The geniuses here at SRSR brought in "financial wizard" Dan Byrnes to be our Mark Smith... and how's that been working out so far ?
FWIW, I'm not much of a Mark Smith fan. All you have to do is look at the wholly predictable smoking hole in the REE space, that was once Smith's baby Molycorp ? At Niocorp, it seems the plan is doing it all over again, now... with another pump and dump... only with the focus in niobium and scandium this time ? They recently came out with a new PEA... which they say includes new "price and market assumptions concerning an expanded demand in the scandium market".
Right. Scandium demand is suddenly going to explode in spectacular fashion... only because that's what they need to have happen to make their PEA be something a bit more pumpably functional, and a bit less non-pumpably dismal...
No doubt that's all and only about the need for generating an ability for them to support saying: "NioCorp's most recent updated Preliminary Economic Assessment, released on October 16, 2015, shows why the Elk Creek Project will deliver exceptional economic results. With anticipated production of 7,490 tonnes per annum (tpa) of Ferroniobium, 97 tpa of Scandium Trioxide, and 23,960 tpa of Titanium Dioxide over its 32-year operating life, Elk Creek is estimated to have pre-tax Net Present Value (NPV) of US$3.07 billion, with an after-tax Internal Rate of Return (IRR) of 27.6%. These economics were calculated using an 8% discount rate."
To put that in context... that says they're basing their "exceptional" economic forecasts largely on success in winning the value from high value and high volume Scandium production... while also saying that each year they're going to be planning on producing enough scandium that it is roughly ten times the current global market... ten times current total consumption... and roughly five times a wag estimating what the total global market demand, including currently unmet demand... might be.
For those who are math challenged... production of 97 tons per year... is a whole lot more than current global consumption of 10 tons per year, and still quite a lot more than estimated total potential global demand of 20 tons per year.
I can imagine what the SRSR "critics" would be saying... if SRSR came out with a similar forecast claiming they were planning to produce 10 times more each year... of anything... than is now required to meet the total global annual market need ?
The foolish SRSR critics called me crazy even for (correctly) predicting the solid 10-15% annual growth that has occurred in niobium, like clockwork... even sustaining it through the predictable cyclic economic downturns we've had in the last few years. What will have to happen in the aluminum industry... to have them ramp up the current consumption of scandium... by 1000% ? How long do you need to sustain 10% annual growth before you end up with a total ten times what you started with ? And, how long does NioCorp expect that ramp in scandium consumption will take ? Color me skeptical.
I don't think they're wrong about the potential role that scandium could and should play in aluminum markets... accepting it being a rough proxy for the similar role of niobium in steel. But, I'd not exactly claim that Smith and Molycorp have demonstrated any particularly useful skill, or any unique strengths in their prior efforts in forecasting the market potentials in rare metals...
Even non-rocket scientists should understand the basic operation of supply and demand well enough to get that it is unlikely you will be able to sustain prices for anything that you produce 10 time more of than what is actually required by the market you have ? The current blood letting in the oil markets is being caused by a mere couple of fractions in the percentage of production in surplus over demand ? It won't even be physically possible, for very long, much less economically viable... to sustain production of anything that is 10 times more than is required to meet current demand... which is already being met.
I'll go way out on a limb and guess that their highly over optimistic PEA pump... won't come close to surviving through to the delivery of the full feasibility study...
Doing the obvious in the math isn't nearly as hard as solving the market problem... and the chicken or the egg element of the need to have a large cheap supply being made available to stimulate the future demand and grow it to the large scale, that you want... without ever having the effort made to enable supply succeed in stimulating demand that grows fast enough to justify the up front expense of creating the supply...
But, then... as Molycorp shows... they don't really care... since it's the investors money they're pissing away...
Given the parallel in the potential risk that other competitors might come along and produce higher volumes of those other minerals you will produce, and produce them in higher volumes... while doing that for far less money than you can ?
If Nemegosenda were ever put in production... perhaps it would put NioCorp out of the niobium business altogether, as well as creating an ability to compete with CBMM on price ?
NioCorp saying they'll have under 30% IRR... even while depending on pie in the sky market and economic assumptions... when CBMM is said to be generating 50% profit margins ?