Niobium Market Fundamentals, page-8

I have mate and I don’t think it’s enough to warrant an acquisition based on the below:

Cash flow to market capital:
FMG has a market cap of 65bln. I’d be elated if WA1 sell 500mln worth of ferroniobium in the first year of production however there are supply/demand factors at play here that management will have to navigate. They can’t flood the market all at once in year 1 (would drive price down). They will probably have to incrementally steal market share from competitors. I suspect this will be very easy since lots of Chinese and Saudi mills will want geographical diversity in where they source their FeNb from. If Araxa stopped the steel industry would be cooked and it would be a field day for WA1 as they would just step up to capture that demand.

Chemophysical characteristics of Nb:
This metal has an incredibly high boiling point at 4744 deg- contributing to its extreme hardness and formability uses in steel. So it’s green from the sense that when you add it to steel you use less iron ore in the long run since the product lasts longer and it’s lighter e.g. bridges and EV parts. However on the non green side of the coin because of its high boiling point there is virtually NO RECYCLING market for the metal unless it’s salvaged in high grade forms like aerospace parts e.g spaceX rocket nozzles.
This is great for niobium miners because during high commodity price cycles e.g iron ore booms Nb supply isn’t affected in the form of recycling substitution like what we see in the copper market for instance. So what happens? Less price volatility in the form of longer sustained high prices = more cash for WA1 and CBMM. Some of you might even ask well what about vanadium? Well V hasn’t been shown to reproduce the same excellent qualities that Nb produces if substituted so it’s a low substitution risk in the long term.

Top 20 shareholders:
Currently away from my home office so I’ll post my Bloomberg terminal screenshot of this list later. Basically a high percentage ownership of this stock is controlled by management and friendly parties of management. No takeover offer would be able to get ASX approval unless these gents sign off on it. I suspect they know very well the cash cow they are all sitting on and wouldn’t dream of selling. A takeover would also require paying out any options and performance rights etc. Regal to me haven’t displayed good capital partner synergies for the long term based on their profit taking of late so I’m keen to see a placement go to a cornerstone in the form of an eccentric billionaire type that has sticky money and hangs on like a barnacle. The brokers and hedge funds have to report to management and winy clients so not only will they be pressured to lock profits in but they will be risk averse at the smell of global market volatility. Private billionaires don’t give a $@&? it’s just another high probability game so most will be happy to just sit back and enjoy the ride.

I’m not averse to an acquisition eventually however I see absolutely no reason to contemplate this until after mine site production ramping has been completed in hopefully 5 years from now. Selling this for less than 3bln would be nuts in my opinion.