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You just keep going and going. A regular energizer bunny. Take a breath and step back a minute. In the past week, you have seen the 2nd and 3rd largest bank failures on record (WaMu in 2008 was #1). You have seen people in Brentwood CA (of all places) lining up to get their money out of banks. Brentwood is probably the top 5 richest neighborhoods in LA. With the current macro backdrop, do you really think that the high redemptions were due to the project alone? Sheesh.
The project is moving forward. This is a greenfield mining project. Invest accordingly.
1. We don't and won't have the share price to qualify
2. We don't meet any of the rest of the listing requirements
3. We don't have sufficient funds to continue operating indefinitely without additional raises
4. Any subsequent interim raises to continue funding operations will continue to dilute the share holder base and share price
5. The macro back drop isn't great. I'd assume Mark took this into consideration when looking out over the next 12-18 months w/o this deal.
and to your previous point about your shares and the RS.
You are currently in the exact same situation with the same market value of shares that you will be after the RS. You are also currently in the exact same situation of trusting that management is doing the right thing and that the value of your investment will not go down. Neither of these change. It is your perception that is changing.
When I evaluate deals - one of the subjective things I like to do is to walk through the alternative if things do not go as planned - What happens if the company doesn't do this deal? Do we continue to drip fund a mining company without unlocking any path to value. As we do that we waste more time, incur more dilution and hope that the next financing opportunity (given a crap macro back drop) is more favorable than our current. How long can the low institutional interest and retail money that have supported operations continue if general market risk increases? In my opinion, it is better to move the ball forward (and this isn't a small step forward) than to hope and pray that we can fund a $1B capex without significant dilution. How expensive does the money become if the retail investors/low institutional are unable to fund operations? What happens to the permitting, tax incentives etc if this project does not break ground in the next 5 years? How much is capex at that point given current/then inflation rates? Is the critical minerals environment better or worse in 5 years? Everything in this game takes longer and costs more. It is not just the cost of funds or the cost of dilution that you need to consider - it is the cost of doing nothing/waiting as well.
At the end of the day - MS is moving this project forward from the position it was. Closer to the development of an operational mine and closer to unlocking additional value. I'm wondering how you would've accomplished this differently? Do you think MS did not consider all options being not only the CEO, but the largest shareholder? Asking for a friend.
apples to oranges. things change. the macro backdrop is considerably different - imo.
Oh and by the way. I like CleanTeq.
Again - argumentative and clearly you have never worked for an institution.
You can't compare the two and make any valid assumptions. Different product mixes (Cobalt has a ton of investor attention currently). Different economics. Different markets and end users. Different size and scale.
"Feel like I am playing cards with my brothers kids"
Name that movie quote.
tedro- your last statement is a MASSIVE assumption. Major investors have just had the ability to start real due diligence. Small retail investors maybe are a bit worried given the share price, but I don't think you are I are privy to the financing discussions that MS and his team are having. To insinuate otherwise is just disingenuous.
Walter's two questions are absolutely correct. You are just being argumentative about it. What also isn't discussed and seems to be implied by the naysayers in this project is that it is a binary outcome. It either works or it is worth nothing. In my mind, that is just silly. The upstream supply of niobium alone at extraction cost is extremely valuable. I am making the bet that it is much more valuable than the current market cap. That is my downside. It certainly isn't zero like some people think. If this company was trading at 50% of NPV right now I would be in a much different place, but its not.
Walter - that last two sentences are the most important ones said on this board in a long time. The mix of production and cost allocation of that production were chosen for this BFS. Trying to compare the NPV of the project by stripping out the NPV of one of the elements without taking into consideration the above is not a correct way to value anything. It may make for a good talking point, but it is very inaccurate.
Don't beat up on Rev. He is not wrong. While this is very positive, Mark is protected and getting paid while he waits.
Because when you raise equity - that is what you do. At least if you want to maintain a decent reputation. Under promise and over deliver.
Walter,
Are you serious with this comment? Permitting, metallurgy, niobium off takes that provide more than enough debt service coverage, a FS study that is defensible, local support, JV w/ a downstream supplier of scandium, talks with 8-10 scandium users for potential offtakes, understanding of the ore body, management team that has done this before and on and on and on. All in 3 years. Typically, I enjoy your counter punching, but you can't be serious with this comment. It is so misleading especially since you are the one that added the word completely. At some point, people need to put this investment in context and give credit where it is due.
AR
tedro - you clearly have not followed this investment. Mark's money went in when this was just a Niobium project. Do you due diligence.
Again, without any specs and purity levels that blanket comment has nothing to do with Niocorp and its Scandium. Aside from that, the premium producers are going to be willing to pay for a politically stable supply of Scandium is significant. Just go ask the tech companies that were trying to secure REE supplies for their applications over the past 10 years. The statement isn't relevant, imo.
I'm not concerned about the pricing differential of Scandium at all. They are going after two completely different markets which all the promoters of the AUS mines are failing to acknowledge. Broad adoption, which they are basing their figures on, is the automotive market. The difference between the specs on the automotive and what they could afford is light years apart from higher grade aerospace, fuel cell and military adoption and what that group can afford to pay and still make the application economical. It is funny that they keep trying to play that card like somehow it makes Niocorp less attractive. Just completely misinformed or disingenuous.
Of course, all just an opinion.
That was my thought exactly. Reliable supply. Secure and convenient location.
Bloom had an agreement inked with another provider, but it was ripped up due to lack of stability in production/quality. Also, if I remember right the amount inked was insufficient to meet Bloom's total demand. At the time (4 years ago), Bloom was looking to security something like 90t per annum. IF memory serves me.
No question that scandium enhances this project, but lack of scandium doesn't kill this project at all. Remember this project started as a niobium deposit. If you go back and look at what the numbers were relative to it being just a niobium project you can get a good sense of cash flow available for debt service.
Cap Ex (back then) $919MM
Niobium Production 7.5MM kg (similar to now)
Niobium Contribution Margin $20-23 (use $20 for conservative purposes)
* $20 margin is what Niobec had
* NIO management insinuated $23 at the time
* Assumed long term pricing of $43.00
Add another $15-$20MM in additional maintenance and burn
Throws of $130-135MM in annual cash flow which is ample debt service coverage for $600MM of debt @ 5.75% 15 AM.
If you remember (way back when) Niocorp intention was to grow their Niobium production with the Niobium market as not to disturb CBMM's market share which stands around 85%.
Assuming a modest 4% growth for the niobium market allowed NIO ample room to increase volumes and cash flow. Plenty of CF for banks and enough for investors.
Obviously, this is all moot because of the mix the NIO team chose. Just thought it would be good to remind people of the original basis for this project and the reason and expectations that most of us had when we invested in NIO in the first place (Quantum days).
Given that, I tend to agree with you (given the mix Nio has chosen) that a scandium offtake will be important for risk capital.
LCP- How many feasibility studies have you been a part of? My guess is none. Reason why? Because typically when you are in discussion with financing institutions they ok the 3rd party providers of the FS information including pricing. It is pulling teeth with these guys trying to get any type of "blue sky" into a feasibility report. The reason is because they put their reputations on the line that what goes into the FS study is defensible. The financing institutions that have worked with these companies don't go back and second guess their inputs. How long do you think these companies would be in business if they consistently produced FS study inputs and analysis that wasn't conservative and defensible to lenders.
People may be pissed, but do you think it really matters. The current investor base isn't the one that will be driving the SP. That much is certain. If they were still driving the bus you would've seen a much higher SP than currently. If MS and Nio deliver on the numbers and the cash flow is available for financing, the institutions will be driving from here on out. You may get a short term sell off, but that will be seen as an opportunity by most. Transfer shares from weaker hands.
If you look at the broader scope, the credibility issue on a few day miss is overstated.
If anyone has any questions as to who has been the consistent seller, please look at pages 102-104.
Some highlights from their 10-Q
With the completion of the work efforts noted above, we are now engaged in wrapping up the final components of the Feasibility Study and expect to publicly release our FS results by June 30, 2017.
Substantially all the Feasibility Study work has now been completed and as of March 31, 2017, we anticipate approximately $0.2 – $0.3 million of work remains, which is expected to be incurred for final Feasibility Study and engineering wrap up. While we may ultimately exceed the amounts as budgeted in the PEA by 5-10%, most of this deviation is for additional metallurgical analyses that Management incurred to identified process breakthroughs with the potential to reduce CAPEX and OPEX, as discussed above. (Cash on hand as of March 31, 2017 was $1.870MM)
The Company anticipates that it may need to raise $5 million to $6 million to continue planned operations focused on financing the Elk Creek Resources Project after the completion of the Feasibility Study. 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.
1. Both financing and debt packages usually take longer than anticipated. They may want the additional capital from a timing perspective.
2. The more liquidity you have on the balance sheet at the time of discussions improves your leverage in the negotiation.
3. As someone else stated, minimum capital requirements for push to US based exchange.
4. Additional cash to being ramping up hiring of staff for the beginning of the production phase while the financing package details and paperwork are being completed. Another way to run parallel paths and improve speed to production.
There are 4 more off the top of my head. If you really think Niocorp was concerned about a lack of significant SP increase post FS, don't you think they would raise more than $1MM CAD. Also, wouldn't any share price appreciation be better to raise money than right now? Obviously, it depends on one's viewpoint, but the negative viewpoint, in my mind anyway, doesn't seem to add up. It is more likely that it gives them greater flexibility with little effort.
I think they have been doing it for the past year. Small amounts consistent over the course of time. Purely automated selling through an affiliate.
Again just speculation on my part, but that is what I would be doing.
You are right about one thing. If I am right, it is all coming to a halt shortly and the fundamentals of this project should begin to take over and be reflected in the PPS.
Convertible deals can be nasty things. Protecting the company in them is difficult (as I keep saying the devil is in the details). I don't fault Niocorp at all for doing the deal at the time. In the long run it doesn't matter and it hasn't hampered Nio's ability to raise additional outside funds, which is sometimes the case. It was a critical time in the Company's development and they needed cash. The way I look at it, Lind made a good deal and Niocorp made a good deal IF it is part of the overall package that gets them to post feasibility, financing and production.
It is a different mentality in investing - debt vs equity. Credit guys are protection of principal guys. The convertible gives them the equity kicker, but really they want to make sure they are getting their principal and interest back. This structure gives them the ability to convert monthly and make a small arb over the term of the note - in effect getting their principal, interest and 5-15% discount included. So the pressure (again just my opinion) is them taking advantage of the arb opportunity and reducing their position over time so they are left with (pick a number) a certain amount of exposure.
Not at all. My statement is based on people that put together convertible financing deals vs true equity players. Just a difference in risk aversion investing in my opinion. If they didn't like the outlook of Nio they never would've lent them money in the first place.
No offense intended here, but its not like you would ever see LIND's name out there on anything. Also, the facility was $10MM. There were warrants attached as well. They are able to exercise the convertibility monthly at 85% discount to the 5 day rolling price avg. I think (don't quote me), but something like $8MM has been borrowed on the facility. Take a $.75/share price tag and you can get close to the number of shares they are effectively long. That is rough numbers 10MM-12MM shares. Throw in the warrants (3.125MM for the First Tranche) and undisclosed amount for Second Tranche and you can see why the consistent pressure on the stock is there. Adjust the share price how ever you want to reflect your preferences. This does not include any of the 10% interest accruing.
The way I look at it is that LIND doesn't want even close to the exposure they are getting in Niocorp. They are derisking as they go and will end up with a nominal amount they are willing to let ride on Niocorp. The structure allows them to derisk monthly and if you take the exposure they have and divide it by any number of shares you think they are trading on a daily basis and you will see how long they would need to be consistent sellers to get to a derisked position. Its alot. Just my opinion of course and the devil is in the documents, but given the fundamental story and the PPS it fits the narrative quite nicely. I would be doing the same thing if I was them.
I know what it is. My point is that there is no way you can look at this project as a typical convertible play. Greenfield junior miner play with very low liquidity means your typical hedge ratio on a convertible play gets thrown out the window. Also, the difference here is that LIND has (more than likely) been converting the securities to equity on a monthly basis as laid out in the terms at 85% of the 5d MA. If done right they should be able to pick up a riskless arb while reducing their overall exposure to what they want to manage. Again the devil is in the details of the docs.
Under no circumstance is what I said a ringing endorsement of LCP. The way he conducts himself deserves the criticism he has received. I'm just glad this board has finally stopped paying attention to his pandering.
** What I described isn't a 'short attack' nor does the hedging ratio mentioned have anything to do with it IMO. It is a systematic selling to derisk the position given their position. I may be completely wrong, but it is the only thing that makes sense given the circumstances. Anyone is welcome to offer another solution.
Again. It is an affiliate of LIND IMO. Just use rough numbers on their $10MM convertible note. Conservatively, they are effectively long 10-15MM shares. These guys don't want all the exposure to NIO through the convertible especially when they can sell shares at market through an affiliate while effectively buying at 85% discount to the 5 day MA. That is the short position. 50,000 shorted per day (again just using whats out there without digging) is nothing. If you use 15MM as their exposure, which obviously depends on details in the documents on exact timing of conversion etc., and LIND at the end of the day wants 50% of the exposure, they will need to sell 7.5MM shares. AT 50,000 per day it is 150 days of selling. That isn't including the warrants attached and is giving LIND the benefit of the doubt that they actually want 50% exposure. Convertible notes are nasty things. I don't fault NIO for taking the money because it moved the project along when it needed it most and the underlying economics of the project make the presence of the convertible short lived. That said, there is no secret as to who is the one selling. Pure automated selling daily. It won't stop until they are taken out or converted to common.
Below is from the press release. Notice the statement on whether Lind has or has agreed to short selling the shares. The docs is where this gets interesting because if it isn't Lind and/or any affiliates then they can easily circumvent. This is what I think is happening. Like I said earlier though, this has a very short lifespan to it. Once the BFS is out either they convert or are taken out in the first tranche of equity. Selling pressure is gone and fundamentals take over. JMO again. I certainly could be wrong.
Lind will be entitled to convert the Convertible Securities in monthly installments over the term, and the Conversion will be at a price per share of 85% of the five-day trailing volume-weighted average price ("VWAP") of the common shares (the “Shares”) prior to the date that notice of conversion is provided by Lind. The Agreement contains restrictions on how much of the Convertible Securities may be converted in any particular month. NioCorp has the option to buy-back up to 70% of the Convertible Security in cash at any time for a nominal premium. Any Shares acquired upon conversion will not be tradable through the TSX until completion of a four-month-and-one-day hold from the time of funding the convertible note; however, the Company has covenanted to file a Short Form Prospectus to qualify the securities issuable under the first Convertible Security for trading. Lind will also be entitled to accelerate its conversion right to the full amount of the face value or demand repayment of the face value in cash upon a default and other designated events. To the extent that the full face value has not been converted at maturity, the balance of the face value is to be paid in cash at the end of the two-year term.
Further, Lind does not and has agreed not to short-sell the shares of the Company.
In addition, in respect of the First Tranche, the Company has agreed to issue 3.125 million warrants, exercisable into Shares for a period of three years at an exercise price of CAD$0.72 per Share. In respect of the Second Tranche (if any), the Company has agreed to issue a number of warrants under a formula based on the amount funded and the prevailing five-day VWAP prior to the date of issue. Any Second Tranche warrants will be exercisable into Shares for a period of three years, at an exercise price of 120% of the VWAP per Share for the five trading days before the Second Tranche closing.
Putz,
I am not sure what that has to do with whether or not Lind is selling. They are long convertible notes.
Lind will be entitled to convert the Convertible Securities in monthly installments over the term, and the Conversion will be at a price per share of 85% of the five-day trailing volume-weighted average price ("VWAP") of the common shares (the “Shares”) prior to the date that notice of conversion is provided by Lind.
Of course they are selling. I don't think they want the full exposure of the conversion and they are getting a small, embedded arb.
JMO
Take a look at what is going on behind the stock. Your research should've led you to the most probable conclusion. IMO, the stock is being suppressed by LIND or an affiliate. It is the continuous pressure on the shares. LIND's ability to continue to do this because of their convertible note has a really short rope at this point. Working on borrowed time. The BFS is coming out and the economics of it are going to be in line with PEA2 w/ maybe a little bump down on CAPEX beyond the stripped out contingencies. Again just my opinion. At this point, MS is already having financing conversations. Post BFS, LIND either converts and rides in the same boat as the rest of us or they get taken out by the first equity tranche. At that point, the fundamentals take over and the selling pressure, which has zero basis in fundamentals, ceases. Only then will you get your share price appreciation. This is a mine, not Tesla. Fundamentals do matter.
Gladly answer your question. My expectation of the numbers in the FS are to mirror the PEA2 numbers with the additional 10% taken out of the contingency cost that was added in the PEA2. That number becomes more refined during the FS stage to 15%. If Niocorp does that, every investor makes out because the project is bankable and will be put into production or bought out pre production. Anything better than that is gravy to me.
No pom poms. My opinion wasn't overly positive or negative. I can't say the same for yours. Hyper negative on the delay when you yourself don't know the reason for the delay. Of course there is speculation until the numbers come out. Nothing in investing is a given, but I will say this. The Company has done a great job thus far of moving this project forward on an aggressive pace. In doing so, they have exposed themselves to delays. Whether or not you are comfortable with them is up to you. I will reiterate what I have said in previous posts and what has been echoed by some others on this board. The last thing MS and management should be concerned about right now is any delay in releasing the FS. They should be focused on the necessary steps to bring a 35+ year mine into production.
I have no idea what your expectations were, but to suggest that nothing has changed is ridiculous. The scandium purity levels are what was necessary to support the pricing in PEA2, in my opinion. That was huge news. There are no pom poms to that. As far as the delay, again based on your own expectations, but this project is so far advanced compared to any other junior miner that has tried to bring a project of this scale into production. If you look at this the way management and MS are looking at it, do you really think they care about an additional 6 months on a 35+ year project to make sure it is done right. 100% of 0 is 0 if my math works. The concern over timing is overblown considering the consequences of your investment if they mess this part up.
Just my thoughts. Not trying to offend anyone.
Disappointment? If the numbers are in line with the PEA2 I will be perfectly happy. That means the contingency costs will be stripped out. The recovery % are improved and the project easily supports financing. MS and the team have done a good job of tempering expectations in my mind. Remember the end goal of this whole project for Niocorp is to bring a mine into production. It isn't to placate the short term interests of the retail investor. If they bring a FS to the table that is bankable and are able to secure financing, it is an absolute win. I think too many people are concerned about the level of SP currently and the timing of the FS. There are many ways to structure the total financial package and the one person who is making those decision has the most at stake. Perfect in my book.
That is only the elephant in the room for someone looking to make quick money. Obviously, everyone is going to have different opinion, but the pricing worry of Scandium is way overblown in my opinion. This is especially the case if the mine ends up in production and becomes a long term value play. It may be more of an issue if it becomes a pre production buyout. Maybe I am wrong. Time will tell.
The board has turned into complete crap in the past 3 months. It used to have constructive discussion and I would like it to get back to that. For those that don't see the value, have a timing issue or out a little over their skis then they should consider that staying in the company is by choice. Stop complaining about it on here and do something.
The scandium pricing is a minor risk to this overall project, imo. The niobium production alone will support financing which allows MS plenty of flexibility in navigating scandium offtakes and pricing. If you remember, the PEA2 had base case and reduced demand scandium values in it. It is worth going back to those assumptions as is the path that most junior miners take and compare that to where Niocorp currently is. Overall, if you are honest about it, the Company has come along way in a short amount of time against some large headwinds.
This is either a pre production buyout or a long term value play that should have a fair amount of money for management to disperse via dividends. There are a number of vertical and horizontal merger plays that are already identified that fit the super alloys play and a management team with considerable knowledge and experience. One gives them a pipeline for product the other is accretive from a cash flow standpoint. Management is completely aligned with shareholders. While we complain about timing delays it is good to step back and see the overall picture. In my opinion, Niocorp is still under the radar from a valuation perspective and coming into a market that is going to grow for decades.
Hard to derisk a junior mining project more than what Niocorp has already done.
AR
It is normal for PP's to have multiple closings. This was just the first tranche of it.