Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
NioCorp Developments (TSX: NB) saw its shares rally on Monday following the announcement that it has received interest from the Export-Import Bank of the United States (EXIM) for a potential financing of up to $800 million for the company’s proposed Elk Creek critical minerals project in southeastern Nebraska.
The funding, should it be granted, will be provided through EXIM’s “Make More In America” initiative. As noted on EXIM’s website, in February 2021, US President Biden signed Executive Order 14017 directing an all-of-government approach to assessing vulnerabilities in – and strengthening the resilience of – the country’s critical supply chains.
NioCorp is currently developing what would be North America’s only advanced materials manufacturing facility for producing niobium, scandium and titanium, all considered critical minerals by the US government.
NioCorp’s facility will be co-located with an underground mine that features the highest-grade primary niobium resource in North America and one of the largest scandium resources in the world. A June 2022 feasibility study estimated that it will produce around 7,300 tonnes of ferroniobium as the primary product plus 102 tonnes of scandium trioxide and 12,000 tonnes of titanium dioxide annually over its 38-year operating life.
In a letter expressing its interest in funding the Elk Creek project costs, projected to be $1.1 billion in the feasibility report, EXIM stated: “Based on the preliminary information submitted on expected exports and jobs supported, EXIM may be able to consider potential financing of up to $800 million of the project’s costs.”
The Bank then noted that the project finance letter of interest represents “only a preliminary step” in the formal EXIM application process, and the communication “does not represent a financing commitment” and “is not an explicit indication of the financial or commercial viability of a transaction.”
NioCorp said it expects to submit an application to EXIM to begin the first phase of the underwriting process as soon as possible. In the letter addressed to the company, EXIM stated that “upon receipt of NioCorp’s application for financing, EXIM will conduct all requisite due diligence necessary to determine if a final commitment may be issued for this transaction.”
The process from submission of a Phase I application to a final commitment of financing by EXIM, if any, is expected to take approximately six to nine months, and is subject to a number of risks and uncertainties, EXIM said.
“We are very pleased with this Letter of Interest from the Export-Import Bank of the United States for NioCorp’s Elk Creek critical minerals project, and with the fact that we may qualify for as much as $800 million in debt financing from EXIM,” Mark Smith, chairman and CEO of NioCorp, said in a news release.
NioCorp’s stock closed Monday’s session 7% higher at $1.37 a share. The company’s market value is C$386.9 million ($284m).
