Edison Investment Research Limited / CA6544846091
08.01.2024 - 11:06:30Edison issues initiation on NioCorp Developments (NB): Niobium husking
| Edison Investment Research Limited 08-Jan-2024 / 10:06 GMT/BST The issuer is solely responsible for the content of this announcement. London, UK, 8 January 2024 NioCorp is developing the Elk Creek mine in Nebraska, which currently hosts the second largest ‘indicated’ or better rare earth resource in the US and, once in production (potentially in FY27), will be North America’s only mine producing niobium, scandium, titanium and rare earths (all of which the US define as ‘critical’). A definitive feasibility study (DFS) on the project in June 2022 calculated a pre-tax internal rate of return (IRR) of 29.2% and a post-tax net present value (NPV8) of US$2,350m, or US$70.51 per existing share in issue, to which NioCorp’s shares are currently trading at a 95.6% discount. However, the project now appears poised for a material change in product mix to improve its economics and reduce its previous, heavy reliance on scandium revenue. NioCorp’s DFS in June 2022 calculated a pre-tax IRR on the Elk Creek project of 29.2% (in US dollar terms) and a post-tax NPV of US$2,350m at an 8% discount rate. This equates to US$70.51 per share in issue, to which NioCorp’s shares are currently trading at a 95.6% discount. Adjusted for Nebraska risk as well as stage of development (ie DFS), we calculate that this should reduce to US$23.48/share. Adjusted for the overall risk of commerciality, we calculate that it should reduce to US$15.79/share – still 5.1x the current share price. Alternatively, adopting a decidedly conservative ferro-niobium price and valuing the company based on an assumed US$425.5m equity raising in the near future in order to keep maximum leverage (net debt/[net debt+equity]) at no more than 2:1 debt:equity, we calculate a fully diluted valuation for NioCorp of US$7.16/share, rising to a peak of US$16.87/share on the cusp of the company’s first significant dividend in FY33. Click here to view the full report. All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached – across institutions, family offices, wealth managers and retail investors – Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first company in-market 17 years ago, Edison has more than 100 employees and covers every economic sector. Headquartered in London, Edison also has offices in New York, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison’s reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Lord Ashbourne +44 (0)20 3077 5700 mining@edisongroup.com Andrew Keen +44 (0)20 3077 5700 mining@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn www.linkedin.com/company/edison-group-/ Twitter www.twitter.com/Edison_Inv_Res YouTube www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
