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I am hesitant to invest in penny stocks, especially in the mining space. Too many things can go wrong: with the geology, the license, or the price of the product being produced. Often times, company capital expenditures mount due to unforeseen obstacles and shareholders face massive dilution.
However, Perpetual Resources (NASDAQ:PPTA) has such a compelling story that I couldn’t resist digging deeper.
nazi assassins
Perpetua Resources is rebuilding a mine that possibly helped defeat the Nazis. The Stibnite Mining District in central Idaho produced 90% of the antimony Americans needed to make tungsten steel and harden lead bullets during World War II.
Before World War II, the US relied on China for this critical metal, but Japan blocked that supply route. That sent the Americans scrambling for a domestic source.
Once World War II ended, production from the Stibnite mine declined. The mine closed completely in 1997. Today, the US relies on China for antimony, which produces 54% of the world’s supply.
That spells bad news as tensions rise between China and the West. And it gets worse: the world’s second largest supplier of antimony is Russia, with 18% of production.
Meanwhile, the uses of antimony have grown since the 1940s. The metal is needed today to produce flame retardant chemicals, automotive brake and clutch parts, and infrared sensors.
Antimony may even play an important role in green battery technology.
bill gates on board
Ambri, a tech start-up, has developed a ‘liquid metal battery’ that it claims can outperform lithium-ion cells. The private company, which was largely financed by Microsoft founder Bill Gates, uses a cathode composed of solid particles of antimony in its patented technology.
Ambri, backed by billionaires, signed a supply agreement with Perpetua Resources in August 2021. Six pilot projects using Ambri’s antimony-containing batteries are underway this year. If the technology lives up to the company’s claims, it could become a widely used solution for storing green energy on the grid. That would boost demand for antimony, an already critical metal.
A golden opportunity?
Perpetua Resources expects to recover 115 million pounds of antimony over the life of its project, with commercial production estimated to begin in 2027. To put that in perspective, the company forecasts that its mine will be able to meet 35% of antimony demand. of the US during his lifetime. (up to 15 years).
In addition, the company expects to extract 4.24 million ounces of gold from the ground.
Mining analysts Hallgarten & Company estimate the net present value (NPV) of the project to be $1.9 billion. The company’s market capitalization is currently $215 million, which means it is trading at a 90% discount to NPV.
Perpetua Resources still needs to achieve numerous permitting and financing milestones before production can begin. But if all goes to plan, it will be the only US producer of a critical metal.
For now, I’m sitting on the sidelines. But I’ll keep an eye out for news on antimony battery cells backed by Bill Gates. If that technology takes off in a big way, the antimony rush will really be on.
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