“If they sell 10,000 tons of niobium, which is probably around the max without a response from CBMM or the rest of the market, at $40,000/ton, that’s a gross of $400 million. Say 75% margins, that’s $300 million net = $4.48/share”
Which would still price WA1 many multiples above current prices. Your estimation of net income is below what Australian IBs and brokers have modelled.
Look at the Jevons Effect. “The entire world only has demand for five IBM computers”
If the annual production now is 120k mt, this can mean either they’re engaging in monopolistic production & pricing or the market has truncated demand.
The real effect is niobium will be substituted for bulk iron in steel making —> more structural steel can be purchased —> reinforcing demand for niobium.
Look at how lithium production has increased since the early 1990s. I think it has increased nine fold from around 20kt pa to over 180 kt pa. Global income and population have not grown anywhere near this.
WA1 Price at posting:
$13.63 Sentiment: Buy Disclosure: Held
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