Perpetua Resources gets nod to seek $1.8 bln US loan for antimony mine

NioCorp Developments

08/04/2024 11:00

By Ernest Scheyder
       April 8 (Reuters) - Perpetua Resources  PPTA.O  has
received a letter of interest from the U.S. Export-Import Bank
(EXIM) for a loan worth up to $1.8 billion to develop an
antimony and gold mine in northern Idaho, part of Washington's
evolving strategy to offset China's critical minerals sector
dominance.    
    The loan, if approved, would be one of Washington's largest
investments ever in a mine and reflect the Biden
administration's growing comfort using the federal government's
balance sheet to fund extractive projects at terms more
favorable than those available with private lenders, a practice
that Beijing has deployed for years.
    Perpetua said EXIM, which acts as the U.S. government's
export credit agency, has told the company that it qualifies for
two loan programs designed to support those that compete with
China. 
    The loan would have a 15-year repayment term, far longer
than likely with private financing. The interest rate would be
set at closing, although EXIM has told Perpetua it qualifies for
"flexibility" on the rate given the mine's Chinese competitors. 
    Perpetua would have to arrange a separate equity funding
component, likely either through issuing stock or a royalty. 
    The letter of interest indicates that Perpetua - which
counts hedge fund manager John Paulson as its largest
shareholder - has cleared the initial loan requirements to start
the formal application process, which is expected to take 12
months. The letter also allows Perpetua to start negotiations
with equipment suppliers.
    The Pentagon has already committed nearly $60 million to
fund permitting for the mine, known as Stibnite, which would
entail cleaning and expanding a site that was polluted by World
War Two-era mining. 
    "This loan is a big piece of our financing puzzle," said Jon
Cherry, who became Perpetua's CEO last month. "It provides a lot
of certainty to move this project forward."
    In response to a request for comment from Reuters, EXIM
said: "Letters of interest are nonbinding statements that
indicate that EXIM is open for business in the market identified
and is willing to consider financing for a given export
transaction should an application be submitted."
    
    COMPETING WITH CHINA
    Located 150 miles (241 km) north of the state capital of
Boise, Stibnite contains roughly 189 million pounds of antimony,
a metal used as a hardening agent for bullets and tanks, as well
as in flame retardants and alloys for electric vehicle
batteries. China is the world's largest antimony producer, with
nearly 50% market share. Stibnite would be the only American
source of the key metal.
    The deposit also contains an estimated 6 million ounces of
gold, most of which would be exported to international
refineries and thus meeting a key requirement for EXIM
financing. While gold is not a critical mineral, its production
is seen as helping to financially buttress the mine's antimony
production and ensure a domestic supply of the metal for the
Pentagon.
        Concerns have grown that China could try to harm the
Perpetua mine's prospects by ramping up its own production of
antimony in a bid to gain global market share, something
Chinese-linked producers of nickel, cobalt and other critical
minerals have systematically done in recent years. 
    The $1.8 billion loan figure is based on an EXIM formula
tied to the number of construction, operation and reclamation
jobs at the mine. The project was forecast in 2020 to cost $1.3
billion, a number expected to rise due to post-pandemic
inflation.
    The backing for Perpetua comes just weeks after the U.S.
Department of Energy (DOE) said it would lend Lithium Americas
 LAC.TO  up to $2.26 billion to build Nevada's Thacker Pass
lithium project, which will supply General Motors  GM.N .
    DOE rules require the use of union labor and do not allow
the funds to be used to dig a mine itself, although processing
facilities do qualify. The EXIM financing rules do not have the
same restrictions on labor and will allow Perpetua to dig a mine
pit. 
    The Stibnite project has not yet won the support of Idaho's
Nez Perce tribe, which is concerned the mine could affect the
state's salmon population. The company and the tribe, however,
have started discussing water restoration projects.
    In addition to the potential loan for Perpetua, EXIM has
announced letters of interest with Australian Strategic
Materials  ASM.AX  for a rare earths project, as well as to
niobium miner NioCorp  NB.O  and titanium recycler IperionX
 IPX.AX .

 (Reporting by Ernest Scheyder; Editing by Veronica Brown and
Andrea Ricci)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))