Securities registered pursuant to section
12(g) of the Act: Common Shares, without par value
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files). Yes☒ No☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At December 31, 2018, the aggregate market
value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was C$124,189,209
based on the closing sale price as reported on the Toronto Stock Exchange. There were 234,293,107 common shares outstanding on September 3, 2019.
The registrant incorporates
by reference in Part III hereof portions of its definitive proxy statement on Schedule 14A for its 2019 annual general meeting
of shareholders.
The mineral resource
and reserve estimates in this Annual Report on Form 10-K (this “Form 10-K”) have been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. The terms
“mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are Canadian mining
terms as defined in accordance with NI 43-101 and the CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted
by the CIM Council, as amended. These definitions differ from the definitions in the SEC Industry Guide 7 under the Securities
Act. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report
reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary
environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms
“mineral resource,” “measured mineral resource,” “indicated mineral resource,” and “inferred
mineral resource” are defined in, and required to be disclosed by NI 43-101; however, these terms are not defined terms under
SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors
are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves.
“Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian securities laws and regulations, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part
of an inferred mineral resource exists or is economically or legally mineable. Certain disclosures of the results of mining operations
contained herein are permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report
mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade
without reference to unit measures.
Accordingly, information
contained in this Form 10-K and the documents incorporated by reference herein contain descriptions of our mineral deposits that
may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements
under the U.S. federal securities laws and the rules and regulations thereunder.
All dollar amounts
in this Form 10-K are expressed in U.S. dollars unless otherwise indicated. The Company’s accounts are maintained in U.S.
dollars and the Company’s financial statements are prepared in accordance with U.S. GAAP. Some of the Company’s material
agreements use Canadian dollars and the Company’s Common Shares, as traded on the TSX, are traded in Canadian dollars. As
used herein, “C$” represents Canadian dollars.
The following table
sets forth the rate of exchange for the Canadian dollar, expressed in U.S. dollars in effect at the end of the periods indicated,
the average of exchange rates in effect during such periods, and the high and low exchange rates during such periods based on the
daily rate of exchange as reported by the Bank of Canada for conversion of Canadian dollars into U.S. dollars.
PART I
Introduction
NioCorp was incorporated
under the laws of the Province of British Columbia under the Business Corporations Act (British Columbia) on February 27, 1987
under the name “IPC International Prospector Corp.” On May 22, 1991, we changed our name to “Kingston Resources
Ltd.” On June 29, 2001, we changed our name to “Butler Developments Corp.” On February 12, 2009, we changed our
name to “Butler Resource Corp.” On March 4, 2010, we changed our name to “Quantum Rare Earth Developments
Corp.” On March 4, 2013, we changed our name to “NioCorp Developments Ltd.”
NioCorp is a reporting
issuer in British Columbia, Alberta, Saskatchewan, Ontario, and New Brunswick. Our registered and records office is located at
595 Burrard Street, Suite 2600, Vancouver, British Columbia V7X 1L3 (ATTN: Blake, Cassels & Graydon LLP). Our principal executive
office is located at 7000 South Yosemite Street, Suite 115, Centennial, Colorado 80112.
Historical Development of the Business
During 2009 and 2010,
the Company commenced mineral exploration activities in the Elk Creek, Nebraska area, including negotiations with local landowners
for land access agreements. The acquisition of the Elk Creek Property was closed in December 2010 and involved the purchase of
all of the issued and outstanding common shares of 0859404 BC Ltd., a private British Columbia company, which in turn held 100%
of the issued and outstanding shares of ECRC and was signatory to the option agreements covering the Elk Creek Property area. A
new Canadian company, 0886338 BC Ltd. was formed to merge with 0859404 BC Ltd., and this merged entity was subsequently amalgamated
into 0896800.
The Company commenced
a field exploration program in 2011, which included verification of previous work which was completed on the Elk Creek Property
in the 1970s and 1980s, re-assaying of historic drill core, an airborne geophysical survey and the completion of five new diamond
drillholes. The available data for the Elk Creek Property was compiled into an updated NI 43-101 resource estimate for the Elk
Creek Project, which was issued in April 2012. Additional drilling and NI 43-101 technical reports, including resource updates
and PEAs, were completed and issued by the Company in 2014 and 2015.
During fiscal
years 2016 and 2017, the Company focused on feasibility study development and, on June 30, 2017, we announced the completion of
the 2017 Feasibility Study.
In connection
with a review by the OSC, on December 15, 2017, the Company filed a revised 2017 Feasibility Study. This revised study contained
no changes to any previously reported numbers or forecasted economic returns of the Elk Creek Project from those contained in the
originally filed 2017 Feasibility Study.
During fiscal
years 2018 and 2019, Company efforts were directed towards obtaining the financing necessary to advance the Elk Creek Project to
construction and operations, and we conducted permitting, engineering and other related activities for the advancement of the Elk
Creek Project. During fiscal year 2019, we received the new mine design based on detailed underground engineering conducted by
Nordmin. On April 16, 2019, we announced the results of the updated underground mine design and supporting infrastructure, the
results of an update to the Elk Creek Project’s mineral resource and mineral reserve estimates, and the 2019 Elk Creek Feasibility
Study based on the new mine design. A full NI 43-101 technical report, incorporating the results of the 2019 Elk Creek Feasibility
Study, was filed on SEDAR on May 29, 2019 with an effective date of April 16, 2019.
Information regarding
the 2019 Elk Creek Feasibility Study is discussed below under Item 2., “Properties.”
Emerging Growth
Company Status
We qualify as an “emerging
growth company” as defined in Section 101 of the JOBS Act as we do not have more than $1.07 billion in annual gross revenue
and did not have such amount as of June 30, 2019, this being the last day of our most recently completed fiscal year.
We may lose our status
as an emerging growth company on the last day of our fiscal year during which (i) our annual gross revenue exceeds $1.07 billion
or (ii) we issue more than $1.07 billion in non-convertible debt in a three-year period. We will lose our status as an emerging
growth company if at any time we are deemed to be a large accelerated filer, as defined in Rule 405 under the Exchange Act. We
will lose our status as an emerging growth company on the last day of our fiscal year following the fifth anniversary of the date
of our first sale of Common Shares pursuant to an effective registration statement.
As an emerging growth
company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised standards
pursuant to Section 107(b) of the JOBS Act. The election is irrevocable.
As an emerging growth
company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Exchange Act. Such
sections are described below:
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●
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Section 404(b) of the Sarbanes-Oxley Act of 2002 requires a public company’s auditor to attest
to, and report on, management’s assessment of its internal controls.
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Sections 14A(a) and (b) of the Exchange Act, implemented by Section 951
of the Dodd–Frank Act, require companies to hold shareholder advisory votes on executive compensation and golden parachute
compensation.
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As long as we qualify
as an emerging growth company, we will not be required to comply with the requirements of Section 404(b) of the Sarbanes-Oxley
Act of 2002 and Section 14A(a) and (b) of the Exchange Act.
Corporate Structure
The Company’s
business operations are conducted primarily through ECRC. The below table provides an overview of the Company’s current subsidiaries
and their activities.
Name
|
|
State/Province
of Formation
|
|
Ownership
|
|
Business
|
0896800 B.C. Ltd.
|
|
British Columbia
|
|
100%
by the Company
|
|
The only business of 0896800 is to hold the shares of ECRC
|
Elk Creek Resources Corp.
|
|
Nebraska
|
|
100%
by 0896800
|
|
The business of ECRC is the development of the Elk Creek Project
|
Business Operations
NioCorp is a mineral
exploration company engaged in the acquisition, exploration, and development of mineral properties. NioCorp, through ECRC, is developing
a superalloy materials project that, if and when developed, will produce niobium, scandium, and titanium products. Known as the
“Elk Creek Project,” it is located near Elk Creek, Nebraska, in the southeast portion of the state.
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Niobium is used to produce various superalloys that are extensively used in high performance aircraft
and jet turbines. It also is used in HSLA steel, a stronger steel used in automotive, bridges, structural systems, buildings, pipelines,
and other applications that generally enables those applications to be stronger and lighter in mass. This “lightweighting”
benefit often results in environmental benefits, including reduced fuel consumption and material usage, which can result in fewer
air emissions.
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●
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Scandium can be combined with aluminum to make super-high-performance alloys with increased strength
and improved corrosion resistance. Scandium also is a critical component of advanced solid oxide fuel cells, an environmentally
preferred technology for high-reliability, distributed electricity generation.
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●
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Titanium is a component of various superalloys and other applications that are used for aerospace
applications, weapons systems, protective armor, medical implants and many others. It also is used in pigments for paper, paint,
and plastics.
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Our primary business
strategy is to advance our Elk Creek Project to commercial production. We are focused on obtaining additional funds to carry out
our near-term planned work programs associated with securing the project financing necessary to complete mine development and construction
of the Elk Creek Project.
Competitive Business Conditions
There is aggressive
competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We
compete for the opportunity to participate in promising exploration projects with other entities. In addition, we compete with
others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment,
and hire qualified mineral exploration personnel. We may compete with other mining companies for mining claims in regions adjacent
to our existing claims, or in other parts of the world should we dedicate resources to doing so in the future. These companies
may be better capitalized than us and we may have difficulty in expanding our holdings through the staking or acquisition of additional
mining claims or other mineral tenures.
In competing for qualified
mineral exploration personnel, we may be required to pay compensation or benefits relatively higher than those paid in the past,
and the availability of qualified personnel may be limited in high-demand mining periods, such as was the case in past years when
the price of gold and other metals was higher than it is now.
Specialized Skill and Knowledge
The Company’s
ability to continue to progress the Elk Creek Project will depend on its ability to attract and retain individuals with (among
other skills) financial, administrative, engineering, geological and mining skills, and knowledge of our industry and targeted
markets. Much of the necessary specialized skills and knowledge required by the Company as a mineral exploration company are available
from the Company’s current management team and Board of Directors. The Company retains outside consultants if additional
specialized skills and knowledge are required.
Cycles
The mining business
is subject to mineral price cycles. The marketability of minerals and mineral concentrates is also affected by worldwide economic
cycles. At the present time, weak demand for some minerals in many countries is suppressing commodity prices, although it is difficult
to assess how long such trends may continue. Fluctuations in supply and demand in various regions throughout the world are common.
The following table
sets forth commodity prices for the last five calendar years for the ferroniobium, scandium trioxide and titanium dioxide products
the Company anticipates extracting from its Elk Creek Project. These pricing surveys may not be representative of the pricing that
the Company anticipates achieving for its products once commercial production begins from its Elk Creek Project.
Year
|
|
Ferroniobium
U.S. Import Price
($/kg-Nb)(1)
|
|
|
Scandium Trioxide
U.S. Price
($/kg)(2)
|
|
|
Titanium Dioxide
U.S. Price
($/kg)(3)
|
|
2018
|
|
$
|
38
|
|
|
$
|
4,600
|
|
|
$
|
0.99
|
|
2017
|
|
|
37
|
|
|
|
4,600
|
|
|
|
0.74
|
|
2016
|
|
|
41
|
|
|
|
4,600
|
|
|
|
0.74
|
|
2015
|
|
|
43
|
|
|
|
5,100
|
|
|
|
0.84
|
|
2014
|
|
|
47
|
|
|
|
5,000
|
|
|
|
0.95
|
|
|
(1)
|
Source: Argus Metal Prices, average annual ending price,
2018. Ferro-niobium 65% Niobium content, FOB U.S. warehouse.
|
|
(2)
|
Source: USGS Mineral Commodity Summary, 2019. scandium
trioxide , 99.99% purity, 5-kilogram lot size.
|
|
(3)
|
Source: USGS Mineral Commodity Summary, 2019. Rutile mineral
concentrate, bulk, minimum 95% Titanium Dioxide, f.o.b. Australia.
|
As NioCorp’s
mining and exploration business is in the exploration stage, and NioCorp has not yet generated any revenue from the operation of
the Elk Creek Project, it is not currently significantly affected by changes in commodity demand and prices, except to the extent
that same impact the availability of capital for mineral exploration and development projects. As it does not carry on production
activities, NioCorp’s ability to fund ongoing exploration is affected by the availability of financing, which is, in turn,
affected by the strength of the economy and other general economic factors.
Economic Dependence
Other than land and
mineral right option agreements and the Offtake Agreements, NioCorp’s business is not substantially dependent on any contract
such as a contract to sell the major part of its product or services or to purchase the major part of its requirements for goods,
services or its raw materials, or any franchise or license or other agreement to use a patent, formula, trade secret, process or
trade name upon which its business depends.
Government Regulation
The exploration and
development of a mining prospect is subject to regulation by a number of federal and state government authorities. These include
the EPA and the USACE as well as the various state and local environmental protection agencies. The regulations address many environmental
issues relating to air, soil, and water contamination, and apply to many mining related activities including exploration, mine
construction, mineral extraction, ore milling, water use, waste disposal, and use of toxic substances. In addition, we are subject
to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals,
and taxation. Many of the regulations require permits or licenses to be obtained, the absence of which and/or inability to obtain
such permits or licenses will adversely affect our ability to conduct our exploration, development, and operation activities. The
failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation
of a permit or license or loss of a prospect.
General
While none of the
lands on which the Elk Creek Project is proposed to be built are owned by the U.S. Government, mining rights are governed by the
General Mining Law of 1872, as amended, which allows for the location of mining claims on certain federal lands upon the discovery
of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties and development and
operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location and maintenance and
mining operations on federal lands are generally administered by the Bureau of Land Management. Additional federal laws, governing
mine safety and health, also apply. State laws also require various permits and approvals before exploration, development or production
operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with financial assurance
provided in the amount of projected reclamation costs. The financial assurance is used to ensure that proper reclamation takes
place and will not be released until that time. Local jurisdictions may also impose permitting requirements, such as conditional
use permits or zoning approvals.
Environmental Regulation
Our mineral projects
are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually
changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects
in the U.S. requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental
and related laws and regulations requires us to obtain permits issued by regulatory agencies and to file various reports and keep
records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to
a public review process during which opposition to our proposed operations may be encountered. We are currently operating under
various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Our policy is to
conduct business in a way that safeguards public health and the environment. We believe that our operations are conducted in material
compliance with applicable laws and regulations.
Changes to current
local, state, or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures
and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might
be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
Environmental Regulation - U.S. Federal Laws
The Comprehensive
Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict,
joint, and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for
the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring clean-up
actions and/or demands for reimbursement for government-incurred clean-up costs or natural resource damages. It is also not uncommon
for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous
substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”), and comparable
state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties
for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA, and comparable state statutes can impose liability
for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such
sites have been completed.
The Clean Air Act,
as amended (“CAA”), restricts the emission of air pollutants from many sources, including mining and processing activities.
Any future mining operations by the Company may produce air emissions, including fugitive dust and other air pollutants from stationary
equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment, which are subject
to review, monitoring and/or control requirements under the CAA and state air quality laws. New facilities may be required to obtain
permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance.
In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order
to comply with the rules.
The National Environmental
Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making
processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities
and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare
either a detailed statement known as an Environmental Impact Statement (“EIS”) or a less detailed statement known as
an Environmental Assessment (“EA”). The EPA, other federal agencies, and any interested third parties can review and
comment on the scope of the EIS or EA and the adequacy of any findings set forth in the draft and final EIS or EA. This process
can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts,
which can in turn impact the economic feasibility of a proposed project.
The Clean Water Act
(“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters
of the U.S. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued
by the EPA or an analogous state agency. The CWA regulates storm water from mining facilities and requires a storm water discharge
permit or Stormwater Pollution Prevention Plan for certain activities. Such a permit requires the regulated facility to monitor
and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of
dredged and fill material in wetlands and other waters of the U.S. unless authorized by an appropriately issued permit. The CWA
and comparable state statutes provide for civil, criminal, and administrative penalties for unauthorized discharges of pollutants,
and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by
the release and for natural resource damages resulting from the release.
The Safe Drinking
Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate
the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others
the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling
a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining-related activities may
result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SDWA and state laws. In addition,
third-party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages,
and bodily injury.
Environmental Regulation − Nebraska
Nebraska has a well-developed
set of environmental regulations and responsible agencies but does not have clearly defined regulations with respect to permitting
mines. As such, review of the project and the issuance of permits by Nebraska agencies and regulatory bodies could potentially
impact the total time to market for our Elk Creek Project. Other Nebraska regulations govern operating and design standards for
the construction and operation of any source of air emissions and landfill operations. Any changes to these laws and regulations
could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating
conditions, technical criteria, fees, or surety requirements. The most stringent permit related to air quality is known as a Prevention
of Significant Deterioration (“PSD”) Permit, which requires the applicant to demonstrate compliance with National Ambient
Air Quality Standards (“NAAQS”) and Best Available Control Technology (“BACT”) for the control of air emissions.
If the facility exceeds the potential to emit thresholds for such a permit and is thus subject to PSD requirements, permanent construction
at the project site may not begin until the responsible agency issues the PSD Permit. For facilities in Nebraska with potential
emissions below PSD thresholds, a state air construction permit is needed. The state permit also requires a demonstration of compliance
with NAAQS but does not require a BACT demonstration and further allows construction at a subject facility to proceed ahead of
permit issuance through an established variance process.
Employees
As of September 3, 2019, we employed nine (9) full-time employees and one (1) part-time employee.
Forward-Looking Statements
Certain statements
contained in this Form 10-K (including information incorporated by reference herein) are “forward-looking statements”
within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are intended to be covered
by the safe harbor provided for under these sections. All statements, other than statements of historical facts, included herein
concerning, among other things, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition
opportunities, our financial position, business strategy and other plans and objectives for future operations, future exploration
activities, future mineral resource estimates, and future joint venture arrangements are forward-looking statements. These forward-looking
statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,”
“project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,”
“will,” “continue,” “potential,” “should,” “could,” and similar terms
and phrases.
Any statements that
express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions,
or future events or performance (often, but not always, using words or phrases such as “expects” or “does not
expect,” “is expected,” “anticipates” or “does not anticipate,” “plans,”
“estimates” or “intends,” or stating that certain actions, events or results “may,” “could,”
“would,” “might,” or “will” be taken, occur, or be achieved) are not statements of historical
fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties,
and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements,
including, without limitation:
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risks
related to our ability to operate as a going concern;
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risks
related to our requirement of significant additional capital;
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●
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risks
related to our limited operating history;
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risks
related to changes in economic valuations of the Elk Creek Project, such as net present value calculations, changes or disruptions
in the securities markets;
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risks
related to our history of losses;
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risks
related to cost increases for our exploration and, if warranted, development projects;
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risks
related to feasibility study results;
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risks
related to mineral exploration and production activities;
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risks
related to our lack of mineral production from our properties;
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risks
related to the results of our metallurgical testing;
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risks
related to the price volatility of commodities;
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risks
related to estimates of mineral resources and reserves;
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risks
related to changes in mineral resource and reserve estimates;
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risks
related to differences in U.S. and Canadian reserve and resource reporting;
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risks
related to our exploration activities being unsuccessful;
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risks
related to our ability to obtain permits and licenses for production;
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risks
related to government and environmental regulations that may increase our costs of doing business or restrict our operations;
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risks
related to proposed legislation that may significantly affect the mining industry;
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risks
related to land reclamation requirements;
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risks
related to competition in the mining industry;
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risks
related to the difficulties of handling the disposal of mine water at our Elk Creek Project;
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risks
related to equipment and supply shortages;
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risks
related to current and future joint ventures and partnerships;
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risks
related to our ability to attract qualified management;
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risks
related to the ability to enforce judgment against certain of our Directors;
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risks
related to claims on the title to our properties;
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risks
related to surface access on our properties;
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risks
related to potential future litigation;
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risks
related to our lack of insurance covering all our operations;
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risks
related to the need for resilience in the face of potential impacts from climate change;
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risks
related to a disruption in, or failure of, our information technology (“IT”) systems, including those related to cybersecurity;
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risks
related to covenants contained in agreements with our secured creditors that may affect our assets;
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risks
related to the extent to which our level of indebtedness may impair our ability to obtain additional financing;
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risks
related to our status as a “passive foreign investment company” under the U.S. Internal Revenue Code of 1986, as amended;
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risks
related to our Common Shares, including price volatility, lack of dividend payments, dilution and penny stock rules; and
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risks
related to our status as an “emerging growth company” and the impact of related reduced reporting requirements on
our ability to attract investors.
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This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described
further under the Item 1A., – “Risk Factors,” below. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated,
or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the
date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances
after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.
Available Information
We maintain a website
at http://www.niocorp.com. Our Common Shares are currently registered under Section 12(g) of the Exchange Act, and we are currently
required to file reports on Forms 10-K, 10-Q or 8-K. Our Annual Report on Form 10-K (which includes our audited financial statements),
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a)
and 15(d) of the Exchange Act, are available on our website, free of charge, as soon as reasonably practicable after we electronically
file such reports with, or furnish those reports to, the SEC The SEC maintains an internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC (http://www.sec.gov). We
do not intend to send security holders a printed version of our Annual Report as it will be available online.
We maintain a Code
of Business Conduct and Ethics for Directors, Officers and Employees (“Code of Conduct”). A copy of our Code of Conduct
may be found on our website in the “About Us” section under the main title “Corporate Governance.” Our
Code of Conduct contains information regarding whistleblower procedures.
We are not including
the information contained on or accessible through our website or the SEC’s website as a part of, or incorporating it by
reference into, this Form 10-K.
Our business activities
are subject to significant risks, including those described below. You should carefully consider these risks. If any of the described
risks actually occurs, our business, financial position and results of operations could be materially adversely affected. Such
risks are not the only ones we face and additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also affect our business. This report contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of
factors, including the risks described below. See “Forward-Looking Statements” under Item 1., “Business.”
Risks Related to Our Business
Our ability to operate as a going concern is in
doubt.
The
audit opinion and notes that accompany our financial statements for the year ended June 30, 2019, disclose that substantial
doubt exists as to our ability to continue as a going concern. The financial statements included in this Form 10-K have been
prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have
incurred losses since our inception.
We currently have
no historical recurring source of revenue and our ability to continue as a going concern is dependent on our ability to raise capital
to fund our future exploration and working capital requirements or our ability to profitably execute our business plan. Our plans
for the long-term return to and continuation as a going concern include financing our future operations through sales of our Common
Shares and/or debt and the potential profitable exploitation of our Elk Creek Project. Additionally, capital markets and general
economic conditions in the U.S. and Canada may impose significant obstacles to raising the required funds. These factors raise
substantial doubt about our ability to continue as a going concern.
We will require significant additional capital to
fund our business plan.
We will be required
to expend significant funds to develop our existing properties and to identify and acquire additional properties to diversify our
property portfolio. We anticipate that we will be required to make substantial capital expenditures for the development of our
Elk Creek Project.
As of June 30,
2019, the Company had cash of $0.4 million and a working capital deficit of $4.8 million, compared to cash of $0.1 million and
working capital deficit of $3.4 million on June 30, 2018.
As of June 30,
2019, the Company’s current planned operational needs were approximately $9.0 million through the end of fiscal 2020. From
the date of this Form 10-K, we anticipate that we may need to raise approximately $8.5 million - $9.5 million to continue planned
operations for the next twelve months. This represents general overhead costs, expected costs relating to securing financing necessary
for the Elk Creek Project, satisfying outstanding accounts payable, and potential retirement of our short-term debt obligations.
Access to additional funds will be utilized to further advance the Elk Creek Project through substantive near-term milestones.
We are actively pursuing
such additional sources of debt and equity financing, and while we have been successful in doing so in the past, there can be no
assurance we will be able to do so in the future.
Our ability to obtain
necessary funding for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide
economy and the price of the products we intend to produce. We may not be successful in obtaining the required financing or, if
we can obtain such financing, such financing may not be on terms that are favorable to us.
Our inability
to access sufficient capital for our operations could have a material adverse effect on our financial condition, results of operations,
or prospects. Sales of substantial amounts of securities may have a highly dilutive effect on our ownership or share structure.
Sales of a large number of Common Shares in the public markets, or the potential for such sales, could decrease the trading price
of the Common Shares and could impair our ability to raise capital through future sales of Common Shares. We have not yet commenced
commercial production at any of our properties and, as such, have not generated positive cash flows to date and have no reasonable
prospects of doing so unless successful commercial production can be achieved at our Elk Creek Project. We expect to continue to
incur negative investing and operating cash flows until such time as we enter into successful commercial production. This will
require us to deploy our working capital to fund such negative cash flow and to seek additional sources of financing. There is
no assurance that any such financing sources will be available or sufficient to meet our requirements. There is no assurance that
we will be able to continue to raise equity capital or to secure additional debt financing, or that we will not continue to incur
losses.
We have a limited operating history on which to base an
evaluation of our business and prospects.
Since our inception,
we have had no revenue from operations. We have no history of producing products from any of our properties. Our Elk Creek Project
is in the exploration stage. Advancing our Elk Creek Project from exploration into the development stage will require significant
capital and time, and successful commercial production from the Elk Creek Property will be subject to permitting and construction
of the mine, processing plants, roads, and other related works and infrastructure. As a result, we are subject to all of the risks
associated with developing and establishing new mining operations and business enterprises including:
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the timing and cost, which can be considerable, of
further exploration, preparing feasibility studies, permitting, engineering and construction of infrastructure, mining, and processing
facilities;
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the availability and costs of drilling equipment,
exploration personnel, skilled labor, and mining and processing equipment, if required;
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the availability and cost of appropriate smelting
and/or refining arrangements, if required;
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compliance with environmental and other governmental
approval and permit requirements;
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the availability of funds to finance exploration,
development, permitting, and construction activities, as warranted;
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potential opposition from non-governmental organizations,
local groups, or local residents that may delay or prevent development activities;
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potential increases in exploration, construction,
and operating costs due to changes in the cost of fuel, power, materials, and supplies; and
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potential shortages of mining, mineral processing,
hydrometallurgical, pyrometallurgical, construction, and other facilities-related supplies.
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The costs, timing,
and complexities of exploration, development, engineering and construction activities may be increased by the location of our properties
and competition from other mineral exploration and mining companies. It is common in exploration programs to experience unexpected
problems and delays during drill programs and, if commenced, development, procurement, construction, and mine start-up. Accordingly,
our activities may not result in profitable mining operations and we may not succeed in establishing mining operations or profitably
producing products at any of our current or future properties, including our Elk Creek Project.
We have a history of losses and expect to continue
to incur losses in the future.
We have incurred losses
since inception, have negative cash flow from operating activities, and expect to continue to incur losses in the future. We incurred
the following losses from operations during each of the following periods ($000):
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$7,336 for the year ended June 30, 2019;
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$8,497 for the year ended June 30, 2018; and
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$14,630 for the year ended June 30, 2017.
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We expect to continue
to incur losses unless and until such time as one of our properties enters into commercial production and generates sufficient
revenues to fund continuing operations. We recognize that if we are unable to generate significant revenues from mining operations
and dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation,
we also expect to face the risks, uncertainties, expenses, and difficulties frequently encountered by companies at the start-up
stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and
our failure to do so could have a materially adverse effect on our financial condition.
Increased costs could affect our financial condition.
We anticipate that
costs at our projects that we may explore or develop will frequently be subject to variation from one year to the next due to a
number of factors, such as changing ore grade, metallurgical performance, and revisions to mine plans, if any, in response to the
physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel, steel, rubber,
chemicals, natural gas, fresh water, electricity, and government actions such as tariffs. Such commodities are at times subject
to volatile price movements, including increases that could make production at certain operations less profitable or not profitable
at all. A material increase in costs at any significant location could have a significant effect on our profitability.
Risks Related to Mining and Exploration
Feasibility study results are
based on assumptions that are subject to uncertainty and the estimates may not reflect actual capital and operating costs and potential
revenues from any potential future production.
Feasibility studies,
including the 2019 Elk Creek Feasibility Study, are used to determine the economic viability of a mineral deposit, including estimated
capital and operating costs. Generally accepted levels of confidence in the mining industry are plus or minus 15% for feasibility
studies. These levels reflect the levels of confidence that exist at the time the study is completed. While these studies are based
on the best information available to us for the level of study, we cannot be certain that actual costs will not significantly exceed
the estimated cost. While we incorporate what we believe is an appropriate contingency factor in cost estimates to account for
this uncertainty, there can be no assurance that the contingency factor is adequate.
The nature of mineral exploration and production
activities involves a high degree of risk and the possibility of uninsured losses.
Exploration for and
the production of minerals is highly speculative and involves much greater risk than many other businesses. Most exploration programs
do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality
to be profitably mined. Our operations are, and any future development or mining operations we may conduct will be, subject to
all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as, but not limited
to:
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economically insufficient mineralized material;
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fluctuation in production costs that make mining uneconomical;
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unanticipated variations in grade and other geologic problems;
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difficult surface or underground conditions;
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metallurgical, pyrometallurgical, and other processing problems;
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mechanical and equipment performance problems;
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failure of dams, stockpiles, wastewater transportation systems, or impoundments;
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unusual or unexpected rock formations; and
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personal injury, fire, flooding, cave-ins, and landslides.
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Any of these risks
can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs
and expenditures, potential revenues, and production dates. We currently have very limited insurance to guard against some of these
risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would
incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent
that are not recoverable, or that result in additional expenses.
We have no history of producing commercial products
from our current mineral properties and there can be no assurance that we will successfully establish mining operations or profitably
produce minerals.
We have no history
of producing commercial products from our current mineral properties. We do not produce commercial products and do not currently
generate operating earnings. While we seek to move our Elk Creek Project out of exploration and into development and production,
such efforts will be subject to all of the risks associated with establishing new mining operations and business enterprises, including:
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the timing and cost, which are considerable, of the construction of mining and processing facilities;
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the availability and costs of skilled labor and mining equipment;
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compliance with environmental and other governmental approval and permit requirements;
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the availability of funds to finance construction and development activities;
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potential opposition from non-governmental organizations, local groups, or local residents that
may delay or prevent development activities; and
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potential increases in construction and operating costs due to changes in the cost and availability
of labor, fuel, power, materials, equipment and supplies.
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It is common in new
mining operations to experience unexpected problems and delays during construction, development and mine start-up. In addition,
our management and workforce will need to be expanded, and sufficient housing and other support systems for our workforce will
have to be established. This could result in delays in the commencement of mineral production and increased costs of production.
Accordingly, we cannot assure you that our activities will result in profitable mining operations or that we will successfully
establish mining operations.
Results of metallurgical testing by us may not be
favorable to, or as expected by, us.
We have completed
significant bench, mini-pilot, and pilot scale metallurgical testing on material from the Elk Creek Project and will continue to
complete necessary metallurgical testing at the bench, mini-pilot, and pilot scale as the exploration and, if warranted, development
of the Elk Creek Project progresses. There can be no assurance that the results of such metallurgical testing will be favorable
to, or will be as expected by, us. Furthermore, there can be no certainty that metallurgical recoveries obtained in bench or pilot
scale tests will be achieved in either subsequent testing or commercial operations. The development of a complete metallurgical
process to produce saleable final products from the Elk Creek Project is a complex and resource-intensive undertaking that may
result in overall schedule delays and increased project costs for us.
Price volatility could have dramatic effects on
our results of operations and our ability to execute our business plan.
The price of commodities
varies on a daily basis. Niobium is a specialty metal and not a commonly traded commodity such as copper, zinc, gold, or iron ore.
The price of niobium tends to be set through a limited long-term offtake market, contracted between very few suppliers and purchasers.
The world’s largest supplier of niobium, Companhia Brasileira de Metalurgia e Mineração, supplies approximately
85% of the world’s niobium. Any attempt to suppress the price of niobium by such supplier, or an increase in production by
any supplier in excess of any increased demand, would have negative consequences on the price of niobium and, potentially, on our
value. The price of niobium may also be reduced by the discovery of new niobium deposits, which could not only increase the overall
supply of niobium (causing downward pressure on its price) but could draw new firms into the niobium industry that would compete
with us.
Scandium trioxide
is used in solid oxide fuel cells and has the potential to become a valuable alloy with aluminum in the aerospace and automotive
industries. Supply of scandium has been sporadic in recent years, and there are no primary scandium mines in the world at present.
Production primarily occurs as a by-product from rare earth, titanium, and to a lesser extent from aluminum plants, primarily in
Russia and China. Our management believes the Elk Creek Project would significantly increase the world’s supply of scandium
trioxide. Although the Company’s market studies indicate a positive outlook for demand, there is no assurance at present
that the Company could sell all of its production. In addition, the sale of scandium represents a significant portion of the Elk
Creek Project revenue; achieving the revenue projected in the Company’s studies is subject to market growth in scandium,
which is a developing market with a risk of oversupply and/or undersupply disrupting pricing.
Titanium metal is
used in various superalloys and other applications for aerospace applications, armor, and medical implants, and in oxide form is
a key component of pigments used in paper, paint, and plastics. The Elk Creek Project would produce a small quantity of titanium
dioxide relative to other producers. As a small producer, we would be subject to fluctuations in the price of titanium dioxide
that would result from normal variations in supply and demand for this commodity.
Estimates of mineralized material and resources
are subject to evaluation uncertainties that could result in project failure.
Our exploration and
future mining operations, if any, are and would be faced with risks associated with being able to accurately predict the quantity
and quality of mineralized material and resources/reserves within the earth using statistical sampling techniques. Estimates of
any mineralized material or resource/reserve on any of our properties would be made using samples obtained from appropriately placed
trenches, test pits, underground workings, and intelligently designed drilling. There is an inherent variability of assays between
check and duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. Additionally,
there also may be unknown geologic details that have not been identified or correctly appreciated at the current level of accumulated
knowledge about our properties. This could result in uncertainties that cannot be reasonably eliminated from the process of estimating
mineralized material and resources/reserves. If these estimates were to prove to be unreliable, we could implement an exploitation
plan that may not lead to commercially viable operations in the future.
Any material changes in mineral resource/reserve
estimates and grades of mineralization will affect the economic viability of placing a property into production and a property’s
return on capital.
Except for the 2019
Elk Creek Feasibility Study, we have not completed feasibility studies on any of our properties and have not commenced actual production.
As a result, mineralization resource/reserve estimates may require adjustments or downward revisions. In addition, the grade of
ore ultimately mined, if any, may differ from that indicated by our feasibility studies and drill results. Minerals recovered in
small scale tests may not be duplicated in large scale tests under on-site conditions or at commercial production scale.
The resource/reserve
estimates included in the 2019 Elk Creek Feasibility Study and contained in this Form 10-K have been determined based on assumed
future prices, cut-off grades, and operating costs that may prove to be inaccurate. Extended declines in market prices for our
products may render portions of our mineralization and resource/reserve estimates uneconomic and may result in reduced reported
mineralization or may adversely affect any commercial viability determinations we may reach. Any material reductions in estimates
of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our Common Share price
and on the value of our properties.
There are differences in U.S. and Canadian practices
for reporting reserves and resources.
Our reserve and resource
estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as we generally
report reserves and resources in accordance with Canadian requirements. These requirements are different from the practices used
to report reserve and resource estimates in reports and other materials filed with the SEC. It is Canadian practice to report measured,
indicated, and inferred mineral resources, which are generally not permitted in disclosure filed with the SEC by U.S. issuers.
In the U.S., mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time the reserve determination is made. Further, “inferred
mineral resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or
economically. Readers of this Form 10-K are cautioned not to assume that all or any part of measured or indicated mineral resources
will ever be converted into reserves recognized under the SEC’s Industry Guide 7 reporting requirements.
Accordingly, information
concerning descriptions of mineralization, reserves and resources contained in this Form 10-K, or in the documents incorporated
herein by reference, may not be comparable to information made public by other U.S. companies subject to the reporting and disclosure
requirements of the SEC.
Our exploration activities on our properties may
not be commercially successful, which could lead us to abandon our plans to develop our properties and our investments in exploration.
Our long-term success
depends on our ability to identify mineral deposits on our existing properties and other properties we may acquire, if any, that
we can then develop into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many
risks, and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain
suitable or adequate machinery, equipment, or labor. The success of commodity exploration is determined in part by the following
factors:
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the identification of potential mineralization based on surficial analysis;
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availability of government-granted exploration permits;
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the quality of our management and our geological and technical expertise; and
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the capital available for exploration and development work.
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Substantial expenditures
are required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract
metal, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Whether a mineral
deposit will be commercially viable depends on a number of factors that include, without limitation, the particular attributes
of the deposit, such as size, grade, and proximity to infrastructure; commodity prices, which can fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing
and exporting of minerals, and environmental protection. We may invest significant capital and resources in exploration activities
and may abandon such investments if we are unable to identify commercially exploitable mineral reserves. The decision to abandon
a project may have an adverse effect on the market value of our securities and the ability to raise future financing.
We may not be able to obtain or renew all required
permits and licenses to place any of our properties into production.
Our current and future
operations, including development activities and commencement of production, if warranted, on the Elk Creek Project, require permits
from governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development,
mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety, and other matters. Companies engaged in mineral property exploration and the development or operation
of mines and related facilities generally experience increased costs, as well as delays in production and other schedules as a
result of the need to comply with applicable laws, regulations, and permits. We cannot predict if all permits that we may require
for continued exploration, development, or construction of mining facilities and conduct of mining operations will be obtainable
or renewable on reasonable terms, if at all. Costs related to applying for and obtaining permits and licenses may be prohibitive
and could delay our planned exploration and development activities. Failure to comply with applicable laws, regulations, and permitting
requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations
to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment,
or remedial actions.
Facilities associated
with the Elk Creek Project, such as the mine, surface plant, tailings facilities, stockpiles and supporting infrastructure, are
likely to either temporarily or permanently impact waterbodies and wetlands that are subject to regulation by the USACE as Waters
of the United States (“WOUS”). We believe that we have obtained the necessary USACE permits to construct the project,
but changes to the design or layout of the facility may trigger the USACE to require us to obtain and maintain additional permits
for the Elk Creek Project. The duration of this permitting exercise is dictated by the USACE, and would need to be completed before
facilities that would impact WOUS could be constructed. We may experience delays or additional costs in relation to obtaining the
necessary permits and these delays and additional costs could negatively affect the economics of the Elk Creek Project and our
results of operations.
Parties engaged in
mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have
civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations,
and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material
adverse impact on our operations and cause increases in capital expenditures or production costs or reduction in levels of production
at producing properties or require abandonment or delays in development of new mining properties.
We are subject to significant governmental regulations
that affect our operations and costs of conducting our business.
Our current and future
operations, including exploration and, if warranted, development of the Elk Creek Project, are and will be governed by laws and
regulations, including:
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laws and regulations governing mineral concession acquisition, prospecting, development, mining,
and production;
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laws and regulations related to exports, taxes, and fees;
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labor standards and regulations related to occupational health and mine safety; and
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environmental standards and regulations related to waste disposal, toxic substances, land use reclamation,
and environmental protection.
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Companies engaged
in exploration activities often experience increased costs and delays in production and other schedules as a result of the need
to comply with applicable laws, regulations, and permits. Failure to comply with applicable laws, regulations, and permits may
result in enforcement actions, including the forfeiture of mineral claims or other mineral tenures, orders issued by regulatory
or judicial authorities requiring operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment, or costly remedial actions. We may be required to compensate those suffering loss or damage
by reason of our mineral exploration activities and may have civil or criminal fines or penalties imposed for violations of such
laws, regulations, and permits.
Existing and possible
future laws, regulations, and permits governing operations and activities of exploration companies, or more stringent implementation,
could have a material adverse impact on our business and cause increases in capital expenditures or require abandonment or delays
in exploration. Our Elk Creek Project is located in Nebraska, and Nebraska does not have clearly defined regulations with respect
to permitting mines which could potentially impact the total time to market for the project.
Our activities are subject to environmental laws
and regulations that may increase our costs of doing business and restrict our operations.
All phases of our
operations are subject to environmental regulation in the jurisdictions in which we operate. Environmental legislation is evolving
in a manner that may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors,
and employees. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances,
protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Compliance
with environmental laws and regulations, and future changes in these laws and regulations, may require significant capital outlays
and may cause material changes or delays in our operations and future activities. It is possible that future changes in these laws
or regulations could have a significant adverse impact on our properties or some portion of our business, causing us to re-evaluate
those activities at that time.
Regulations and pending legislation governing issues
involving climate change could result in increased operating costs, which could have a material adverse effect on our business.
A number of governments
or governmental bodies have introduced or are contemplating legislative and/or regulatory changes in response to concerns about
the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant
costs on us, on our future venture partners, if any, and on our suppliers, including costs related to increased energy requirements,
capital equipment, environmental monitoring and reporting, and other costs necessary to comply with such regulations. Any adopted
future climate change regulations could also negatively impact our ability to compete with companies situated in areas not subject
to such limitations. Given the emotion, political significance, and uncertainty surrounding the impact of climate change and how
it should be dealt with, we cannot predict how legislation and regulation will affect our financial condition, operating performance,
and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global
marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation. The potential
physical impacts of climate change on our operations are highly uncertain and could be particular to the geographic circumstances
in areas in which we operate and may include changes in rainfall and storm patterns and intensities, water shortages, changing
sea levels, and changing temperatures. These impacts may adversely impact the cost, production, and financial performance of our
operations.
Land reclamation requirements for our properties
may be burdensome and expensive.
Although variable
depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies
(as well as companies with mining operations) in order to minimize long-term effects of land disturbance.
Reclamation may include
requirements to:
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control dispersion of potentially deleterious effluents;
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treat ground and surface water to achieve water quality standards; and
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reasonably re-establish pre-disturbance landforms and vegetation.
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In order to carry
out reclamation obligations imposed on us in connection with our potential development activities, we must allocate financial resources
that might otherwise be spent on further exploration and development programs. We plan to set up a provision for our reclamation
obligations on our properties, as appropriate, but this provision may not be adequate. If we are required to carry out unanticipated
reclamation work, our financial position could be adversely affected.
We face intense competition in the mining industry.
The mining industry
is intensely competitive in all of its phases. As a result of this competition, some of which is with large established mining
companies with substantial capabilities and with greater financial and technical resources than ours, we may be unable to acquire
additional properties, if any, or financing on terms we consider acceptable. We also compete with other mining companies in the
recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for qualified
employees, our exploration and development programs may be slowed down or suspended. We compete with other companies that produce
our planned commercial products for capital. If we are unable to raise sufficient capital, our exploration and development programs
may be jeopardized or we may not be able to acquire, develop, or operate additional mining projects.
Difficulties in handling the disposal of waste waters
at our Elk Creek Project could negatively affect our potential production and economics at the project.
The Company has conducted
three field investigations and two major technical studies into the hydrogeology of the Elk Creek carbonatite, which is the geologic
formation which hosts the mineralized material that would be extracted by the Company’s mining operations. The Company expects
to encounter significant amounts of water in the carbonatite, which will need to be pumped out of the formation to facilitate a
mining operation. Water quality analyses have demonstrated that this water will have elevated temperature and salt content when
compared to other water resources in the area. While the Company has developed plans to treat water produced from the mine for
use in its operations, there is no guarantee that the permits needed for the treatment of the water or the disposal of the resultant
waste products will be issued by the state of Nebraska, nor is there any guarantee that such permits will be issued in a timely
fashion.
A shortage of equipment and supplies could adversely
affect our ability to operate our business.
We are dependent on
various supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such
supplies, equipment, and parts could have a material adverse effect on our ability to carry out our operations and could therefore
limit, or increase the cost of, production.
Joint ventures and other partnerships, including
offtake arrangements, may expose us to risks.
We have entered into
three offtake agreements related to our Elk Creek Project as well as agreements related to the supply of natural gas and electricity
to the project site, and may enter into joint ventures or partnership arrangements, including additional offtake agreements, with
other parties in relation to the exploration, development, and production of certain of the properties in which we have an interest.
Any failure of such other companies to meet their obligations to us or to third parties, or any disputes with respect to the parties’
respective rights and obligations, or price fluctuations and termination provisions related to such agreements, could have a material
adverse effect on us, the development and production at our properties, including the Elk Creek Project, the joint ventures, if
any, or their properties and therefore could have a material adverse effect on our results of operations, financial performance,
cash flows and the price of the Common Shares.
We may experience difficulty attracting and retaining
qualified management to meet the needs of our anticipated growth, and the failure to manage our growth effectively could have a
material adverse effect on our business and financial condition.
We are dependent on
a relatively small number of key employees, including our Chief Executive Officer. The loss of any officer could have an adverse
effect on us. We have no life insurance on any individual, and we may be unable to hire a suitable replacement for them on favorable
terms, should that become necessary.
It may be difficult to enforce judgments or bring
actions outside the U.S. against us and certain of our directors.
We are a Canadian
corporation and, as a result, it may be difficult or impossible for an investor to do the following:
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enforce in courts outside the U.S. judgments obtained in U.S. courts based upon the civil liability
provisions of U.S. federal securities laws against these persons and the Company; or
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bring in courts outside the U.S. an original action to enforce liabilities based upon U.S. federal
securities laws against these persons and the Company.
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Title to our properties may be subject to other
claims that could affect our property rights and claims.
There are risks that
title to our properties may be challenged or impugned. Our current Elk Creek Project is located in Nebraska and may be subject
to prior unrecorded agreements or transfers or native land claims, and title may be affected by undetected defects. Our current
leases give us an option to purchase the property in order to construct the Elk Creek Project, but the rights of the current owners
to sell the property subject to these options may be subject to prior unrecorded or unknown claims to title. We have investigated
our rights to explore and exploit the Elk Creek Project resource and, to the best of our knowledge, our rights in relation to lands
covering the Elk Creek Project resource are in good standing. However, there may be valid challenges to the title of our properties
that, if successful, could impair development and/or operations. Further, our current land agreements are of fixed duration, and
expire between December 2019 and September 2021.
We may be unable to secure surface access or purchase
required surface rights.
Although the Company
acquires the rights to some or all of the minerals in the ground subject to the mineral tenures that it acquires, or has a right
to acquire, in some cases it may not thereby acquire any rights to, or ownership of, the surface to the areas covered by such mineral
tenures. In such cases, applicable mining laws usually provide for rights of access to the surface for the purpose of carrying
on mining activities; however, the enforcement of such rights through the courts can be costly and time consuming. It is necessary
to negotiate surface access or to purchase the surface rights if long-term access is required. There can be no guarantee that,
despite having the right at law to access the surface and carry on mining activities, we will be able to negotiate satisfactory
agreements with any such existing landowners/occupiers for such access or purchase of such surface rights, and therefore we may
be unable to carry out planned mining activities. In addition, in circumstances where such access is denied, or no agreement can
be reached, we may need to rely on the assistance of local officials or the courts in such jurisdiction the outcomes of which cannot
be predicted with any certainty. Our inability to secure surface access or purchase required surface rights could materially and
adversely affect our timing, cost, or overall ability to develop any mineral deposits we may locate.
Our properties and operations may be subject to
litigation or other claims.
From time to time
our properties or operations may be subject to disputes that may result in litigation or other legal claims. We may be required
to assert or defend against these claims, which will divert resources and management time from operations. The costs of these claims
or adverse filings may have a material effect on our business and results of operations.
We do not currently insure against all the risks
and hazards of mineral exploration, development, and mining operations.
Exploration, development,
and mining operations involve various hazards, including environmental hazards, industrial accidents, metallurgical and other processing
problems, unusual or unexpected rock formations, structural cave-ins or slides, flooding, fires, and periodic interruptions due
to inclement or hazardous weather conditions. These risks could result in damage to or destruction of mineral properties, facilities,
or other property, personal injury, environmental damage, delays in operations, increased cost of operations, monetary losses,
and possible legal liability. We may not be able to obtain insurance to cover these risks at economically feasible premiums or
at all. We may elect not to insure where premium costs are disproportionate to our perception of the relevant risks. The payment
of such insurance premiums and of such liabilities would reduce the funds available for exploration and production activities.
A disruption in, or failure of our third-party
service providers’ IT systems, including those related to cybersecurity, could adversely affect our business operations and
financial performance.
We rely on the
accuracy, capacity and security of our third-party service providers’ IT systems for the operations of many of our business
processes and to comply with regulatory, legal and tax requirements. We are dependent on third parties to provide important IT
services relating to, among other things, operational technology at our facilities, human resources, electronic communications
and certain finance functions. Despite the security measures that our third-party service providers have implemented, including
those related to cybersecurity, their systems could be breached or damaged by computer viruses, natural or man-made incidents or
disasters, or unauthorized physical or electronic access. Though our third-party service providers have controls in place, we cannot
provide assurance that a cyber-attack will not occur. Furthermore, we may have little or no oversight with respect to security
measures employed by third-party service providers, which may ultimately prove to be ineffective at countering threats. Failures
of our our third-party service providers’ IT systems, whether caused maliciously or inadvertently, may result in the disruption
of our business processes, or in the unauthorized release of sensitive, confidential or otherwise protected information or result
in the corruption of data, which could adversely affect our business operations and financial performance. In addition, we may
be required to incur significant costs to protect against and, if required, remediate the damage caused by such disruptions or
system failures in the future.
Risk Related to Our Debt Securities
In the event of certain breaches with our Secured
Creditors, our assets may be affected.
We have, pursuant
to the Lind Agreement and in connection with the Smith Credit Agreement and Original Smith Loan (collectively, the “Current
Smith Loans”), granted security interests to Lind and Mark Smith (together, the “Secured Creditors”) over all
of the assets of the Company in consideration of the debt facilities provided by each Secured Creditor. In the event of certain
breaches of the Lind Agreement, and the terms of the Current Smith Loans, one or both of the Secured Creditors may be entitled
to execute on their security interests and seize or retain our assets, including the shares of 0896800 and ECRC, as well as any
assets of either subsidiary. Certain rights of each of the Secured Creditors to execute on their security interests are subject
to notice and cure provisions in respect of default by us; however, any such exercise could materially damage our value and our
ability to retain or progress development of the Elk Creek Project.
The level of our indebtedness from time to time
could impair our ability to obtain additional financing.
From time to time
we may enter into transactions to acquire assets or the shares of other companies or to fund development of the Elk Creek Project.
These transactions may be financed partially or wholly with debt, which may increase our debt levels above industry standards.
Our articles of incorporation do not limit the amount of indebtedness that we may incur. Our indebtedness could impair our ability
to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise. Our
ability to service our debt obligations will depend on our future operations, which are subject to prevailing industry conditions
and other factors, many of which are beyond our control.
Risks Related to the Common Shares
We believe that we may be a “passive foreign
investment company” for the current taxable year and for one or more future taxable years, which may result in materially
adverse U.S. federal income tax consequences for U.S. investors.
We generally will
be designated as a “passive foreign investment company” under the meaning of Section 1297 of the U.S. Internal Revenue
Code of 1986, as amended (a “PFIC”) if, for a tax year, (a) 75% or more of our gross income for such year is “passive
income” (generally, dividends, interest, rents, royalties, and gains from the disposition of assets producing passive income)
or (b) at least 50% or more of the value of our assets produce, or are held for the production of, passive income, based on the
quarterly average of the fair market value of such assets. U.S. shareholders should be aware that we believe we were classified
as a PFIC during our tax years ended June 30, 2018 and 2017, and based on current business plans and financial expectations, believe
that we may be a PFIC for the current and one or more future taxable years. If we are a PFIC for any taxable year during a U.S.
shareholder’s holding period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition
of Common Shares or warrants, or any “excess distribution” received on its Common Shares, as ordinary income, and to
pay an interest charge on a portion of such gain or distribution. These consequences will be mitigated with respect to the Common
Shares, but not the warrants, if the shareholder makes a timely and effective “qualified electing fund” or “QEF”
election or a “mark-to-market” election with respect to the Common Shares. A U.S. shareholder who makes a QEF election
generally must include in income on a current basis for U.S. federal income tax purposes its share of our net capital gain and
ordinary earnings for any taxable year in which we are a PFIC, whether or not we distribute any amount to our shareholders. A U.S.
shareholder who makes a mark-to-market election generally must include as ordinary income each year the excess of the fair market
value of the Common Shares over the taxpayer’s basis therein. Each U.S. shareholder should consult its own tax advisors regarding
the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares and
warrants.
Our Common Share price may be volatile and as a
result you could lose all or part of your investment.
In addition to volatility
associated with equity securities in general, the value of your investment could decline due to the impact of any of the following
factors upon the market price of the Common Shares:
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Disappointing results from our exploration efforts;
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Decline in demand for Common Shares;
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Downward revisions in securities analysts’ estimates or changes in general market conditions;
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Technological innovations by competitors or in competing technologies;
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Investor perception of our industry or our prospects; and
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General economic trends.
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In the past fiscal
year, the trading price of our stock on the TSX has ranged from a low of C$0.52 to a high of C$0.72. In addition, stock markets
in general have experienced extreme price and volume fluctuations, and the market prices of securities have been highly volatile.
These fluctuations are often unrelated to operating performance and may adversely affect the market price of the Common Shares.
As a result, you may be unable to sell any Common Shares you acquire at a desired price.
We have never paid dividends on the Common Shares.
We have not paid dividends
on the Common Shares to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends
with respect to the Common Shares will depend on our ability to successfully develop one or more properties and generate earnings
from operations. Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends
on Common Shares will depend upon our earnings, our then-existing financial requirements, and other factors, and will be at the
discretion of our Board of Directors.
Investors’ interests in the Company will be
diluted and investors may suffer dilution in their net book value per Common Share if we issue additional employee/Director/consultant
options or if we sell additional Common Shares to finance our operations.
In order to further
expand the Company’s operations and meet our objectives, any additional growth and/or expanded exploration activity will
likely need to be financed through sale of and issuance of additional Common Shares, including, but not limited to, raising funds
to explore the Elk Creek Project. Furthermore, to finance any acquisition activity, should that activity be properly approved,
and depending on the outcome of our exploration programs, we likely will also need to issue additional Common Shares to finance
future acquisitions, growth, and/or additional exploration programs of any or all of our projects or to acquire additional properties.
We will also in the future grant to some or all of our Directors, officers, and key employees and/or consultants, options to purchase
Common Shares as non-cash incentives. The issuance of any equity securities could, and the issuance of any additional Common Shares
will, cause our existing shareholders to experience dilution of their ownership interests.
If we issue additional
Common Shares or decide to enter into joint ventures with other parties in order to raise financing through the sale of equity
securities, investors’ interests in the Company will be diluted and investors may suffer dilution in their net book value
per Common Share depending on the price at which such securities are sold.
We are subject to the continued listing criteria
of the TSX and our failure to satisfy these criteria may result in delisting of the Common Shares.
The Common Shares
are currently listed on the TSX. In order to maintain the listing, we must maintain certain financial and share distribution targets,
including maintaining a minimum number of public shareholders. In addition to objective standards, the TSX may delist the securities
of any issuer if, in the TSX’s opinion, the issuer’s financial condition and/or operating results appear unsatisfactory;
if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to
make continued listing on the TSX inadvisable; if the issuer sells or disposes of principal operating assets or ceases to be an
operating company; if an issuer fails to comply with the listing requirements of the TSX; or if any other event occurs or any condition
exists which makes continued listing on the TSX, in the opinion of the TSX, inadvisable.
If the TSX delists
the Common Shares, investors may face material adverse consequences, including, but not limited to, a lack of a trading market
for the Common Shares, reduced liquidity, decreased analyst coverage of the Company, and an inability for us to obtain additional
financing to fund our operations.
The issuance of additional Common Shares may negatively
impact the trading price of our securities.
We have issued Common
Shares in the past and will continue to issue Common Shares to finance our activities in the future. In addition, outstanding options,
warrants, and broker warrants to purchase Common Shares may be exercised, resulting in the issuance of additional Common Shares.
The issuance by us of additional Common Shares would result in dilution to our shareholders, and even the perception that such
an issuance may occur could have a negative impact on the trading price of the Common Shares.
We are an “emerging growth company,”
and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Common Shares
less attractive to investors.
We are an “emerging
growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage
of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies,
including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved. We could be an emerging growth company for up to five years, although circumstances could cause
us to lose that status earlier, including if the market value of our Common Shares held by non-affiliates exceeds $700 million
as of any December 31 before that time, in which case we would no longer be an emerging growth company as of the following June
30. We cannot predict if investors will find our Common Shares less attractive because we may rely on these exemptions. If some
investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and
our Common Share price may be more volatile. Under the JOBS Act, emerging growth companies can also delay adopting new or revised
accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves
of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting
standards as other public companies that are not emerging growth companies.
Broker-dealers may be discouraged from effecting
transactions in Common Shares because they are considered a penny stock and are subject to the penny stock rules.
Our Common Shares
are currently considered a “penny stock.” The SEC has adopted Rule 15g-9 which generally defines “penny stock”
to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. The Common Shares are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.”
The term “accredited investor” refers generally to institutions with assets in excess of $5.0 million or individuals
with a net worth in excess of $1.0 million or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations
for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the
secondary market for the Common Shares. Consequently, these penny stock rules may affect the ability of broker-dealers to trade
in the Common Shares.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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None.
Elk Creek Project, Nebraska
Our principal mineral
property is the Elk Creek Property, a niobium, scandium and titanium exploration project. The Elk Creek Project does not have any
proven or probable reserves under SEC Industry Guide 7 and the Elk Creek Project is exploratory in nature. The below information
is in part summarized or extracted from our 2019 Elk Creek Project Feasibility Study.
Mr. Jean-Francois
St-Onge, P.Eng, and Mr. Glen Kuntz, P. Geo, both of whom are independent qualified persons as defined in NI 43-101, have reviewed
and approved the mineral reserves and mineral resources, respectively, and have verified the data contained in those portions of
the Elk Creek Project disclosures relevant to their area of responsibility included in this Form 10-K related to the 2019 Elk Creek
Feasibility Study.
Scott Honan, M.Sc.,
SME-RM, a qualified person as defined in NI 43-101, has supervised the preparation of the scientific and technical information
that forms the basis for the Elk Creek Project disclosure in this Form 10-K and has approved the disclosure in this Form 10-K related
thereto. Mr. Honan is not independent of the Company, as he is the Vice President, Business Development. The full NI 43-101 technical
report, incorporating the results of the 2019 Elk Creek Feasibility Study was filed on SEDAR on May 29, 2019.
Property Description and Location
The Elk Creek Property
is a niobium-bearing carbonatite deposit located in Johnson County, southeast Nebraska, USA. In addition to niobium, other elements
of economic significance include titanium and scandium. The Elk Creek Property is situated as shown in Figure 1 below and is located
within the USGS Tecumseh Quadrangle Nebraska SE (7.5 minute series) mapsheet in Sections 1-6, 9-11; Township 3N; Range 11 and Sections
19-23, 25-36; Township 4N, Range 11, at approximately 40°16’ north and 96°11’ west in the State of Nebraska,
in central USA. The Elk Creek Property is approximately 45 miles southeast of Lincoln, Nebraska, the state capital of Nebraska.
Figure 1 - Property Map showing Location of Elk
Creek Project
Title and Ownership
The Company currently
holds 21 option agreements that are material to the Elk Creek Project and one perpetual easement of a land parcel at the terminus
of a proposed waterline to the Missouri River from the Elk Creek Property, if required. The current optioned land package
covers an area of 4,042 acres.
Option agreements
are between NioCorp’s wholly-owned subsidiary ECRC and the individual landowners. Land ownership for the agreements significant
to the Elk Creek Project are shown in Figure 2 and listed in Table 1. Significant agreements are those which have been demonstrated
to host mineralized material, or which have the potential to be the site of buildings, facilities or other surface infrastructure.
Figure 2 - Land Tenure Map
Source: NioCorp, 2019
Table 1: Active Lease Agreements Covering the Elk Creek
Project
Agreement Identifier
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Hectares
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Acres
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Agreement Expiry
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Beethe008
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107.82
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266.43
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30-Apr-20
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Beethe002
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146.56
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362.16
|
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19-Feb-21
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Beethe003
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48.69
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120.32
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24-Jun-20
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Beethe007
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66.27
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|
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163.75
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20-Jan-21
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Heidemann003
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|
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48.56
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|
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120.00
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17-Mar-20
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Heidemann004
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|
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62.96
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|
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155.58
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15-Mar-20
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Heidemann005
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|
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79.55
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|
|
|
196.57
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16-Mar-20
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Heidemann006
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|
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64.75
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|
|
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160.00
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26-Mar-20
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Heideman007
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|
|
64.75
|
|
|
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160.00
|
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25-Mar-20
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Koehler001
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|
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64.75
|
|
|
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160.00
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|
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12-Jun-20
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Krueger001
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|
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123.41
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|
|
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304.95
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|
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18-Dec-19
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Nielsen001
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|
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112.81
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|
|
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278.75
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25-Jun-20
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Othmer003
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61.48
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|
|
|
151.93
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22-Jan-21
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Othmer004
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|
|
113.31
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|
|
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280.00
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22-Jan-21
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Watermann001
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32.37
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80.00
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6-Sep-21
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Woltemath80S
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32.37
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|
|
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80.00
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4-Dec-19
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Woltemath001
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48.47
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|
|
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119.77
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21-Jan-20
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Woltemath002
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|
|
152.49
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|
|
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376.81
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4-Dec-19
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Woltemath003J
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|
|
89.03
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|
|
|
220.00
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|
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25-Mar-20
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Woltemath003P
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|
|
82.96
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|
|
|
205.00
|
|
|
25-Mar-20
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Shuey001
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|
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32.37
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|
|
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80.00
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28-May-20
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Source: NioCorp, 2019
The current estimated
Mineral Resource is wholly contained within parcels Woltemath003J and Beethe008, and agreements covering both of these properties
have been secured. The Company considers these two leases to be the only leases on which the Company’s development of the
Elk Creek Project is substantially dependent. Negotiations for additional lands to support various configurations of the surface
operations have been completed. The Company believes that the surface plant and facilities associated with the Elk Creek Project
could be located in any number of places and would not necessarily need to be sited on lands contiguous with the Beethe008 and
Woltemath003 properties.
As part of the exploration
option agreements, where required, the Company has also secured surface rights, which allow for access to the land for drilling
activities and associated mineral exploration and project development work.
The agreements that
involve mineral rights include a 2% NSR royalty attached with the option to purchase (“OTP”). The agreements grant
the Company an exclusive right to explore and evaluate the property for a period of 60 months, with an OTP the mineral rights,
the surface rights or a combination of the mineral and surface rights at any time during the term. As the Woltemath80S agreement
is limited to an OTP for the surface rights only, it does not contain an NSR provision.
Accessibility, Physiography, Climate and Infrastructure
The Elk Creek
Property is easily accessible year-round as it is situated approximately 45 miles southeast of Lincoln (State Capital), Nebraska
and approximately 68 miles south of Omaha, Nebraska. Access to the site can be completed via road or from one of the regional airports.
There are several regular flights to both Lincoln and Omaha; however, the Elk Creek Property is most easily accessible from Lincoln.
From Lincoln Municipal Airport, the Elk Creek Property is accessed via paved roads on the main network and a secondary network
of gravel roads. The drive from the Lincoln Municipal Airport to the property is typically 1 hour and 15 minutes, and from Omaha’s
Eppley Airport the drive is approximately 1 hour and 45 minutes.
Geologists can be
sourced from local universities. An experienced mining-related workforce can be found in Denver, Colorado (eight hours drive west
of the Elk Creek Property).
Southeast Nebraska
is situated in a Humid Continental Climate (Dfa) on the Köppen climate classification system. In eastern Nebraska, this climate
is generally characterized by hot humid summers and cold winters. Average winter temperatures vary between 13°F to 35°F.
Average summer temperatures vary between 64°F to 90°F. Exploration, construction and operational activities may be conducted
all year round.
Average monthly precipitation
(rain and snowfall) varies between 0.9 and 5.0 inches. Average yearly precipitation is between 31 and 33 inches with an average
yearly snowfall of approximately 28 inches. Nebraska is located within an area known for tornadoes which runs through the central
U.S. where thunderstorms are common in the spring and summer months. Tornadoes primarily occur during the spring and summer and
may occur into the autumn months.
The Company has negotiated
surface rights as needed as part of its existing lease agreements. There is sufficient suitable land area available within the
Elk Creek Property area for mine waste disposal, for future tailings disposal, a processing plant, and related mine infrastructure.
There are several
local communities near the Elk Creek Property including Elk Creek and Tecumseh that will provide local housing for the Elk Creek
Project. There are a number of other communities within driving distance and the large cities of Lincoln and Omaha are within reasonable
driving distance. Mining activities currently taking place in the area are limited to limestone and aggregate operations to support
the local cement manufacturing and construction industries.
The Elk Creek
Property site has no existing infrastructure except being adjacent to the Nebraska state highway 50 and County Road 721. The Elk
Creek Project will be accessed from County Road 721 through a guard gate into the Elk Creek Property.
The Elk Creek Project
is expected to incorporate surface and underground infrastructure, as well as tailings storage facilities. The offsite infrastructure
is expected to include a new high voltage transmission line constructed by the local utility company and providing power to an
on-site primary sub-station and a natural gas pipeline built by the owner of the interstate pipeline. Water used for all on-site
process needs and activities will be supplied from mine dewatering activities, local groundwater wells and from a local water utility.
See “Feasibility Study” below for additional information regarding proposed infrastructure related to the Elk
Creek Project.
The local topography
of eastern Nebraska is relatively low-relief with shallow rolling hills intersected by shallow river valleys. Elevation varies
from about 1,066 to 1,280 feet above sea level. Bedrock outcrop exposure is nonexistent in the Elk Creek Project area.
The majority of the
Elk Creek Project area is used for cultivation of corn and soybeans, along with uses as grazing land. Native vegetation typical
of eastern Nebraska is upland tall-grass, prairie and upland deciduous forests.
Geology and Mineralization
Geology
The Nebraska Precambrian
basement predominantly comprises granite, diorite, basalt, anorthosite, gneiss, schist and clastic sediments. A series of island
arcs sutured onto the Archean continent created the basic framework of the area. This suture left a north-trending intervening
boundary zone ancestral to the Nemaha Uplift, providing a pre-existing tectonic framework which controlled the trend of the later
Midcontinent Rift System (1.0 to 1.2 billion years ago). The Carbonatite is located at the northeast extremity of the Nemaha Uplift.
The Elk Creek Property
includes the Carbonatite that has intruded older Precambrian granitic and low- to medium-grade metamorphic basement rocks. The
Carbonatite and Precambrian rocks are believed to be unconformably overlain by approximately 200 m of Paleozoic marine sedimentary
rocks of Pennsylvanian age (approximately 299 to 318 million years ago).
As a result of this
thick cover, there is no surface outcrop within the Elk Creek Property area of the Carbonatite, which was identified and targeted
through magnetic surveys and confirmed through subsequent drilling. The available magnetic data indicates dominant northeast, west-northwest
striking lineaments and secondary northwest and north oriented features that mimic the position of regional faults parallel and/or
perpendicular to the Nemaha Uplift.
The Elk Creek Carbonatite
is an elliptical magmatic body with northwest trending long axis perpendicular to the strike of the 1.1 billion years ago Midcontinent
Rift System, near the northern part of the Nemaha uplift. It was first discovered by drilling in 1971 and tentatively identified
as a carbonatite on the basis that it resembled rocks of the Fen District of Norway. The definitive confirmation of carbonatite
was completed using Rare Earth Element (“REE”), P205 and 87Sr/86Sr isotope analysis. The Carbonatite has also been
compared to the Iron Hill carbonatite stock in Gunnison County, Colorado on the basis of similar mineralogy.
The Carbonatite consists
predominantly of dolomite, calcite and ankerite, with lesser chlorite, barite, phlogopite, pyrochlore, serpentine, fluorite, sulfides
and quartz. It is, however, believed from stratigraphic reconstruction based on drill core observation in the area that the carbonatite
is unconformably overlain by approximately 200 m of essentially flat-lying Palaeozoic marine sedimentary rocks, including carbonates,
sandstones and shales of Pennsylvanian age (approximately 299 to 318 million years ago).
Current studies suggest
that the Carbonatite was emplaced approximately 500 million years ago in response to stress along the Nemaha Uplift boundary predating
deposition of the Pennsylvanian sedimentary sequence (approximately 299 to 318 million years ago). However, observations on drill
cores from the Elk Creek Project site show that the contact between the Carbonatite body and the Pennsylvanian sediments is a sheared
but oxidized contact suggesting that the Carbonatite is intrusive in the Pennsylvanian sequence. Furthermore, both rock types appear
to have been affected by at least one main brittle-ductile deformation event resulting in formation of fault structures. Microstructures
including sub-vertical and sub-horizontal tension veins, together with related sheared veins and fault planes displaying sub-vertical
and sub-horizontal slickensides along drill cores are indications for the presence of extensional and oblique to strike-slip faults.
These faults could correspond to the magnetic lineaments present in the area.
Mineralization
The property hosts
niobium, titanium, and scandium mineralization as well as rare earth elements and barium mineralization that occurs within the
Elk Creek Carbonatite. The current known extents of the Carbonatite unit are approximately 950 m along strike, 300 m wide, and
750 m in dip extent, below the unconformity. Niobium, titanium and scandium are considered the main elements of interest.
The deposit contains
significant concentrations of niobium. Based on the metallurgical testwork completed to date at a number of laboratories using
QEMSCAN® analysis, the niobium mineralization is known to be fine grained, and that 77% of the niobium occurs in the mineral
pyrochlore, while the balance occurs in an iron-titanium-niobium oxide mineral of varying composition.
Within the Elk Creek
Carbonatite, a host of other elements exist with varying degrees of concentration. The Company has completed both whole rock analysis
and multi-element analysis on all samples for the 2014 drilling program, described below, plus resampling of selected historical
core/pulps between 2011 and 2014.
Historical
Exploration
Drilling at the Elk
Creek Property was conducted in three phases. The first was during the 1970’s and 1980’s by the Molybdenum Company
of America (“Molycorp”), the second in 2011 by Quantum (NioCorp under its former name), and the third and latest program
from 2014 to 2016 by NioCorp. To date, 129 diamond core holes have been completed for a total of 64,981 m over the entire geological
complex. Of these, a total of 48 holes (33,909 m) have been completed to date in the mineralized area and are used in the current
Mineral Resource estimate. Five additional holes with a total length 3,353.1 m, were drilled for hydrogeologic and geotechnical
purposes. No sampling has been completed of these holes to date and therefore they have not been considered for the Mineral Resource
estimate.
All drilling has been
completed using a combination of Tricone, Reverse Circulation (“RC”) or Diamond Drilling (“DDH”) in the
upper portion of the hole within the Pennsylvanian sediments. All drilling within the underlying Carbonatite has been completed
using DDH methods.
Table 2: Summary of Drilling Database within Elk Creek Deposit
Area
Year
|
|
Company
|
|
Number of
Holes
|
|
|
Average
Depth(m)
|
|
|
Sum
Length(m)
|
|
1970-1980
|
|
Molycorp
|
|
|
27
|
|
|
|
596.6
|
|
|
|
16,108.2
|
|
2011
|
|
Quantum
|
|
|
3
|
|
|
|
772.6
|
|
|
|
2,317.7
|
|
2014-2015
|
|
NioCorp
|
|
|
18
|
|
|
|
845.4
|
|
|
|
15,482.8
|
|
Total
|
|
|
|
|
48
|
|
|
|
700.9
|
|
|
|
33,908.7
|
|
Source: Nordmin, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molycorp 1973-1986
Between 1973 and 1974,
Molycorp completed six drillholes: EC-1 to EC-4, targeting the Elk Creek anomaly and two other holes outside the Elk Creek anomaly
area. Drillholes were typically carried out by RC drilling through the overlying sedimentary rocks and diamond drilling through
the Ordovician-Cambrian basement rocks.
Molycorp continued
their drill program from 1977 and, in May 1978, Molycorp made its discovery of the current Mineral Resource with drillhole EC-11.
EC-11 is located on Section 33, Township 4N, and Range 11. The Carbonatite hosting the Elk Creek Project was intersected at a vertical
depth of 203.61 m (668 ft).
Molycorp continued
its drilling program through to 1984, which mainly centered on the Elk Creek Project within a radius of roughly 2 km. By 1984,
Molycorp had completed 57 drillholes within the Elk Creek gravity anomaly area, which included 25 drillholes over the Elk Creek
Project area.
From 1984 to 1986,
drilling was focused on the Elk Creek gravity anomaly area. The anomaly area is roughly 7 km in diameter and drilling was conducted
on a grid pattern of approximately 610 by 610 m (roughly 2,000 by 2,000 ft.) with some closer spaced drillholes in selected areas.
By 1986, a total of
106 drillholes were completed for a total of approximately 46,797 m (153,532 ft). The deepest hole reached a depth of 1,038 m (3,406
ft) and bottomed in carbonatite.
Quantum, 2010-2011 (NioCorp under its former name)
In April 2011, Quantum
conducted a preliminary drill program (three holes) on the Elk Creek deposit and two REE exploration targets (two holes), which
have been excluded from the current Mineral Resource estimation, as they do not intersect the Nb2O5 anomaly
and are located to the east. The objectives of the drill program over the Elk Creek Property were to verify the presence of higher-grade
niobium mineralization at depth, and to infill drill the known niobium deposit in order to upgrade the resource category of the
previous resource estimate and expand the known resource. The drill program was also established to collect sufficient sample material
for metallurgical characterization and process development studies of the niobium mineralization.
The 2011 program consisted
of five inclined drillholes, totaling 3,420 m of NQ size diameter core. Inclusive of this total, three drillholes, totaling 2,318
m were drilled into the known Elk Creek deposit.
NioCorp 2014 to present
NioCorp commenced
drilling on the Elk Creek Property using a three-phased program with the aim of increasing the confidence in the 2012 Mineral Resource
Estimate from Inferred to Indicated. The three-phased program was originally based on 14 drillholes for approximately 12,150 m
(announced in a press release on April 29, 2014), but was subsequently expanded during the program to 18 drillholes for approximately
15,482 m. Three of the 18 drillholes were drilled for the purpose of metallurgical characterization and process development studies.
Two of these drillholes, NEC14-MET-01 and NEC14-MET-02 were not assayed, while NEC14-MET-03 was quarter cored with one quarter
being assayed and the remainder used for metallurgical testwork. The drilling has been orientated to intersect the geological model
from the southwest and northeast (perpendicular to the strike), with the exception of NEC14-011 and NEC14-012, which were oriented
southeast and northwest, respectively.
2019 Elk Creek Feasibility Study
During the third
quarter of fiscal year 2019, we received and completed our review and analysis of the final proposed mine design based on detailed
underground engineering conducted by Nordmin. On April 16, 2019, we announced the results of the updated underground mine design
and supporting infrastructure, the results of an update to the Elk Creek Project’s mineral resources and mineral reserve
estimate, and the 2019 Elk Creek Feasibility Study based on the new mine design. A full NI 43-101 technical report, incorporating
the results of the 2019 Elk Creek Feasibility Study, was filed on SEDAR on May 29, 2019.
Primary changes
reflected in the updated mine design include a longer mine life, mining at greater depths to target higher niobium grades in the
early years of mining operations, utilizing artificial ground freezing methods to mitigate water inflow during shaft construction,
eliminating the active dewatering system that would have consisted of up to 15 large dewatering wells, and replacing a ventilation
raise bore with a ventilation shaft to be installed with conventional sinking methods. In addition, the new mine design contemplates
treating all water produced during mining operations, and water used in ore processing, on site for use in operations and replacing
a brackish water discharge system with a system that produces solid salt that would be impounded on site.
The Elk Creek
Project is planned as an underground mining operation using a long-hole stoping mining method and paste backfill, operating with
a processing rate of 2,764 tonnes per day. Expected total production over the 36-year mine life includes 168,861 tonnes of payable
niobium, 3,410 tonnes of scandium (“Sc2O3”), and 418,841 tonnes of titanium (“TiO2”). Estimated up-front
direct capital costs are $760 million, in addition to indirect costs of $185 million, pre-production capital costs of $97 million,
an overall contingency of $101 million, and pre-production net revenue credit of $265 million.
Financial
Analysis Included in the 2019 Elk Creek Feasibility Study
The metrics
reported in the 2019 Elk Creek Feasibility Study are based on the annual cash flow model results. The metrics are on both a pre-tax
and after-tax basis, on a 100% equity basis with no Elk Creek Project financing inputs and are in Q1 2019 U.S. constant dollars.
Foreign exchange impacts were deemed negligible as most, if not all, costs and revenues are denominated in U.S. dollars.
Key criteria
used in the analysis are discussed in detail throughout this section. Principal Project assumptions used are shown summarized below.
Description
|
|
Value
|
|
Pre-Production Period
|
|
|
4 years
|
|
Process Plant Life
|
|
|
36 years
|
|
Mine Operating Days per Year
|
|
|
365
|
|
Mill Operating Days per Year
|
|
|
365
|
|
Discount Rate
|
|
|
EOP @ 8
|
%
|
Commercial Production Year
|
|
|
2023
|
|
Source:
Nordmin, 2019
Summary of Key Evaluation Metrics and Projected Economic
Results Included in the 2019 Elk Creek Feasibility Study
Description
|
|
Value
|
|
Ore Mined (kt)
|
|
|
36,313
|
|
Mining Rate (t/d)
|
|
|
2,764
|
|
Nb2O5 Grade
|
|
|
0.81
|
%
|
TiO2 Grade
|
|
|
2.86
|
%
|
Scandium Grade (g/t)
|
|
|
65.7
|
|
Contained Nb2O5 (kt)
|
|
|
293
|
|
Contained Sc (t)
|
|
|
2,387
|
|
Contained TiO2 (kt)
|
|
|
1,039
|
|
Total Ore Processed (kt)
|
|
|
36,313
|
|
Processing Rate (kt/y)
|
|
|
1,009
|
|
Average Recovery, Nb2O5
|
|
|
82.4
|
%
|
Average Recovery Sc
|
|
|
93.1
|
%
|
Average Recovery TiO2
|
|
|
40.3
|
%
|
Recovered Nb2O5 (kt)
|
|
|
241
|
|
Recovered Sc (t)
|
|
|
2,223
|
|
Recovered TiO2 (kt)
|
|
|
419
|
|
Realized Market Prices
|
|
|
|
|
Nb ($/kg)
|
|
$
|
46.55
|
|
TiO2 ($/kg)
|
|
$
|
0.99
|
|
Sc2O3 ($/kg)
|
|
$
|
3,676
|
|
Payable Metal
|
|
|
|
|
Nb (t)
|
|
|
168,861
|
|
Sc2O3 (t)
|
|
|
3,410
|
|
TiO2 (t)
|
|
|
418,841
|
|
Description
|
|
Value ($000)
|
|
Total Gross Revenue
|
|
$
|
20,807,083
|
|
Operating Costs:
|
|
|
|
|
Mining Cost
|
|
|
(1,562,803
|
)
|
Process Cost
|
|
|
(3,874,533
|
)
|
Site G&A Cost
|
|
|
(301,103
|
)
|
Concentrate Freight Cost
|
|
|
(10,290
|
)
|
Other Infrastructure Costs
|
|
|
(198,532
|
)
|
Water Management Cost
|
|
|
(609,195
|
)
|
Tailings Management Cost
|
|
|
(72,228
|
)
|
Property Tax
|
|
|
(218,634
|
)
|
Royalties
|
|
|
(279,224
|
)
|
Annual Bond Premium
|
|
|
(5,500
|
)
|
Total Operating Costs
|
|
|
(7,132,042
|
)
|
Operating Margin (EBITDA1)
|
|
|
13,675,041
|
|
Effective Tax Rate
|
|
|
17.5
|
%
|
Income Tax
|
|
|
(2,319,660
|
)
|
Total Taxes
|
|
|
(2,319,660
|
)
|
Working Capital
|
|
|
0
|
|
Operating Cash Flow
|
|
$
|
11,355,381
|
|
Source:
NioCorp, 2019
Operating Cost Estimates Included in the 2019 Elk Creek Feasibility
Study
The following
LoM unit operating costs include the pre-production and first/last years of production.
Description
|
|
LoM US$/t ore
|
|
Mining Cost
|
|
$
|
43.04
|
|
Process Cost
|
|
|
106.70
|
|
Water Management Cost
|
|
|
16.78
|
|
Site G&A Cost
|
|
|
8.29
|
|
Other Infrastructure
|
|
|
5.47
|
|
Tailings Management Cost
|
|
|
1.99
|
|
Other Expenses
|
|
|
6.30
|
|
Total LoM Operating Costs
|
|
|
188.56
|
|
Royalties/Annual Bond Premium
|
|
|
7.84
|
|
Total All-In Operating Costs
|
|
$
|
196.41
|
|
Source: Nordmin, 2019.
Total may not sum due to rounding.
|
1
|
The term “EBITDA” refers to earnings before
interest, taxes depreciation and amortization. See “Non-GAAP Financial Performance Measures” below for a discussion
of the use of non-GAAP financial measures.
|
Capital Cost Estimates
Included in the 2019 Elk Creek Feasibility Study
The
following table shows the breakout in LoM initial capital and sustaining capital (including closure and reclamation) cost estimates,
which total $1,609 million. An overall 9.67% contingency factor has been applied to the initial capital estimate, while a smaller
6.25% contingency was applied to the sustaining capital estimate. The initial capital estimate of $1,143 million will be partially
offset by a Gross Pre-production Revenue Credit of $265 million (generated by pre-production product sales), which equates to a
net cost of $879 million.
|
|
$000
|
|
Description
|
|
Initial
|
|
|
Sustaining
|
|
|
Total
|
|
Capitalized Preproduction Expenses
|
|
$
|
82,531
|
|
|
$
|
-
|
|
|
$
|
82,531
|
|
Site Preparation and Infrastructure
|
|
|
40,569
|
|
|
|
15,007
|
|
|
|
55,576
|
|
Processing Plant
|
|
|
367,439
|
|
|
|
96,448
|
|
|
|
463,886
|
|
Water Management and Treatment
|
|
|
73,756
|
|
|
|
23,613
|
|
|
|
97,369
|
|
Mining Infrastructure
|
|
|
256,731
|
|
|
|
180,438
|
|
|
|
437,170
|
|
Tailings Management
|
|
|
21,423
|
|
|
|
78,855
|
|
|
|
100,277
|
|
Site Wide Indirects
|
|
|
7,368
|
|
|
|
-
|
|
|
|
7,368
|
|
Processing Indirects
|
|
|
96,028
|
|
|
|
-
|
|
|
|
96,028
|
|
Mining Indirects
|
|
|
39,766
|
|
|
|
-
|
|
|
|
39,766
|
|
Process Commissioning
|
|
|
13,350
|
|
|
|
-
|
|
|
|
13,350
|
|
Mining Commissioning
|
|
|
1,444
|
|
|
|
-
|
|
|
|
1,444
|
|
Owner’s Costs
|
|
|
33,619
|
|
|
|
-
|
|
|
|
33,619
|
|
Mine Water Management Indirects
|
|
|
8,520
|
|
|
|
-
|
|
|
|
8,520
|
|
Closure and Reclamation
|
|
|
-
|
|
|
|
44,267
|
|
|
|
44,267
|
|
Contingency
|
|
|
100,797
|
|
|
|
27,429
|
|
|
|
128,227
|
|
Total Capital Costs
|
|
$
|
1,143,340
|
|
|
$
|
466,058
|
|
|
$
|
1,609,398
|
|
Preproduction Revenue Credit
|
|
|
(264,747
|
)
|
|
|
|
|
|
|
|
|
Net Project Total
|
|
$
|
878,593
|
|
|
|
|
|
|
|
|
|
Source: Nordmin 2019.
Totals may not sum due to rounding.
Planned Mining Operations
The Elk Creek Project
is planned as a high-grade underground mining operation using a long-hole stoping mining method and paste backfill, with shaft
access to minimize development through water bearing horizons. The mine will utilize jumbo drills for lateral development and tophammer
and down-the-hole drills for vertical development and production stoping. Rock bolters will be used for ground support and probe
holes will be used to support mine grouting where required. Ore will be remotely mucked from the bottom stope accesses using 14
tonne Load-Haul-Dump units (“LHD”). The LHDs will transport the ore to an ore pass directly or to remuck bays to maximize
the efficiency of the stope mucking operations. When needed, a second LHD and a fleet of 40 tonne haul trucks will be used to transport
ore from the remuck bays to the grizzly feeding the underground material handling system. Multiple remuck bays are used on each
level to avoid interference between the LHD and the haul trucks. The ore is fed through the grizzlys with rock breakers into an
underground crusher (the “Primary Crusher”) and via a material handling system to the surface.
Planned Processing
Operations
Planned ore process
operations include mineral processing, hydrometallurgical processing (“Hydromet”), and pyrometallurgical processing
(“Pyromet”) housed in separate buildings.
The mineral processing
building will house all of its equipment within a single large building. The primary driver of mineral processing is the dry processing
of ore. Ore from the Primary Crusher (located in the underground mine) will be fed to the secondary cone crusher system, operating
in closed circuit with a double deck screen. The screen undersize from the cone crusher system will be fed to a high-pressure grinding
roll unit (“HPGR”), operating in closed circuit with another double deck screen. The HPGR screen undersize is the comminution
product that will report to the Hydromet process.
The Hydromet plant
building will be a multi-level engineered steel structure which will house equipment on two levels. Ore from mineral processing
will be fed through 15 individual processes required to separate the three recoverable products. The purpose of the Hydromet processing
steps is to leach the pay metals into solution using two separate acid leaches (HCl Leach and Sulfuric Acid Bake), remove impurities,
separate the three pay metals, and perform precipitation/processing to final solid oxide forms. Outputs from the Hydromet Process
include saleable titanium dioxide and scandium trioxide, with niobium pentoxide reporting to the Pyromet plant for final processing.
The Hydromet plant will be supported by a Hydrochloric Acid Regeneration plant and a Sulfuric Acid Plant.
The Pyromet building
will house most of its equipment within a single building. The purpose of the Pyromet plant is to reduce the niobium pentoxide
coming from the Hydromet feed by converting it into a saleable ferroniobium (FeNb) metal. Aluminum shots and iron oxide pellets
will be introduced to an electric arc furnace on a continuous basis along with fluxing agents and niobium pentoxide to produce
a saleable FeNb metal.
Proposed Production
Plan and Schedule
Based on the 2019
Elk Creek Feasibility Study, the operating mine life is approximately 36 years with a nominal processing rate of 2,764 tonnes per
day. The Elk Creek Project timeline is based on First Metal 42 months after Authorization to Proceed, plus an additional six months
of Ramp-up to 100% of production capacity for a total of 45 months and assumes no financing constraints. The NioCorp board
must approve a construction program and budget before construction of the Elk Creek Project can begin. This approval, along with
the receipt of all required governmental permits and approvals and the completion of project financings, will determine whether
and when construction of the Elk Creek Project can begin.
Proposed Tailings
Storage
The tailings produced
by the process plant will consist of filtered water leach residue, calcined excess oxide, and slag. Four TSFs will be constructed
sequentially to contain the tailings over the life of the Elk Creek Project and would contain approximately 14.5 million tonnes
of tailings. The tailings facilities have been designed to incorporate two independent areas: a composite-lined tailings solids
storage area; and an area with double lined containment including a leak collection and recovery system for management of stormwater
runoff and drainage from the tailings solids. The TSFs will store predominantly dry (i.e., not in a slurry consistency) tailings
from the plant with embankment construction based on a “downstream” construction method. Facility closure is considered
in the design.
Proposed Salt Management
The crystalline salt
produced as a waste product of heating and evaporating brine from the Reverse Osmosis (“RO”) water treatment plant
will be transported by conveyor to the temporary salt staging area and then be transported by truck to the dedicated salt management
cells (“SMC”). Two SMCs will be constructed sequentially to contain the salt over the life of the project and would
contain approximately 1.63 million cubic meters of salt. The SMCs design will incorporate a composite-lined storage area with double-lined
containment including a leak collection and recovery system for management of stormwater runoff and drainage.
Proposed Water Management
For the first
several years of construction, the advancement of the shaft and underground workings will require limited dewatering, anticipated
to be through lower-level sumping and pumping for surface collection and disposal. Initially, water will be stored in the lined
SMC #1 during construction or will be trucked off-site for treatment at a local publicly owned treatment works. Excess water in
the SMCs will be spray evaporated within the footprint of the Cell, to avoid the reintroduction of soluble salts into the water
treatment system. Temporary on-site storage or off-site shipment and disposal of the crystallizer solid waste may be necessary
until construction of SMC #1 is completed.
Once full operations
commence, we anticipate a shortfall of approximately 3,700 gpm of operational and processing water, as the underground mine dewatering
is only expected to produce 1,000 gpm. To make up this shortfall, we would purchase fresh water from a local utility and from local
landowners.
Once tailings
begin being deposited in the TSF, internal contact water (from residual moisture in the tailings and precipitation falling within
the impoundment footprint) will need to be actively managed. This water will be collected and treated using lime softening to precipitate
hydroxide and carbonate solid forms for many of the inorganic constituents. The treated water will be filtered to remove the solids
(which will be returned to the TSF for disposal), and the clean water will be pumped to the process plant RO system for further
treatment. The clean water from the process plant RO unit will be used in the process plant, and the reject concentrate will be
crystallized and deposited back into the SMCs.
Power
The local power utility
(Omaha Public Power District) will provide power from nearby transmission lines to the site. This will require that an approximate
18-mile transmission line be installed by the utility to provide the site sub-station with the required site power demand. The
local power utility will also design and install the main substation that will be owned and maintained by the utility. This infrastructure
will be paid back through rate changes on the electrical usage.
Natural Gas
Natural gas, to be
used throughout the Elk Creek Project during the construction and operation phases of the project, will be brought to the site
via pipeline from the local utility company. NioCorp has a natural gas transportation contract with Tallgrass Energy, which operates
the Rockies Express (“REX”) pipeline. Tallgrass will construct a 45 km (28 mile) gas pipeline lateral from the main
REX pipeline system in Kansas to the project site. The lateral will be sized to provide a minimum of 27.5 dekatherms of gas per
day. Natural gas will be distributed to all on-site facilities utilizing buried high-density polyethylene natural gas distribution
pipe. Natural gas piping above ground and located inside of facilities will consist predominately of carbon steel pipe. Maximum
on-site pipeline distribution pressure will be 100 psig. Natural gas will be used for facility heating, water heating, and for
natural gas-fired process equipment.
Markets
Market studies for
niobium, titanium dioxide and scandium trioxide are an important part of the proposed Elk Creek operation. These commodities, especially
niobium and scandium trioxide (scandium), are thinly traded without an established publicly available price discovery mechanism.
Hence, detailed third party market studies provide the basis for assumptions used in the economic analysis.
The economic analysis
in the 2019 Elk Creek Feasibility Study used the 2019 U.S. dollar base price of $47/kg Nb as the forward-looking price for steel
grade (65%) ferroniobium based on published independent third-party reports. The base price is adjusted to a realized price to
account for the discount provisions contained in the two ferroniobium offtake agreements that the Company has concluded.
NioCorp engaged OnG
Commodities LLC (OnG) to produce a market assessment in April 2017 (OnG, 2017). The study examines current scandium production
trends (approximately 20 tons/year) from existing and emerging producers plus an outlook for supply to 2028. The outlook then
reviewed the current and emerging applications for scandium including fuel cells, aerospace, industrial and other uses plus and
an outlook for demand to 2028. Based on these inputs, OnG provided pricing forecasts and global demand volumes by year to 2028
based estimated production costs and supply-demand balances. The pricing sheet for the OnG Commodities report was updated for NioCorp
in 2019 (OnG, 2019).
No formal market study
was done for TiO2 during the report period as it only represents 2% of overall revenue in the economic analysis. All
market information for titanium and titanium dioxide is derived from USGS Commodity Market Summaries (Bedinger, 2019).
Taxation Rates Included
in the 2019 Elk Creek Feasibility Study
Taxes that may be
levied on the Elk Creek Project can be summarized as follows:
|
●
|
Corporate Income Tax rates are 21% for Federal and 7.81% for Nebraska
|
The Elk Creek Project
is eligible for federal depletion allowances and credits, as well as various state incentives. The calculated effective income
tax rate for the Elk Creek Project is 17.5%.
Elk Creek Project Environmental Performance
under New Mine Design Included in the 2019 Elk Creek Feasibility Study
The new mine
design further reinforces the environmental performance of the Elk Creek Project. Together with previously disclosed environmental
and process innovations incorporated in the 2017 Feasibility Study, the new mine design now incorporates these following strategies
and technologies designed to minimize environmental impacts of operation:
|
●
|
Zero Process Liquid Discharge: The Elk Creek facility
will now operate as a “Zero Process Liquid Discharge” facility, with no releases of process liquids. Instead, both
naturally occurring, brackish (slightly salty) water produced during mining operations, and water used in ore processing, will
be treated on site for use in operations. A solid salt will be produced from water treatment operations which will be stored on
site.
|
|
●
|
No Wastewater Discharge to the Missouri River: By
treating water on site, the Elk Creek Project no longer needs to transport water for discharge into the Missouri River. This will
release the Elk Creek Project from having to obtain a specific National Pollutant Discharge Elimination System water quality discharge
permit from the State of Nebraska, or an additional Section 404 permit, or a Section 408 permit from the USACE. The Section 408
permit would have required completion of an Environmental Assessment study, a process that is governed by NEPA and involves review
by multiple federal government agencies.
|
|
●
|
Additional Protection of Groundwater Resources Through
Artificial Ground Freezing: The Elk Creek Project’s new mine design will utilize artificial ground freezing as part of the
process of sinking the production and ventilation shafts. Artificial ground freezing creates a temporary frozen barrier that helps
to protect groundwater resources in the area while shaft-sinking operations are underway.
|
|
●
|
Avoidance of Permanent Impacts to Federally Jurisdictional
Waters: We designed the layout of the Elk Creek Project to minimize or avoid permanent impacts to any federally jurisdictional
waters and/or wetlands on the property. This reduced the expected environmental impacts and allowed the Elk Creek Project to secure
a Clean Water Act Section 404 permit from the USACE under the Nationwide Permit program, a much more efficient and less expensive
process than an individual Section 404 permit. No other NEPA-level federal permits are now expected to be required for the Elk
Creek Project.
|
|
●
|
Recycling of Reagents Used in Mineral Processing:
Metallurgical and process breakthroughs that we accomplished in 2016 and 2017 are expected to help reduce the volume of material
planned for disposal in the Elk Creek Project’s tailings storage areas. As more of this material is recycled, the environmental
footprint of the Elk Creek Project is reduced.
|
|
●
|
Utilizing Tailings as Underground Mine Backfill: We
plan to fill underground voids concurrently with mining operations using a paste backfill material that contains mine waste material
that typically would be stored in above-ground mine tailings storage areas.
|
Mineral
Reserves and Resources
The Mineral Reserves
and Mineral Resources disclosed below are based on the 2019 Elk Creek Feasibility Study in conformity with generally accepted CIM
“Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are reported in accordance with
the CIM “Definition Standards – For Mineral Resources and Mineral Reserves, May 10, 2014.” Mineral Reserves and
Mineral Resources at the Elk Creek Project as of June 30, 2019 are summarized below in Table 3 and Table 4, respectively.
Cautionary
Note to U.S. Investors: The terms Proven Reserve, Probable Reserve, Indicated Resource, and Inferred Resource as described in Tables
3 and 4 below are as defined in Canadian National Instrument 43-101. These terms are not defined under SEC Industry Guide 7 and
are not SEC Industry Guide 7 proven and probable reserves. In addition, the estimation of inferred resources involves far greater
uncertainty as to their existence and economic viability than the estimation of other categories of resources. U.S. investors are
cautioned not to assume that estimates of inferred mineral resources exist, are economically minable, or will be upgraded into
measured or indicated mineral resources. See “Cautionary Note to U.S. Investors Regarding Mineral Reserve and Resource Estimates”
above.
Table 3: Underground Mineral Reserve Estimate for Elk Creek
Classification
|
|
Tonnage
(x1000 mt)
|
|
|
Nb2O5 Grade (%)
|
|
|
Contained Nb2O5
(mt)
|
|
|
Payable Nb
(mt)
|
|
|
TiO2
Grade
(%)
|
|
|
Contained TiO2
(mt)
|
|
|
Payable TiO2
(mt)
|
|
|
Sc Grade (ppm)
|
|
|
Contained Sc
(mt)
|
|
|
Payable Sc2O3
(mt)
|
|
Proven
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable
|
|
|
36,313
|
|
|
|
0.81
|
|
|
|
293,321
|
|
|
|
168,861
|
|
|
|
2.86
|
|
|
|
1,039,050
|
|
|
|
418,841
|
|
|
|
65.7
|
|
|
|
2,387
|
|
|
|
3,410
|
|
Total Proven and Probable
|
|
|
36,313
|
|
|
|
0.81
|
|
|
|
293,321
|
|
|
|
168,861
|
|
|
|
2.86
|
|
|
|
1,039,050
|
|
|
|
418,841
|
|
|
|
65.7
|
|
|
|
2,387
|
|
|
|
3,410
|
|
Source: Nordmin, 2019. All
figures are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
February 19, 2019 Mineral Reserve Details
|
Parameter
|
|
Value
|
|
|
Unit
|
Mining Cost
|
|
|
43.55
|
|
|
US$/mt mined
|
Processing
|
|
|
108.16
|
|
|
US$/mt mined
|
Water Management and Infrastructure
|
|
|
13.71
|
|
|
US$/mt mined
|
Tailings Management
|
|
|
1.35
|
|
|
US$/mt mined
|
Other Infrastructure
|
|
|
6.96
|
|
|
US$/mt mined
|
General and Administrative
|
|
|
8.65
|
|
|
US$/mt mined
|
Royalties/Annual Bond Premium
|
|
|
7.53
|
|
|
US$/mt mined
|
Total Cost
|
|
|
189.91
|
|
|
US$/mt mined
|
Nb2O5 to Niobium conversion
|
|
|
69.6
|
|
|
%
|
Niobium Process Recovery
|
|
|
82.36
|
|
|
%
|
Niobium Price
|
|
|
39.60
|
|
|
US$/kg
|
TiO2 Process Recovery
|
|
|
40.31
|
|
|
%
|
TiO2 Price
|
|
|
0.88
|
|
|
US$/kg
|
Sc Process Recovery
|
|
|
93.14
|
|
|
%
|
Sc to Sc2O3 conversion
|
|
|
153.4
|
|
|
%
|
Sc Price
|
|
|
3,675
|
|
|
US$/kg
|
|
●
|
Nordmin has reported the mineral reserve based on the mine
design, mine plan, and cash-flow model utilizing an average cut-off grade of 0.788% NB2O5 with an NSR of
$500/mt.
|
|
●
|
Nordmin considers that the mineral reserve is amenable
for underground extraction with a processing method to recover FeNb (as the saleable product of Nb2O5),
TiO2, and Sc2O3 products.
|
|
●
|
The economic assumptions used to define Mineral Reserve
cut-off grade are as follows:
|
|
o
|
Annual LoM production rate of ~7,220 tonnes of FeNb/annum,
|
|
§
|
Initial elevated five-year production rate ~ 7,351
tonnes of FeNb/annum
|
|
o
|
Mining dilution of ~6% was applied to all stopes and
development, based on 3% for the primary stopes, 9% for the secondary stopes, and 5% for ore development.
|
|
o
|
Mining recoveries of 95% were applied.
|
|
o
|
Price assumptions for FeNb, Sc2O3,
and TiO2 are based upon independent market analyses for each product.
|
|
o
|
Price and cost assumptions
are based on the pricing of products at the “mine-gate”, with no additional down-stream costs required. The assumed
products are a ferroniobium product (metallic alloy shots 0.65NbŸ0.35%
Fe), a titanium dioxide product in powder form, and scandium trioxide in powder form.
|
|
●
|
The mineral reserve has an average LoM NSR of $538.63 /tonne.
|
|
●
|
Nordmin has provided detailed estimates of the expected
costs based on the knowledge of the style of mining (underground) and potential processing methods (by third-party qualified persons).
|
|
●
|
Mineral Reserve effective date February 19, 2019. The financial
model was run post-February 2019, which reflects a total cost of $196.41 versus $189.91 used in the February 19, 2019 Mineral
Reserve Details Table above. Nordmin does not consider this a material change.
|
|
●
|
Price variances for commodities is based on updated independent
market studies versus earlier projected pricing. The updated independent market studies do not have a negative effect on the reserve.
|
|
●
|
Nordmin completed a site inspection of the deposit through
a subcontractor, Jean-Francois St-Onge, P.Eng., Associate Consulting Specialist – Mining, an appropriate “independent
qualified person” as this term is defined in NI 43-101.
|
Table 4: Mineral Resource Statement for Elk Creek
Classification
|
|
Cut-off NSR (DIL)(US$/mt)
|
|
|
Tonnage
(x1000 mt)
|
|
|
Nb2O5 Grade (%)
|
|
|
Contained Nb2O5
(mt)
|
|
|
TiO2
Grade
(%)
|
|
|
Contained TiO2
(mt)
|
|
|
Sc Grade (ppm)
|
|
|
Contained Sc
(mt)
|
|
Indicated
|
|
|
180
|
|
|
|
183,185
|
|
|
|
0.54
|
|
|
|
981,092
|
|
|
|
2.15
|
|
|
|
3,940,419
|
|
|
|
57.65
|
|
|
|
10,562
|
|
Inferred
|
|
|
180
|
|
|
|
103,992
|
|
|
|
0.48
|
|
|
|
498,864
|
|
|
|
1.81
|
|
|
|
1,886,181
|
|
|
|
47.38
|
|
|
|
4,928
|
|
Source: Nordmin, 2019.
All figures are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
February 19, 2019 Mineral Resource Details
|
Parameter
|
|
Value
|
|
|
Unit
|
Mining Cost
|
|
|
50.0
|
|
|
US$/mt mined
|
Processing
|
|
|
125
|
|
|
US$/mt mined
|
General and Administrative
|
|
|
5.0
|
|
|
US$/mt mined
|
Total Cost
|
|
|
180
|
|
|
US$/mt mined
|
Nb2O5 to Niobium conversion
|
|
|
69.6
|
|
|
%
|
Niobium Process Recovery
|
|
|
82.36
|
|
|
%
|
Niobium Price
|
|
|
39.60
|
|
|
US$/kg
|
TiO2 Process Recovery
|
|
|
40.31
|
|
|
%
|
TiO2 Price
|
|
|
0.88
|
|
|
US$/kg
|
Sc Process Recovery
|
|
|
93.14
|
|
|
%
|
Sc to Sc2O3 conversion
|
|
|
153.4
|
|
|
%
|
Sc Price
|
|
|
3,675
|
|
|
US$/kg
|
Calculated CoG NSR diluted 6 %
|
|
|
180
|
|
|
US$/mt
|
|
●
|
Mineral resources are reported inclusive of the mineral
reserve. Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures are rounded to
reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations
inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, Nordmin does not consider
them to be material.
|
|
●
|
The reporting standard adopted for the reporting of the
MRE uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May
10, 2014) as required by NI 43-101.
|
|
●
|
CIM definition standards for mineral resources and mineral
reserves (May 2014) defines a mineral resource as:
|
|
|
“(A) concentration or occurrence of diamonds,
natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial
minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects
for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known,
estimated or interpreted from specific geological evidence and knowledge”.
|
|
●
|
Historical samples have been validated via re-assay programs,
and all drilling completed by NioCorp has been subjected to QA/QC. All composites have been capped and then composited where appropriate,
and estimates completed used ordinary kriging. The concession is wholly owned by and exploration is operated by NioCorp Developments
Ltd.
|
|
●
|
The project is amenable to underground longhole open stoping
mining methods. Using results from metallurgical test work, suitable underground mining and processing costs, and forecast product
pricing Nordmin has reported the mineral resource at an NSR cut-off of US$180/mt.
|
|
●
|
Economic Assumptions Used to Define Mineral resource Cut-off
Value:
|
Diluted NSR (US$) = Revenue per block
Nb2O5 (diluted) + Revenue per block TiO2 (diluted) + Revenue per block Sc (diluted)
Diluted tonnes per block
|
●
|
Price assumptions for FeNb, Sc2O3, and TiO2 are based upon
independent market analyses for each product.
|
|
●
|
Price and cost assumptions
are based on the pricing of products at the “mine-gate”, with no additional down-stream costs required. The assumed
products are a ferroniobium product (metallic alloy shots 0.65NbŸ0.35%
Fe), a titanium dioxide product in powder form, and scandium trioxide in powder form.
|
|
●
|
The “reasonable prospects for economic extraction”
requirement generally implies that the quantity and grade estimates meet certain economic thresholds and that the mineral resources
are reported at an appropriate Cut-off Grade (“CoG”), considering extraction scenarios and processing recoveries.
Based on this requirement, Nordmin considers that major portions of the project are amenable for underground extraction with a
processing method to recover FeNb (as the saleable product of Nb2O5), TiO2, and Sc2O3 products.
|
|
●
|
The result of positive indications from the company’s
metallurgical testing and development program, titanium (TiO2) and scandium (Sc) were added to the mineral resource Statement
in February 2015. Both metals can be recovered with simple additions to the existing process flowsheet and would provide additional
revenue streams that would complement the planned production of ferroniobium.
|
|
●
|
Nordmin has provided reasonable estimates of the expected
costs based on the knowledge of the style of mining (underground) and potential processing methods (by third-party qualified persons).
|
|
●
|
Mineral Resource effective date February 19, 2019.
|
|
●
|
Nordmin completed a site inspection of the deposit by Glen
Kuntz, BSc, P.Geo., Consulting Specialist - Geology/Mining, an appropriate “independent qualified person” as this
term is defined in NI 43-101.
|
Environmental and Social
A number of key permits
and environmental management requirements have been identified for the Elk Creek Project, some of which need to be implemented
as soon as practicable in order to maintain the proposed Elk Creek Project schedule.
|
●
|
While not necessarily complex, the timing generally required to complete permitting through any
federal regulatory agency requires that NioCorp engage key agencies (in this case the USACE and possibly the EPA) early on in Elk
Creek Project development and consider the siting and orientation of facilities carefully to minimize the risk of a protracted
National Environmental Policy Act analysis of the Elk Creek Project. At the present time, the company believes that we have completed
the major federal permitting actions needed for project construction, although changes to the design or location of project facilities
may require that additional federal permits be obtained.
|
|
●
|
Construction at the facility will require an air construction permit (the “Air Permit”)
from the State of Nebraska. The Air Permit will describe all of the prospective air emissions from the facility and will require
the completion of an air quality model that demonstrates compliance with the NAAQS. Permanent construction at the site cannot commence
until this permit is issued, although a number of preconstruction activities are allowed under standing Nebraska Department of
Environment and Energy (“NDEE”) policy. A variance procedure is available to permittees that allows construction to
proceed in advance of permit issuance if a determination is made that the permit will not be issued before permanent construction
is scheduled to commence. An application for the air construction permit was submitted to the State on July 24, 2019.
|
|
●
|
A radioactive materials license will be needed from the Nebraska Department of Health and Human
Services (“NDHHS”), Office of Radiological Health. Because of their limited experience with hard rock mining in the
State of Nebraska, much less mining that includes Naturally Occurring Radioactive Material, the NDHHS may require additional information
and more time to approve the Elk Creek Project under a Broad Scope License.
|
|
●
|
Documentation of existing baseline environmental conditions at the Elk Creek Project site was initiated
in 2014 and should continue throughout the permitting process. Additional studies will need to be added once regulatory authorities
have been given an opportunity to review the current mine plan presented in the 2019 Elk Creek Feasibility Study and assess their
particular data needs for approval of the Elk Creek Project.
|
|
●
|
Surface water monitoring should continue throughout the permitting process and extend into construction
and operations as part of the Environmental Management System. The NDEE Water Quality Division has been engaged in order to discuss
the Elk Creek Project.
|
|
●
|
A wetland delineation and potential jurisdictional waters assessment was conducted in late 2014
to identify wetland and drainage features within the proposed Elk Creek Project boundary which resulted in a formal JD being issued
by the USACE on September 6, 2016. The entire project has been authorized under the non-notifying provisions of Nationwide Permit
12.
|
|
●
|
Closure costs for the Elk Creek Project have been estimated at just over $44 million, including
approximately $13.5 million for reclamation and closure of the TSFs and $16.6 million for plant and building removal and reclamation.
|
|
●
|
Community engagement has occurred in parallel with Nebraska field operations and has included public
meetings, presentations to public agencies, communications with local and state politicians, meetings with environmental groups,
and one-on-one meetings with area landowners.
|
Other Elk Creek Project Activities
|
●
|
In addition to finalizing the mine design and completing the 2019 Elk Creek Feasibility Study and
2019 Technical Report, we continued development of the Air Permit application, including the detailed engineering necessary to
support the submission of the Air Permit application, which was submitted to the NDEE on July 24, 2019.
|
During the year ended
June 30, 2019, we continued to advance the competitive process to identify and select engineering, procurement and construction
firms for surface development, and underground mine development.
Proposed Activities
Our long-term financing
efforts continued during the quarter ended June 30, 2019. As funds become available through the Company’s fundraising efforts,
we expect to undertake the following activities:
|
●
|
Acquisition of key land parcels currently subject to the Company’s Option to Purchase agreements;
|
|
●
|
Continuation of the Company’s efforts to secure federal, state and local permits;
|
|
●
|
Negotiation and completion of engineering, procurement and construction (“EPC”)
agreements;
|
|
●
|
Completion of the final detailed engineering for the underground portion of the Elk Creek Project;
|
|
●
|
Initiation and completion of final detailed engineering for surface project
facilities;
|
|
●
|
Construction of natural gas and electrical infrastructure under existing
agreements to serve the Elk Creek Project site;
|
|
●
|
Initiation of revised mine groundwater investigation and control activities; and
|
|
●
|
Initiation of long-lead equipment procurement activities.
|
Non-GAAP Financial Performance Measures
Non-GAAP financial
performance measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S.
GAAP. These measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with
U.S. GAAP.
The 2019 Elk Creek
Feasibility Study uses non-GAAP financial performance measures, such as EBITDA, Averaged Annual EBITDA and Averaged EBITDA Margin,
for purposes of projecting the economic results of the Elk Creek Project. We are unable to provide a reconciliation of these forward-looking
non-GAAP measures to the most comparable U.S. GAAP financial performance measures because certain information needed to reconcile
those non-GAAP measures to the most comparable U.S. GAAP financial performance measures is dependent on future events, some of
which are outside the control of the Company, such as FeNb, Sc2O3 and TiO2 prices, interest rates and exchange rates. Moreover,
estimating such U.S. GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult
and could not be accomplished without unreasonable effort.
Corporate Headquarters
We lease our principal executive office
space at 7000 South Yosemite Street, Suite 115, Centennial, Colorado.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
As of September 3, 2019,
we are not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial
condition or operating results. Further, to the Company’s knowledge, no such proceedings have been threatened against the
Company.
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
Pursuant to Section
1503(a) of the Dodd-Frank Act, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine
in the U.S. are required to disclose specified information about mine health and safety in their periodic reports. These reporting
requirements are based on the safety and health requirements applicable to mines under the Federal Mine Safety and Health Act of
1977 (the “Mine Act”) which is administered by the U.S. Department of Labor’s Mine Safety and Health Administration
(“MSHA”). During the fiscal year ended June 30, 2019, the Company and its subsidiaries and their properties or operations
were not subject to regulation by MSHA under the Mine Act and thus no disclosure is required under Section 1503(a) of the Dodd-Frank
Act.