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Are you saying it's dumb to hold 100,000 shares in this company?
You have not read the BFS. Scandium cost as laid out in the study is $1100/kg. This is the cost to extract the Sc from the 'byproduct'. The Capex to add the Sc production CAPABILITY is minimal. The actual cost to extract it from the byproduct is $1100/kg.
Tedro, I think they are onto us.
No problem. Both of us will be there.
I would say that by definition if this goes belly up the share value is zero. If the banks deem the Sc forecasts trustworthy this goes forward, but the longs still won't see ultimate returns until the production and Sc price points come to fruition.
If the banks do not buy in, NB is reliant on an existing mining company to buy them out. An existing company would likely be more risk tolerant than a debt investor and willing to speculate on the undeveloped Sc market while tolerating the slow bleed of operating on Nb only.
If neither of these play out, the only real assets left are the drilling results. These are worth 10 million or so at most, and would likely be liquidated. Guess who has positioned himself to gain in that event? Yep, Mark Smith with his loans to the company. Smith is fully hedged against this company failing.
None of this is to question MS's intentions. He clearly has a ton to gain if this goes through. The point is, just like Lind, he has been able to fully reduce his risk in the project so that his downside is minimal and upside is the moon.
Come on now. Can you fairly categorize the overwhelming state of this board as just faint praise?
There is a considerable chance this company does go belly up. The BFS acknowledges they need approximately 10 million over the next year. If the private placements dry up, where does this come from?
I give it a 50/50 chance at this point. Depending on your available funds the potential upside could be great, but don't kid yourself into thinking that MS's investment isn't hedged by his position, and that his income he has to protect within the rules of the SEC.
and with MS as chair maybe they can get iaalf to pay Niocorp Sc prices.
Why do you think that is? Why the fear of lawsuits?
Derisked = less risky than before.
MS is a smart guy. He knows how to play this game. The point is certainly to get investors to believe there is "no risk", of which he's clearly done a good job with the retailers, but every statement he has made on risk can be attributable to their being less risk than the day before. These statements can be defended in court as forward looking statements if the project ultimately fails and MS finds himself the defendant in a lawsuit.
See, I'm not upset with management for those comments. Their number one priority right now is to get this funded. So by all means, they need to keep beating that drum. They are in a salesman role right now. Sell it to the banks, Mark!
I, on the other hand, as a small retail investor, am skeptical of a number of things, but very disappointed in some of these small hiccups that show a lack of professionalism from a sales standpoint.
All of this ignores my complaint that it wasn't disclosed to shareholders that the banks wanted an engineering study to review the BFS. This was clearly why RPM was hired, but MS has continually led us to believe that the BFS high level results would kickstart finance discussions. Next we are told we need the full BFS, and at the Town Hall (Not a Shareholder Update!) we are told the banks need the RPM review before consideration. Either the goal posts are constantly moving or shareholders are being strung along. I'll let the long and strong crowd answer that.
It was a shame that post got deleted, but I read it. I was ready to post many of the same thoughts, and a couple disagreements before I was unable to reference it.
WS, I'm pretty sure you know full well why the price is where it is. Ockham's Razor is the best explanation. This Carbonite body has been well known for years and never developed. The benefits of Ti and Nb have also been well known for years, as well as there extraction costs. The body was never deemed feasible until the recent speculation for Sc demand. The Sc forecasts by NB could be correct, but institutional investors are not investing based on the speculation of anyone that claims they can predict the price point of a commodity in its infancy. The project is clearly dependent on the Sc so without guaranteed sales with a price floor this project will not be approved by the debt market. Niocorp is at this point dependent on a take or pay contract for the Sc.
I'm not saying this can't happen, but don't expect a billion dollar investment without it.
Of course, Lind and the other private placements also have an effect, but this is ultimately the price that is paid without an institutional backer. Don't blame Lind or the PP investors, those that played this correctly have free warrants ands are better positioned than any of the longs.
There is nothing to gain by voicing my skepticism over the scandium prices directly to the company. Jim's justification for the price is in the sticky. It's the entire management's team job right now to convince investors that they are right. Why would I expect a different response?
I've asked about the German Loan Guarantee via email and webcast. Specifically the part about requiring a full financing plan before they will make the guarantee. This question has gone unanswered. I also submitted a question asking for Mark to add some color to the passage in the BFS that indicated the project would not make investment criteria without the scandium sales. It appears nobody's questions were answered via the webcast, which is fine and mostly what I expected as the event was marketed to the community.
That would be post 27576, in response to being labeled a short.
Nice edit job by the way...
I'll ask again. Please quote where I said I own no shares. When you give up, please let me know what your agenda is in labeling anyone that brings up valid points as to the feasibility of financing this project as a non-shareholder. Then go back and read my posts on what the other potential scandium players are doing, and why that makes some skeptical of obtaining financing.
When this board repeatedly claims the quality of management is one of the best things going for the company, it leaves me wondering how simple errors like this happen.
It looked fine to me. It was an email sent to investors on record suggesting we bone up on last years update to compare.
As a shareholder, do you find it acceptable that management sends emails to potential large investors, analysts, and anyone else that registered for the webcast with completely erroneous information?
I believe laziness is the term used for the google issue but it is much more appropriate here. I'm guessing this was a copy and paste job from the annual meeting.
I'm less impressed with the email sent out prior to the town hall than the google hacking issue.
I assume everyone else got this message as well in the reminder email one hour prior:
Hi ... we are looking forward to having you join us. You might be interested in reviewing Mark Smith's Update to Shareholders, which we publicly released this morning. I think you'll find it very informative. You can download it here: https://goo.gl/zM9k7r.
Have a great weekend!
Jim Sims
jim.sims@niocorp.com
I first saw this on Friday and thought I must have missed an update, but no, the link takes you to the December 2016 update!
I would think NB would have the cancellation clause, but we will have to ask Jim for the details of that agreement.
Good find, by the way. This is the type of update/research/diligence this board could use. This news easily could have gone unnoticed without a PR from NB.
Have you confirmed with Niocorp that the offtake agreement was transferable?
An offtake itself does little. Any scandium agreement needs a defined price somewhere near that in the BFS.
To hijack another political quote:
It's the scandium pricing, stupid!
This was Metallica Minerals SCONI project, which Australian Mines now owns. They still plan to produce 90t, but have just started a BFS which likely won't be complete for a couple years. This project is adjacent to CleanTEQs and geologically very similar.
The agreement was for 30t - 60t, but that was five years ago. I was under the impression the agreement simply expired due to lack of progress but have not been able to find any details on that except for the confirmation that it was not valid as of the end of 2016.
I think the worst doomsday scenario I've contributed is agreeing with a previous poster that 1.50 is a decent buyout. I wouldn't call a triple from today's price a doomsday.
There is an overwhelming fear on this board of shorts, day traders, and market makers. Satire is difficult to interpret online. If I misinterpreted prior comments I do apologize, but I have my doubts as to your intentions. Your hyperbole certainly supports this.
I'm a random message board poster offering thoughts, opinions, and unsubstantiated theories. I pray no one considers me credible and take my posts with skepticism, but at the same time I hope to learn through dialogue and encourage others to do the same.
I've assumed nothing. I'm telling you what the debt market wants to see. None of us know where negotiations currently stand. All I know is no institution is investing in a mine that is dependent on an element without significant price history until a contract is in place to define such price. If you want to give up an incredible amount of equity someone may take the chance on a new market for Sc, but it certainly won't be the debt market. That is where the buyout or significant strategic partner negotiations come into play.
Serious question, have you ever invested in corporate bonds?
It's a commodity until proven otherwise. That burden of proof is on Niocorp and the institutions have the final say. One can market it as a specialty chemical as much as they want. I've got ocean front property in Arizona, but until I find a buyer it will remain the barren land it seems to be.
LCP, you've made a couple of comments recently about government welfare. Did the "Great Recession" of 2008-2009 not teach us that government welfare creates some very intriguing investment opportunities?
You need an expert to tell you that commodities can fluctuate greatly? Let alone those without a significant market?
You've got to be kidding. You think one "expert" can accurately predict the market price of a any mineral this far out? Matheson's opinion is certainly as good as any, but we can't even predict the prices of known commodities (or specialty chemicals) that far out, let alone those with such a small market. It's a great anecdote for Niocorp, but that alone isn't going to get the company anywhere in the debt market. The Scandium production won't be respected by institutions until there is a contract in place with a definitive price range.
I don't really disagree with this. I would imagine buyers are looking for similar agreements as to the Nb offtakes, that is pricing set to a benchmark with a discount applied for the agreement. Of course MS would sign if someone agreed to the annual prices in the FS, but getting someone to commit to those prices is a pipe dream. (And for all the naysayers out there, this doesn't mean the pricing forecasts are inaccurate, just that nobody is going to commit to them in an offtake.)
My thought is that MS is waiting for institutional input on a minimum return they would accept, and that is largely dependent on the Sc sale price. With the high production cost, uncertainty and new birth of the market, and dependence on Sc sales, it would be wreckless for the company to commit to a benchmark price without a minimum. Nb has strong price support and we are not significantly changing global supply. You increase global supply of Sc 5x in your first year of production and the price could fall a lot more than the 20% assumed in the FS. Thus a floor needs to be set in the agreement. There is also a distinct possibility that the Sc offtake gets tied into a much larger deal involving debt and equity. In that regard the lack of an offtake increases leverage.
After receiving the in-principle eligibility, the next step in the Untied Loan Guarantee program is to submit the overall financing scheme of the project. Without a complete financing scheme, I don't believe there can be any movement on the guarantee.
https://www.agaportal.de/_Resources/Persistent/51a840f83ab59decc6c196c991185625bebd741e/e_ufk_50jahre.pdf
Page 13 and 14.
My suspicion is they are negotiating scandium offtakes and getting into deeper discussions with the lenders. One possibility is that the MS held off on signing any Scandium offtakes until he is able to get the input from the institutions as to what they need to see in the agreements. Those conversations really couldn't happen prior to Friday. The Untied Loan Guarantee application can only come after all this.
I'm with you on your buyout scenarios.
I made no such statement. You are interpreting my comments at your own will. I'm not gambling on a buyout, quite the opposite really. I think a buyout is in the best interest of shareholders. I've held this belief from day one and the full BFS reconfirms this. This does not exclude the option of building and operating the mine as a viable alternative.
I think there is far greater gamble banking on a scandium offtake, a junior mining company obtaining a billion dollars in financing, and ultimately a junior mining company constructing and operating a mine of this magnitude than a buyout, MS's credentials withstanding.
The BFS made it clear that without scandium sales, this is not worthy of investment. How many institutional investors will finance on the belief that the market is going to grow 5x in the next four years over 30x in the next 10? I'm not saying those predictions may not be accurate, but nobody is lending this kind of money without some sort of contract supporting the demand and price, and I'm not even sure an offtake agreement is enough support.
Take a look at page 410 of the BFS (434 in the pdf). The niobium offtakes don't even have pricing guarantees. They are ultimately based on benchmarks. I don't think a similar scandium offtake without some sort of price floor flies with an institution. Nb has significant history of price stability. Sc does not.
While we wait for offtakes, permitting, and investment, this company continues to incur expenses. Take a look at section 26 for some more significant expenses that will likely be incurred prior to financing. Where do you think the money comes from between now and the time of a significant investment? Equity sales.
A buyout alleviates the shareholder of all this risk between the now and the time of initial production. A well capitalized company does not need an immediate offtake to proceed with construction. They have four years to negotiate a better deal as the market develops.
Finally, take a look at some of the work that Northcott and RPM have done. I'd link you to some projects but the Northcott site is down. I'd like to see a single example of a junior mine obtaining a billion dollars for construction. Every other large project has been with a large existing company. BHP Billiton, Rio Tinto, Vale, etc.
I'm not saying it can't happen, but to suggest one is gambling by suggesting a buyout is in the best interest of this company is absurd.
There are 7055 tonnes annually of the mineral FeNb. The payable material is Nb2O3. 65% of the FeNb is actual Nb that can be hydrolyzed to Nb2O3 (niobium pentoxide).
7055 * .65 * 39.6 = ~$183.4MM
Production costs are the actual costs associated with mining the material and hydrolysis of FeNb to Nb2O3. These are operating expenses.
This has been my thought since the day I invested in this company.
I don't know if this is enlightening or not, but it is not alarmingly high. The Australian players Clean Teq, and Australian Mines have production costs in the $700-$800USD range. SCY has the lowest at a claimed $557. We have the lowest scandium density at a ppm of 70. SCY is over 200, but they are also a pure play scandium company.
Australian Mines has other mines to maintain cash flow, but their SCONI project is all Scandium. Of these, I think Clean Teq is the most intriguing as they are marketing as a nickel and cobalt company with scandium.
When you figure that these are all open pit mines with much higher scandium content in their ore, the production cost does not seem quite so bad. Still high, but not alarmingly so.
Where we could shine is the the size of the carbonite, and the annual production rates. Niocorp has the potential to produce much more Scandium than any of these other companies, allowing them to impact the global supply and demand far more than anyone else. The specialty chemicals email from Jim that is stickied is relevant as well. Perhaps our extraction process costs more but also removes more impurities and subjects us to a premium market that the other players have less access to due to the type of impurity in their ore, but that's pure speculation on my part.
A chemist could likely examine the various reports in the appendices and provide a detailed answer as to the costs incurred to produce Sc2O3.
And this is why I would like to see a detailed letter from the team, preferably in the next week. I understand there are NDA's in place that would limit the content, but the shareholders have not been formally addressed since March.
As of today, we have a feasibility study that suggests this mine is not worthy of institutional investment. This may be so conservative as to be unlikely, so let's here Mark's forward looking statements on what management believes to be likely.
My confusion is that the statement indicates the Nb can pay for the total planned production, but I have not found any discussion on the feasibility of ramping the scandium up and down. At $1100/kg to produce Sc2O3, but minimal additional Capex, can the infrastructure be put in place but the mine operate for Nb and Ti only in the short term if the Sc market does not develop as assumed in the report? Eliminating the Sc from the opex even after making the capital investment may make sense to balance global supply. This project does potentially make Niocorp the largest Sc producer in the world.
Maybe this is somewhere in the report, but I have not found it.
Considering there does not currently seem to a plan B, I sure hope they have something soon.
Two major group of risks rated high were identified during the session and were tagged having a
Mitigation Plan.
• Risks associated with market development of the scandium;
• Risks associated with a new hydrometallurgical process.
For those risks, the mitigation measures are planned to be put in place during the next phase of the
Project. NioCorp should continue and expand its efforts to engage potential offtake customers for all
of its three products, in particular Sc2O3.
Nb sales (32% of gross revenue
generated) as modelled would cover the cost of production for all three commodities but Sc2O3 sales
will be required to generate positive cash flow to cover any Project loan principal repayments/interest
expense and meet investment criteria for stakeholders.
It would sure seem to be a no based on this. I don't think we see any financing without a scandium offtake. Hopefully 25% is enough.