New CEO To Take Gold & Antimony Project to Finish Line

Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) announced that President and Chief Executive Officer Laurel Sayer is stepping down and has been replaced effective March 14 by former PolyMet Mining Corp. Chairman, President, and CEO Jon Cherry.

Sayer will remain as senior advisor to the company until her April 2025 retirement.

"I joined Perpetua with the goal of securing a Record of Decision for the Stibnite Gold Project," Sayer said. "Now, with our final Record of Decision expected in 2024, it's time to pass the baton to the leader who will take Perpetua into our next phase of Development."

Analyst Mike Niehuser of Roth Capital Partners noted in a March 14 research note that Cherry's more than 33 years of industry experience "may provide PPTA with the necessary leadership to advance the project to operation and meet unexpected challenges."

Niehuser, who maintained his Buy rating on the stock with a price target of US$7.25 per share, said researchers had anticipated "a leadership transition upon permitting later in 2024."

Analyst Mike Niehuser of Roth Capital Partners noted that Cherry's more than 33 years of industry experience "may provide PPTA with the necessary leadership to advance the project to operation and meet unexpected challenges."

However, he continued, "We view the appointment favorably as a timely and natural addition necessary for the development of the project."

PolyMet's NorthMet project received the highest rating the Environmental Protection Agency (EPA) has ever given to a mining project, Perpetua said.

Cherry also "played a leading role in negotiating a joint venture with Teck Resources Ltd. (TECK:TSX; TECK:NYSE) before PolyMet's sale to Glencore International Plc (GLNCY:OTCMKTS)."

Perpetua is focused on the exploration, site restoration, and development of gold-antimony-silver deposits in the Stibnite-Yellow Pine district of central Idaho. The company says Stibnite is one of the highest-grade, open-pit gold deposits in the U.S.

The company is working to restore the abandoned mine site and produce gold, as well as produce the only antimony in the U.S. The strategic critical mineral is used in many military applications, including armor-piercing bullets, night vision goggles, and laser sighting, Forbes reported.

"It is the key element in the creation of tungsten steel and the hardening of lead bullets, two of its most crucial applications during WWII," David Blackmon wrote for the publication.

The historic Stibnite mine "was able to step up production of the antimony that is an element in the mine's ore and helped fill the void."

"The Stibnite mine ended up producing fully 90% of America's demand for antimony for the duration of the War and was key to producing 40% of the tungsten steel needed for the military effort," Blackmon wrote. "Following the War, output from the Stibnite mine gradually declined, and its operations were shut down entirely in 1997."

The Catalyst: Company Reaches 'Inflection Point'

According to the company's most recent investor presentation, Perpetua expects to finalize an environmental impact statement (EIS) by Q2 of 2024 and reach a Final Record of Decision for Stibnite by Q4 of 2024. Additionally, the company expects to receive ancillary permits and project financing in early 2025 and reach a construction decision later in 2025. Perpetua intends to achieve commercial operations in 2028 based on the current timeline.

"I think Perpetua has reached an inflection point in the project's life, and we are looking forward to more exciting updates coming this year," said the company's investor relations manager, Chris Fogg. "We continue to expect our stock to rerate as we achieve additional milestones."

He continued, "At current prices, there is ~2x-5x upside if our stock trades at a P/NAV multiple closer to the average of our peers."

On January 5, 2024, Mike Kozak with Cantor Fitzgerald rated Perpetua as a "Speculative Buy" with a target share price of CA$16.50 per share, with a potential return on investment of more than 200%.

Niehuser said the appointment of Cherry ahead of the Record of Decision "demonstrates PPTA's confidence in receiving permits."

"Following the Record of Decision, PPTA should receive a positive rerating," he wrote. "In addition, the feasibility study will be updated, providing information to review our price target."

PolyMet last year accepted Glencore's proposal to buy the remaining 18% stake in the company for about US$73 million, Reuters reported a 167% premium to the share price.

Cherry also was a senior leader for the multi-billion-dollar Resolution Copper joint venture project owned by Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) and BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK), general manager of Rio Tinto's Eagle Mine (the United States of America's only primary nickel-copper mine), and senior project engineer at Rio Tinto's Kennecott Utah Copper.

Cherry will lead the Perpetua Resources team as the Stibnite gold project completes permitting and transitions into development and operations.

"One of the primary reasons I was drawn to Perpetua Resources is that the team has clearly focused on doing business the right way," Cherry said. "I look forward to advancing Perpetua's vision to restore an abandoned legacy mine site, responsibly develop one of the highest grade open-pit gold mines in the United States, and support national security and the energy transition by becoming the only domestically mined source of the critical mineral antimony."

Gold on the Rise?

The gold market continues to hover above US$2,000 an ounce this year and has eked out record highs. Florian Grummes, managing director at Midas Touch Consulting, told Kitco that "regardless of short-term pullbacks or interim consolidations, this likely signifies only the beginning of the next major uptrend in the precious metals sector."

Grummes said he ultimately sees a price target of as much as US$2,535 an ounce.

"It can be assumed that after the two-and-a-half-month consolidation, the ongoing rally is unlikely to end after just three weeks. In case of doubt, the new uptrend may continue swiftly but with volatility," he said.

Rick Mills, author of the Ahead of the Herd newsletter, noted that the biggest beneficiaries of rising gold prices would be gold miners' stocks, "which are dirt-cheap and mostly forgotten today."

"That leading GDX gold-stock ETF can more than double during major gold uplegs!" he wrote. "And smaller fundamentally superior mid-tiers and juniors well outperform GDX majors."

On January 5, 2024, Mike Kozak with Cantor Fitzgerald rated Perpetua as a "Speculative Buy" with a target share price of CA$16.50 per share, with a potential return on investment of more than 200%.

"When in production, Stibnite will be one of the Top 5 largest gold mines and the single largest antimony mine in the United States," he wrote. 

Ownership and Share Structure

Refinitiv reports that management and insiders own approximately 0.38% of the company.

According to Refinitiv, Director Christopher James Robinson owns 0.09% of the company, while CFO Jessica Marie Largent owns 0.13%, former President and CEO Laurel Sayer owns 0.14%, Vice President of Permitting Alan Douglas Haslam owns 0.09%, David L. Deisley owns 0.02%, General Counsel L. Michael Bogert owns 0.05%, Vice President of External Affairs Mckinsey Margaret Lyon owns 0.05%, Director Robert Alan Dean owns 0.01%, and Human Resources Manager Tanya Dawn Nelson owns 0.01%.

A strategic investor, Paulson & Co. Inc., owns 38.63% of the company. According to Refinitiv, institutions own approximately 26.66% of the company, as Kopernik Global Investors, L.L.C. owns 8.19%, Sun Valley Gold, L.L.C. owns 7.28%, Krilogy Financial L.L.C. owns 2.6%, BlackRock Institutional Trust Company, N.A., owns 2.77%, B. Riley Financial Inc. owns 2.32%, Eidelman Virant Capital owns 1.49%,, Franklin Advisors Inc. owns 0.85%, Earth Resource Investment Group owns 0.73%, and State Street Global Advisors (U.S.) owns 0.7%.

Refinitiv reports that there are 64.12 million shares outstanding and 63.75 million free float traded shares. The company has a market cap of CA$339.75 million and trades in a 52-week range between CA$3.56 and CA$7.32.

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. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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