US Forestry Service OKs Perpetua’s Stibnite gold mine in Idaho, lifting shares

Perpetua Resources’ (TSX: PPTA; NASDAQ: PPTA) shares jumped 19% Monday to a 12-month intra-day high after receiving a federal forestry service permit for the Stibnite gold project in Idaho.

After eight years of review, national forest supervisors in state capital Boise and the city of Payette signed the final record of decision on Monday. Environmentalists expressed dismay as investors welcomed the approval. The Stibnite project in central Idaho is to create one of the largest gold, silver and antimony mines in the United States.

The decision approves the company’s 2021 modified mine plan after hearing public objections. It allows Perpetua to move forward with other permits for the nearly $1.3 billion project.

Perpetua shares last traded at $18.34, up $2.37 on Monday afternoon in Toronto. They had traded as low as $3.65 in the past 12 months. Perpetua has a market capitalization of $1.3 billion.

Permits needed

It still needs a Clean Water Act Section 404 permit, state cyanidation and discharge permits, a dam safety permit, water rights and other environmental approvals. The company expects to complete permitting by midyear. Construction is to begin shortly afterward with full production slated for 2028.

The approval puts it among a few projects that have cleared the National Environmental Policy Act permitting process, according to Perpetua president and CEO Jon Cherry.

“This approval elevates Stibnite to an elite class of projects in America that have cleared NEPA,” he said in a release. “The Stibnite project is a win for Idaho, a win for the environment and a win for America’s national security.”

According to the feasibility study published in 2021, Stibnite is expected to produce 4.2 million oz. of gold and 115 million lb. of antimony over a 15-year mine life, with the first four years making up a sizeable part of the production.

The project includes the only domestic reserve of antimony essential for defence, energy and technology sectors.

$1.3B capex

The project has an after-tax net present value of US$1.3 billion at 5% discount rate. It has an internal rate of return of 22% and a payback period of just under three years. Those figures were calculated using a gold price at US$1,600 per oz. However, these figures would improve to US$1.9 billion NPV, 28% IRR and 2.5-year payback when a higher gold price of US$1,850 is applied.

Mining is to involve three open pits. It will likely require major restoration to fix contamination from decades of past mining. The project also entails punching in a new road through three areas and along a designated wilderness zone as well as the filling of a local waterway, Meadow Creek, with mine waste.

Perpetua plans to reclaim disturbed areas, create wetlands and restore stream habitats. The concept requires independent oversight of tailings storage. It also requires strict controls on dust and water use.

The mine site, first exploited in 1919, has undergone years of study and regulatory scrutiny. In 2021, the Environmental Protection Agency approved a cleanup deal with Perpetua. It includes addressing legacy tailings at the site.

Public opposition

The US Forestry Service received over 28,000 public comments during the permitting process. This showed the project’s significance and controversy.

The Idaho Conservation League (ICL) opposes the project. It argues that Stibnite threatens the South Fork Salmon River watershed. This area is a critical habitat for endangered fish and a cornerstone of Idaho’s natural heritage, the group says.

The project would irreversibly scar the region, ICL public lands and wildlife director John Robison says.

He said it was clear the latest mine plan had not addressed the concerns of ICL, its partner groups, the Nez Perce Tribe and the public.

“The Stibnite project will essentially create a massive toxic landscape at the top of this watershed—if we let them,” he wrote in a blog post Monday.