NioCorp Developments (TSE: NB) (NIOBF) evaluates, acquires, explores, and develops mineral deposits. It focuses on a superalloy materials project in Southeast Nebraska for the production of niobium, scandium, and titanium.
The company recently announced that it closed a private placement in which it raised C$4.8 million in gross proceeds. Each unit was priced at C$0.96 and consisted of one common share and one common share warrant. The warrants will give investors the ability to acquire additional shares at a price of C$1.10 before the expiration date of July 1, 2024.
There appears to have been strong investor demand, as the units were priced at a premium to the five-day volume-weighted average price of the shares. In addition, the company was initially only planning to raise C$4.35 million. The money raised by the company will be used to continue advancing its Elk Creek Project and for general corporate purposes.
However, it’s important for investors to remember that equity financings are dilutive to shareholders. An investor’s stake in a company shrinks every time new shares are issued. Indeed, with 269.04 million shares outstanding, the 4,981,035 units issued equate to a dilution of about 1.86% if no warrants are exercised. If all warrants are exercised, then the dilution would double to 3.72%.
Investor Sentiment
The sentiment among TipRanks investors is currently positive. Out of the 539,843 portfolios tracked by TipRanks, less than 0.1% hold NB.
However, in the last 30 days, 4.2% of those holding the stock increased their positions. As a result, the stock’s sentiment is much higher than the sector average, as demonstrated in the following image:
Analyst Recommendation
NioCorp has a Moderate Buy consensus rating based on one Buy assigned in the past three months. The average NioCorp price target of C$1.40 implies 56% upside potential.
Final Thoughts
Although investors have been diluted by the private placement, they appear to remain positive about the stock’s future prospects. Indeed, even the analyst who covers the stock sees significant upside potential for the stock.
