Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) is not just developing its Stibnite project in Idaho for gold and antimony, a critical mineral needed by the military. It is also looking to restore the area environmentally after it was abandoned following more than 100 years of mining.
The company has completed the requirements to conclude the environmental impact statement process for the project. The U.S. Forest Service will outline the final statement and draft record of decision by the end of the year, followed by a record of decision in early 2024.
Analyst Mike Niehuser of ROTH Capital Partners predicted in an Aug. 22 research note that the project is on its way to final approval.
"We believe that Perpetua has a clear pathway to be awarded a record of decision for the proposed development," Niehuser wrote. "This may soon transform the company's perception by investors for the Stibnite gold project to be a bankable project."
Niehuser maintained ROTH's US$7.25 per share target price on the stock and rated it a Buy.
Perpetua also has signed a Definitized Agreement for Critical Minerals with the U.S. Department of Defense (DOD) for an award of US$24.8 million under the Defense Production Act. The money is "intended to support construction readiness and environmental studies to continue through the permitting process," explained Niehuser.
The money should help see the company through the process with the U.S. Forest Service, noted analyst Mike Kozak of Cantor Fitzgerald in an Aug. 21 research note. Kozak rated the stock a Speculative Buy with a US$13.25 per share target price.
"With $14.1 MM (million) in cash at exit Q2/23, and additional grant income forthcoming from the DOD, we continue to believe Perpetua is fully funded through Federal permitting," Kozak wrote.
More than 100 Years of Mining
The antimony and gold mineralization at Meadow Creek was first discovered in 1914. By 1938, it had produced more than 50,000 ounces gold (Au), 180,000 ounces silver (Ag), and many tons of antimony (Sb), Perpetua said.
The underground mine was abandoned for the Yellow Pine Pit in 1938, and for several years in the 1940s, a mill there produced about half of the U.S. tungsten supply and up to 90% of the antimony for use in World War II.
The mill shut down in 1952, and by 1958 production for the district totaled more than 405,000 ounces Au, 88 million pounds Sb, 1.5 million ounces (Moz) Ag, and 13.5 Moz tungsten (W).
A second generation of miners operated from 1978 to 1996, leaving a still-visible heap of neutralized ore, Perpetua said. Production during this second chapter of the mine's life totaled more than 581,000 ounces Au and 149,000 ounces Ag, the company said.
"Should Perpetua Resources earn the right to mine the District again, the historic tailings would be reprocessed and placed in a modern, lined facility along with new tailings from Perpetua Resources’ mill," the company noted on its website. "In addition, spent ore in the SODA area may be utilized for construction purposes, reducing the need for mining of fresh aggregate."
Perpetua plans to support local fish and wildlife populations, perform significant reclamation and restoration of the area, institute reforestation and wetland mitigation programs, and commit to an estimated 25 years of water treatment.
The Catalyst: 'Area Will Not Recover on its Own'
ROTH's Niehuser noted that Perpetua has taken several actions to move Stibnite toward a record of decision on the environmental impact statement, including signing the agreement with the DOD.
It has signed a Clean Water Act Settlement Agreement with the Nez Perce Tribe, establishing the "parameters of activities" to clean up waste and improve water quality it deems essential.
Perpetua also has hired experienced mining project development professional Michael Wright to serve as vice president of projects, a positive move according to ROTH.
"This is significant for its organization to transition from a permitting focus to define the Stibnite gold project to be financeable," Niehuser commented.
Currently at the site, the East Fork of the South Fork of the Salmon River dumps into the Yellow Pine Pit, and passage for migratory fish like salmon has been blocked for more than 80 years. Sediment from Blowout Creek also settles in the pit.
The company said it has volunteered to remove and safely store over 300,000 tons of legacy tailings and waste at Stibnite and divert and line streams to help keep water clean.
"The Stibnite Gold Project site has a long history of mining," the company said on its site. " A lot has changed since the first miners found the site more than a century ago and began the extraction of minerals critical to our national interests. Today, we understand the environmental sensitivities of the area and have increasingly high standards and strict regulations guiding our work. This area will not recover on its own."
The company said it has also built environmental principles into its core business plans, adopting an Environmental, Social, and Governance (ESG) policy in 2019; installing solar power at the site; and launching a sustainability roadmap in 2022.
Why Gold? Why Antimony?
Gold has long been "considered a safe-haven asset for retaining its value throughout history," Forbes wrote in "Why Gold Is a Good Investment Right Now" in May.
"Gold became a darling for investors in 2020 during the worst pandemic in generations, gaining as much as 40%," Forbes wrote. "Gold has returned 18% over the last three years, 54% over the last five years, and 41% over the last decade. That compares unfavorably to the S&P’s 41% three-year return, 51% five-year return, and 156% ten-year return but easily trumps the low- to mid-single-digit returns for other nonequity investments such as government bonds and high-yield savings accounts."
According to a recent Gallup poll, about one-quarter of Americans think gold is the best asset to invest in long-term, its highest level in more than a decade.
Currently about 90% of the world's antimony supply is controlled by China, Russia, and Tajikistan. The United States has no domestically mined source of the critical mineral, which is essential to national defense as a key component for munitions and used in flame retardants.
The market for the element was valued at US$1.9 billion in 2022 and is projected to grow from US$2.04 billion this year to US$3.64 billion by 2032, a compound annual growth rate (CAGR) of 7.5%, according to a report by Market Research Future.
The element is also used in fireworks, pigments, and batteries.
"The Antimony Trisulfide market is expected to witness robust growth in the near future," noted Benzinga.com. "Factors such as increasing demand for flame retardants in various end-use industries and the expanding electronics sector are the key drivers contributing to the growth of this market."
Ownership and Share Structure
Perpetua Resources Corp.'s market cap is US$205.73 million. It has a fully diluted base of 66.3 million shares, including 1.78 million options and 1.36 million warrants. As of June 30, its estimated cash balance was US$14 million.
According to Reuters, 72.31% of the company is with institutions. Paulson & Co. Inc. has 39.22%, with 24.77 million shares. Kopernik Global Investors LLC has 8.31%, with 5.25 million. Sun Valley Gold LLC has 7.86%, with 4.97 million. Krilogy Financial LLC has 2.57%, with 1.62 million, and BlackRock Institutional Trust Company NA has 2.29%, with 1.45 million.
0.31% is held by management and insiders.
Chief Financial Officer Jessica Largent has 0.08%, with around 50,000 shares. Chief Executive Officer and President Laurel Sayer has 0.07%, with around 50,000; and Director Chris Robinson has 0.06%, with 40,000.
The rest is with retail investors.
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