Perpetua Resources Corp. (PPTA:TSX; PPTA:NASDAQ) applied for $2 billion ($2B) in debt financing from the Export-Import Bank of the United States (EXIM), so it can advance its Stibnite gold-antimony project in Idaho further, reported Mike Niehuser, managing director and senior research analyst at ROTH Capital Partners, in a May 23 research note.
"We believe that EXIM financing is likely due to project economics and the Administration's priorities," Niehuser wrote. "We expect Perpetua to receive approval in the requested amount, leading to a construction decision, with the potential to commence construction in 2025."
39% Implied Return
ROTH maintained its $19 per share target price on Perpetua, trading at the time of Niehuser's report at $13.66 per share, the analyst noted. From this price, the return to target is 39%.
Perpetua remains a Buy.
Niehuser also reported that on May 23 the company had 71.54 million shares outstanding, a market cap of $977.28 million ($977.28M) and a 52-week range of $5.05–15.18 per share.
Financing Expectations
Earlier this year Perpetua prepared an updated Stibnite budget showing capex of $2.2B. The $2B the company applied for from EXIM reflects this new capex and anticipated job creation, Niehuser explained.
The analyst shared ROTH's expectations related to financing for Stibnite. ROTH expects that Perpetua may already have nondilutive public and private financing lined up to cover the remaining roughly $2M needed for capex. ROTH expects the company can get conventional funding once it has EXIM approval.
ROTH expects Perpetua will secure all of the financing it needs for Stibnite. The project appears financeable from a lender's perspective based on the various production and economic scenarios outlined in the 2025 Financial Update, noted Niehuser. Using consensus metal price assumptions ($2,100 per ounce gold, $10 per pound antimony and $27 per ounce silver), which are lower than in the outlined base case, Stibnite is "marginally economic."
Also, Stibnite aligns with the U.S. Administration's priorities when it comes to developing domestic supply chains of critical minerals, antimony in this case, noted Niehuser. Stibnite has been placed on a list of mining projects strategically important to the country.
ROTH expects EXIM's financing amount and terms to be better than those Perpetua would get with conventional debt financing.
"Assuming a 'whole of government' approach, we believe that lender return thresholds should be less stringent with an attractive interest rate and a longer amortization schedule," Niehuser wrote. "This could positively impact returns important to equity holders."
Favorable Outlook
Anticipating that Perpetua will receive financing in the near term, ROTH raised its net asset value price multiple assumption to 0.65x from 0.45x.
"This reflects our optimism for favorable financing terms from EXIM, the potential availability of additional grants from the U.S. Department of Defense and additional exploration, adding resources beyond year four and extending mine life, resulting in more robust project economics," Niehuser explained.
Base Case A for Stibnite, whose figures are close to ROTH's long-term price assumptions, uses a gold price of $2,350 per ounce and an antimony price of $12 per pound. The resulting economics are a $2B net present value discounted at 5% and a 19.1% internal rate of return.
Permitting Update
Niehuser pointed out that Perpetua now has all of the required federal permits for Stibnite. It received the last one, a Clean Water Act Section 404 permit, on May 19 from the U.S. Army Corps of Engineers. In January of this year, the U.S. Forest Service greenlighted the project via its Final Record of Decision.
The mining company still needs two permits from the state of Idaho, the analyst added, receipt of which is expected soon.
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