Thanks to record gold prices, Laurel Sayer and Perpetua Resources is set to resurrect a shuttered Idaho mine that will once again supply the Pentagon with vital weapons-grade antimony, bust a Chinese monopoly, and underwrite the rehabilitation of 20 miles of back country salmon streams.
By Christopher Helman, Forbes Staff
How frustrating to be a Chinook salmon. You exit the Pacific Ocean into the Columbia River, then migrate up the Snake River to the Salmon River, where hundreds of miles from the ocean in central Idaho you finally reach your ancestral stream, the East Fork of the South Fork of the Salmon River – only for the journey to end in an abandoned mine pit called the “Glory Hole,” where your path upstream is blocked by a million tons of mine tailings leaching a ton of arsenic a year into your river.
During World War II the Stibnite mine near Yellow Pine, Idaho (pop: 32) produced 50% of the tungsten and 90% of the antimony vital to the war effort. Antimony, a soft, shiny metalloid, is used in explosives, ammunition and now in semiconductors, solar panels and night vision gear. Mine operators back in the day weren’t too worried about the plight of migrating salmon or even the gold ore they produced, much of which they left behind in tailings piles.
After being mothballed in 1997, the site became somewhat of an obsession for geologists and entrepreneurs who recognized how much valuable ore remained. “We didn’t make this mess, but we are willing to be part of the solution,” says Laurel Sayer, CEO of publicly traded Perpetua Resources Idaho (market cap $600 million) who was working as a conservationist, running the Idaho Land Trust a decade ago when she learned about the Stibnite mine and caught the bug. “I was so drawn to the opportunity to marry the responsible production of gold and antimony and leave it better than it is today.” (Stibnite is the mineral form of the element antimony, often found in ore containing gold.)
Why care so much? The mine, in the Payette National Forest, could not be in a more remote or rugged location. But its contents are unique to North America, and uniquely vital for national security. That’s because in recent decades China has cornered the antimony market, controlling some 90% of global supplies with mines in China and Tajikistan.
“When we don’t control the resource, they can manipulate the price,” says Sayer, 67. In the eight years since she started guiding Perpetua (formerly Midas Gold) through the federal permitting process, antimony prices have nearly doubled – to a record $22,000 a ton after China’s announcement in August that it would restrict exports. It was already evident that the U.S. was in vital need of diversifying supply; now getting access to 75,000 tons of antimony reserves at the mine has become a low-key emergency.
But although the U.S. Department of Defense is a big backer of Perpetua’s efforts, with $70 million in grants so far, not even the Pentagon can simply order the mine reopened. For eight years Perpetua has labored under the auspices of the National Environmental Policy Act to detail how its new mining operation would clean up the mess of the old one.
Sayer relied on her background working on Capitol Hill to acquire the adequate “social license”, mostly by utilizing the good neighbor approach. “In developing the plan we worked backwards,” she says. “What do we want it to look like and what do we have to do to get there?” The vision involved 450 acres of restored wetlands, forests replanted with 65,000 trees and 20 miles of stream reopened to the salmon.
In 2020 the Forest Service released a draft environmental statement for the project, which inspired more than 8,000 public comments, inspiring Perpetua to re-engineer for lower arsenic levels and cooler salmon-friendly temperatures in the river. That led to a supplemental environmental statement in 2022, and another couple years of comments and reconsiderations. This September, Perpetua celebrated receipt of a final environmental statement.
Meanwhile, a year ago the Nez Perce tribe settled its Clean Water Act lawsuit against Perpetua for $5 million in payments. And even before receiving official greenlights (expected by yearend) Perpetua has spent $17 million on conservation work, including moving 325,000 tons of old mine tailings away from waterways.
Naturally, groups like the Save The South Fork Salmon still object to any plan involving open pits and cyanide-based ore leaching. But it’s unlikely now for any heckler’s veto to block a Pentagon pet project. “I’m a mom of a veteran soldier in Iraq,” says Sayer. “I know what it means to have our soldiers prepared.”
Another force propelling Perpetua is the surge in the price of gold since the pandemic. Even at a record $2,660 per ounce, demand is strong. Costco, which sells 1 oz gold bars via its website, reports that customers have been buying the bars at a rate of $100 million per month. “Antimony is the enabler, but gold drives the economics,”says Sayer. Over the 15 year initial life of the mine, Perpetua expects to produce an average 300,000 ounces of gold per year at an average all-in cost of $650/oz and eventually generate hundreds of millions of dollars in annual profits. For goldbugs, this makes Perpetua an alluring long-term, out-of-the-money option on the yellow metal, with a lot more appreciation potential than buying shares in a physical gold ETF, or top miners like Barrick Gold or Franco-Nevada.
Investing in micro-cap Perpetua is not risk-free. Its stock has tripled since February to more than $9, but it has been extremely volatile. From its peak at $15 in August 2020, it fell to under $2 by the end of October 2022. The company has posted cumulative losses of $600 million going back more than a decade, with $400 million spent just getting through the eight-year-long NEPA process. Despite an annual cash-burn of about $20 million, Perpetua has just $10 million in long-term debts. To build out the mine, Perpetua has tapped RBC Capital Markets and Endeavor Financial to arrange financing and is already eyeing a potential $1.8 billion in loans from the U.S. Export-Import Bank. Tax credits for critical materials enshrined in the 2022 Inflation Reduction Act promise to offset 10% of antimony production costs.
There’s naturally some execution risk here. With the permitting phase nearly complete, Sayer has turned over the reins to new CEO John Cherry who previously ran PolyMet Mining after years at Rio Tinto. He’ll oversee a construction phase featuring 650 workers who will be transported in for two-week work stints – like rig hands on a Gulf of Mexico oil platform.
Sayer says measuring success will be easy: “All you have to do is to see the salmon come back and spawn again.”
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