Back on June 24, I told you about the one mining stock that’s the only U.S. source for the critical strategic metal, antimony.
The company is Perpetua Resources (PPTA) and, at that time, I recommended buying the stock at its then-current price of $6.83.
Since then, there has been a lot more news regarding antimony and export restrictions on it from China. Perpetua stock is now up to $8.64 a share (+26.5%), and there is a lot more upside to come.
Let me explain why.
What Are the Uses for Antimony?
Antimony is a shiny gray minor metal known since ancient times when it was used in medicine and cosmetics. The most commonly mined ore is called stibnite, which contains antimony and sulfur.
Antimony can also be a byproduct of gold mining. It can also be recovered from recycling lead-acid batteries.
Its biggest application today is as a flame retardant, which accounted for around half of global usage in 2023. But there are faster-growing usages for antimony that are critical…
The first use is in military equipment, such as infrared missiles, nuclear weapons, and night vision goggles. It’s also used as a hardening agent for bullets and tanks.
The second fast-growing use is in photovoltaic glass to improve the performance of solar cells. It would not surprise me that, in a few years, this will become the biggest use of antimony.
China to Limit Antimony Export
Beginning on Sept. 15, China will limit exports of antimony. This is crucial because China is the world’s largest producer of antimony, accounting for 48% of mine production in 2023, according to U.S. Geological Survey (USGS) data.
China is also the biggest producer of processed antimony, including antimony trioxide (ATO), which is traditionally used in flame retardants and increasingly in solar glass. China had also been the biggest exporter of antimony ingots, but as Chinese production of solar cells has surged, it is consuming these ingots domestically.
That’s why China's exports of unwrought antimony, including ingot, had already been falling dramatically. Customs data showed that exports fell 45% year-on-year in the first half of 2024 to 1,694 metric tons.
In addition, China’s antimony ore production has declined to 40,000 tons in 2023 from 61,000 tons in 2020. This was thanks to falling ore grades and tougher environmental requirements. That 40,000 tons is almost 80% less than it extracted in 2008!
Antimony Prices
The price of antimony was already trading at all-time highs - above $22,000 a metric ton - before China announced its restrictions. The price had roughly doubled since the start of the year due to a global deficit of the metal.
The metals consultancy CRU Group told Reuters, "Given we are still at record prices, it's likely that prices will go even higher with this announcement." CRU added that prices could reach $30,000 a ton as buyers look to stockpile material for future production.
This seems reasonable, and may be too conservative of an estimate. China’s export restrictions could widen the deficit in the antimony market, which the consultancy Project Blue estimated at 10,000 tons in May.
Overall global production of antimony is half what it was in 2019. Not surprising, then, that the price of antimony has quintupled since that time, doubling this year alone.
And new supplies look a ways off…
Perpetua Resources Stock is a Buy
Perpetua Resources is building a U.S. antimony and gold project with support from the Pentagon and the U.S. Export-Import Bank.
In April, Perpetua Resources received a letter of interest from the U.S. Export-Import Bank for a loan up to $1.8 billion. The monies will be used to develop its antimony and gold (GCZ24) mine in Idaho.
In addition, antimony is so important to national defense that the Defense Department committed nearly $60 million to fund the mine’s permitting process, which has lasted eight years already, to boost U.S. production.
Located within the abandoned Stibnite Mining District, Perpetua Resources' Stibnite Gold Project is one of the largest economic reserves of antimony not controlled by China. The Stibnite Project will provide our country with its only mined source of antimony and could satisfy about 35% of U.S. antimony demand in the first 6 years of production.
The company is totally rehabilitating the site, including environmentally, at a cost of a billion dollars. The Stibnite Gold Project would be the 4th largest U.S. gold operation by grade, and likely produce between 4 and 5 million ounces of gold. As the only domestic source of mined antimony, the project is expected to produce about 115 million pounds, while the U.S. uses roughly 56.7 million pounds of antimony each year - much of which comes from China.
Perpetua had initially planned to begin production by 2028, should it obtain final permits this year. But China's moves meant the company is studying ways to produce antimony faster.
The company’s CEO, Jon Cherry, told Reuters: "We are looking at things that we can do during construction to get antimony out the door sooner for some of these strategic needs. The (U.S.) Department of Defense is aware of the critical nature of antimony and the short supply available. We've been hearing from a lot of different sources about the lack of supply for antimony, that the market is very tight and getting tighter daily."
Add it all up, and PPTA stock is still a buy at the current price of $8.64.
