Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) got a target price boost from ROTH Capital Partners on the news the mining company received a letter of interest for $1.8 billion ($1.8B) in financing from the Export-Import (EXIM) Bank of the United States, reported ROTH Capital Partners 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 contingency of about $1.658B.
59% potential return
Niehuser indicated that ROTH increased its target price on Perpetua 38%, to $10 per share from $7.25. The company is now trading, in comparison, at about $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, 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.
U.S. supply compelling
The EXIM Bank is aware of the importance of antimony and a future domestic supply of it, highlighted Niehuser, given 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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