Strategic Gold Asset Secures Major Backing, Exceeding Expectations

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Stillwater Critical Minerals Corp. (PGE:TSX.V; PGEZF:OTCQB; J0G:FSE) has received a share-based payment from Heritage Mining Ltd. as part of the ongoing earn-in agreement for the Drayton-Black Lake gold project in Ontario. The transaction has resulted in Stillwater now holding 15.35 million common shares of Heritage, equivalent to approximately 13.3% of its total outstanding shares. Additionally, Stillwater holds three million share purchase warrants, which, if exercised, would increase its ownership to 15.5% on a partially diluted basis.

The earn-in agreement, initially announced on Nov. 29, 2021, and later amended, allows Heritage to acquire up to a 90% interest in the Drayton-Black Lake gold project. To date, Heritage has met the requirements for the first earn-in milestone of 51%, which involved issuing 15.35 million shares and three million warrants to Stillwater, making cash payments totaling US$170,000, and completing US$2.5 million in exploration expenditures.

As explained in the news release, further obligations remain for Heritage to reach its full 90% earn-in. These include the issuance of an additional 1.1 million shares to Stillwater and an additional US$2.5 million in exploration and development work before the agreement's fifth anniversary. Upon full earn-in, Stillwater will retain a 10% free carried interest, with Heritage covering all project costs until the completion of a feasibility study that meets National Instrument 43-101 technical standards. Heritage has also received additional new drill permits and is planning a program for 2025.

Stillwater also retains a net smelter return (NSR) royalty on the project and a discovery payment agreement, which grants Stillwater US$1 per ounce of gold or gold equivalent as mineral resources are defined, up to a maximum of US$10 million. In the event Heritage does not complete the full earn-in requirements, a joint venture could be formed based on existing ownership levels. Heritage must maintain a minimum annual exploration and development expenditure of US$500,000 to retain its status as the project operator.

The early warning report regarding this transaction has been filed in accordance with National Instrument 62-103 and is available on SEDAR+.

Sector Overview: Gold's Performance Amid Inflation, Debt, and Geopolitical Uncertainty

According to Mining.com on January 4, Jeffrey Christian of CPM Group reported that gold prices had risen sharply since mid-2019, with an average price of US$2,370 per ounce as of late November 2024, representing a 21% increase from the previous year.

Christian noted that investment demand remained the most significant factor in setting gold prices, driven by economic, financial, and political uncertainties. He projected an additional 13% rise in gold prices in 2025, reaching an annual average of approximately US$2,730 per ounce. CPM also expected a 1.5% increase in global mine production, bringing output to around 88.6 million ounces. Additionally, secondary supply from recycled gold was forecasted to rise by 10% due to higher gold prices and worsening consumer economic conditions.

Chris Temple of The National Investor expressed confidence that Stillwater Critical Minerals was well-positioned for a recovery following tax-loss selling. He upgraded his recommendation back to a "Buy," anticipating that both market conditions and strategic advancements would enhance the company's valuation in the near term.

On January 6, Reuters reported that gold prices dipped slightly as U.S. Treasury yields reached an eight-month high, making non-yielding gold less attractive. Nitesh Shah, a commodity strategist at WisdomTree, stated that bond yields placed downward pressure on gold, although he expected gold to reach US$3,050 per ounce by the end of 2025.

He attributed this forecast to expectations of U.S. dollar depreciation and falling bond yields, while also noting that escalating geopolitical tensions in the Middle East could pose additional upside risks for gold.

According to GoldSwitzerland on January 19, Ronnie Stoeferle highlighted that gold's performance in 2024 had been exceptional, with a 27.2% gain in U.S. dollars. He noted that total demand for gold in the first three quarters of 2024 set a record at 3,761.9 tons, reflecting a 2.7% increase from the previous year. While central bank purchases had declined from record levels in 2022 and 2023, demand remained strong, with the People's Bank of China resuming purchases after a brief pause. Stoeferle also reported that supply increased, with gold mining output rising by 3.0% and gold recycling increasing by 9.1%. He emphasized that despite a post-election consolidation in gold prices, the broader economic and geopolitical environment continued to support gold's long-term strength.

According to Stockhead on January 24, rising gold prices in Australia have significantly enhanced the valuation of key gold projects. The publication highlighted how current gold prices, approaching AU$4,400 per ounce, have dramatically increased the economic viability of development-stage gold projects. Higher gold prices have also driven market recognition for companies positioned to capitalize on the surge, with increasing investor interest and heightened trading volumes since late 2024.

On January 28, 321 Gold reported that while recent gold price action showed some pullback from highs of US$2,790 per ounce, technical indicators suggested continued strength in the market. The report noted that broader economic concerns, including inflation, overvalued stock markets, and rising government debt, have fueled demand for gold as a hedge against financial instability. The publication also referenced discussions around a potential U.S. gold revaluation, a move that could further strengthen gold's role as a monetary asset. Despite near-term volatility due to upcoming economic reports and Federal Reserve meetings, 321 Gold projected that gold could rally toward US$3,000 in the coming months.

Third-Party Analysis: Expert Confidence in Stillwater's Polymetallic Growth

According to The National Investor on January 8, Chris Temple reaffirmed his positive stance on Stillwater Critical Minerals Corp., citing its substantial polymetallic resource and increasing industry and government attention. He noted that the company had strong backing from Glencore, which positioned it favorably for future development. Temple highlighted the company's ability to advance its base metals resource, nearly half of which consists of nickel, and emphasized that upcoming policy shifts under the new U.S. administration could provide additional tailwinds for the company.

Temple stated that while Stillwater had a solid foundation with an existing significant resource, development challenges remained. He pointed out that the current base case involved a block cave mining approach, which would require further refinement. However, he remained optimistic about the company's potential, emphasizing that its progress in developing a cost-effective recovery formula could be a key factor in unlocking long-term value.

Temple also expressed confidence that Stillwater Critical Minerals was well-positioned for a recovery following tax-loss selling. He upgraded his recommendation back to a "Buy," anticipating that both market conditions and strategic advancements would enhance the company's valuation in the near term.

Company Catalysts: Advancing Resource Development with Industry Support

The Drayton-Black Lake project represents a strategic asset for Stillwater, according to the company investor presentation, providing ongoing exposure to high-grade gold exploration in Northwestern Ontario while allowing the company to focus its resources on its primary Stillwater West critical mineral project in Montana.

Heritage's progress toward the full earn-in is expected to drive further exploration and development at Drayton-Black Lake. The project is located in a geologic setting known for its high-grade gold potential, adjacent to Nexgold's Goliath gold project. Historical drilling and bulk sampling across more than 30 kilometers of underexplored strike have demonstrated significant gold mineralization, reinforcing the potential for future resource expansion.

With continued exploration commitments and planned share payments, Stillwater is positioned to benefit from Heritage's advancement of the project while maintaining long-term upside through its retained interest, NSR royalty, and discovery payment agreement.

Ownership and Share Structure

Management and insiders own approximately 20% of Stillwater, according to the company.

Executive Chairman and Director Gregory Shawn Johnson owns 2.86%, President and CEO Michael Victor Rowley owns 2.56%, Independent Director Gregor John Hamilton owns 1.65%, Independent Director Gordon L. Toll owns 0.44%, and Vice President of Exploration Daniel F. Grobler owns 0.23%, according to Reuters.

Institutions own approximately 25% of the company, high net-worth investors own about 37%, and Glencore Canada Corp. owns 15.4%. About 18% of the company's shares are in retail, Stillwater said.

There are about 227 million shares outstanding with 174.5 million free float traded shares, while the company has a market cap of CA$36.33 million and trades in a 52-week range of CA0.1000 - CA0.2200.