Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) "stands to benefit" from China's imminent export restrictions on antimony once the company's past-producing Stibnite mine comes online, reported H.C. Wainwright & Co. analyst Heiko Ihle in an Aug. 22 research note.
"In general, we believe that tightening global supply elevates the strategic importance of the firm's U.S.-based Stibnite gold project," Ihle wrote.
51% Return Potential
The analyst noted that H.C. Wainwright reiterated its US$13.25 per share target price on the explorer-developer, now with a share price of about US$8.78.
The difference between these prices implies a 51% return for investors.
Perpetua remains a Buy, wrote Ihle.
Tighter Antimony Supply
As of Sept. 15, China will begin restricting its exports of antimony and related elements, reported Ihle, which includes banning "exporting antimony-related products without permission." Today, China produces about 48% of the global supply of antimony, an element used in several different products used by the military, such as infrared missiles and ammunition.
"Going forward, we anticipate tighter antimony supply across the globe," Ihle wrote.
U.S.-Based Antimony Project
Perpetua Resources owns a past-producing antimony mine in Idaho called Stibnite, where it is working on construction and preparation for state and federal permitting, wrote Ihle. The goal is for Stibnite to again produce antimony as well as gold.
The analyst highlighted that review of the Final Environmental Impact Statement (FEIS) by the cooperating agency is done and in the final stage.
"Looking ahead, we expect the company to potentially accelerate production plans as the company encounters increased interest from investors and other sources of funds," Ihle wrote.
The analyst pointed out that before China's recently announced export restrictions, the U.S. already had made a move to support Perpetua to offset China's dominance in critical metals production. This was in the form of a letter of interest from the U.S. Export-Import Bank for a loan of up to US$1.8 billion, Ihle reported, through its Make More in America Initiative and its China and Transformational Exports Program.
Expected Stock-Moving Events
According to Ihle, expected upcoming catalyst include the U.S. Forest Service's biological assessment moving to the formal consultation stage and Perpetua receiving the final Section 401 water quality certification from the state of Idaho.
Also, the FEIS and draft record of decision are expected to be published in Q3/24, the final record of decision, in Q4/24.
"We reiterate continued news flow," Ihle wrote.
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Disclosures for H.C. Wainwright & Co., Perpetua Resources Corp., Aug. 22, 2024
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I, Heiko F. Ihle, CFA , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of Perpetua Resources Corp. (including, without limitation, any option, right, warrant, future, long or short position).
As of July 31, 2024 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Perpetua Resources Corp..
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from Perpetua Resources Corp. for non-investment banking services in the previous 12 months.
The Firm or its affiliates did not receive compensation from Perpetua Resources Corp. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
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