Niocorp Developments Ltd (NB)

[douginil]

Thanks monocle for providing a reference to Tim Worstall’s recent Seeking Alpha article.

In my opinion Tim Worstall is a generalist, between Feb 5, 2022 and May 23, 2022, 15 weeks, he has published 40 articles on Seeking Alpha, each on a different company or topic. Among his articles there were 7 that covered non-energy or non-resource subjects.

While “A mile wide and an inch deep” might be a bit severe, maybe "A mile wide and 3 feet deep" could be appropriate, of course I am using Tim’s own words, in my opinion of course.

The work that has gone into preparing Feasibility Study (FS) 2022 and all of the previous NioCorp FSs for the Elk Creek deposit have all been done by impartial 3rd party experts in the various fields of the project from mine design, ore preparation, ore processing, element separation, product marketing and pricing, etc. NioCorp has bent over backwards to be sure that the components of the FS are based on, and are agreed to and signed off by impartial 3rd party experts. It could be said that the FSs are based on knowledge experts that are "3 feet wide and a mile deep".

Hmmmmm Tim Worstall's article commenting on NioCorp’s May 18, 2022 Press Release (PR), is tough to read considering his inaccuracies, statements and mis-statements.

It is distressing to see how many times he includes qualifying wording and “evasively yours” type wording and phrases: ... ”in my opinion of course” or words to that effect ... “A rule of thumb” ... “Just work with me on this” ... “These aren't wholly accurate (partly because I'm guesstimating the FX rate” ... “they're good enough for the purposes I want to put them here” ... “Don't get hung up on the accuracy of the numbers, savour the point being made instead” ... “I know those aren't right but they're good enough for us” ... “We're just pencil sketching here after all” ... “Sure, we've taken very rough numbers and prices” ... “Again, these numbers are fragile” ... ”I could be wrong “


Scandium
- His use of a selling price of US$1,100/kg Scandium Oxide versus US$3,750/kg. However, Table 5 in the Appendix of the PR shows $3,675/kg for Scandium.
- His implication is that the selling price for a commodity product is the best that can be obtained, which is not realistic in my mind of course I am using Tim’s own words “...in my opinion of course”
- He questions the price that is used for Scandium and questions how fast the market for Scandium could be grown.
- The fact that some of the Scandium is covered by an off-take agreement with a trading party that would like more Scandium and is probably intimately knows what the pentup demand is.
- There is an abundance of literature about the weight savings, strengthening, and weld advantages of aluminum-scandium alloys as well as actual military and commercial uses.
- A few year back AIRBUS patented an Al-Sc alloy for use in aerospace applications. In the 2-3 years prior to production I suspect the demand will be there, in my opinion of course.
- I suspect that the price Bloom Energy would pay for Scandium Oxide at a purity and form that NioCorp will produce is higher that the commodity price that he quotes.
- He stands by his numbers and opinions which is OK, but in my opinion they do not apply to NioCorp.

Rare Earths
- He claims “They'll not be producing the individual elements as that requires another $billion plant to perform that separation. They'll be producing a mixed concentrate. Mixed concentrates aren't worth very much”.
- The “Mixed concentrates aren't worth very much” is correct.
- However, the other parts of the statement are not.
- The PR specifically stated “There is potential for NioCorp’s REEs to be mined, crushed,and placed into solution as part of the process NioCorp plans to use to produce its primary niobium, scandium, and titanium products.”
- The PR specifically stated “NioCorp could produce separated rare earths as a byproduct”.
- In various comments from both Mark Smith and Scott Honan if it is decided that NioCorp would produce rare earth oxides or metals there would be some incremental “bolt-on CAPEX”, although not at the level of an additional “$billion” that he quoted.


Tim Worstall’s closing comment (for which he has very little, if any, legal responsibility) is:

“It is my absolute insistence that no one is going to come to market with a single mine supplying a many times multiple of the current global market and then also be able to sell that production at three times and more the current global price. Markets just do not work that way.

Hey, I could be wrong but that's not the way I would bet on this particular subject.

I do not agree his overall analysis. I prefer to be more trusting of management and the 3rd party experts who participated in the preparation of FS 2022 for which they do have a legal liability for its accuracy.

But as in Tim’s words its “my opinion of course”

When thinking about this project I always like to remind myself of the off-takes that have been place for a number of years.
Nb - 75% off-take and a non-binding letter of intent for the balance 25% .
Sc - 10% off-take with the entity, Traxys North America, expressing interest in a larger off-take.

The pricing quoted for Niobium and Scandium in FS 2022 are acceptable to NioCorp’s 3rd party marketing and pricing experts, they must be reasonable to the off-take entities because they are still in-place.