U.S. Mining Co. Receives LOI for US$1.8B in Financing

Source: Mike Niehuser 04/11/2024

These funds could significantly derisk this Idaho-based gold-antimony-silver project, noted a Roth MKM report.

Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) got a target price boost from Roth MKM on the news the mining company received a letter of interest for US$1.8 billion ($1.8B) in financing from the Export-Import (EXIM) Bank of the United States, reported Roth MKM analyst Mike Niehuser in an April 9 research note.

“The potential for financing through the EXIM [Bank] significantly reduces the financing risk associated with the [Stibnite] project, increasing Perpetua’s bargaining position with potential strategic investors and partners,” Niehuser wrote.

The 2020 feasibility study of Stibnite, Perpetua’s gold-antimony-silver project in Idaho, outlined total capex with a contingency of about US$1.658B.

59% Potential Return

Niehuser indicated that Roth increased its target price on Perpetua by 38% to US$10 per share from US$7.25. The company is now trading, in comparison, at about US$6.29 per share.

The difference between the current price and the new target price implies a potential return for investors of 59%.

Perpetua remains a Buy.

What To Expect

The next step is for the EXIM Bank to conduct due diligence with respect to Stibnite, which is likely to take about 12 months, Niehuser noted. It is expected that in this process, the bank will update estimates of metals prices and costs and review the Final Record of Decision.

As far as when Perpetua will receive this and other documents, it expects to get the Final Environmental Impact Statement and Draft Record of Decision this quarter, followed by the Final Record of Decision by year-end.

About the Financing

To determine a financing amount for Stibnite, Niehuser reported, the EXIM Bank used a formula that estimated the project’s future jobs creation.

The analyst also pointed out that Stibnite may be eligible for consideration under the China and Transformational Exports Program (CTEP). If so, the EXIM Bank could provide Perpetua financing terms akin to those the Republic of China gives its state-subsidized businesses.

“While potential financing by EXIM under the CTEP could be amortized over 15 years, the 2020 feasibility study suggests the potential for a more rapid repayment of debt and even more so at current market prices,” Niehuser wrote.

US Supply Compelling

The EXIM Bank is aware of the importance of antimony and a future domestic supply of it, highlighted Niehuser, given that China, Russia, and Tajikistan control 90% of the world’s supply of it.

In addition to munitions and other wartime gear, the metal has numerous other applications. It is used in mobile phones, semiconductors, large storage batteries, wind and hydro turbines, solar panels, plastics, and more. The Stibnite mine operated historically, producing antimony trisulfide during World War II, Niehuser wrote.

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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. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
3. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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Disclosures for Roth MKM, Perpetua Resource Corp., April 9, 2024

Regulation Analyst Certification (“Reg AC”): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures: Shares of Perpetua Resources Corp. may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2024. Member: FINRA/SIPC.

( Companies Mentioned: PPTA:TSX; PPTA:NASDAQ, )