Sector NewswireTM Sector: Mining, Precious Metals, Industrial :
News Release - July 10, 2020 5:15 PM ET Editorial Release
NioBay Metals Releases Updated Mineral Resource Estimate at James Bay Niobium, Now Advancing to PEA
NEW YORK, NY, July 10, 2020 /Sector Newswire/ -- NioBay Metals Inc. (TSX-V: NBY) (US Listing: MDNNF) yesterday reported an updated Mineral Resource estimate for its James Bay Niobium Project, located in Northern Ontario. The MRE shows an increase in tonnage of 33.6% and 13.8%, respectively, for the Inferred and Indicated Resources categories.
The Mineral Resource at NioBay's James
Bay Nb deposit now sits at:
"To put matters in perspective for those that do not understand Niobium; the value of the rock at NioBay's James Bay deposit is close to $200/t, that translates to an equivalent* resource of ~3.1 g Au/t with ~6,300,000 ounces of Gold." *NON 43-101 / Niobium valued at US$40/kg, $1,600/oz Au
The July 9, 2020 news release regarding the Mineral Resource Estimate from the Company may be viewed in full at http://www.globenewswire.com/news-release/2020/07/09/2060106/0/en/NioBay-Reports-a-Significant-Increase-in-Resources-at-James-Bay-Niobium.html online. Excerpt copy may be viewed below.
Additionally, NioBay is the subject of a Mining MarketWatch Journal review. Full copy of the Mining Journal Review may be viewed at https://miningmarketwatch.net/nby.htm online. Excerpt copy may also be viewed further below.
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Excerpt of NioBay's July 9, 2020 upgraded Mineral Resource Estimate news announcement:
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Excerpt copy of recent Mining Journal review:
NioBay Metals Inc. is focused on advancing its flagship 100%-owned James Bay Niobium project in Northern Ontario Canada. Niobium (Nb; atomic number 41) is a critical element, primarily used as an important additive/strengthener in the high-value steel making process. There are only three niobium producers globally (2 in Brazil, 1 in Canada), all privately held and highly profitable. NioBay Metals Inc. has an impressive niobium resource deposit at James Bay with earmarks of it becoming the fourth producer in the world. The Company is expected to have a Preliminary Economic Assessment (PEA) in hand this Q4-2020 demonstrating robust economics. Following the PEA look for the Company to derisk the project quickly; upgrade its resource to Measured in order to be suitable to conduct a Feasibility Study. Astute investors would do well to familiarize themselves and take a position now in NBY.V as once derisked NioBay will have a target on its back, it stands an excellent chance of being taken private, like the other 'cash-cow' producers in the niobium oligopoly space.
Using a Model of Implied Capital (MOIC -- what an interested party would pay once derisked) discounted to where the company sits today, we see the share price of NBY.V poised for upside revaluation, trading significantly higher in the near-term, as more people appreciate the developing opportunity. In-fact, we can confirm that John Kaiser, of Kaiser Research, has recently issued commentary on NBY.V to his paid readership; we can confirm from statements at venues such as the Metals Forum that a 5x to 10x rise in share price is in order, the NEV of NioBay is $1.4B, and look for NBY.V to trade at C$1.25 to C$2.17 per share as the reality of what NioBay possesses is better understood.
Figure 1. (above) - Drill core from NioBay's Winter-2020 drill program at the James Bay Niobium Project. Note the size of the pyrochlore, which is the mineral that contains the Niobium -- that is one of the reasons NioBay's recovery is exceptionally high (near-80%, which is superior to existing producers). NioBay has a very unique deposit in terms of the prevalence of copious amounts of coarse pyrochlore crystals.
NioBay's winter-2020 drill program has yielded quality results, confirming the continuation of a high-grade zone heading north, it also provided insight that will lead to improved economics in the approach for mining the deposit. The upcoming PEA is expected to consider various mine plans, including a hybrid scenario of an open pit south of the creek and underground for mineralization to the north. The deposit seems to be dipping to the north, so it will be more efficient to progress underground anyways.
The math on the James Bay Niobium Project is shaping up to be quite impressive: In the PEA, we believe NioBay will demonstrate costs on par with the highly profitable Niobec Mine (which has been in operation for ~43 years now and currently produces ~7,000 Nb tpa, representing ~8% of global supply), costs in the range of US$18 to $20/kg of Nb. With NioBay targeting an operation capable of producing 6,500 Nb tpa (6,500,000 kg Nb/annum, which is expected to represent ~5% global market share, seeing the NioBay processing ~2.2Mt per year of rock), and with the sale price of Nb stable at ~US$40+/kg of Nb (stable even in rough times, since the price of niobium is not set by 'supply and demand', price is set by the largest producer of the oligopoly; CBMM which currently supplies ~80% of global supply), NioBay will be in a position to hit a serious home-run for shareholders, demonstrating an operation capable of throwing off positive cash-flow of US$100M to $150M per annum for at least a couple decades.
NioBay will be targeting its production output based on market share, it does not want to be more than 5% of the market so as to not disturb the market. NioBay will get its foot in the door without creating an issue with CBMM (the largest producer).
Currently NBY.V has ~52.2 million shares outstanding, and has a market cap of ~C$28 million. In total there are roughly 1,700 shareholders in NBY.V. ~40% of the shares are owned by insiders, with Osisko Gold Royalties owning a 20% stake in the Company. In the last private placement Osisko chipped-in to maintain its 20% share. NioBay Metals Inc. shares head office space with Osisko Gold Royalties in Montreal.
Below we look closer at the compelling opportunity NioBay Metals Inc. presents for investors.
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Understanding the importance of Niobium
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Niobium - Global Markets
Supply - only 3 producers
Figure 3a. (above) - The 3 suppliers that supply the global demand for Niobium. The size of the market for steel grade is approaching ~100,000t of Nb/annum, its close to a $4B market, not large, however what is unique is there are only 3 suppliers.
Figure 3b. (above) - Sales by Suppliers in 2019
Commentary on CBMM's global dominance and how it benefits the other two producers (and NioBay when it becomes a producer): CBMM in Brazil is a giant in proportion to the other two producers. CBMM controls the market (+80% supply of the global market) by virtue of its size, capabilities, and gargantuan +500Mt of established resource (and more if they need it). The price of niobium is whatever they say. The cost of niobium is negligible to steel producers in terms of the amount used and benefits derived, CBMM has for decades maintained a cordial relationship with industry and set a fair price for niobium, one which affords CBMM a handsome return, and by default the two other smaller producers have reaped rich margins too. CBMM could squash the other two producers in the market, but due to the unique market dynamics and its sheer dominance, CBMM would be foolish; if CBMM were to drop the price by just say US$5/kg., at 100,000 Nb tpa (the level NioBay forecasts CBMM sales to be at in 2026 when James Bay could potentially come online), it would cost CBMM half a billion $, something they are simply not going to do -- CBMM's loss would dwarf the benefit derived. Even in hard economic times (e.g. after the 2008 financial crisis), CBMM had no problem adjusting to market conditions as the swing supplier. In fact, the current President & CEO of NioBay Metals Inc., Claude Dufresne, was the person in charge of niobium sales for the Niobec Mine in Canada during the 2008 financial crisis, he was able to sell 100% of its product in 2008, 2009, and 2010 at stable prices. Even though demand globally dropped 40% at one point, the Canadian producer sold all throughout. CBMM didn't chase the market for sales volume, they just sold less and waited for the market to come back. CBMM has the ability to supply 100% of the world demand, they have been in this position for decades while the other two players nibbled at the crumbs. CBMM is so huge and profitable they will expand as the world demand requires. In reality, how it works is the purchasing managers want to secure supply from Canada first and use CBMM as the swing supplier, the purchasing manager does not want to use just one supplier and wants to support the little guy -- and that is the way it works. Having a 4th producer is not going to impact the big producer -- NioBay Metals' strategy is to be the smallest producer and no more than 5% of global demand.
Niobium Demand in 2009 vs 2019
Figure 4. (above) - Demand in 2009 vs 2019
Niobium Demand and Price
Figure 5. (above) - World Consumption over the last 11 years and price. Note that the price remains stable, between US$34 and US$42/kg for over 11 years, even when there is weakness in demand. CBMM knows it can't force demand with lower prices, so it rides out the waves as the swing supplier.
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NioBay Metal's James Bay Niobium Project, Northern Ontario - 100% owned
The property comprises
the Crown Mining Lease (# CLM11) and covers a total of 2,530
hectares. Location
Figure 7. (above) - Location maps. The
James Bay Niobium Project is located in Northern Ontario, ~40 km
south of a small town called Moosonee, ~100 km north of Detour Gold,
~400 km east of the old Victor Mine (a DeBeers Diamond Mine that
recently shut down). NioBay's James Bay Niobium Project is located
outside of the watershed (significantly less challenging to develop
from an environmental standpoint). The project is well situated near
infrastructure and a stable workforce.
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History
In June 2016, NioBay Metals Inc. acquired 100% of the property from Barrick Gold Inc., James Bay Columbium Ltd., and Goldcorp Inc.
When NioBay approached the previous owner, NioBay was the one that had to educate them as to the significance of what had previously been discovered on the property in the past, and essentially forgotten with time;
Discovered in 1966
Lakefield Research carried out metallurgical tests
Feasibility study was completed by Bechtel Canada in 1969.
NioBay Metals Inc. has access to all technical data and drill cores.
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The following is a conceptual underground mine plan of the deposit from a 2019 scoping study
Figure 8. Scoping study image from 2019. A PEA is expected to be delivered in Q4-2020 with various mining scenarios, including a lower capex and lower opex hybrid open pit (south of the creek) with underground (dipping to the north). Capex to begin an operation under an underground scenario would be in the neighborhood of CDN$375 million - $400 million, less if open-pit scenario is pursued. Once the project is derisked to Feasibility, there are lots of entities that would be interested in the steady cash flow this operation would generate -- we believe private capital will take this to its full potential.
3D Image of deposit
Figure 9. (above) -- 3D View James Bay Niobium Deposit
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2020 Winter Drill Program
Surface View of Deposit
Figure 10. (above) -- Surface view of NioBay's James Bay Niobium deposit. The three black lines seen in the image (from left/south, to right/north) are sections 200, 400, and 600, which were subjects of the winter 2020 drill program. You can see the deposit starts to split, and the split seems to get wider as you move north, now if you compare the sections to their respective cross sections below, the gap between between mineralization and the surface is visible and progresses as the sections moves north -- the important thing is the deposit is richly mineralized further below and also much wider on sections 400 and 600. It is believed to be the case that if NioBay continues to drill on section 800 and 1,000 it could well be the case the mineralization continues -- this will increase the resource. Currently NioBay is just at ~330m depth. Also visible in the surface view image (above) is the outline of the creek that cuts through the deposit -- as stated previously, the upcoming PEA is expected to have a hybrid mining scenario that sees an open pit on the shallower south and heading underground before reaching the creek.
Section 200 - Winter 2020 drill program
Figure 11. (above) - Section 200 winter drill program.
Section 400 - Winter 2020 drill program
Figure 12. (above) - Section 400 winter drill program 2020.
Section 600 - Winter drill program 2020
Figure 13. (above) - Section 600 winter drill program 2020. If allowed to put gold equivalent, that 246m intersect of 0.57% Nb2O5 would equate to ~3.5 g/t Gold.
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A look at how a NioBay's James Bay compares to the Niobec
Figure 14. (above) - Comparison of Niobec (in blue) to NioBay's James Bay (in red). What really makes the big difference is the superior recovery rate for NioBay of 78% to 80%, compare that to Niobec which is ~65%. In the 60s NioBay's James Bay deposit had a bulk sample run at Lakefield and achieved 78% to 80% recovery rate with extremely good quality concentrate. Although NioBay's grade is ~10% lower -- the formula is always GRADE X RECOVERY making NioBay's ratio ~10% higher than Niobec's mine. Plus consider NioBay will may pursue an open pit initially, and it will be near surface. NioBay is more remote than Niobec, and will have to bring its concentrate off to the nearby town of Moosonee then off to the train, thus additional cost there. Overall it appears NioBay should have about the same costs as Niobec. Niobec's costs are US$18 - $20 per kg Nb.
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NioBay Metals' Strategy
NioBay Metals' strategy is to be the smallest producer and no more than 5% of global demand. This strategy allows Niobay to comfortably exist with the other two smaller producers and remain insignificant to CBMM.
Figure 15. (above) - Forecast chart of CBMM sales growth line (seen in blue) relative to NioBay coming online in 2026 (seen in green) -- NioBay registers as a minor non threatening blip on the radar.
Figure 16. (above) - CBMM (in blue) relative to NioBay's James Bay Niobium Project at 5% of market share (in green). By having a strategy of representing 5% of the global market, over time NioBay can step-up its production output as global sales volume rises, and still remain at 5%.
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Full copy of the Mining Journal Review may be viewed at https://miningmarketwatch.net/nby.htm online.
This release may contain forward-looking statements regarding future events that involve risk and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual events or results. Articles, excerpts, commentary and reviews herein are for information purposes and are not solicitations to buy or sell any of the securities mentioned. Readers are referred to the terms of use, disclaimer and disclosure located at the above referenced URL(s).
SOURCE: Sector Newswire editorial
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