earth Resource Investment Group owns 0.73%, and State Street Global Advisors (U.S.) owns 0.7%.
Refinitiv reports that there are 64.12 million shares outstanding and 63.75 million free float traded shares. The company has a market cap of CA$536.07 million and trades in a 52-week range between CA$3.56 and CA$9.38.
Important Disclosures:Perpetua Resources Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
For additional disclosures, please click here.
