Economics of US Gold-Antimony Project Still Robust
Research Report

Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) refreshed the financial aspects of its Stibnite gold-antimony project in Idaho, and its economics remain strong, reported Cantor Fitzgerald Analyst Mike Kozak in a Feb. 14 research note.

"The financial update is an important derisking event that will now enable Perpetua to apply to the U.S. Export-Import Bank for up to US$1.8 billion (US$1.8B) in project debt financing," Kozak wrote.

37% Implied Uplift

Given the news, Cantor reiterated its Buy rating and CA$23.25 per share price target on Perpetua, trading now at about CA$16.97 per share, noted Kozak. The difference between these prices implies a potential return for investors of 37%.

"Buy this dip," the analyst recommended.

Updated Costs

Kozak identified the key financial components Perpetua updated from its 2020 feasibility study (FS). For each, the analyst presented the gold company's new figure, Cantor's current estimate and the previous amount in the FS.  

Initial capex now is estimated to be higher than before, at US$2.2B versus US$1.3B previously. Cantor's projection is US$2B.

The new opex, or all-in sustaining cost for net byproducts, is US$756 per ounce (US$756/oz), up from US$636/oz in the FS and below Cantor's estimate of US$840/oz.

Strong Economics

At a US$2,100/oz gold price, the financial update has Stibnite's after-tax net present value discounted at 5% (NPV5%) at US$1.4B, the same as Cantor's projection, noted Kozak. This is lower than the amount in the FS, which was US$2.4B.

At spot metal prices, though, Stibnite's after-tax NPV5% is higher than in the FS, at US$3.7B.

"[The] project remains very robust," wrote Kozak.

Other Work

The analyst pointed out that Perpetua is taking other steps to advance Stibnite. For instance, it has begun detailed engineering studies on Stibnite and signed a procurement contract with Idaho Power Co. for power line materials.