Should I buy this Bill Gates-backed penny stock?

I am hesitant to invest in penny stocks, especially in the mining space. Too many things can go wrong – with geology, or licensing, or the price of the commodity being produced. Many times, a company’s capital expenditure increases due to unexpected obstacles, and the shareholders will be heavily diluted.

But, Perpetual Resources (NASDAQ:PPTA) has such an interesting story that I couldn’t resist digging deeper.

Nazi killers

Perpetua Resources is redeveloping mines that may have helped defeat the Nazis. The Stibnite Mining District, in central Idaho, produced 90% of the antimony America needed to make tungsten steel and harden lead bullets during WW2.

Before WW2, the US depended on China for this critical metal, but Japan blocked the supply route. That sent America scrambling for domestic resources.

After WW2 ended, the output from the Stibnite mine decreased. The mine was closed entirely in 1997. Today, the US is once again dependent on antimony in China, which produces 54% of the global supply.

This caused bad news because of the tension between China and the West. And it gets worse: the second largest supplier of antimony in the world is Russia, with 18% of production.

Meanwhile, the use of antimony has been growing since the 1940s. The metal is now needed to produce flame retardant chemicals, automotive clutch and brake parts, and infrared sensors.

Antimony may play a major role in green battery technology.

Bill Gates is on board

Ambri, a technology start-up, has developed a ‘liquid metal battery’ that it claims can outperform lithium-ion cells. A private company, which is largely funded by Microsoft founder Bill Gates, using a cathode composed of solid particles of antimony in its patented technology.

Billion-backed Ambri signed a supply agreement with Perpetua Resources in August 2021. This year, six pilot projects using batteries containing Ambri’s antimony are underway. If the technology meets the company’s demands, it could become a widely used solution for storing green energy on the grid. This would require a turbocharge of antimony, an already critical metal.

A golden opportunity?

Perpetua Resources expects to recover 115 million kilograms of antimony over the life of the project, with commercial production expected to begin in 2027. To put that in perspective, the company estimates its mine will be able to meet 35% of US antimony demand over its lifetime. (up to 15 years).

Additionally, the company expects to pull 4.24m ounces of gold out of the ground.

Mining analysts Hallgarten & Company estimate the net present value (NPV) of the project at $1.9bn. The company’s current market capitalization is $215m, meaning it trades at a 90% discount to NPV.

Perpetua Resources still needs to achieve many permitting and financing milestones before it can begin production. But if everything goes according to plan, it will be the only American producer of critical metals.

Now, I’m sitting in the side row. But I’ll be watching closely for news of the antimony battery cells that Bill Gates is backing. If the technology takes off in a big way, the antimony rush will continue to be active.