Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) sold a royalty on all future silver production from its Stibnite gold-antimony-silver open-pit project in Idaho to Franco-Nevada, which paid Perpetua US$8.5 million (US$8.5M) up front, reported Cantor Fitzgerald analyst Mike Kozak in a March 22 research note.
This is "a much welcome cash injection as Perpetua nears the conclusion of the federal permitting process," Kozak wrote.
219% Return Possible
The analyst reiterated Cantor's CA$16.50 target price on Perpetua, currently priced at about CA$5.65 per share, noted Kozak. The difference between these prices implies a potential return for investors of 219%.
Valuation of the Royalty
According to Kozak, the after-tax net present value, discounted at 5%, of the royalty is US$11.5M, using a long-term silver price of US$24 per ounce.
"Perpetua selling forward all future silver production from the mine is immaterial to the project economics as the metal represents less than 0.3% of Stibnite's total future revenues as per the 2020 feasibility study," the analyst explained.
All Cashed Up
Kozak pointed out that Perpetua has sufficient funds to get through federal permitting. In addition to the US$8.5M from Franco-Nevada and the US$7.1M that the company had at the end of Q3/23, it has further funding, up to US$34.6M from the U.S. Department of Defense.
What To Watch For
Upcoming catalysts for Perpetua include completion of the Final Environmental Impact Statement and a Draft Record of Decision from the U.S. Forest Service, expected in Q2/24. After, that the Final Record of Decision will be issued, likely in Q4/24.
"When in production, Stibnite will be one of the Top 5 largest gold mines and the single largest antimony mine in the United States," Kozak wrote.
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Important Disclosures:
- 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.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Cantor Fitzgerald, Perpetua Resources Corp., March 22, 2024
The opinions, estimates and projections contained in this report are those of Cantor Fitzgerald Canada Corporation. (“CFCC”) as of the date hereof and are subject to change without notice. Cantor makes every effort to ensure that the contents have been compiled or derived from sources believed to be reliable and that contain information and opinions that are accurate and complete; however, Cantor makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this report or its contents. Information may be available to Cantor that is not herein. This report is provided, for informational purposes only, to institutional investor clients of Cantor Fitzgerald Canada Corporation, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. This report is issued and approved for distribution in Canada, CFCC., a member of the Investment Industry Regulatory Organization of Canada ("IIROC"), the Toronto Stock Exchange, the TSX Venture Exchange and the CIPF. This report is has not been reviewed or approved by Cantor Fitzgerald & Co., a member of FINRA. This report is intended for distribution in the United States only to Major Institutional Investors (as such term is defined in SEC 15a-6 and Section 15 of the Securities Exchange Act of 1934, as amended) and is not intended for the use of any person or entity that is not a major institutional investor. Major Institutional Investors receiving this report should effect transactions in securities discussed in the report through Cantor Fitzgerald & Co.
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Disclosures as of March 22, 2024 Cantor has provided investment banking services or received investment banking related compensation from Perpetua Resources Corp. within the past 12 months. The analysts responsible for this research report do not have, either directly or indirectly, a long or short position in the shares or options of Perpetua Resources Corp. The analyst responsible for this report has not visited the material operations of Perpetua Resources Corp. No payment or reimbursement was received for related travel costs.
Analyst certification The research analyst whose name appears on this report hereby certifies that the opinions and recommendations expressed herein accurately reflect his personal views about the securities, issuers or industries discussed herein
