WA1 (ASX) Niobium Market Fundamentals

Originally posted by Explorer10: ↑

Hi All,

Firstly congratulations to Paul and the team who continue to deliver for shareholders on the tailwinds of an incredible discovery. This is hands down one of the best on the ASX in the past 10 years.

I am setting up this thread to generate discussion on the fundamentals that drive this unique and extremely profitable partial monopoly/oligopolistic mineral market.

For context yes I am a shareholder and have made some exceptional gains in my portfolio on this stock. I continue to hold and will not sell a single unit until the full value of this world class discovery has been realised. All my comments and observations are based on my own research and knowledge.

A LOT OF PEOPLE keep freaking out about the share price so I am here to explain why I think the share price will continue to experience volatility in the short term and why I believe this creates an incredible opportunity for those who are patient and more long term focused (I am). Up to my gills on this stock for several reasons.

Niobium Market Fundamentals
Total global market size = 3bln by 2028 so yes if you back test the numbers CBMM clear about 1.3bln in cash flow every year from their Araxa operation in brazil. As the planet's industry expands so too does this market size. Look up the multi billionaire family (Moreira Salles) who have worked incredibly hard to retain ownership of this asset over the past 60 years since its discovery.
Open pit profit margins = ~400% CBMMs. WA1's will be very similar. At current prices about USD $40/kg this makes open pit niobium the most profitable bulk mining mineral market on the PLANET not far behind open pit hard rock lithium mining about 350% for comparison.
Underground profit margins = ~200% ENR is an underground play and will be a LOT more expensive to develop than WA1's Luni
Distance to market = less than half the shipping distance to the Asian and Saudi Arabian (very high growth) steel markets compared to CBMMs port
Commodity price catalysts = global crude steel production rates, Chinese manufacturing PMI, iron ore spot prices
Commodity demand catalysts = global population growth, US and China GDP output
Niobium uses = very large percentage used in manufacturing steel with the beginning of new diversification of customer supply into niobium oxides for cathode uses (high growth market)
Projected market growth = 3.78% CAGR

Short Term Market CatalystsThe Chinese real estate market is currently sh67##%& itself so in the absence of quantitative easing by Xi Xinping, the demand for steel will fall thus the price of niobium can also be expected to fall modestly. In the long term however the real price outpaces inflation due to its tight market characteristics. Very very few commodity prices behave like this albeit gold if you look up as a comparison. So once again Niobium is a very special mineral. Institutions who are over all of these areas that I have just touched on may sell the stock however this is very short minded. I see it as an opportunity to purchase at regular oversold intervals over the next 0-5 years. Think big on this one . Look back at what happened to Sirius Resources even after the takeover by IGO there were still 6 bags in it if you had of hold onto the stock a couple years post take over, not including the value that was generated through the SR2 component.

My Current Luni Mineral Resource Estimate

I know, not thread relevant however its just easier to post it here.
This is back of the envelope however I do explain my assumptions.
I believe this deposit will be the worlds second largest after CBMM's Araxa and eventually the worlds most strategically important due to proximity to china, india and saudi arabia.

Tonnes = (2000m x 1500m (plan view maps) x 2.2 (estimated density of saprock carbonatite)) = 6,600,000 x 50 m (mineralisation thickness)
= 330Mt Insitu mineral value = 330Mt @ 1.5% Nb (have to guess a mean grade here - basically trying to smooth the high grade pockets across the tonnes = 4.95Mt Nb x 40,000 USD/tonne = 198 billion dollars contained life of mine Nb metalIronically the company is going to be building this mine in a soft iron ore market which is actually the best time to build since interest rates will be lower in 3 years time and thus CAPEX overall lower.

Best of luck to all current and future holders!

Cheers,
Explorer10

Expand

For completeness...

Before you get to sell ferro niobium - you first have the build a mine, concentrator and smelter

Not much data around on those capex costs, but if you look at the old Cradle DFS it was $200m in 2016

https://www.cradleresources.com.au/wp-content/uploads/2016/04/Cradle-Definitive-Feasibility-Study-Investor-Presentation.pdf

Escalate that inflation and you could be at $300-$400m

The price of ferro niobium is now circa $24,000 per tonne, as per the USGS:

This has halved since pre 2018 as per USGS:

WA1 still looks interesting - but be cautious on capex, opex and potential margin at this point

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(20min delay)
Last $14.83		Change -0.250(1.66%)		Mkt cap ! $961.9M

Open	High	Low	Value	Volume
$15.17	$15.17	$14.59	$2.321M	156.4K

Niobium Market Fundamentals, page-4

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