Perpetua Resources Corp.'s Stibnite gold project in Idaho is also expected to supply up to 35 percent of the U.S.'s annual demand for antimony, a critical metal. Find out why analysts recommend this developer.
Perpetua Resources Corp. (PPTA: TSX; PPTA: NASDAQ) The Stibnite gold project in Idaho is also expected to provide the United States with up to 35% of its needs for the critical metal antimony, a sector currently dominated by China, Russia and Tajikistan, which control 90% of the supply chain. , said new president and CEO Jon Cherry.
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 on Wednesday that Stibnite is a “very unique American opportunity.”
Gold is the economic driver of the project, “but to be honest with you, it's really the antimony aspect” that attracted him to Perpetua and Stibnite, Cherry said. “This is a really important project for the United States”
Analyst Mike Niehuser of Roth Capital Partners noted in a Research note from March 14 that Cherry's experience “could provide PPTA with the leadership needed to move the project toward operations and address unexpected challenges.”
According to the company's most recent report investor presentationPerpetua plans to finalize an environmental impact statement (EIS) in the second quarter of 2024 and reach a final record of decision for Stibnite in the fourth quarter of 2024.
Analyst Mike Niehuser of Roth Capital Partners noted that Cherry's experience “could provide PPTA with the leadership needed to move the project toward operations and navigate unexpected challenges.”
Additionally, the company expects to receive ancillary permits and project financing in early 2025 and make a construction decision later in 2025. Perpetua intends to achieve commercial operation in 2028 based on of the current calendar.
“We also expect a rerating as Perpetua continues to be significantly undervalued relative to our peer group,” Cherry said. “Permitted projects are trading at a premium in our sector, and we expect our valuation to improve as we continue this process. So there is an opportunity for new investors today.”
Niehuser, who raised 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 confidence of PPTA in obtaining permits”.
The Catalyst: Facing China, Russia and Tajikistan
Stibnite is one of the richest open-pit gold deposits in the United States, according to the company, which is working to restore the abandoned mining site and produce gold and the only antimony in the United States. The critical strategic mineral is used in many military applications, including armor-piercing bullets, night vision goggles and laser sighting, Forbes reported.
“It was the key element in the creation of tungsten steel and the hardening of lead bullets, two of its most crucial applications during World War II,” David Blackmon wrote for the publication.
The historic Stibnite mine “was able to scale up production of antimony which is an element of the mine's ore and helped fill the gap.”
“The Stibnite mine ended up producing 90 percent of the U.S. demand for antimony for the duration of the war and played a key role in producing 40 percent of the tungsten steel needed for the military effort,” Blackmon wrote. “After the war, production at the Stibnite mine gradually declined and its operations were shut down entirely in 1997.”
Perpetua's stock rose 44% following this news.
The company also has two other competitive advantages in Stibnite, Cherry said Wednesday. First, its all-in sustaining cost profile places it in “the lowest quartile of the global cost curve.” Additionally, he said the plan selected for the mine is expected to bring environmental benefits to the area, such as improving water quality and restoring fishways.
“Brownfield restoration is also one of the main pillars of Perpetua’s vision,” Cherry said. “As an environmental engineer by training, I understand the complexities of developing an asset like ours while protecting and restoring the environment.”
Cherry most recently served as Chairman 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 that it had received a Letter of Interest (LI) from the Export-Import Bank (EXIM) from the United States for financing of up to US$1.8 billion for Stibnite. The loan would be offered under EXIM's “Make More in America” and “China and Transformational Exports Program” initiatives, Cantor Fitzgerald analyst Mike Kozak noted in a research note.
Perpetua's stock rose 44% following this news.
“According to PPTA, the LI indicated that the potential $1.8 ($1.5 billion) in sustainment debt financing may also be eligible for special consideration under Section 402 of the EXIM Reauthorization which 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 as a speculative buy with a target price of C$16.50.
Kozak continued: “The potential $1.8 (billion) in financial support for the EXIM project is directly linked to the antimony byproduct (critical for munitions) that will be produced at the Stibnite open pit gold project in PPTA (Idaho). »
The company said it plans to submit a formal application to the bank this year, following which EXIM will conduct due diligence to determine whether a final commitment can be issued.
Cherry said that as PPTA continues to achieve its milestones and goals, he expects the company's stock price to rise further.
“I came here thinking this project was really going to be a home run,” Cherry said. “But after being here and kind of kicking the tires and getting into a little more detail, I actually think instead of a home run, it's actually going to be a Grand Slam .”
Shareholding and sharing structure
Refinitiv reports that management and insiders own about 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 Licensing Alan Douglas Haslam owns 0.09%, David L. Deisley owns 0.09%. 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 Chief Resource Officer 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, Kopernik Global Investors, LLC owns 8.19%, Sun Valley Gold, LLC owns 7.28%, Krilogy Financial LLC owns 2.6%, BlackRock Institutional Trust Company, NA, owns 2.77%. B. Riley Financial Inc. holds 2.32%, Eidelman Virant Capital 1.49%, Franklin Advisors Inc. 0.85%, Earth Resource Investment Group 0.73% and State Street Global Advisors (United States) 0.7 %.
Refinitiv reports that there are 64.12 million shares outstanding and 63.75 million shares floating traded. The company has a market capitalization of CA$536.07 million and trades over a 52-week period between CA$3.56 and CA$9.38.
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