Critical Minerals Project Gains Momentum with Strong Financials and Strategic Advances

Perpetua Resources Corp. PPTA reported its unaudited condensed consolidated financial results for the second quarter of 2024, ending June 30. The company's primary focus remains on advancing the Stibnite Gold Project through the permitting process under the National Environmental Policy Act (NEPA) and preparing for the project's construction. The Stibnite Gold Project is significant for its potential to provide the United States with a domestic source of antimony alongside its substantial gold reserves.

Perpetua reported no lost time incidents or environmental spills during the second quarter, marking a strong safety record for the period. The company also received an additional US$34.4 million in funding through a modified Technology Investment Agreement under Title III of the Defense Production Act. Furthermore, Perpetua published its 2023 Sustainability Report, highlighting its ongoing commitment to environmental and social governance.

In April 2024, Perpetua received a letter of interest for up to US$1.8 billion in financing from the Export-Import Bank of the United States, signaling significant financial backing for the Stibnite Gold Project. "Stibnite is a world-class gold project with a strategic and valuable by-product in antimony, and we look forward to building on our momentum" said Jon Cherry, President and CEO of Perpetua Resources, in a company news release. The company anticipates several important milestones in the near future as it continues to unlock value for its stakeholders.

Critical Facts About Critical Minerals Mining

The critical minerals sector has experienced unprecedented growth in recent years, driven by the global transition to clean energy technologies. According to the International Energy Agency (IEA) on July 10, "investment in critical mineral development rose 30% last year" further highlighting the sector's growing significance.

Mike Niehuser of Roth MKM maintained a Buy rating on Perpetua Resources, with a target price of US$10 per share

Perpetua Resources, through its Stibnite Gold Project, believes it may contribute to this expanding market, particularly with its focus on the production of antimony, a critical mineral essential for national security and clean energy technologies.

As covered by Fortune Business Insights, antimony, also known as stibnite, has seen rising industrial demand, with its market size projected to grow from US$1.08 billion in 2024 to US$1.78 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 6.5% according to a recent report by Fortune Business Insights.

The report highlighted that "the increasing demand for flame retardants is driving the growth of the antimony market, particularly due to stringent regulations mandated by the Occupational Safety and Health Administration (OSHA) to practice flame-retardant clothing."

The ongoing investments in the critical minerals sector are essential for the affordability and speed of clean energy transitions. The IEA expressed "cautious optimism that the recent boom in investments in critical minerals will help meet increasing demand to achieve net-zero transition targets." As Perpetua Resources advances its Stibnite Gold Project, it aligns with the broader industry trend of bolstering critical mineral supplies to support both national security and the global push toward decarbonization.

Pepetua's Momentum and Motivation

Perpetua Resources has made substantial progress in advancing the Stibnite Gold Project, both in terms of permitting and construction readiness. The United States Forest Service (USFS) updated the project schedule in January 2024, with the Final Environmental Impact Statement (FEIS) and a Draft Record of Decision expected in the third quarter of 2024, followed by a Final Record of Decision in the fourth quarter. The USFS has confirmed that cooperating agency reviews of the FEIS are complete, with final consultations underway.

Technical Analyst Clive Maund rated Perpetua Resources as a Buy for all timeframes.

In addition to the NEPA process, Perpetua is moving forward with several ancillary permits, including its 404 permit application with the U.S. Army Corps of Engineers and the formal Endangered Species Act Section 7 consultation, which began in April 2024. The Idaho Department of Environmental Quality issued its final 401 Water Quality Certification for the project in May 2024.

The company is also actively preparing for construction, having appointed Jonathan Cherry as the new President and CEO and a Vice President of Projects to lead the Stibnite Gold Project. Perpetua has engaged Ames Construction as the construction manager general contractor, advancing detailed engineering for the proposed Burntlog Route and power line construction with Idaho Power and Kiewit. Ausenco has been awarded the Basic and Value Engineering Scope for the project, and key subject matter experts have been hired to guide engineering and construction readiness efforts.

Analysts Analyze Perpetua Resources

According to Mike Niehuser of Roth MKM, Perpetua Resources Corp.'s Stibnite Gold-Antimony Project in Idaho "merited immediate attention and endorsement" by the U.S. federal government. In his July 22, 2024, research note, Niehuser emphasized the project's importance to national defense, particularly in light of antimony's inelastic demand and the multiple risks associated with its supply. He highlighted that the Department of Defense (DOD) had previously funded the Stibnite project due to its strategic value, noting that "advancement of the Stibnite gold project may be paramount" from the DOD's perspective.

Niehuser maintained a Buy rating on Perpetua Resources, with a target price of US$10 per share, implying a 56% potential return for investors based on the company's trading price at the time of the report of approximately US$6.41 at the time of his report. He also pointed out that the U.S. needs the Stibnite project to come online to secure a domestic supply of antimony, which is critical for various military applications. With China, Russia, and Tajikistan controlling 90% of the global supply of antimony, Niehuser commented that this reliance "places the U.S.' manufacturing base and national security at risk should relations between the U.S. and China deteriorate."

Further, Niehuser noted that the price of antimony had surged to over US$10 per pound, significantly higher than the US$3.50 per pound used in the project's 2020 feasibility study. This price increase, along with higher prices for gold and silver, suggested a much stronger economic outlook for the project, with a potential net present value of US$2.943 billion and an internal rate of return of 36.9% under optimistic price scenarios.

Niehuser also highlighted the potential for additional financing support through the Export-Import Bank of the United States (EXIM), which had indicated the possibility of financing US$1.8 billion of debt for the project. This potential financing could significantly reduce the project's financial risk, especially considering the Stibnite project's estimated capex requirement of US$1.658 billion. The DOD had already provided approximately US$75 million to Perpetua Resources for various purposes, including antimony testing and permitting activities.

In a separate analysis, Technical Analyst Clive Maund described Perpetua Resources as a momentum play in May, noting the recent strong gains in the company's stock price following the announcement of potential financing from EXIM. He suggested that the stock could see further significant gains, with a near-term target of US$9 per share, representing a potential 50% increase. Maund rated Perpetua Resources as a Buy for all timeframes, appealing to both short-term speculators and long-term investors.

According to technical analyst Jason Sen on Investing.com, gold is currently in a 4-month sideways consolidation pattern, but there are several positive indicators suggesting a potential for a significant breakout. Sen noted that gold has recently tested key resistance levels at 2432/36 and 2473/75, which could be crucial in determining the next upward move. Despite the current overbought conditions, Sen emphasized that "the long-term bull trend for gold is expected to continue higher eventually" reinforcing the positive outlook for the precious metal.

Sen highlighted that "in a consolidation channel such as this, it is more likely that prices will break higher eventually because it is expected to be a continuation pattern, not a reversal pattern." This suggests that the current sideways movement may be setting the stage for a bullish breakout, particularly if gold can surpass the critical resistance at 2479 and challenge the July all-time high at 2483/84.

While the consolidation has made it challenging to identify strong support levels, Sen expressed optimism that a break above these key resistance points could trigger a new leg higher in the longer-term bull trend, providing a positive outlook for gold investors.

Ownership and Share Structure

According to Reuters, management and insiders own approximately 0.55% of Perpetua and institutions own about 33.09%.

Top institutional shareholders include Kopernik Global Investors LLC with 8.13%, Sun Valley Gold LLC with 7.23%, Krilogy Financial LLC with 2.68%, BlackRock Institutional Trust Co. with 2.63%, Herr Investment Group LLC with 2.12%, and State Street Global Advisors (US) with 0.73%, Reuters reported.

Of insiders, Chief Financial Officer Jessica Marie Largent owns 0.15%, former President and CEO Laurel Sayer owns 0.14%, and Director Chris Robinson owns 0.09%.

A strategic investor, Paulson & Co. Inc., owns 38.38% of the company.

Refinitiv reports that there are 64.54 million shares outstanding and 64.19 million free float traded shares. The company has a market cap of US$339.65 million and trades in a 52-week range between US$2.64 and US$7.13.

Important Disclosures:

1. 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.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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