@galliumaslan ... Using all known current metrics, you get a valuation of around the current price. We are all holding at this price, and possibly buying based on future possibilities..
I already know what the actual resource size is as I spent many hours working out depth, grade and location of every hole. We have plenty of shallow mineable ore for decades depending upon which way management decide to go.
The future is particularly hard to see, but one possibility is that the price of coking coal goes through the roof, taking the price of steel with it. A whole lot more project managers decide they need niobium reinforced steel for their structural components and the demand for ferroniobium goes through the roof, all while the required Niobium for lithium batteries takes off, sending the price of niobium to $100,000/tonne.
Management here, with all sorts of offtake agreements and cash from those desperate for Niobium decide to triple plant size from 1Mt/a during planning to 3Mt/a at start in 4 years time. At 3Mt/a we might be mining an average grade of 1.8%, with enough ore for over 20 years at that grade.
Assuming 60% recovery and lots of byproduct credits for everything else we have, we'll be producing around 32,000t/a of Niobium, and with the byproducts of phosphate, tantalum, REEs paying for operating costs a $US3.2B in free cashflow would be possible. Assuming 90m shares after dilution and a 10X multiple on cashflow, meaning a $A530 price per share..
How likely is such a scenario? you might say very remote, yet that is pretty much what happened to PLS, only a different commodity. Are metallurgical coal prices likely to rise a lot? I'd suggest yes as we have mined all the best deposits world wide. Demand for niobium in batteries likely to rise? Again highly likely due to the benefits already shown...
Things I can tell you as a certainty. We have high grade compared to everyone except Araxa, who have just completed an upgrade of their mine processing plant, due to growing demand for Niobium. Because of the high grade our deposit will be mined. Working out DCF or NPV on what's known today in regard to supply and demand is a fool's errand, by the time we start mining the price and quantity needed of niobium in the world market will be different.
You can be extremely bearish about Niobium and call this overvalued, or be bullish and call it extremely undervalued.
There are plenty of projects with very positive feasibility studies on all sorts of commodities that just sit there untouched by big money. There are other projects that attract big money long before the feasibility studies are finished, as big money knows when something has an outstanding grade at shallow depth and will be profitable over the longer term. For big money, throw out the window all NPVs and DCF type calculations, as they already know the future will look nothing like the present..
(20min delay)
