Stillwater Critical Minerals (TSXV: PGE; US-OTC: PGEZF) is exploring to boost its nickel-palladium project in Montana as it awaits word due this year on Defense Department funding.
Glencore (LSE: GLEN), which took a 15% stake in May, is backing a program to add to the 40,000 metres of drilling so far that yielded a 2023 resource estimate of 1.6 billion lb. of nickel, copper and cobalt and 3.8 million oz. of palladium, platinum, rhodium and gold. Stillwater is preparing for a preliminary economic study that could benefit from a grant request to the Pentagon of around US$50 million.
The application was filed before the Defense Department last week started a new board to oversee stockpiling and strategies to secure supplies of critical materials essential for national defence. President-elect Donald Trump is expected to continue the Biden administration’s policy of reducing reliance of foreign supplies, especially from China.
“This board signals serious movement by the U.S. government to secure domestic supplies of critical minerals,” Stillwater CEO Michael Rowley told The Northern Miner by phone on Monday. “It’s an excellent time to be in the United States, with bipartisan support for critical minerals and a premium placed on U.S.-produced metals.”
Design research
The company plans to use existing grants, including nearly US$2.8 million in Advanced Research Projects Agency – Energy funding secured in 2023 and 2024, to refine extraction technologies, optimize mine design and enhance its resource base. Rowley said it was too early for definite timelines.
“We aim to complete a PEA and potentially move into a pre-feasibility study,” he said, “depending on the outcomes of the initial assessments.”
Rowley acknowledged that significant capital expenditures will be required to bring the project to production. These costs will depend on mine design, processing methods and further resource definition.
Struggling neighbour
And even though Stillwater West sits less than a kilometre from Sibanye-Stillwater’s (NYSE: SBSW; JSE: SSW) operations and smelting facilities, potentially lowering future production costs, the neighbour faced major cutbacks last year.
Sibanye placed its Stillwater West (same project name) palladium mine on care and maintenance, cut production by 200,000 oz. of platinum and palladium and laid off 800 workers. Persistently low palladium prices, coupled with competition from Russian producers operating at lower costs, forced the South African miner to restructure.
Stillwater’s geological characteristics set it apart, the CEO said.
“Our mineralization occurs in tens to hundreds of metres of thickness compared to Sibanye’s 1.8-metre-thick JM Reef,” he said. “This gives us flexibility in mine design.”
The project’s resource estimate covers five deposits in a 9-km central area of the project, with significant expansion potential along strike and at depth. Rowley underlined the project’s optionality, with grades and widths comparable to South Africa’s Platreef, a globally renowned nickel and PGM deposit.
Metal prices
Nickel and palladium prices have been under pressure in recent years from oversupply. Now, S&P Global Market Intelligence forecasts the nickel price to increase by 6.3% from last year’s US$16,000 a tonne average to US$17,000 per tonne this year as increased demand gradually reduces a surplus. It traded at US$15,380 per tonne on Monday.
Long-term forecasts for nickel are more optimistic, such as US$26,000 per tonne by 2033 as EV demand rises, according to Fitch.
The palladium outlook is also supposed to perhaps double in the long-term because of continued demand in hybrid vehicles, supply constraints in Russia and industrial demand, analysts such as CoinPrice have forecast. Palladium on Monday traded at US$970 per ounce.
USSM partnership
Analysts at Vancouver-based Couloir Capital underlined the importance of Stillwater West’s resource base in an October report. They also liked Stillwater’s October deal with Missouri-based US Strategic Metals (USMM), which focuses on processing critical minerals for battery-grade metals for local use.
“The partnership with USSM includes a potential offtake agreement providing visibility of revenue and cash flow,” Couloir said.
Stillwater shares trading in Toronto closed nearly 8% lower on Monday at 12¢ apiece, having trended 25% weaker over the past 12 months. It had tested 10¢ and 22¢ over the period and has a market capitalization of $27.5 million.
Policy timing
Stillwater West’s timing appears opportune, with the Biden administration’s industrial policy—including the Inflation Reduction Act, CHIPS Act and Bipartisan Infrastructure Law—injecting federal dollars into critical sectors.
However, Rowley cautioned that the IRA, while spurring demand for U.S.-sourced metals, has not directly benefited Stillwater or other upstream miners financially.
“The act pushed end users like automakers to seek IRA-compatible battery metals, but miners like us haven’t seen funding flow yet,” he said.
“With out-of-work miners next door and a recognized district producing critical minerals for over a century, the conditions are right for projects like Stillwater West to help the U.S. build domestic supply chains.”
Be the first to comment on "Stillwater Critical Minerals scrambles for DoD dollars"