Niocorp’s Elk Creek Project in southeastern Nebraska, whose primary product is niobium, fits the bill perfectly. Niobum is used to enhance the strength of the steel and Elk Creek is home to the highest-grade primary niobium resource in North America, one of the largest in the world, and the only such resource under development in the United States.
Elk Creek is located on private land with extensive infrastructure and has the strong support of the community and state and local government support. And you can be sure it will have the greatest champion in President Trump. The US currently imports all of its niobium, a metal so important it has been deemed critical and strategic to Western defense needs.
Elk Creek will be a 2,700 tonne-per-day producer, with a pre-tax NPV of US$3.07 billion, after-tax NPV of US$2.3 billion, and average pre-tax cash flow of US$438 million per year. Elk Creek’s initial capital cost will be in the range of US$979 million, which is the primary reason why there is such a large disconnect between the current market cap and NPV of projected cash flow. Nevertheless, 75% of Elk Creek’s niobium has already been contracted for sale, 50% to $13 billion European multinational conglomerate ThyssenKrupp, and 25% to $2.4 billion steel and metal manufacturer, Commercial Metals Company.
This means Niocorp has very bankable off-takes to secure financing come time. Furthermore, because of ThyssenKrupp’s involvement, Elk Creek Project has received, in principle, eligibility approval for a loan guarantee from the German Government’s Untied Loan Program.
Niocorp has been making incredible headway, with the feasibility study almost complete. With the Trump Engine securely behind them, we reiterate a target price of target price of C$1.95, or a 130% gain from the current price, using a blend of cash flow and multiples.
We believe Elk Creek will be fast-tracked by the new administration, and will be one of the most important projects in the United States during Trump’s tenure. The upside in this stock is incredible. |