I strongly recommend that anyone new to WA1 watch Paul's video presentation at the Noosa Conference. It’s a great way to get up to speed with everything you need to know.
I want to share what's on my mind and explain why I continue to hold this stock. In my opinion, the upside potential is very high. However, please don't just take my word for it—I challenge everyone to ask questions.
Most of us are aware that even when you are conservative with your estimates or numbers, every scenario looks promising for WA1. I firmly believe this will definitely become a mine, potentially as early as 2029.
I decided to create a dedicated thread to make it easier for newcomers to find information or reference back to something. I find that a lot of good posts get lost in the general discussion thread, and I've noticed many repeated questions. Hopefully, this clears up some of the main questions, such as how profitable WA1 might become, transport issues, and whether there is room in the market for a new player.
If you have a question, please post it in the General Discussion thread to prevent it from getting lost in the pages. If you're a strong participant and would like to add information to this dedicated thread that would benefit WA1, then feel free.
Now for my babbling; Is there Room for WA1?
Ive decided to double check these numbers using the CAGR of each niobium product except the batteries.
The total production came in at 158,000metric tons, not including the battery market. It is projected to reach closerto the 2029 demand of 171,000 metric tons.There is an opportunity for WA1 toaddress the market gap, as CMOC has not scaled up their production over thepast decade. This could be due to their phosphate-to-niobium ratio, whichrequires scaling up phosphate production to increase niobium output.
In 2020, CBMM upgraded their productioncapacity to 150,000 metric tons of ferroniobium per year, assuming 100%availability and ideal conditions. Adjusting for real-world conditions with 90%throughput and 85% availability, CBMM's actual production capacity is about114,750 metric tons per year.
CMOC's annual production is 10,000 metrictons per year, bringing the total from the two major producers to 124,750metric tons.
Thisleaves a market gap of 40,000-50,000 metric tons by 2029, which WA1 couldpotentially fill.
A 2 million tons per annum (mpta)plant, based on previous models with a 2.5% grade, 60% recovery, and 85%availability, can produce this amount annually.Paul noted that CBMM is supportive ofWA1, which could help reduce supply risk, fill the market gap, and promotegreater adoption of niobium products.
China Molybdenum Co., Ltd (CMOC) has beena significant player in the niobium market, primarily processing ore with aniobium grade of around 1.3%. This lower grade requires more ore to beprocessed to extract the same amount of niobium, leading to higher operationalcosts and a more intensive use of resources. The throughput at CMOC’s plantreflects their strategy to optimize production despite the lower-grade ore,resulting in higher overall costs.
In contrast, WA1 Resources plans to processore with a higher grade of 2.5% niobium. This higher grade will result inseveral cost efficiencies:
1.HigherYieldper Ton of Ore: With a 2.5% niobium content, WA1’s ore will producesignificantly more niobium per ton compared to the 1.3% grade ore processed byCMOC. This higher yield means that less ore needs to be mined and processed toobtain the same amount of niobium.
2.EconomiesofScale: WA1’s planned plant throughput is substantial, allowing the company toleverage economies of scale. Larger-scale processing facilities typicallybenefit from lower per-unit costs due to the spreading of fixed costs over alarger production volume and improved efficiency in resource utilization.
3.ReducedOperatingCosts: Higher-grade ore requires less energy and fewer chemicals forprocessing, leading to lower operational costs. These savings are compounded bythe increased throughput, making the overall production process morecost-effective.
4.EnhancedProfitMargins: With the combination of higher-grade ore and scaled-up processing, WA1can expect to achieve better profit margins. The ability to produce moreniobium at a lower cost per unit enhances the financial viability of theiroperations.
In summary, while CMOC has established itsposition in the niobium market through efficient processing of 1.3% grade ore,WA1 Resources stands to gain significant cost advantages by processinghigher-grade ore at a larger scale. This strategic difference positions WA1 topotentially outcompete existing producers by offering a more cost-effective andprofitable niobium production process.
I am using very conservative numbers in the recovery and note that Ferroniobium would be 42.5ktpa, enough to fill the supply gap.
Information on pricing of this product isn't easy to find. The information I could find was in CMOCs quarterlies. Ive decided to convert it to AUD for your convenience:
Based on revenue, their average sale price of their niobium was AUD $58,000.
Now below I have made 3 models, 1 based on a 37.99% Profit Margin like CMOC's, 1 on Globe Metals FS study of 70.37% and 1 on an average between the two of 54.18%.
Now time for same evaluation guess work, Ive decided to use the average P/E ratio based on 3 big Australian mining companies.
The location will not be the issue CMOC is a similar distant from port as WA1.
Trucking costs
Annual Production: WA1 Resources produces 42,500 tons of ferroniobium annually.
Daily Production: This equates to approximately 116.44 tons per day.
Road Train Capacity: A 4-carriage road train can carry 136 tons, sufficient to transport the daily production in one trip.
Trucking Costs: The daily cost for trucking is 20,000 AUD.
Cargo Revenue: The revenue generated from one fully loaded truck is 7,888,000 AUD.
Daily Profit: After subtracting the trucking costs, the daily profit from transporting the ferroniobium is 7,868,000 AUD. Gross Profit: At 37.99% Margin: 2,995,391.20 AUD At 54.18% Margin: 4,272,038.40 AUD At 70.37% Margin: 5,553,565.60 AUD
In my opinion transporting goods will not be a bottleneck or costly issue.
Remember, feel free to question it, but on the General discussion thread. And for our substantial contributors if you have anything you think will had value and insight please post on here.
I will be deep diving into the Plant design and cost when the MRE comes out. When I have information that is comparable or close to the costs and design of the plant I will share here. Stay tuned.
WA1 Price at posting:
$15.33 Sentiment: Buy Disclosure: Held
(20min delay)