NioCorp Developments used to be called Quantum Rare Earth Development. The name change from March 2013 has not changed the nature of the company. They still plan to extract niobium in Nebraska. Rare earth elements are crucial to the defense and high-tech sectors. It is crucial that competent miners extract these elements for processing.
Their current CEO is the former CEO of Molycorp, the largest rare earths producer in the US. It is usually good for a junior resource company to have experienced mining executives, but they need to have the right kind of experience. Mineweb's reporting on this CEO's tenure at Molycorp mentions losses and legal problems. Bloomberg's reporting on that period at Molycorp highlights operational problems. Junior mining companies need a management team that won't bring drama. Capital markets dislike drama and reward competence.
NioCorp's minor projects in Saskatchewan and Australia are too immature to deserve an economic estimate. The main NioCorp project at Elk Creek has a 43-101 estimate of MII resources from April 2012. The grades aren't exactly stellar but the size of the deposit matters. The 43-101 report acknowledges the logistics trifecta that a mining project needs: roads, power, and water. I could not locate any photos of this property on NioCorp's website but the 43-101 report indicates the land is mostly flat with some rolling hills. Flat relief areas are good for the eventual construction of tailing areas. The report's bottom line recommends an exploration budget of CAD$4.89M to further refine an estimate of the niobium deposit.
I checked SEDAR for their latest financial report dated March 31, 2014. They had CAD$3.9M in cash on hand but lost about CAD$378K for the quarter. That gives them quite a few months from that date before they will have to close another capital raise. The problem I noted from that financial statement is that much of the expenses generating those losses are for administrative matters like management fees. NioCorp needs to spend towards exploration plan as recommended in the 43-101 report.
I remember first noticing this company back in 2011 when junior rare earth companies were riding the media's fascination with the Molycorp story. The share price of Quantum/NioCorp has always been in the pennies but crashed during September 2011 and did not really recover until April 2014. It is still a high-risk prospect. NioCorp must obviously raise more capital and dilute shareholders further just to prove its Elk Creek project is viable. Creating a functional mine is a consideration far in the future.
Full disclosure: No position in NioCorp at this time; no position in its predecessor tickers at any time in the past.
Editorial note: I made a minor correction on 09/15/14 to the number of months their cash reserve will last based on their burn rate; the cash will last longer than I had first anticipated. It does not materially change my assessment of this company's prospects.
Their current CEO is the former CEO of Molycorp, the largest rare earths producer in the US. It is usually good for a junior resource company to have experienced mining executives, but they need to have the right kind of experience. Mineweb's reporting on this CEO's tenure at Molycorp mentions losses and legal problems. Bloomberg's reporting on that period at Molycorp highlights operational problems. Junior mining companies need a management team that won't bring drama. Capital markets dislike drama and reward competence.
NioCorp's minor projects in Saskatchewan and Australia are too immature to deserve an economic estimate. The main NioCorp project at Elk Creek has a 43-101 estimate of MII resources from April 2012. The grades aren't exactly stellar but the size of the deposit matters. The 43-101 report acknowledges the logistics trifecta that a mining project needs: roads, power, and water. I could not locate any photos of this property on NioCorp's website but the 43-101 report indicates the land is mostly flat with some rolling hills. Flat relief areas are good for the eventual construction of tailing areas. The report's bottom line recommends an exploration budget of CAD$4.89M to further refine an estimate of the niobium deposit.
I checked SEDAR for their latest financial report dated March 31, 2014. They had CAD$3.9M in cash on hand but lost about CAD$378K for the quarter. That gives them quite a few months from that date before they will have to close another capital raise. The problem I noted from that financial statement is that much of the expenses generating those losses are for administrative matters like management fees. NioCorp needs to spend towards exploration plan as recommended in the 43-101 report.
I remember first noticing this company back in 2011 when junior rare earth companies were riding the media's fascination with the Molycorp story. The share price of Quantum/NioCorp has always been in the pennies but crashed during September 2011 and did not really recover until April 2014. It is still a high-risk prospect. NioCorp must obviously raise more capital and dilute shareholders further just to prove its Elk Creek project is viable. Creating a functional mine is a consideration far in the future.
Full disclosure: No position in NioCorp at this time; no position in its predecessor tickers at any time in the past.
Editorial note: I made a minor correction on 09/15/14 to the number of months their cash reserve will last based on their burn rate; the cash will last longer than I had first anticipated. It does not materially change my assessment of this company's prospects.
