Major niobium discovery ticks boxes for outperforming fundie

The majority of Niobium’s demand comes from the construction sector, where small amounts of the critical mineral are used to strengthen alloys – predominately stainless steel. This makes it a staple in architecturally magnificent developments, such as the beams and girders in high-rise buildings, and the structural supports of bridges – while often being a feature of the steel support configurations of concrete slabs. It also finds its way into high strength, wear-resistant railway tracks, heavy machinery, pressure vessels, oil & gas pipelines and rigs, jet engines and rockets.

It’s been a game changer for the construction industry. To put it into context, the construction of the Eiffel Tower took around 7,300 tonnes of wrought iron – but it could now be built with only 2,000 tonnes of niobium enhanced steel.

In recent times, the commodity is being touted as a battery metal, due to its fantastic super-conductibility, high melting point and attractive anti-corrosion properties that makes it a durable soft metal.

It’s major prospects within the battery sector largely rest on its ability to drastically reduce the time it takes to fully charge a battery, which could potentially be done in 10 minutes. Toshiba’s Niobium Titanium Oxide battery can provide a mileage of up to 320km and is able to charge to  90% capacity after six minutes. It can fast charge to 80% capacity after 25,000 cycles (maximum charge to complete drain).

Ferroniobium, at a purity of 65% niobium, is the primary form of metal that is traded and  currently sells for over US$40,000/tonne.

It’s difficult to find niobium exposure in general, including on the ASX, which is part of the reason why one of Datt Capital’s favourite stock picks, WA1 Resources Ltd (ASX: WA1), got so much notice when they pulled a drill core out of the ground that was choc full of it. The headline assay was 54m at 0.62% Nb2O5, 0.18% TREO, 3.85% P2O5, from 162m, within an interval of 142m at 0.31% Nb2O5, 0.17% TREO, 3.94% P2O5 from 74m. The hole finished with 2m at 1.22% Nb2O5, 0.22% TREO, 5.73% P2O5, with 6 drill core assays yet to be released to the market – including one from surface.

WA1 garnered significant attention during their major niobium discovery in October 2022 – an event that progressively catapulted their market cap from $7 million to over $300 million. This awareness has sustained, as it currently trades over $5/share. Datt took their position in WA1’s $2/share capital raise – after the discovery was significantly de-risked but still with plenty of upside.

Discussing the commodity, Emmanuel stated “Niobium actually has a very unique supply structure, with almost 90% of global supply coming from a single Brazilian mine. It produces at quite a similar grade to where we think WA1’s discovery will eventually get to, in terms of defining a resource.”

The assays kept flowing, with another monster intercept being released a couple weeks later that revealed 136m at 0.40% Nb2O5, 0.17% TREO, 3.90% P2O5 from 28m, including 28m at 0.92% Nb2O5, 0.30% TREO, 5.58% P2O5 from 28m and 4m at 2.88% Nb2O5, 0.68% TREO2 , 10.70% P2O5 from 32m.

Emanuel recognises niobium’s important place in the energy transition, describing it as critical to the world’s renewable energy endeavours. Indeed, its applications in lithium-ion batteries reinforce this notion, with its significant reduction in fire risk and rapid charging capabilities forming an attractive proposition for the sector.

Datt uses a combination of both top down and bottom up strategies, while strictly investing on the ASX. The fund conducts all of its research in house, rather than relying on broker reports or external parties. They have analysed over 1,600 companies since inception, with just a small fraction of the deals making it through to the portfolio. It’s important to note that WA1’s discovery is contained in a carbonatite mineral system, which is the same source as the world’s three operating niobium mines.

WA1 fit Datt’s criteria, with Emanuel describing it: “It is still a reasonably speculative exposure, but we consider it to be a high quality one at that”. The stock did increase over 200% from their initial entry.

Click here to view more videos from Emanuel Datt’s The Insider: Meet the Fund Manager session.

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