NioCorp CEO provides cash to company

Drill rigs at NioCorp Developments' Elk Creek niobium project in southeastern Nebraska. Credit: NioCorp Developments.Drill rigs at NioCorp Developments' Elk Creek niobium project in southeastern Nebraska in 2015. Credit: NioCorp Developments.

For the second time in less than two months, Mark Smith of NioCorp Developments (TSX: NB; US-OTC: NIOBF) has dug into his own pockets for loans to the company he leads.

The president, CEO and executive chairman loaned NioCorp US$1.5 million on June 17, and followed up with a US$2-million non-revolving credit facility on July 1.

The funds will help NioCorp refine its Elk Creek niobium project in southeastern Nebraska, and stay on track to complete a feasibility study.

“I want to make sure that we don’t slow down any of the studies we’re undertaking to move this project forward,” Smith explains of his personal loans to the company. “In the last year we’ve been going at a feverish pace, and that is all about having confidence in a wonderful orebody and metallurgy that is getting better and better understood every day. Our goal is to develop this project, and we don’t want to go slow, we want to get this technical work done so that we can do the financing and start construction, and I didn’t want any financial issues to get in the way of that speed, so I’m making sure the company has what it needs financially as we start the financing process.”

Smith — who is also NioCorp’s largest shareholder, with an 11.8% stake in the company — says he expects to move Elk Creek into the construction phase of mine development in 2016, once a feasibility study is completed.

Elk Creek is the only primary niobium deposit in the U.S. and the highest-grade undeveloped niobium deposit in North America, according to the company, which points out in its literature that the U.S. imports 100% of its niobium needs. Elk Creek also contains titanium and scandium. 

Indicated resources at Elk Creek measure 80.5 million tonnes grading 0.7% niobium pentoxide (Nb2O5), 2.7% titanium dioxide (TiO2) and 72 parts per million scandium trioxide (Sc), while the inferred resource stands at 99.6 million tonnes grading 0.6% Nb2O5, 2.3% TiO2 and 63 grams scandium per tonne. The resource is based on a 0.3% Nb2O5 cut-off grade.

Late last year, NioCorp entered into an off-take agreement with Germany’s ThyssenKrupp Metallurgical Products GmbH, which will purchase about 50% of Elk Creek’s planned ferroniobium production.

In addition to an underground mine at Elk Creek, there will be a crushing, grinding and mineral processing operation to produce a niobium concentrate. The concentrate would be fed to a hydrometallurgical operation that would produce a niobium precipitate as well as titanium dioxide and scandium trioxide co-products. A final pyrometallurgical step would convert the niobium precipitate to ferroniobium using an aluminothermic reduction process.

In April, an updated preliminary economic assessment outlined a 3,700-tonne per day production rate over a 36-year operating life with an average grade of 0.8% Nb2O5.The study estimated a production rate of 7,500 tonnes of ferroniobium a year, 23,000 tonnes of titanium dioxide and 12,800 tonnes of scandium trioxide.

Total upfront capital costs in the PEA add up to US$919 million, offering a US$606-million after-tax net present value and a 14.6% after-tax internal rate of return. The PEA used pricing of US$45 per kilogram for niobium, US$2.10 per kilogram for TiO2 and US$3,500 per kilogram for scandium.

Smith joined NioCorp as CEO and director in September 2013, and is also CEO of Largo Resources (TSXV: LG; US-OTC: LGORF), which is ramping up production at its Maracas Menchen vanadium mine in Brazil. He is a big believer in the importance of strategic metals. 

Vanadium and niobium are both used in steel production. Vanadium is used as an alloy to strengthen steel, while niobium is mainly used in the form of ferroniobium to produce high-strength, low alloy steel (HSLA), which is both light and strong, and used in automotive, structural and pipeline applications. 

NioCorp said in a presentation that HSLA steel is stronger than traditional steel, allowing for a lower steel volume to strength ratio and reducing its overall weight. Ferrovanadium, the closest possible substitute, needs double the amount for the same strength performance, but does not provide what ferroniobium offers, such as lighter, finer-grained steel and anti-corrosive properties. 

Scandium is used as an alloy with aluminum to increase strength without sacrificing corrosion resistance, as well as in solid oxide fuel cells, ceramics, electronics, lasers and lighting, while titanium in the form of an oxide is used mainly as a pigment in paint, plastic and paper. As a metal, titanium is used in aerospace applications, armour, chemical processing, marine hardware, medical implants, power generation and sporting goods. 

NioCorp acquired Elk Creek in May 2010. Elk Creek is a former Molycorp (NYSE: MCP) project, where Smith served as CEO until leaving the company in December 2012. (In late June, Molycorp, which owns the Mountain Pass rare earth mine in California, 96 km southwest of Las Vegas in the Mojave desert, filed for Chapter 11 bankruptcy protection under a US$1.7-billion debt load.)

In May, NioCorp announced that it had been named (and ranked second overall) in a list of the top-50 performing companies on the OTC Markets Group. The OTCQX Best 50 is the first-ever annual ranking of strong U.S. and international companies traded on the OTCQX marketplace.

Between January 2014 and January 2015, Niocorp’s share price soared 420%. 

In February 2015, the company was named to the 2015 TSX Venture 50, as the mining sector’s top-performing company on the exchange, and graduated to the Toronto Stock Exchange in March.

At press time the junior was trading at 77¢ per share within a 52-week range of 46¢ in October 2014, and $1.90 in March 2015.

“We’re committed to construction and production, and we don’t want anything to slow us down right now,” Smith says. “It’s full speed ahead.”

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