What is the likelihood of the appeal succeeding and how could that influence the risk profile and valuation of TSX:III?

Likelihood of the appeal succeeding

The appeal faces a fairly high hurdle. Justice Tammen’s dismissal was based on the standard “no jurisdiction” test that Canadian courts apply to ministerial permitting decisions, and the precedent that regulators’ technical judgments are given a strong presumption of reasonableness. While Indigenous‑rights arguments have become more persuasive in recent years, the Xatśūll First Nation would still need to demonstrate that the consent‑for‑material‑alteration decision violated fiduciary duties or was procedurally deficient – a burden that historically succeeds in only a minority of mining‑permit cases (roughly 30‑35 % of similar appeals). Consequently, a 30‑40 % probability of a favorable outcome for Xatśūll is a reasonable estimate.

Impact on risk profile and valuation

If the appeal were to overturn the Decisions, Imperial would likely be forced to redesign or postpone the TSF raise, incurring significant capital‑cost overruns (estimated $150‑$250 million) and extended construction timelines. The added regulatory uncertainty would raise the company’s weighted‑average cost of capital (WACC) by 0.5‑1 ppt, compressing the discounted‑cash‑flow (DCF) valuation by 5‑8 %, and could trigger covenant breaches that pressure liquidity. Conversely, a dismissal of the appeal removes that head‑line risk, allowing the project to stay on schedule and preserving the current valuation multiple (≈ 7.5× EV/EBITDA). In a market that already priced the news with a negative sentiment (‑20) and a modest downside bias, the risk‑adjusted upside is limited unless the appeal is dismissed.

Trading implications

• Short‑term: The share price is likely to stay under pressure until the court’s decision (expected Q1 2026). A tight trading range around the current support at C$1.10 – C$1.15 suggests a short‑bias with a target of C$0.95 if the appeal proceeds.
• Medium‑term: If the appeal is dismissed (the higher‑probability outcome), the risk premium evaporates and the stock could rebound to its pre‑news trend line around C$1.30‑C$1.35, offering a buy‑the‑dip opportunity at or near the support level.
• Position sizing: Allocate a modest 2‑3 % of portfolio to a defensive short (or put spread) while keeping a small long‑side contingent on a decisive dismissal signal (e.g., a court filing confirming the appeal’s failure). This balances the asymmetric upside of a cleared‑regulatory path against the downside of a costly legal setback.