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I sense a bit of skepticism there. The point I'm trying to make, from a risk avoidance perspective, it is far more logical to decrease complexity, scope and costs, than to increase it. This is not applicable to software development only.
CapEx Investors might prefer cheaper, less complex and less risky (single product) projects over a 4 metals project (if you consider REEs as one metal). There are lots of other options in the US, Canada and Australia. But you all know this...
REEs from Elk Creek? I wonder...
IMO, MS is desperately seeking a way to save this project from a premature death. Why else add even more complexity and CapEx to the project? Best practices teach us to start small and only add/upscale if things unfold successfully. It’s called MVP: Minimum Viable Product. That’s the way you do it in 2022: agile. There's no excuse for making things unmanageable.
But if MS is convinced that Elk Creek becomes viable only with REEs added, it’s becoming a sad story. Could it be that MS is emotionally too much involved to back down now, that he would rather go down with his ship, like a proud captain?
Niocorp wants to produce REE Oxides (end products for the magnet industry, not some intermediary product). How many millions will this add to the already huge CapEx? Another USD 500 million? That would result in a CapEx of at least USD 1.6B. Now why would you want to do a thing like that? I’m lost here.
It’s not like CapEx investors are banging on the door! A higher CapEx is even a bigger hurdle. Now why would somebody do this voluntarily? Answer: it's called tunnel vision. When does persistence becomes tunnel vision?
But wait, we still have Walterc with his excellent DD (that rhymes). I'm sure he'll find a way out. Most definitely.
Food for thought
Today Brazil produces about 120 Kt of niobium, back in 1999 it was about 20 Kt. It took over 20 years to grow from from 20 to 120 Kt.
This is the diagram
https://minio.scielo.br/documentstore/1516-1439/BDGSCwPV98xBphJ8vJyrSsk/a20ca250d91c48e052adb3204c1d40962b485d3d.jpg
This is the article
https://www.scielo.br/j/mr/a/BDGSCwPV98xBphJ8vJyrSsk/?lang=en#ModalFigf03
Niocorp’s presentation says the scandium market today is 22 tonnes per year. If Elk Creek gets into production – in 3 years – scandium supply will go up from say 30 to 130 tonnes per year. A highly relevant question here: Can the market absorb this huge supply shock?
Here’s the relevant economic theory: https://en.wikipedia.org/wiki/Supply_shock
In the short run, an economy-wide positive supply shock will shift the aggregate supply curve rightward, increasing output and decreasing the price level.[1] A positive supply shock could be an advance in technology (a technology shock) which makes production more efficient, thus increasing output.
This diagram shows the effect of a positive supply shock
http://textbook.stpauls.br/Microeconomics/images/pic108.gif
Niocorp needs a scandium price of USD 3,600 per kilogram. A supply shock would put a lot of pressure on that price. Almost 60% of Niocorp’s revenue comes from scandium sales. Project CapEx > 1B USD.
IMO, a supply shock is what’s holding potentially interested CapEx investors back from stepping in. ‘Build it, and they will come’ is just too risky. And why would anyone want to be the first and sole investor putting in USD 25M (< 2,5% of the 1B required)? It doesn’t make those supply concerns go away!
Now all of these issues would completely disappear if Niocorp were to secure at least another 60 tonnes of scandium offtakes (@ USD 3,600 p/kg). And that's a huge challenge!
US 3,600 per kilogram
I think you're right.
The project needs further de-risking. Niocorp needs another 60 tonnes of scandium offtakes @ 3,600 p/kg, before CAPEX investors step up to the plate. Those offtakes would silence all the critics.
GLTA
No, Sikes’ answers are not satisfying! Why are you all so submissive to Walterc? Wake up!
My take on this: discussions have been going on for over 2 years, without any results. He talks about what Niocorp wants, about the mechanisms behind CAPEX financing, but not why those seemingly interested investors won’t step up to the plate? Wouldn’t you want to know the answer to that question? I guess, you all probably already know the answer!
https://seekingalpha.com/article/4451466-niocorp-i-am-bearish
Sikes concludes with some bla bla about how they’re constrained by the securities counsel. I feel so sorry for them. But in fact, there’s not much to tell here. Other than they are desperately trying to flog a dead horse. Don’t think those potential investors able to fund the US 1.2B CAPEX won’t do their DD.
Walterc, this was a missed opportunity. Next time you should ask some tough questions instead!!! But maybe the answers you’ll get are not what you’re looking for …
Hey walterc, since you represent all Belgians it should not be a problem to include someone from the Netherlands as well. You're probably busy right now doing your DD, but nevertheless.
Here's my SIMS question: why is Mr. Smith looking for REEs @ Elk Creek? I know REEs are hot and Mark reads news papers. But I feel he's a desperate man and needs help. He thinks the Elk Creek project is not good enough as it is, it needs more. Another mining plan, another DFS and even more time and funding. I really hope they won't find any REEs there.
Look at the share price charts, we're going down, soon to be a penny stock again. Mark needs mental support. I hate to see someone in pain. My questions to SIMS: how can we help Mark?
Nio's first and most sincere fan.
Not only 'the man' when it comes to DD. walterc, again and again you amaze me! WOW!!! Also an expert bookkeeper who really knows how to fiddle the figures to get the results management wants to communicate. True genius!!!
Does anyone have Mark’s email? Or does anyone know where he lives?
I want to get the latest scandium-price memo to him, so they can incorporate this into DFS no 3 (which is in the making). I hate it when people make fun of Mark, like he’s some kind of opportunistic fool…
Hallgarten on scandium, page 8…
“Since then prices have undoubtedly gone down with everyone getting it (except maybe at Niocorp who “didn’t get the memo” or it didn’t suit them to read it). The USGS is, alas, the most public price-taker in the Scandium space and yet it seems to be quite out of touch with reality. In fact the disparity with the word on the street is startling, implying that the USGS should either improve its sources or desist from guesstimating for the metal.”
Here's the report, dated February 18, 2021 insert-text-here
Nio’s most sincere and no 1 fan…
Look what I found. Go ahead, google 'Element North 21'
This is what you'll find:
'Element North 21 The number one Scandium specialist'
'Element North 21 is the first and only scandium producer in the North America.
That's not fair(!), they call themself the number one and only scandium producer in North America.
Well... maybe slide 19 of our corporate presentation needs some correction. But, how arrogant to call yourself the number one!
No, no, not so fast. We're talking DD here.
I think we should consult walterc first. I don't want to impose any restrictions on posters, but we can't have people talking nonsense on this board. Nio's biggest fan.
Kmack49, and if they won't leave maybe we should storm Niocorp's HQ.
BTW, I did a calculation on the back of a napkin.
CAPEX 1.14B
2/3 equity = 760M
1.29B shares added (against SP of 0.59)
Total number of shares = 1.54B
That's USD 1.37 per share, based on NPV of 2.1B
WOW!!!
The thought of the financing coming soon really makes my day! I think we should all welcome these new shareholders on our message board. It will be a massive party, one big happy family.
Moderators, please make this post a sticky note?
Ow, kmack49, i love a bit of competition.
I'm so anxious to hear back from walterc, our spiritual leader. I think we'll both enjoy his guidance, it will make us rich , in the end, some day. No doubt about that. We'll have such a good time!
Hey Walterc, you forgot to conclude with: "But, do your own DD".
Let me ask you a question. Your DD is way better than any one of us here on the board. You see things that nobody sees. Please, let us in on some of your secret Nicorp insights? Please enlighten us, the ignorant.
Regards, the real biggest Niocorp fan
Miranna, V.CCE explains it all. Also Google Rockstone, todays article on niobium, v.cce. Samples found upto 5.9% niobium!!!
Mine life is 21 years. This is because the NSW mining lease is max. 21 years.
The Nyngan resource is big and rich enough to extend the mine life and/or upscale production. The current scenario in the DFS only uses up 1/6 of the resource.
Max. mine life: 6 * 21 = 126 years
Max. production: 38.5 * 6 = 231 tonnes Sc per year.
The combination of 115.5 tonnes Sc for 42 years would also be possible. Remember SCY also owns Honeybugle, which is similar in size and grade.
BTW the 200 million CAD is not correct.
In the DFS: 225 million USD (8% discount rate) = 306 million CAD
Husker,
1. The outcome of the NPV calculation depends on the discount rate used, individuals may use different rates. The 200 million CAD is not an ‘objective’ company value.
2. Another method often used to calculate the value of a company is based on the EBITDA. Company value = 5 to 10 times the EBITDA.
In the DFS you can find SCY’s EBITDA: 49,5 million USD
5 * 49.5 = 247.5 million USD (= 338 million CAD)
10 * 49.5 = 495 million USD (= 675 million CAD)
3. What you also should take into account is that SCY story is like the scandium story, a growth story. If you assume that SCY will double their production in 3 years, this should also be incorporated in the company value (and share price).
I think this answers your question.
GLTA
Thanks futrcash for you positive thoughts.
I'm also long on SCY and I look forward to the DFS in March 2016. It's a pity that the company sends out so few news releases, but perhaps this is common in this phase of the project. Your thoughts on this?
There are another things that keep puzzling me. Maybe you can help me with this. I found an interesting article in the Nyngan Observer, dated January 20, 2016 on the meeting held on December 2, 2015.
http://www.nynganobserver.com.au/story/3675726/local-jobs-predicted-from-new-venture/
1. It's just writing down what other people said. Why did it take 7 weeks to publish this article?
2. There's a part where George said: “You can build with it way faster than we can supply it. We have more customers than product". Could it be that there are offtake agreements signed, but because of NDA's (non-disclosure) we don't get to hear about them until they are disclosed in the DFS? Are there examples of this?
GLTA
Hi longgun, thanks for your analyses and observations! I agree with your final remark. Maybe it's also impatience... @ 0,14 SCY is a nice buying opportunity.
Good luck to the longs.
Hi Longgun, I fully agree with your comments on Niocorp.
The discussion on price is somewhat more complicated, I think. It is all about the assumptions made. It starts with the way the supply-and-demand-curve is drawn. If supply remains relatively limited, the usage of scandium maybe restricted to areas where a high price is justified. Where the benefits exceed the added costs of scandium. And how about collusion; price setting by the market leader. With only a handful producers this is a foreseeable scenario.
Yesterday was great for all longs, hope this trend continues...
GLTA
Thanks Longgun. I'm convinced. Still adding to my postion. SCY is a once in a life time opportunity.
TMLonggun, you have access to KRO. What's your opinion on John Kaisers new NPV model on SCY? Thanks for your reply.
Production starts in 2017.
It would be nice to have an updated corporate presentation which reflects all the good news.
Very good news!! I like the part where George says: 'We also intend to pursue additional offtake agreements which will further demonstrate the strong demand for scandium we see from end users in a number of areas and products. The manufacturing sector has been waiting for a dependable scandium supply that is both scalable commercially, and located in a proven, stable mining jurisdiction, and we intend to meet that need.'
This sounds like a promise.
Okay, here it is.
I work at an insurance company; we sell our products mainly through the independent broker channel. Back in 1999, we were the first to introduce web based systems for quotations and new applications. Brokers were used to working with (stand alone) Windows laptops, which gave them a lot of flexibility. 'Web based' had lots of benefits but mobile internet wasn't as fast and reliable as it is today.
Although everybody did agree that web based systems were the future, it took us far more time than anticipated to get an installed base. In order to work with these new systems, these brokers had to modify their sales processes. For instance, due to slow mobile internet, they had to meet clients at their offices rather than their homes, like they were used to.
Some brokers were early adopters - often small ones - while others waited for more proven technology. When some of your best and biggest brokers are laggards, you can see how challenging the adoption process is.
TMLonggun, thanks for your elaboration.
It has allready been 4 months since we last had an update on the project. It's just nice to have more frequent updates. I'm long on SCY as well. And I agree with you, they will succeed.
From my own experience I know how challenging it is to develop new markets and meet all projected milestiones. Especially if potential customers are large firms and they need to move in the same pace as you are.
Good luck.
That would be great Sagittarius, thanks!
Hi TMLonggun, you seem to be well informed. Do you have any ideas on our current situation? I appreciate your opinions. Thanks.
SCY no longer in default!
http://www.bcsc.bc.ca/About_Issuers/Issuer_Information/?partyid=214589
Received an email from SCY regarding the late filings
"I assume this is the insider filing due in 2014 that was filed in April 2015. This was an inadvertent mistake by the filer and is the only late insider filing mistake I am aware of in 3 years."
Ed Dickinson
Office: 775.591.4544
edward.dickinson@ScandiumMining.com
This message was posted today by Brownie51 on Stockhouse.com
Thanks!!
What I like about SCY:
- It is the most advanced scandium project in the world.
- They have applied for patents which may result in licensing fees from the other Australian scandium projects (which are less advanced), further increasing the economics of this project.
- They plan to build their processing facility in a modular fashion to upscale production rapidly in order to meet the growing scandium demand. I think this is very clever.
Listen to the expert (John Kaiser)
Your are absolutely correct. I was a former Niocorp investor. They are actually a niobium play, scandium is just a byproduct. Their grades and deposit are much smaller. Also their PEA, published recently, was rather disappointing. They plan to produce 13 tons p/a at a price of 3500 usd/kg per annum, which I don't think is realistic. Share price went down by > 30%. We're better off with SCY IMO.
Hi TMLonggun, I'm a new poster on this board. Last week I grabbed 82K SCY shares, and I'll get some more in the weeks ahead. I think SCY has a great future and I'm defenitely long on this stock.
Good luck to all.
I'm out. You may not agree with me, but I think the fundamentals have actually changed. I was longing for the PEA, convinced that it would move the share price up. It didn't happen. I wish everyone on this board good luck. Thanks!!
I see red figures. The wolfs are playing with our stock
I have two concerns with this PEA:
- Dilution. The CAPEX is 919 million USD. Taking into account a contingency of 25%, this is still 735 million USD. Converted to CAD makes 920 million. Now 1/3 is equity financing, which is 307 million CAD. At a price of say 1,50 CAD this means 200 million additional shares.
- Enough demand for scandium. NB has a 3,500 USD/kg scandium price tag for 36 years. SCY uses a price of 2,000 USD/kg in their PEA. SCY has roughly the same timeline as Niocorp and intends to sell 35 tons of SC per annum. Together they will produce 48 tons p/a, an increase by 400% at current levels. It takes several years to develop new products incorporating SC. Will there be enough demand for Scandium by 2017? What will this do to the price of scandium?
You were first, I was thinking the same. I've got these heine's to bring out a toast on your lucky number. Cheers. The 100.000th will be mine
I don't think its fair to say that people are misguided by the numbers in the PEA. Its just hard to swallow the deception. The market is always right. Right now, we are the people of broken dreams...
wssj, thanks for sharing.