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It's doubtful that it's the PP buyers. There were only 46 buyers to begin with, and any shares they purchased are subject to a 4 month holding period.
It is possible the same PP holders were selling existing shares, but it would have made more sense for that to happen last week.
I think some of the previous theories thrown around make the most sense. There was clearly a large single seller in Frankfurt today. I think yesterday was largely Lind or Mackie selling into a support level. You could spin this as a positive as those firms have likely been trying to sell for months without over pressuring the price. They found a large buyer willing to maintain the pps yesterday.
That would be a wash sale in the US. Selling at a loss and immediately rebuying is not illegal, but you must wait 30 days to rebuy if you wish to record the loss in the year of the transaction.
Or maybe one was financially savvy and already had a significant retirement account and this series of investments pushed them over the edge from comfort to a little bit of luxury.
I'm out boys. Getting late out west and time to enjoy my birthday. 8/4. Get it?
It's entirely up to us. We hired MS as CEO. Everybody has their selling point. It's simply a matter of where the lines between pride, risk, and the bird in the hand meet.
I don't particularly think a buyout will occur either, but not for your reasoning. The partnerships and messaging you reference can largely be construed as positioning for capital.
Also, any valuation based on NPV (please pardon my missed decimal point earlier, obviously should have been 1.7) already takes into account the billion dollars of capex. We own the asset of the FS and have options for the rights to the entire minefield. The risk associated with building and operating is why I assume a significant discount to NPV, but that is something that us shareholders could debate about all day - hence this forum!
If I had bought in at the prices of Mark et al, absolutely I'd sell at 2.50 and eliminate the risk from my portfolio. What a huge return! However it is not solely Marks decision on a buyout offer, it's up to the board and ultimately 50% of shareholders.
Bear in mind, a significant portion of Marks job right now is to make this project enticing to both debt and equity investors. Convincing them that we are fully capable of building and operating the mine increases our leverage.
What makes you think I believe .53 is overpriced?
In fairness, the tedroenous of the post is dependent on the putcheviousness of the topic.
I'm curious as well what others think a buyout price what be. Not because I think anyone here has a clue, but should a buyout happen I think it is most likely to happen between August 14th and the end of the year. As I started the post, it's fun to talk about and fills the time until the next news release and or full FS is released.
I'm beginning to see the divide on this board. It's not shorts. I understand some that have been here for years don't desire to engage in the same conversations ad nauseum, but many that have only been invested in the last 12 months or so or are considering investing wish to have these discussions. Anyone that hasn't cashed out only have paper gains, but those of you that invested for a dime or in the teens already view this as a great investment. Even if there are issues with financing, permitting, etc. it is rather unlikely that you walk away from this without making money. My sincere congratulations. The value of the BFS alone provides a floor for the stock, but well under the current price. With a dime as your cost basis you have a pretty thick cushion and the upside from that initial investment is astronomical.
More recent investors have a much different risk/reward ratio here. Many are underwater. There is a high degree of skepticism with the investor that is dependent on a buyout or successfully operating mine to make money. The long term investors are out of the risk zone. We are not. As a shareholder, I would accept a $5 buyout in the next six months in a heartbeat. I'd take as low as 2.50. Those that have already banked gains or feel confident that they will may not accept this as they rather see it play out over the next 3-5 years to obtain full value.
Correction: 17 billion amongst 200 million shares is obviously 8.50. 25% ROI would therefore be 6.80.
You guys sure are a sensitive bunch. The previous poster had been asking for opinions on buyout price for days. Thought I'd engage him with a very high level view. Sheesh....
My apologies in advance for doing this to you as this was a thorough post!
Cliff notes:
1. Someone within Niocorp likely wrote the letter.
2. An administrator in the Governor's office reviewed, addressed, and put the letter on official letterhead.
3. Governor signs letter.
4. Tedro wears tinfoil hats.
We can have fun with this. Things change and nobody wants to go through pages and pages of posts for these opinions.
I say $5 USD.
There are a few things to look at. The NPV in the FS is the most significant as there is far more data behind that valuation than anything else. At $17B and roughly 200 million shares, let's say each share is worth $6.50, but each share clearly is not worth that today else the pps wouldn't be ~.53. It trades here because there is significant risk, mostly revolving around financing, but certainly around metal pricing, the actual scandium market and the accuracy of resource measurements as well.
One could also argue there is tremendous upside. There are potentially more resources than indicated in the report. As mentioned a few times today already, 32 years is likely a minimum to the life expectancy, but pulling in numbers greater than 32 years out has minimum effect on NPV and would not have been beneficial to the BFS. You also have potential government interest and niobium/scandium industry growth that provides upside.
I took the $6.50 of the NPV, assumed a company was looking for at least a 25% ROI in a buyout, and rounded down to $5.
This is all my unsubstantiated theory and should not be construed as investment advice.
The colder weather actually helps you. It's the freeze/thaw cycles that cause issue. I'm not saying it's not done in that area all the time as well, but it will take longer.
Ideally, Niocorp is able to secure $200MM in financing through a lender as soon as Germany approves the guarantee. With that guarantee I would like to think MS can negotiate a deal with a lender that does not include equity, but this may be wishful thinking.
Phase 1 of this project is the pipeline, followed by dewatering the mine before major construction takes place. The dewatering alone will take months. The best case scenario would be the pipeline starts in the fall, as winter is not the best time to be running 30 miles of pipe in Nebraska. Even in the best case scenario, you are in spring of 2018 before significant work starts, with summer or fall being more likely. The point being that over the next year your major expenses are tied up in the pipeline, pumping system, and likely some early progress payments with the EPC firm that Niocorp contracts to build this thing. Money will burn fast once major construction starts, but that initial $200MM would go a long ways.
I think there is a lot of confusion around the mechanics of a large equity offering at the point construction starts. This will be nothing like the private placements. It will not be an offer to buy x shares at y price. It will be a packaged deal to a lender, without necessarily a price attached to the equity. In other words, and I'm just throwing numbers out, a debt/equity offering at this point would be more along the lines of a $1B loan with 5-7 year maturity, amortized over 20 years, and 8-10% interest. To close the loan, Niocorp offers 80 million shares, or approximately 40% of the company.
It's unlikely it would all happen with a single investor in one deal like this, but this an example.
The other thing at play here is the agreement with Northcott and RPM. This could certainly be about advertising the company to potential buyout suitors, and definitely has the intent to bring in private investment, but I suspect they are also putting together a bond market report. When we are far enough along in constuction that cash flow is imminent and coupons could be paid a bond offering may be the best way to finance the final construction phases.
This is all my unsubstantiated theory and should not be construed as investment advice.
You don't think a 30 P/E ratio is realistic for a company with a single mine?
They have neither. In general, they have options to purchase mineral and surface rights over the entire anticipated mine, and include exploration rights, i.e. drilling. These rights mostly expire between 2019 and 2022. An overview of these are available in various filings. I expect the purchase price to be in the feasibility study.
You viewed it as a day to be celebrated. Others such as myself viewed it with skepticism and concern.
I see far more talk about charts and day-to-day price action from the long time regulars on this board than anyone else. I fail to understand why the longs are so concerned with the daily price movement, but besides that, I much prefer reading the opinions of knowledgeable shorts than I do that of longs. The pros to investing in the company have been provided by the company itself. The cons are only provided by outside resources and independent opinion.
Besides all that, the concern over shorts is rather laughable. The short interest in this company is incredibly low as institutions have completely ignored the company to date. As for retailers, shorting OTC and penny stocks has very high barriers to entry. According to Yahoo Finance, there are an estimated 83,000 shares short. A value of less than $50k USD. Less than .1% of the float. Just like the money associated with the daily volume of this stock, this is nothing but chump change to any potential market maker.
I made no claim that it was in desperation. I did not realize that other's take my posts so seriously that I needed an explicit disclaimer that it was my opinion.
My claim was this was a publicity stunt or a worrisome indication that something was amiss with the permitting. It is not difficult to get to that conclusion.
Separately, to think that this request originated with the Governor is naive. It is great to have the governor's support, but it is a very easy assumption to make that some one in Niocorp assisted with the letter at a bare minimum.
Then you miss the point about due diligence. Waiting for an SEC filing is going to cause you to miss a lot of opportunities for either buying or selling. The company is not going to disclose an issue with a permit via email to a single investor, and likely won't disclose it via press release until the permit status was in serious jeopardy or even denied. If something goes wrong at Niocorp prior to funding by large institutions, the stock will drop significantly in a flash.
While some here apparently have 100% confidence and seem to be in "wait and see for the good news" mode. I and others approach this investment with a high degree of skepticism and recognize that there is no guarantee that the mine will be funded or built. The insight and collaboration provided by healthy discussion can help investors identify gaps, concerns, or misleading statements in a press release that may help make a determination that it would be in our own best interests to close our positions in a hurry. If we wait for facts, as reported in filings, we will be too late. I have a bit of concern with the last release. Not enough to close a position, but I will continue to watch the wording of future press releases for signs that I interpret as distress.
I agree with your premises on speculation and safety, but a conclusion of too many questions does not complete a logical argument.
An informal message board hardly qualifies as professional dialogue. This is no more formal than a text message. I'm truly sorry that you feel so threatened by contrarian viewpoints.
I think I get it now. When those that have been posting for years provide their analysis it's opinion. When new posters post their own it's "unsubstantiated theory".
I disagree about the best way to express these concerns. While it is certainly acceptable to contact IR directly, and encouraging that Jim responds so promptly, relying only on notes issued from the company does not constitute a proper due diligence plan, in my unsubstantiated theory. My preference when engaging IR of any company is typically to write a letter and let it sit for a day or so while I review it for clarity, accuracy, and detailed yet concise questions. I approach critical, non-urgent issues in my professional career the same way. I bear no issue with those that asked immediately, but I would have let it sit for 24 hours and then asked the pertinent question. This does not alleviate the desire and benefit of discussion with other investors.
The analysis and insight that individual investors can provide is an invaluable tool in this age. There's no better way to get this than to actively engage others. If you want facts, as others have pointed out, the SEC filings are the only place to find those. Anything else is opinion. Anyone making investment decisions based solely on a forum post is a fool. Likewise, those that believe anonymous posters have the ability to influence the charts with these posts is equally as foolish.
You continue to gloss over what was the larger concern. That being concern over the remaining federal permits and the need to expedite them. Jim addressed most of this, although the explanation leads one to wonder why this process wasn't used for the other 404 permit. I surmise they were unaware of the order, unsure it would apply to a supplier of infrastructure projects, or simply decided against making the request until the order had aged a bit.
The etiquette issue was mostly evidence that Niocorps intent with this was publicity. That's fine, but I don't think they considered the concern that some investors would have with asking for an expedited review now and not before.
To my knowledge, this board is for insight and discussion. Some of us prefer to take a contrarian view to these releases, just as the debt market will be doing. Short term investors and day traders may love these as they provide rapid movements. PR's like this one do little to nothing to convince institutional investors or larger mining companies to invest in Niocorp, which is the primary challenge this company faces. Support from the state has always been there. If you want to pat yourself on the back for a 7% paper gain then by all means have at it, but I will continue to assess this highly speculative investment on a daily basis and value this board as a tool in that assessment.
That's a great answer. Thanks for sharing. I still would have liked to have seen them use the process for the 404 permit on the main line, and still believe that the basis of the request likely has more to do with publicity than the actual need to expedite this permit, but it is refreshing to see that Jim is able to respond accordingly.
"Trust but verify." I'll continue to poke holes as I see them. The institutions will do the same.
While the governor of Nebraska served me for a long time, Ricketts never has and thus I would not feel it was appropriate to contact his office on the matter.
That's a fine suggestion, but as this board has provided me with quite a bit of insight, I like to also provide my own to those who may find interest in my thoughts.
Can you share what you wrote? I was going to ask what permit they are trying to expedite through this executive order, and why the order wasn't used for the 404. I do not want to bother Jim with the same question if you have already asked.
The etiquette issue is one to take up with the Governor's office, not Niocorp.
Addressee:
MG Donald E. Jackson, Jr
Deputy Commanding General Civil & Emergency Operations (ATTN-CECW-ZA)
U.S. Army Corps of Engineers
441 G Street NW
Washington, DC 20314
Greeting:
Dear Major General Jackson
Paragraph's 5 and 6 directly address the President, whom the letter was not sent to and is not in the carbon copy line. The letter closes with "Thank you, Mr. President" and NOT "Thank you MG Jackson".
Those are the etiquette issues. The fundamental issue is the intent of the company making the request to the Governor for an expedited permit. If the company planned to expedite the process from the beginning, I would have expected them to mention the use of this Executive Order when the press release announcing the approval of the 404 was made. I also would have expected they use the same order to expedite the 404, which was applied for in the Spring, well after the order was made. The fact that they announce the existence of this letter via a press release over a month after 404 approval leads me to wonder if they have encountered roadblocks in obtaining the 408 permit.
I did not make any such claim that Ricketts is unaware of the project. I will make the claim that it is unprofessional of the Governor to address one individual in the heading of a letter and a completely different individual in the body and closing.
The proper etiquette would have been to address MG Jackson throughout the letter with a CC to the President. This oversight makes me question the level of involvement that Ricketts had in this request, which all brings me back to my original question. Should we be concerned about the 408 permit, or was this a cheap publicity stunt? There are better ways for the State of Nebraska to build publicity for the project than crafting an unnecessary letter to the USACE and further tying up their resources.
A well written open letter directly to Trump from any state governor regarding a project that has great potential to strengthen the US steel industry would be much more beneficial than this one.
Why would the governer write a letter to the USACE asking for the environmental review to be expedited and approved if all the remaining permitting was from the state? The federal 408 permit application has not been approved.
Is anybody else alarmed by the Ricketts letter? The intent of the executive order was written into the title. It's to expedite the federal permitting process. This letter was written for one of two reasons. Either it's a cheap publicity stunt, or the Corp of Engineers is stalling/rejecting the 408 permit application and Niocorp has reached out to the Governor for help. We've been given no update on the 408 permit since the 404 was approved, so this letter has me worried with that still outstanding.
Additionally, I have doubts that Ricketts even wrote the letter. The letter addresses Major General E. Jackson in the heading, yet directly addresses the President in the body and conclusion. My suspicion is someone in Niocorp wrote the letter, while an administrator with the state addressed the proper individual with the USACE. Somewhere along the lines a basic proofing was overlooked, but this certainly was not a letter from the Governor straight to the President.
This may be a better question for Jim, but perhaps someone else has already asked. Why wasn't the private placement open to US investors? I would have gladly taken advantage of the "buy one get one free" warrant deal. Was there a legal reason for this? Or did they need someone to hold the bag while they asked other existing shareholders for more capital?
in spite of being in discussions with a dozen or more interested parties...
I ask again, source?
Where has anyone from Niocorp ever mentioned that there were a dozen or more interested parties?
we care what the investment bankers think - and they love these new FS numbers!
Source?
I may have figured out the payable metals portion. 7055 tonnes * 32 years * 65% contained Nb = 146,744 tonnes. These numbers are provided in the production summary at the beginning. This is close to the payable metal number of 143,824 but is still more than one would expect for rounding error and further begs the question where does the 65% contained Nb come from as opposed to the 82.4% average recovery shown further down in the report?
You are adding the credit when you should be subtracting it from the total cost. The credit is for the Ti sold during construction. A contingency will be required by any financiers and I highly doubt they will respect future revenues. The company will need to have commitments for a minimum of $1,087MM. My question is how much will they need committed before they start the dewatering and other early construction.
I have a few technical questions about the report. I'm trying to make sense of the production numbers. I'll use the Niobium for this example.
First, I want to note that the BS uses only probable mineral reserves. When you throw in the indicated and inferred resources the production rates are potentially much higher. This all relates to the conservative nature of the BFS as pointed out by others that are required in NI 43-101.
On to the numbers. There are probable reserves of 31.7 million tonnes of ore at 0.79% niobium. 31.7*.079% = 250,000 tonnes of contained niobium. This is where you can plug in the indicated or inferred values in the study and come up with the potential for a much higher value.
Next, if we take the recovery rate of 82.4% for niobium and multiply by the 250,000 tonnes we would have 206,000 tonnes, but the study shows 214,000 tonnes. The values for TiO2 and Sc work out as expected. 8,000 tonnes is not a rounding error. Am I missing something here?
What is "payable metal"? Does anyone know how that number was figured?
I'd also like to understand the annualized production rates 7055 tonnes of niobium over 32 years gives 225,760, which doesn't match any of the other numbers I come up with.
I'm sure the payable metal and annualized numbers are something I'm missing due to my lack of understanding mining reports, but the recovered Nb number has me concerned.