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Your NPV numbers seem correct. You can also look at the sensitivity charts starting on page 41 of the FS. The revised study takes these out to a +/-30% price difference. A 25% Nb price increase gives Pre-tax NPV of 2.6-2.7B using the 8% discount.
The niobium sales pay for the the Scandium and titanium production, but it wasn’t breakeven from an NPV perspective. With the high Capex, niobium and titanium alone gave a negative NPV. I haven’t crunched the numbers posted today to see if $50/kg gets it into positive territory without the Sc sales.
And brothers aren't afraid to disagree. I don't see any purpose at all in following the daily or weekly swings. The volumes are so small that no metric is really going to help you find an entry/exit point any better than gut feel. Less than 50k shares traded today all under .50 USD. That's less than $25k. It's small retailers and means nothing. If you think this gets financed and becomes operational, then dollar cost average in this vicinity.
On the other hand, the contract with Nordmin for detailed engineering was significant and I would really like to see a letter to shareholders with more information. MS indicated at the meeting in October that detailed engineering would require $25M to proceed without interruption. Nordmin has agreed to do the mine and dewatering portion already. I am very curious in the details of that deal. I'm somewhat worried that they went with such a small firm, but there is reason to be cautiously optimistic that a firm would agree to this without public disclosure of a financing agreement.
My message was also part of that batch. It says it cannot be appealed since an Admin deleted it.
Zing!
http://niocorp.com/images/Financial_Reports/NioCorp_FS_2017Q4.pdf
10k page 107 of the pdf. Directors and officers hold 28,310,066. There has been no filing indicating that any of them have sold since this 10k was released.
http://niocorp.com/images/Financial_Reports/Niocorp_10Q_2018_Q2.pdf
Most recent quarterly 10k has no update on insider holdings. Updated outstanding share count is 208,861,265 due to the private placement and Lind convertible securities.
28,310,066/208,861,265 = 13.6% held by insiders.
This does not include whatever Northcott and Lind currently hold, nor any small holdings by institutions.
Meaning retailers own an absolute maximum of 86.4%, but that would have to assume our parter Northcott sold all of their shares. That wouldn't be a very good sign, now would it?
How about these other articles from the same website?
https://simplywall.st/stocks/ca/materials/tsx-nb/niocorp-developments-shares/news/can-niocorp-developments-ltd-tsenb-improve-your-portfolio-returns/
https://simplywall.st/stocks/ca/materials/tsx-nb/niocorp-developments-shares/news/what-does-niocorp-developments-ltds-tsenb-balance-sheet-tell-us-about-its-future/
They are no better. It's all auto generated crap that provides no insight to the company whatsoever. What makes it even worse is that the data has been proven incorrect.
FYI, all I did to find this junk is google niocorp and click on news.
I would suggest that you stop sharing factually incorrect information autogenerated by subscription sites that is easily proven wrong.
This is another bot written article. Directors and executives held 13.44% of shares as of 8/25/17, per the year end 10k which is the last report detailing insider ownership. I haven't seen any filings indicating any insider sales. It's likely Lind still holds many shares. Northcott holds shares. Other institutions hold a small number of shares. Retailers do not hold 89.21%
The third party review stating no fatal flaws was a review of the technical engineering. It was not a review of the market forecast for any of the products. It essentially says that the chemical process should work as planned, that the initial (non-detailed) mine design is adequate, and that the geological reports are within the level of confidence indicated. It is purely an engineering review and has nothing to do with the finances of the project.
The fact that 13 engineers signed their names to the FS does not mean that each one of them reviewed all 898 pages. You can find the sections that each engineer was responsible for on page 29 of the FS.
Section 19.1.3 contains the pricing forecast for Scandium. Grant Malensek, MEng, Penf/PGeo is the only one to sign off on the pricing.
don't lose the faith - "we're in the bottom of the ninth, and the bases are loaded!" /i]
This implies we are currently losing.
onlinemetals?
We expect that the Company will operate at a loss for the foreseeable future. The Company’s current planned operational needs are
approximately $3.1 million until June 30, 2018, net of the recent investment by Lind and assuming the Company’s exercise of its right to call an
additional $1.0 million under the Lind Agreement. In addition to outstanding accounts payable and short-term liabilities, our average monthly
expenditures are approximately $379 per month where approximately $289 is for administrative purposes, including overhead and estimated
costs related to securing financing necessary for advancement of the Elk Creek Project. Approximately $89 per month is planned for
expenditures relating to the advancement of Elk Creek Project. The Company’s ability to continue operations and fund our current work plan is
dependent on Management’s ability to secure additional financing.
The Company anticipates that it may need to raise $5.0 to 6.0 million to continue planned operations for the next twelve months focused on
financing the Elk Creek Resources Project. Management is actively pursuing such additional sources of debt and equity financing, and while it
has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.
Note that those monthly numbers are in thousands.
The third party technical review is still not complete.
Long-term financing efforts continued during the quarter ended December 31, 2017, with principal activities focused on outreach to and
discussions with several potential sources of project funding, as well as completing the technical due diligence review (the “technical review”) of
the Company’s recently released Revised Elk Creek Feasibility Study by RPM Global USA, Inc. on behalf of a potential debt financing
syndicate. The technical review is projected to be completed in the quarter ending March 31, 2018. The technical review will provide an
independent analysis and opinion on the technical content of the Revised Elk Creek Feasibility Study, and will be provided to financial
institutions expected to form debt and/or equity syndicates that will help finance the Elk Creek Project.
This is from the 10Q released on 2/9 and may have been posted already. I've been away for a while.
I believe he stated that he wanted $25MM by Q1 so they could start detailed engineering without interruption. Nordmin has agreed to do the engineering on the underground mine and has a letter of intent to build it as well (EPC). What we don't know are the financial terms of this and how they impact the need for $25MM to start the process.
It's been almost 4 months since the last shareholder update. Someone complained about the lack of updates during that meeting. The complaint is still warranted.
The tailings are required for backfill. They go right back into the mine. Sims comments are certainly interesting, but pulling any other elements from the mineral ore would require a redesign of the chemical plant and metallurgical process. It may not be possible to extract niobium, Scandium, and another mineral at the same time in a cost effective process. Titanium is commonly referred to as a byproduct in Niocorps proposed process because it’s extraction cost is nil. A chemist may be able to give a detailed answer, but it is very possible that the Scandium extraction process does not allow for easy extraction of other elements. Conversely, pulling out other elements before the ore goes through the Scandium circuit could raise the price of the Scandium extraction.
These are bot generated reports based solely on technicals that are completely meaningless for a thinly traded penny stock on the OTC. Any price target should be based on the actual production value of the mine. Investment decisions should then be based on the probability that the mine makes it to production.
You're trying to extrapolate bulk pricing from a small sample.
Yttrium oxide is priced around $6/kg. The metal form is around $35/kg. You could certainly make the argument that a domestic source should be secured as pretty much the entire worldwide supply comes from China and as such they have near ultimate pricing control.
https://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/mcs-2017-yttri.pdf
http://mineralprices.com/
If you have to read between the lines on this you are looking way too hard. The dates tell the whole story. Nordmin launches a construction company to take on full EPC projects on 2/6. Niocorp announces a detailed engineering agreement and letter of intent for EPC services on 2/7. That's not a coincidence.
Has anybody asked Jim what the finances and contractual obligations of the agreement look like?
I've found some other tools that have been life changing. I suppose I should pass on these tips. First, I subscribed to the Niocorp news updates via the webpage. Second, part of my morning routine is to check my favorite finance app, where I've saved NIOBF!. Finally, you may or may not have heard of this site, but "Google" will allow you to search newsfeeds for key terms like niobium, scandium, or Niocorp. You can even set it up to automatically send you new articles instead of searching everyday!
Agreed.
Great post, WS!
Niocorp didn't just ask them not to short, Lind agreed.
http://niocorp.com/index.php/press-releases/279-niocorp-completes-instititutional-investment-deal
Further, Lind does not and has agreed not to short-sell the shares of the Company.
This is from the original 2015 announcement. I don't believe the agreement has been amended other than to increase the funding amount and extend the date.
The shares are also still subject to the 4-month hold.
I'm not going to try to spin this as positive as it clearly indicates that major financing is not in the imminent future. MS could have easily supplied a bridge loan if we were getting financing soon.
But it's not a death spiral either. It's just more share dilution.
Didn't he say he wanted the first tranche of financing in place by the end of Q1? I don't remember him saying anything about all of it. I believe he said something along the lines of wanting $25MM in place as that would allow the detailed engineering to start without fear of interruption.
I'm not sure we should expect a public release on the 3rd party engineering report, although a letter to shareholders in the next couple of weeks would be nice. It is not an unreasonable expectation for MS and team to formally address us once per quarter.
There are no other approvals to be obtained for the loan guarantee until an application with a lender is made. This obviously requires a lender first.
This has been debated here ad nauseum. There is no need to try to go off of memory. Niocorp currently stands to get $130MM guaranteed via the UFK.
The conditions of the guarantee require the financing scheme for the entire project to be in place before it is issued. However, the German government may enter a binding agreement to guarantee the $130MM prior to the complete financing being in place, that agreement of course would make the guarantee contingent on a complete financing plan.
Page 36 of the corporate presentation. I believe they spoke about this briefly during the investor call if you wanted to re-watch to confirm.
http://niocorp.com/images/NioCorp_Elk_Creek_Project_Summary.pdf
The measurements were completed in August and at the time of the call the permit package was being prepared. I'd like to think it's been submitted but we have not heard this news.
From the FS:
There are two types of construction permits: state construction permits and federal construction
permits, known as New Source Review (NSR) or Prevention of Significant Deterioration (PSD)
permits. The type of construction permit that is needed will depend on the quantity of air pollutants
that potentially could be released from the new plant or expansion project.
Because the Project includes a primary sulfuric acid plant [a regulated facility under 40 CFR §
52.21(b) which anticipates emissions in excess of the regulatory thresholds], and since Nebraska is
currently classified as in “attainment” of all ambient air quality standards, a federal PSD construction
permit will be required. The entire permit process is expected to take at least 190 days, provided that
there are no significant technical issues or problems in obtaining information, and the facility has
submitted a complete application (including detailed air
Everyone wants to talk about the DoD and Scandium, but we have already learned from Jim Sims that at the most the DoD would make a one time purchase for Sc. Regardless of what comes out in Mathis’ report, a one time sale of Sc is not going to get this mine funded.
Sc offtakes are in my opinion the key to funding, but in this case Niobium is the story that can generate a significant investment.
Scandium is NOT scarce. The ability to process it to Sc2O3 is. Luckily for the US, we have a long standing ally that appears to have a few companies that can readily supply Sc should the market determine its benefit.
Niobium is a different story with very few current suppliers and/or potential suppliers. The US certainly doesn’t want to rely on a Chinese owned mine in Brazil for their NB supply, and the Canadians current supply is dwindling with prospective mines much further off than Niocorp.
If the DoD’s strategic mineral reserve is your reason for investing in this company, Niobium is the element to watch, not scandium.
Welcome Max. I agree with your last two statements. The news from Friday was not positive and the mess Monday was already baked into the price as the state tax concessions were fully expected. I believe the tax reform package urged a new large investor to establish a position or an existing investor to add to a position. The executive order has likely helped support today’s price.
...Niocorp lives or dies by scandium.
I misunderstood you then. Yes, it’s responsible on OSC’s part. It’s an oversight by Niocorp that this information would not have been required.
This still isn’t a surprise to anyone that’s really done their DD though. It was clear since the FS was released that the project was completely dependent on the Sc market developing. I ran a quick analysis that pulled Sc out completely (costs and revenues) and showed a negative NPV.
The facts haven’t changed. If the banks believe in the Sc projections the project goes through, if they don’t or are unwilling to take a risk on a new market this goes nowhere. The only material change is that the FS now includes many of the things that you, I, and others have previously warned about.
The report was provided “At the OSC’s request.” Responsible, required. Tomato, tomahto.
It’s not positive.
It’s probably not negative either, but it would have been nice if the additional details were provided in the original study and this revision wasn’t necessary. There have been many questions about the potential scandium market that it should have been expected that the FS would require more detail.
Extremely unlikely. The third party review is a technical review on the mining and extraction process. It has nothing to do with a Scandium market study, which is what every change in this revision is about.
Most of the changes are to section 19 and provide more information about the potential scandium market and how Matheson arrived at his projections. This section was pretty thin to begin with. I would not look much further into it other than a request for further detail.
The added risk factors to section 25 could be reason for concern. One of them is something that many of us have also questioned. SRK says that “Niocorp may not receive specialty chemical pricing for its scandium.”
Now if you regularly peruse 10k’s you know that most companies try to disclose any remotely possible risk, so there may not be much to this, but it would look a lot better if it was included from the beginning.
It’s just the sensitivity analysis. IIRC it previously went to +/-20%. They are just showing what the results would be now if estimates are 30% off either way.
They are not remotely the same. The engineering report is a report summarizing and verifying the technical details of the project and is being performed by RPM Global. This is the one we/banks are waiting for. Banks are pretty good about reviewing the finances of a project on their own, but don't tend to be too knowledgeable on geology, metallurgy, etc.
Actually three years ago today his 18 million shares were worth $12.42MM CAD. Today $6.66MM, but why cherry pick numbers?
You and Landmark really are a special kind of stupid aren’t you? Buffett and Berkshire have no history in the mining industry and MS has acknowledged that they have no interest in Elk Creek. Any hypothetical NDA does not give a CEO permission to lie to investors. Buffett isn’t happening. Move on.
Jim's comments on the loan guarantee:
The short answer to your question is that a binding commitment for a loan guarantee from the German Government’s UFK program can be secured prior to execution of the overall financing package. That binding commitment is publicly disclosed at the time. The actual loan guarantee from the German Government is formally issued as part of the full debt package/solution for a project, given that (in our case) such a guarantee would be for a portion of our expected debt financing, and such debt financing is expected to be an integral element of the overall CAPEX raise. But the binding commitment of the UFK program for a loan guarantee is a very significant catalyst to completing the assembly of a project’s CAPEX solution.
By way of background, the team at Northcott Capital, which is helping to shepherd us through this program and the larger debt financing effort, has been through this process many times before on behalf of natural resource development projects such as ours. Assembling such debt packages can be a highly complex process that involves many players, multiple optionalities, and considerable time to navigate. Here is how the process general works in practice:
The first step is to obtain “in-principle eligibility.” We secured this following execution of our commercially binding offtake agreement with ThyssenKrupp. The guarantee amount is tied to the value of the FeNb to be sold into Germany. At present, a loan guarantee from the UFK program for our project is estimated to be in the US$120 million – US$130 million range. This initial determination from the German Government has been an important driver of our debt financing effort to date.
As you may know, the German Government funds this program because its manufacturing-based economy is highly dependent upon imports of raw materials such as FeNb. As such, it sees value in committing German taxpayer funds to help its manufacturing base secure such imported raw materials. Additionally, both the German government, and manufacturers such as ThyssenKrupp, see value in diversifying their upstream raw material supply chains as much as possible. That helps to de-risk their operations. Given the relatively limited supply diversity of FeNb today, an additional source – particularly from the U.S. – is welcomed by these manufacturers.
Our in-principle eligibility was re-confirmed recently after the UFK program received our Elk Creek Feasibility Study.
The next step is “Preliminary Approval” from the UFK program. That is a major step in the process, as Preliminary Approval is binding upon the German Government to provide the guarantee. This requires the appointment of a bank as the UFK agent and is undertaken in parallel with banking credit approvals. Typically, the Preliminary Approval will be received once the UFK Banks get their credit approvals. The grant of Preliminary Approval for a project is publicly disclosed.
Following Preliminary Approval, our team then works with a lender, and in our case in conjunction with consortium of lenders, on the terms of the financing to be guaranteed by the UFK program.
The actual guarantee from the UFK program is issued as a final part of a full debt package/solution for the project.