Friday, May 20, 2016
Niobium Down Under
The post “Niobium: Grey By Any Other Name” introduced yet another shiny, grey metal and an aspiring new producer in the U.S., NioCorp Developments Ltd. (NB: CVE or NIOBF: OTC/PK). With applications for niobium expanding, especially for aerospace and defense, and no domestic niobium supply currently available, NioCorp sees an opportunity. The company is trying to develop a new resource in Nebraska and hopes to grab a significant piece of the $500 million annual market for niobium. NIOBF could provide investors with an interesting pure play on this key element for metal alloys.
True enough there are niobium producers already in production. CBMM and AngloAmerican Plc (AAL: London or NGLOY: OTC/PK) operate resources in Brazil, making them the two largest suppliers of niobium. The third major producer is the Magris Resources’ Niobec subsidiary in Canada. CBMM and Magris are privately held. AngloAmerican is a large, diversified mining company with a stock value driven primarily by its fortunes in iron ore, coal and copper. Alkane Resources (ALK: ASX or ANLKY: OTC/QX) is yet another option.
Alkane is developing a large mineral resource in New South Wales called the Dubbo Zirconia Project. Besides zirconia, the company expects to retrieve niobium, tantalum and several other rare earth elements. The plan is to process one million tons of ore annually. The resource is large with an expected life of 70 years. The company has received approval from several regulatory groups, the most recent of which was approval of the construction period by the New South Wales Environmental Protection Agency.
The company has also made progress with plans for processing its potential ore output. In April 2016, a letter of intent was received from Vietnam Rare Earth JSC to process the rare earth concentrate that is recovered from the Dubbo project.
Alkane is trying to raise AUS$16 million (US$22.2 million) in new capital for its Dubbo project. In April 2016, the company started an offering to current shareholders of one share at AUS$0.20 (US$0.28) for every five shares outstanding. The new shares present an interesting option on Alkane’s plans - far more interesting than the current price for the stock.
ANLKY is quoted by the U.S. Over-the-Counter service at US$1.50 per share. With average volume near 150 shares per day, accumulating a meaningful position would take some time. Even with the added currency exchange and brokerage costs, the Australian Stock Exchange quotation has more appeal - AUS$0.20 (US$1.08) and volumes near 600,000 shares per day.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.