NioCorp has signed a commercial sales agreement with Traxys North America. Under the agreement, Traxys is obligated to purchase 12 tonnes of Sc over the course of Elk Creek’s first 10 years of production. Additionally, 75% of the Elk Creek Project’s primary product, Ferroniobium (FeNb), is under contract over the first 10 years of production: thyssenkrupp (OTC: TYEKF), 50%; Commercial Metals Company, 25%
Fahy Capital Management is not an investor in NioCorp. We may, however, initiate a position in thyssenkrupp this quarter.
NorZinc is at the high end of the Absolute Cost Structure curve and the low end of the Net Profit Margin curve. In other words, Prairie Creek is a Project that will require substantially higher Silver, Lead and Zinc prices in order to be viable.
In a raging silver bull market, we think shares could appreciate by as much as 382%, which assumes shares will trade at approximately 5x future net annual cash flows.
Fahy Capital Management is not an investor in NorZinc.
Belo Sun Mining reports that a three judge panel decision by the Court of Appeals of the Federal Justice in Brazil has ruled unanimously that SEMAS remains the competent authority for the environmental permitting of the Volta Grande Gold Project.
The ruling confirms that the Construction and Environmental Licenses granted by SEMAS for the Volta Grande Gold Project remain valid, subject to the completion of the Indigenous Study. [LINK]
$VNNHF : Belo Sun Mining — Independent Economic Analysis
We boosted our stake in Denison Mines this morning by 25% following an updated analysis in which the company achieved a maximum in-house Composite Rating of 5. Denison Mines excelled in the following categories: Net Profit Margin (Phoenix), Absolute Cost Structure (Phoenix), True Value Discount, and Market Cap Growth. Our Target, however, has been lowered by 20%, as our updated calculations implied a True All-In Cost (TAIC) that was higher than expected for Phoenix, while Net Profit Margin and Absolute Cost Structure for Gryphon were average.
MTQ Scores & Composite Ratings — Study Group Comparison
For stocks under study, Absolute Cost Structures (ACS) above 70% are associated with rapid falloffs in MTQ Scores and low MTQ Scores are predictors of low Net Profit Margins.
We will be monitoring stock price performance of a basket* of stocks over the next 24 months in order to establish whether or not there is a statistically significant correlation between price performance and MTQ Scores.
If we are able to ascertain that MTQ Scores serve as predictors of price performance, those scores will become cornerstones of our stock selection process.
*Fahy Capital Management does not necessarily own shares of the stocks under study.
The Fenix Project is on the high end of the TAIC curve. It will need higher gold prices to be viable. Above $1,700, Net Profit Margin becomes sustainable. It is important to note that social investment costs will be much higher than envisioned by Atacama Pacific and that will have a further deleterious impact on margins, as has the 35% increase in Chilean Corporate Taxes since 2014.
Note: A high score (> 0.5) implies a greater-than-even chance of an enterprise exhibiting both a high Net Profit Margin and low Absolute Cost Structure at the Long-Term Price Case at which it was evaluated.
Our Hypothesis: High MTQ Scores are a reliable determinant of Future Market Cap Growth
The MTQ Score is the 4th pillar of our updated valuation methodology. It will be published in future analyses alongside TAIC, ACS and True Value.