At December 31, 2021, the aggregate
market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was
$245.4 million based on the closing sale price
as reported on the Toronto Stock Exchange and the daily exchange rate as reported by the Bank of Canada for conversion of
Canadian dollars into U.S. dollars. There were 278,127,688
common shares outstanding on September 6, 2022.
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 preliminary economic assessments, 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 a NI 43-101 technical report for the Elk Creek Project (the “2017 NI 43-101 Elk Creek Technical Report”). In connection
with a review by the Ontario Securities and Exchange Commission, on December 15, 2017, the Company filed a revised 2017 NI 43-101
Elk Creek Technical Report. This revised report 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 NI 43-101 Elk Creek Technical Report.
During
fiscal year 2019, we received a 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, and the 2019 NI 43-101 Elk Creek Technical Report based on the new mine design. During fiscal year 2020, the
Company focused efforts on advancing detailed engineering of the surface and underground facilities and negotiating the follow-on
contracts associated with the planned construction of the surface and underground features of the project, as well as obtaining
the Air Permit. The Air Permit required the completion of an air quality model that demonstrates compliance with the NAAQS. The
final Air Permit was issued by the State of Nebraska on June 2, 2020, for the Elk Creek Project.
During
fiscal year 2021, we obtained funding which allowed us to purchase land and mineral rights at the Elk Creek Property and continue
early project execution activities. With the acquisition of the land and mineral rights, the Company now owns the surface land
on which the Elk Creek Project’s mine infrastructure and supporting operations will be located once sufficient project financing
is obtained, along with ownership of the mineral rights to more than 90% of the Elk Creek Project’s mineral resources and
mineral reserves.
During
fiscal year 2022, we focused efforts towards refining our Elk Creek Project mineral resource and mineral reserve estimates. This
work included additional assays of historical drill core to fill data gaps in the existing resource database and re-modeling of
the Elk Creek Project to include REEs. Based on this re-interpretation of the geologic data, an update to the mine plan was also
completed. Accordingly of this work, we issued the 2022 NI 43-101 Elk Creek Technical Report on June 28, 2022. Finally, to comply
with the regulations under S-K 1300, we are filing the S-K 1300 Elk Creek Technical Report Summary as an exhibit to this Annual
Report on Form 10-K.
During fiscal
year 2022 we also advanced our efforts to optimize our process design to contemplate the recovery and production of REEs, including
completion of bench and pilot scale testing on elements of the current metallurgical flowsheet as well as illustrating that NioCorp
can recover and produce high purity, fully separated magnetic rare earth products, such as neodymium-praseodymium oxide, dysprosium
oxide, and terbium oxide in addition to the niobium, scandium, and titanium products already planned for production by the Company,
once Project financing is secured and additional work has been completed on the technical and economic feasibility of adding REEs
to the Elk Creek Projects’ existing planned product suite. Following the success of this testing, the Company advanced the
construction of a demonstration-scale test plant (the “Demonstration Plant”) located in Trois-Rivières, Quebec.
Construction of the Demonstration Plant encountered supply chain delays which negatively impacted our estimation of the completion
date; however, as of September 6, 2022, construction of the Demonstration Plant was substantially completed, and commissioning
has been initiated. The Demonstration Plant is expected to confirm the results of the bench and pilot scale testing noted above,
as well as provide updated recovery percentages for the niobium, scandium, titanium and REEs we intend to produce. The Demonstration
Plant results would then be used to finalize the design of the optimized production plant for the Elk Creek Project along with
demonstrating potential metallurgical recoveries for the prospective magnetic rare earth products.
Information
regarding the Elk Creek Project is discussed below under Item 2., “Properties.”
Emerging
Growth Company Status
Prior
to June 30, 2022, we qualified as an “emerging growth company” as defined in Section 101 of the United States Jumpstart
Our Business Startups Act of 2012. We lost our status as an emerging growth company as of June 30, 2022, and are now subject to
Section 14A(a) and (b) of the Exchange Act beginning with our fiscal year starting July 1, 2022. However, notwithstanding the
loss of our status as an emerging growth company, we will continue to be exempt from Section 404(b) of the Sarbanes-Oxley Act
of 2002 for so long as we are neither a “large accelerated filer” nor an “accelerated filer” as those
terms are defined in Rule 12b-2 under the Exchange Act.
Corporate
Structure
The
Company’s business operations are conducted primarily through ECRC. The table below 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.
| ● | 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 automobiles,
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. |
| ● | 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. |
| ● | 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. |
During
fiscal year 2022, the Company also advanced work on the determination of the economic potential of expanding its currently planned
product suite from the Elk Creek Project to include REEs.
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.
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, strong demand for some minerals in many countries is lifting 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. Price ($/kg-Nb)(1) |
Sc2O3
U.S. Price ($/kg)(2) |
TiO2
U.S. Price ($/kg)(3) |
| 2021 |
$44 |
$2,200 |
$1.50 |
| 2020 |
37 |
3,800 |
1.18 |
| 2019 |
39 |
3,900 |
1.13 |
| 2018 |
38 |
4,600 |
1.03 |
| 2017 |
37 |
4,600 |
0.74 |
| (1) | Source:
Argus Metal Prices, average annual ending price, 2021. Ferroniobium 65% niobium content,
FOB U.S. warehouse. |
| (2) | Source:
USGS Mineral Commodity Summary, 2022. Sc2O3, 99.99% purity, 5-kilogram
(“kg”) lot size. |
| (3) | Source:
USGS Mineral Commodity Summary, 2022. Rutile mineral concentrate, bulk, minimum 95% TiO2,
f.o.b. Australia. |
As
NioCorp is a development stage issuer and 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 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 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.
Human
Capital
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.
As
of June 30, 2022, we had eight full-time employees as well as one contract employee. In addition, we use consultants with specific
skills to assist with various aspects of our corporate affairs, project evaluation, due diligence, corporate governance and property
management.
Our
compensation programs are designed to align compensation of our employees with the Company’s performance and to provide
the proper incentives to attract, retain and motivate employees to achieve superior results. The structure of our compensation
programs balances competitive wages and benefits and incentive earnings for both short-term and long-term performance.
Our
priority to maintain a culture of ethical performance as a core value is reflected in the Company’s Code of Conduct (as
defined below) and other related policies. Oversight is provided by the Company’s Board of Directors and, for specific areas
of performance, by committees of the Board of Directors. Employees are required to review the Code of Conduct on a periodic basis.
Our compensation programs also include consideration of ethical performance in determining incentive awards.
The
Company also provides a robust suite of benefits to our employees, including 401(k) participation, medical-insurance options,
and programs to encourage and support the whole person.
Forward-Looking
Statements
This
Annual Report on Form 10-K and the exhibits attached hereto contain “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning
of applicable Canadian securities legislation (collectively, “forward-looking statements”). Such forward-looking statements
concern our anticipated results and developments in the operations of the Company in future periods, planned exploration activities,
the adequacy of the Company’s financial resources, and other events or conditions that may occur in the future.
Forward-looking
statements have been based upon our current business and operating plans, as approved by the Company’s Board of Directors;
our cash and other funding requirements and timing and sources thereof; results of feasibility studies; the accuracy of mineral
resource and reserve estimates and assumptions on which they are based; the results of economic assessments and exploration activities;
and current market conditions and project development plans. The material assumptions used to develop the forward-looking statements
and forward-looking information included in this Annual Report on Form 10-K include: our expectations of mineral prices; our forecasts
and expected cash flows; our projected capital and operating costs; accuracy of mineral resource estimates and resource modeling
and feasibility study results; expectations regarding mining and metallurgical recoveries; timing and reliability of sampling
and assay data; anticipated political and social conditions; expected national and local government policies, including legal
reforms; successful advancement of the Company’s required permitting processes; and the ability to successfully raise additional
capital.
Forward-looking
statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “potential,” “possible,” and similar expressions, or statements
that events, conditions, or results “will,” “may,” “could,” or “should” (or the
negative and grammatical variations of any of these terms) occur or be achieved. 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.
Such forward-looking statements reflect the Company’s current views with respect to future events and are subject to certain
known and unknown risks, uncertainties, and assumptions. Many factors could cause actual results, performance, or achievements
to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking
statements, including, among others, risks related to the following:
Risks
Related to Our Business:
| |
● |
risks
related to our ability to operate as a going concern; |
| |
● |
risks
related to our requirement of significant additional capital; |
| |
● |
risks
related to our limited operating history; |
| |
● |
risks
related to our history of losses; |
| |
● |
risks
related to cost increases for our exploration and, if warranted, development projects; |
| |
● |
risks
related to a disruption in, or failure of, our information technology (“IT”) systems, including those related
to cybersecurity; |
| |
● |
risks
related to equipment and supply shortages; |
| |
● |
risks
related to current and future offtake agreements, joint ventures, and partnerships; |
| |
● |
risks
related to our ability to attract qualified management; |
| |
● |
risks
related to the effects of the COVID-19 pandemic or other global health crises on our business plans, financial condition and
liquidity; and |
| |
● |
risks
related to the ability to enforce judgment against certain of our directors. |
Risks
Related to Mining and Exploration:
| |
● |
risks
related to estimates of mineral resources and reserves; |
| |
● |
risks
related to mineral exploration and production activities; |
| |
● |
risks
related to our lack of mineral production from our properties; |
| |
● |
risks
related to the results of our metallurgical testing; |
| |
● |
risks
related to the price volatility of commodities; |
| |
● |
risks
related to the establishment of a reserve and resource for REEs and the development of a viable recovery process for REEs; |
| |
● |
risks
related to the estimation of mineral resources and mineral reserves; |
| |
● |
risks
related to changes in mineral resource and reserve estimates; |
| |
● |
risks
related to competition in the mining industry; |
| |
● |
risks
related to the management of the water balance at our Elk Creek Project; |
| |
● |
risks
related to claims on the title to our properties; |
| |
● |
risks
related to potential future litigation; and |
| |
● |
risks
related to our lack of insurance covering all our operations. |
Risks
Related to Government Regulations:
| |
● |
risks
related to our ability to obtain or renew permits and licenses for production; |
| |
● |
risks
related to government and environmental regulations that may increase our costs of doing business or restrict our operations; |
| |
● |
risks
related to changes in federal and/or state laws that may significantly affect the mining industry; |
| |
● |
risks
related to the impacts of climate change, as well as actions taken or required by governments related to strengthening resilience
in the face of potential impacts from climate change; and |
| |
● |
risks
related to land reclamation requirements. |
Risks
Related to Our Debt:
| |
● |
risks
related to covenants contained in agreements with our secured creditors that may affect our assets; and |
| |
● |
risks
related to the extent to which our level of indebtedness may impair our ability to obtain additional financing. |
Risks
Related to Our Common Shares:
| |
● |
risks
related to qualifying as a “passive foreign investment company” under the U.S. Internal Revenue Code of 1986,
as amended; and |
| |
● |
risks
related to our Common Shares, including price volatility, lack of dividend payments, dilution and penny stock rules. |
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 Annual Report on Form 10-K.
ITEM
1A. RISK FACTORS
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
notes that accompany our financial statements for the year ended June 30, 2022, disclose that substantial doubt exists as to our
ability to continue as a going concern. The financial statements included in this Annual Report on Form 10-K have been prepared
under the assumption that we will continue as a going concern. We are a development stage issuer 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.
As discussed further below, while we have been successful in doing so in the past, there can be no assurance we will be able to
raise funds in the future. 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, 2022, the Company had cash of $5.3 million and working capital of $2.0 million, compared to cash of $7.3 million and
working capital of $3.4 million on June 30, 2021.
As
of June 30, 2022, the Company’s current planned operational needs are approximately $9.5 million through the end of fiscal
2023. From the date of this Annual Report on Form 10-K, the Company anticipates that it does not have sufficient cash to continue
to fund basic operations for the next twelve months. This includes 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 fund basic operations as well as 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 a development stage property. Advancing our Elk Creek Project from a development stage property to a production
stage property 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:
| ● | the
timing and cost, which can be considerable, of further exploration, preparing feasibility
studies, permitting, engineering and construction of infrastructure, mining, and processing
facilities; |
| ● | the
availability and costs of drilling equipment, exploration personnel, skilled labor, and
mining and processing equipment, if required; |
| ● | the
availability and cost of appropriate smelting and/or refining arrangements, if required; |
| ● | compliance
with environmental and other governmental approval and permit requirements; |
| ● | the
availability of funds to finance exploration, development, permitting, and construction
activities, as warranted; |
| ● | potential
opposition from non-governmental organizations, local groups, or local residents that
may delay or prevent development activities; |
| ● | potential
increases in exploration, construction, and operating costs due to changes in the cost
of fuel, power, materials, and supplies; and |
| ● | potential
shortages of mining, mineral processing, hydrometallurgical, pyrometallurgical, construction,
and other facilities-related supplies. |
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 for exploration companies
to experience unexpected problems and delays during development, if commenced, including engineering, procurement, construction,
commissioning and ramp-up. Accordingly, our activities may not result in profitable operations and we may not succeed in establishing
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:
| ● | $9,929
for the year ended June 30, 2022; |
| ● | $4,390
for the year ended June 30, 2021; and |
| ● | $4,001
for the year ended June 30, 2020. |
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 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, aluminum, iron, 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.
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 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.
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, project 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. Ongoing disruptions to the world’s economy, including issues
related to supply chains and the COVID-19 pandemic, may delay our ability to secure supplies and equipment for the Elk Creek Project
on a timely basis
Joint
ventures and other partnerships, including offtake arrangements, may expose us to risks.
We
have entered into three offtake agreements and one letter of intent 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.
The
effect on the capital markets and the economy of recent global events, including the COVID-19 pandemic, could have an adverse
effect on NioCorp’s business plans, financial condition and liquidity.
As
a result of the ongoing COVID-19 pandemic and the Russian invasion of Ukraine, certain events have affected the global and United
States economies, including increased inflation, supply chain issues, additional volatility in commodity prices, and uncertain
capital markets with declines in leading market indexes. In addition, in the U.S., the Federal Reserve has begun raising interest
rates sharply, the continuation of which could lead to a recession with uncertain and potentially severe impacts upon most operating
sectors. We cannot predict how this will affect our business, but the impact may be adverse.
Although
it is not possible to predict the ultimate impact of the COVID-19 pandemic, or other global health crises, on NioCorp’s
business plans, financial position or liquidity, such impacts that may be material include, but are not limited to: (i) inability
to obtain necessary licenses or permits due to impacts on the operations of local, state and federal regulatory agencies, (ii)
delays in the completion of the mine and surface engineering designs and uncertainty regarding our ability to finalize necessary
Engineering, Procurement, and Construction (“EPC”) agreements as a result of disruptions in the businesses of our
engineering consultants and key contractors for the Elk Creek Project, (iii) reduced availability and productivity of our employees,
(iv) increased operational risks as a result of remote work arrangements, including the potential effects on internal controls,
as well as cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other
similar events, (v) a negative impact on our liquidity position, and (vi) increased costs and less ability to access funds under
our existing credit facility and the capital markets. The full extent to which the COVID-19 pandemic, or other global health crises,
and our precautionary measures may continue to impact our business will depend on future developments, which continue to be highly
uncertain and cannot be predicted at this time.
In
addition, we cannot predict the impact that the COVID-19 pandemic, or other global health crises, will have on our customers,
suppliers, vendors, and other business partners, and each of their financial conditions; however, any material effect on these
parties could adversely impact us. The impact of the COVID-19 pandemic, or other global health crises, may also exacerbate other
risks discussed herein, any of which could have a material effect on us. This situation is changing rapidly, and additional impacts
may arise that we are not aware of currently.
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:
| ● | 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 |
| ● | 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. |
Risks
Related to Mining and Exploration
We
face numerous uncertainties in estimating our mineral reserves and resources and inaccuracies in our estimates could result in
lower than expected revenues, higher than expected costs and decreased profitability.
A
mineral is economically recoverable when the price at which we may sell the mineral exceeds the costs and expenses of mining and
selling the mineral. Forecasts of our future performance are based on, among other things, estimates of our mineral reserves.
We base our reserve and resource information on engineering, economic and geological data assembled and analyzed by qualified
persons, which include various engineers and geologists on our staff and of third parties. Our estimates are also subject to SEC
regulations regarding classification of reserves and resources, including S-K 1300. Our reserve and resource estimates as to both
quantity and quality are updated from time to time to reflect additional information received. There are numerous uncertainties
inherent in estimating quantities and qualities of mineral reserves and resources, including many factors beyond our control.
Estimates
of mineral reserves and resources necessarily depend upon a number of variable factors and assumptions, any one of which may,
if incorrect, result in an estimate that varies considerably from actual results. These factors and assumptions include, but are
not limited to:
| ● | geologic
and mining conditions, which may not be fully identified by available exploration data
and may differ from our experience; |
| ● | demand
for the minerals that we plan to produce; |
| ● | current
and future market prices for minerals and contractual arrangements; |
| ● | current
and future operating costs and capital expenditures may exceed estimates, notwithstanding
that, under S-K 1300, operating cost and capital expenditure estimates in feasibility
studies must have an accuracy level of at least ±15% and a contingency range not
exceeding 10%; |
| ● | severance
and excise taxes, royalties and development and reclamation costs; |
| ● | future
mining technology improvements; |
| ● | the
effects of regulation by governmental agencies; |
| ● | the
ability to obtain, maintain and renew all required permits; |
| ● | employee
health and safety; and |
| ● | historical
production from the area compared with production from other producing areas. |
The
conversion of reported mineral resources to mineral reserves should not be assumed, and the reclassification of reported mineral
resources from lower to higher levels of geological confidence should not be assumed. As such, actual mineral tonnage recovered
from identified reserves, and revenues and expenditures with respect to our reserves, may vary materially from estimates. Thus,
these estimates may not accurately reflect our actual reserves. Any material inaccuracy in our estimates related to our reserves
could result in lower than expected revenues, higher than expected costs or decreased profitability, which could materially and
adversely affect our business, results of operations, financial position and cash flows.
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:
| ● | economically
insufficient mineralized material; |
| ● | fluctuation
in production costs that make production uneconomical; |
| ● | unanticipated
variations in grade and other geologic problems; |
| ● | difficult
surface or underground conditions; |
| ● | metallurgical,
pyrometallurgical, and other processing problems; |
| ● | mechanical
and equipment performance problems; |
| ● | failure
of dams, stockpiles, wastewater transportation systems, or impoundments; |
| ● | unusual
or unexpected rock formations; and |
| ● | personal
injury, fire, flooding, cave-ins, and landslides. |
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 mining 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 mining properties. We do not produce commercial products and
do not currently generate operating earnings. While we seek to move our Elk Creek Project from a development stage property to
a production stage property, such efforts will be subject to all of the risks associated with establishing new mining operations
and business enterprises, including:
| ● | the
timing and cost, which are considerable, of the construction of mining and processing
facilities; |
| ● | the
availability and costs of skilled labor and equipment; |
| ● | compliance
with environmental and other governmental approval and permit requirements; |
| ● | the
availability of funds to finance construction and development activities; |
| ● | potential
opposition from non-governmental organizations, local groups, or local residents that
may delay or prevent development activities; and |
| ● | potential
increases in construction and operating costs due to changes in the cost and availability
of labor, fuel, power, materials, equipment and supplies, and the time elapsed since
the most recent estimates of cost and availability were made. |
It
is common in new mining and processing operations to experience unexpected problems and delays during engineering, procurement,
construction, commissioning, and initial operations. 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 production and increased costs of production. Accordingly, we cannot assure you that our activities will result in profitable
operations or that we will successfully establish mining and processing 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.
Sc2O3
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 existing metallurgical plants, primarily in Russia, Canada, the Philippines,
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 TiO2
that would result from normal variations in supply and demand for this commodity.
We
may not be able to establish a viable recovery process for REEs.
The
market for rare earth products requires particular levels of purity and chemical form, which are achieved through the extraction
and separation of individual REEs from each other as well as from the other constituents in the rare earth ore. At present, the
Company has not completed the engineering or testing of a process for producing commercial rare earth products and has further
not declared a REE reserve estimate for the Elk Creek deposit. The completion of the work necessary to demonstrate an economically
feasible rare earth recovery system will require significant expenditures of cash and considerable time to complete. There is
no guarantee that the Company will be successful in demonstrating positive economics for a rare earth recovery system tied to
the Elk Creek Project, nor is there any guarantee that once constructed, the rare earth recovery system will operate as designed
and produce saleable commercial products.
Estimates
of resources and reserves 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 resources/reserves within the earth using statistical sampling techniques. Estimates of any resources/reserves
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 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.
Mineral
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 and reserve estimates included in the S-K 1300 Elk Creek Technical Report Summary and contained in this Annual Report
on 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 resource/reserve estimates uneconomic and may result
in reduced reported resources/reserves or may adversely affect any commercial viability determinations we may reach. Any material
reductions in estimates of resources/reserves could have a material adverse effect on our Common Share price and on the value
of our properties.
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 water balance management 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. Further, based on such plans, the operations will rely on a water treatment system to achieve zero
discharge of wastewater, and there is no guarantee that this system will function as designed or achieve nameplate treatment capacity.
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 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 additional property, which, along with the property we already own, will allow us
to construct the Elk Creek Project once sufficient project financing is obtained. 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/reserve and, to the best of our knowledge, our rights in relation to lands
covering the Elk Creek Project resource/reserve 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, which are important
for operations, are of fixed duration and expire between December 2024 and May 2040.
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, mining, and surface 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.
Risks
Related to Government Regulation
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:
| ● | laws
and regulations governing mineral concession acquisition, prospecting, development, mining,
and production; |
| ● | laws
and regulations related to exports, taxes, and fees; |
| ● | labor
standards and regulations related to occupational health and mine safety; and |
| ● | environmental
standards and regulations related to waste disposal, toxic substances, land use reclamation,
and environmental protection. |
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 while the State does have a comprehensive and modern
set of environmental regulations, it does not have specific regulations with respect to permitting or reclaiming mines which could
potentially impact the total time to market for the project.
Our
activities are subject to environmental laws and regulations that may change, thereby increasing our costs of doing business and
restricting 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:
| ● | control
dispersion of potentially deleterious effluents; |
| ● | treat
ground and surface water to achieve water quality standards; and |
| ● | reasonably
re-establish pre-disturbance landforms and vegetation. |
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.
Risks
Related to Our Debt
In
the event of certain breaches with our Secured Creditors, our assets may be affected.
We
have, in connection with the Smith Credit Agreement, granted security interests to Mark Smith (the “Secured Creditor”)
over all of the assets of the Company in consideration of the debt facilities provided by the Secured Creditor. In the event of
certain breaches of the terms of the Smith Credit Agreement, the Secured Creditor may be entitled to execute on its security interest
and seize or retain our assets, including the shares of 0896800 and ECRC, as well as any assets of either subsidiary. Certain
rights of the Secured Creditor to execute on its 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, 2022 and 2021 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:
| ● | disappointing results from our exploration and/or, if warranted, project development efforts; |
| ● | decline in demand for Common Shares; |
| ● | downward
revisions in securities analysts’ estimates or changes in general market conditions;
|
| ● | technological
innovations by competitors or in competing technologies;
|
| ● | investor
perception of our industry or our prospects; and
|
| ● | general
economic trends.
|
In
the past fiscal year, the trading price of our stock on the TSX has ranged from a low of C$0.76 to a high of C$1.75. 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.
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 or $300, 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.
| ITEM
1B. | UNRESOLVED
STAFF COMMENTS |
None.
Elk
Creek Project, Nebraska
Our
principal mineral property is the Elk Creek Property, a niobium, scandium and titanium development stage property. The Elk Creek
Project has established indicated and inferred resources along with probable reserves and the Company has completed a feasibility
study for the project. The below information is in part summarized or extracted from our S-K 1300 Elk Creek Technical Report Summary,
which is filed as Exhibit 96.1 to this Annual Report on Form 10-K. The Company does not have any other material properties.
The qualified
persons responsible for preparing the S-K 1300 Elk Creek Technical Report Summary are Dahrouge Geological Consulting USA Ltd.;
Understood Mineral Resources Ltd.; Optimize Group; Tetra Tech; Adrian Brown Consultants Inc.; Metallurgy Concept Solutions; Magemi
Mining Inc.; L3 Process Development; A2GC; Scott Honan, M.Sc, SME-RM, NioCorp; Everett Bird, P.E., Cementation; Matt Hales, P.E., Cementation; Mahmood Khwaja, P.E., CDM Smith; Martin Lepage, P.Eng, Ing., Cementation; and Wynand
Marx, M.Eng, BBE Consulting. A matrix of the sections for which each qualified person is responsible is included in the S-K 1300
Elk Creek Technical Report Summary. Except for Scott Honan, none of the qualified persons is affiliated with the Company. Mr. Honan
is the Chief Operating Officer of the Company.
Property
Description and Location
The
Elk Creek Property is a carbonatite deposit located in Johnson County, southeast Nebraska, USA. The carbonatite contains elements
of economic significance, including niobium, titanium, and scandium, as well as potential economic significance for rare earth
products. The Elk Creek Property is situated as shown 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 11E and Sections 19-23, 25-36; Township 4N, Range 11E, 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.
Title
and Ownership
Land
in the project area is exclusively owned by private entities, and there is no federal or state land in the project area. The Company
has secured its rights to the project area by purchasing land from private landowners or by entering into agreements with the
landowners as described below.
The
Company currently owns one 226.43-acre parcel of land and associated mineral rights, and an additional 40 acres of mineral rights,
within the carbonatite footprint. The Elk Creek Project’s mine infrastructure and a portion of the supporting operations
is planned to be located on this land parcel. Ownership of the mineral rights discussed above includes a 2% NSR royalty and grants
us access to more than 90% of the Elk Creek Project’s mineral resources and mineral reserves.
As
of June 30, 2022, the total book value of the Elk Creek Property and associated buildings and equipment was $16.9 million.
The
Company also holds eight OTPs that are associated with the Elk Creek Project and one perpetual easement of a land parcel along
the Missouri River. The current optioned land package covers an area of 1,396 acres and is reflective of the land needed to secure
the remaining mineral resources and mineral reserves held under the OTPs along with the land needed for the development and operations
of the Elk Creek Project for its proposed 38-year operating life.
In
general, exercise of an OTP is accomplished by paying the greater of a fixed amount per acre or a multiple of the appraised value
at the time of purchase. If the land is not purchased by the Company during the term of the OTP and the land in question is needed
for the project, the Company will negotiate a new OTP with the landowner. The OTP is accompanied by a negotiated payment to the
landowner that is paid upon execution of the OTP by the Company and the landowner. As of June 30, 2022, the Company is obligated
to make payments totalling approximately $61 over the next 13 years to maintain our rights under these OTPs. Details on the current
OTPs held by the Company are shown in the table below.
Active
Lease Agreements (OTP’s) Covering the Elk Creek Project as of September 2022
| Agreement
Identifier |
Hectares |
Acres |
Agreement
Expiry |
| Beethe007 |
66.27 |
163.75 |
20-Jan-26 |
| Heidemann005 |
79.55 |
196.57 |
16-Mar-25 |
| Nielsen001 |
100.90 |
249.32 |
25-Jun-25 |
| Nielsen002 |
11.91 |
29.43 |
25-Jun-25 |
| Woltemath80S |
32.37 |
80.00 |
4-Dec-24 |
| Woltemath002 |
152.49 |
376.81 |
4-Dec-24 |
| Woltemath003J |
89.03 |
220.00 |
25-Mar-25 |
| Shuey001 |
32.37 |
80.00 |
27-May-40 |
The
OTPs are between NioCorp’s wholly owned subsidiary ECRC and the individual landowners. Land subject to the OTP agreements
is currently used for agricultural purposes, including growing row crops (corn and soybeans) and pasturing livestock. The land
owned by ECRC houses the company drill core and geological sample repository in two steel core shed buildings and the company
maintains a cover crop (sorghum and rye) on portions of the property that were formerly used for growing row crops. The former
landowner maintains a residence and several outbuildings on the property subject to a life estate that accompanied the purchase
of the property by the Company in fiscal year 2021.
The
agreements that involve mineral rights include a 2% NSR royalty attached with the OTP. The OTPs grant the Company an exclusive
right to explore and evaluate the property for the term thereof, with an option to purchase 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 option to purchase
the surface rights only, it does not contain an NSR provision.
Land
Tenure Map as of September 2022
The
current estimated mineral resource and reserve is wholly contained within land owned by the Company and parcel Woltemath003J.
The Company considers these two properties to be the only properties on which the Company’s development of the Elk Creek
Project is substantially dependent.
As
part of the OTPs, 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.
Accessibility,
Physiography, Climate and Infrastructure
The
Elk Creek Property is easily accessible year-round as it is situated approximately 45 miles southeast of Lincoln, Nebraska, the
state capital, 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.
The
Elk Creek Property is immediately adjacent to paved Nebraska state highway 50, and the mineral resource and mineral reserve are
centered in Township 4N, Range 11E, Section 33. This section is immediately southwest of the junction of Nebraska state highways
50 and 62. Rail access is available in the town of Elk Creek, which is located 3 miles east of the project area. Water is available
at the project site from a well, as well as from Elk Creek, which crosses Section 33. Water is also available from the Johnson
County Rural Water system, which has distribution infrastructure on the north side of the Section 33 and from the Pawnee County
Rural Water system, which has distribution infrastructure on the south side of Section 33. Electricity is provided at the Company’s
Core Storage sheds located on the west side of Section 33 on land owned by the Company from the Omaha Public Power District (“OPPD”).
Personnel are available from the local surrounding towns, including Elk Creek (3 miles east), Tecumseh (6 miles north), Steinauer
(5 miles south), Pawnee City (10 miles south) and Syracuse (20 miles north). Due to the project’s location in Nebraska,
there are no ports nearby.
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.
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 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 “—2022 Elk Creek 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 ft above sea level. Bedrock outcrop exposure is nonexistent in the Elk Creek Project
area.
The
majority of the area around the Elk Creek Project 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
Elk Creek Property includes a Carbonatite that has intruded older Precambrian granitic and low- to medium-grade metamorphic basement
rocks. The Carbonatite is an elliptical magmatic body with a 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. 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.
Mineralization
The
property hosts niobium, titanium, and scandium mineralization as well as REEs 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 Rare Earth Developments Corp (“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 and reserve estimates. Five additional
holes, with a total length of 3,353.1 m, were drilled for hydrogeologic and geotechnical purposes in 2015. No sampling has been
completed of these five holes to date and therefore they have not been considered for the mineral resource or reserve estimates.
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.
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 |
|
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 m by 610 m (roughly 2,000 ft 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
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 and reserve 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. 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.
During
fiscal year 2022, NioCorp collected a total of 1,095 samples originating from 18 diamond drill holes completed by MolyCorp, as
discussed above. These samples were collected, and subsequently assayed, in order to fill in gaps in our records regarding REE
grades and tonnage that may exist in the deposit. Assaying was conducted at Actlabs in Ancaster, Ontario. The assay results were
subjected to a Quality Assurance and Quality Control (“QA/QC”) program consistent with industry best practices.
A
list of the drillholes, sample storage location, and number of assay results, related to the records gaps noted above, are presented
below and are represented as blue drillhole intervals. Each sample represented a 5-foot section of drill core. All of the holes
noted below were drilled into the Elk Creek carbonatite in the vicinity of the mineral resource for the Elk Creek Project.
2021
Sampling Summary
| Resource
Area Drillholes |
Source
/ Storage Facility |
Samples
selected for REE and Sc Assays |
| EC-011 |
Molycorp
Samples / Mead Core Warehouse |
65 |
| EC-014 |
Molycorp
Samples / Mead Core Warehouse |
16 |
| EC-015 |
Molycorp
Samples / Mead Core Warehouse |
151 |
| EC-016 |
Molycorp
Samples / Mead Core Warehouse |
26 |
| EC-018 |
Molycorp
Samples / Mead Core Warehouse |
92 |
| EC-019 |
Molycorp
Samples / Mead Core Warehouse |
53 |
| EC-020 |
Molycorp
Samples / Mead Core Warehouse |
30 |
| EC-021 |
Molycorp
Samples / Mead Core Warehouse |
45 |
| EC-022 |
Molycorp
Samples / Mead Core Warehouse |
57 |
| EC-024 |
Molycorp
Samples / Mead Core Warehouse |
19 |
| EC-026 |
Molycorp
Samples / Mead Core Warehouse |
86 |
| EC-027 |
Molycorp
Samples / Mead Core Warehouse |
34 |
| EC-029 |
Molycorp
Samples / Mead Core Warehouse |
27 |
| EC-030 |
Molycorp
Samples / Mead Core Warehouse |
25 |
| EC-031 |
Molycorp
Samples / Mead Core Warehouse |
47 |
| EC-032 |
Molycorp
Samples / Mead Core Warehouse |
111 |
| EC-034 |
Molycorp
Samples / Mead Core Warehouse |
54 |
| EC-037 |
Molycorp
Samples / Mead Core Warehouse |
74 |
| EC-054 |
Molycorp
Samples / Mead Core Warehouse |
83 |
| |
Total |
1,095 |
Resource
Area Assay Distribution Showing REE Assays (Red) and REE Assay Gaps (Blue).
Internal
Controls
NioCorp
integrated a series of routine QA/QC procedures throughout the sampling and analytical analysis for drilling programs to ensure
the highest level of quality was maintained throughout the process leading to the estimate of mineral reserves and mineral resources
for the Elk Creek Project. This included the insertion of duplicate samples taken from various stages of the process, insertion
of known control samples (standard reference materials, certified reference materials (“CRM”), and blanks) and sending
third-party pulps to the secondary lab (SGS Canada Inc.).
Sample
tickets were assigned initially at the core shed using barcodes with duplicate tickets placed inside and on the outside of the
bag. Sample identification was confirmed using barcode labelling and visual sample type comparisons before sample shipment. The
use of barcoded samples ensured both shipment forms and analytical labs used accurate information. Multiple types of QC samples
were inserted at this stage of the process, which includes the following:
| ● | Field
quartz blanks (1 in 20, or 5%) were inserted within or immediately after samples collected
from mineralized intervals, targeting zones of elevated visual mineralization, where
possible. |
| ● | CRMs
(1 in 20, or 5%) were inserted in the field with the sample sequence. |
| ● | Field
quarter-core duplicates (1 in 20, or 5%) were inserted to test mineralization and sampling
variability. |
Additional
details on the QA/QC program can be found in Section 8 of the S-K 1300 Elk Creek Technical Report Summary.
Mineral
deposits, including the Elk Creek deposit, are inherently uncertain because of variability at all scales and sparse sampling.
In addition to uncertainty associated with estimation, there are specific risks and sources of uncertainty associated with the
Elk Creek deposit. See Item 1A, Risk Factors.
S-K
1300 and other similarly purposed International Codes (JORC, 2012; NI 43-101, 2014) are designed to require disclosure to the
public of risks relating to mineral resource and reserve estimation as identified and evaluated by a qualified person. The qualified
persons responsible for the S-K 1300 Elk Creek Technical Report Summary address the technical risks in various sections and consider
that no material technical risks are identified. Additional descriptions of the risks and uncertainty associated with reported
mineral reserves and resources can be found in Section 11 of the S-K 1300 Elk Creek Technical Report Summary.
2022
Elk Creek Feasibility Study
During
fiscal year 2022, the Company launched geological, metallurgical, engineering, and other analyses to assess the feasibility of
adding REE production to its plans once sufficient work has been completed. The Company and its consultants were required to complete
additional assays of historical drill core to fill data gaps in the existing resource database to establish an REE mineral resource.
The mine plan was also updated. To comply with S-K 1300 regulations, we are filing the S-K 1300 Elk Creek Technical Report Summary
as an exhibit to this Annual Report on Form 10-K, which was based on the economic and process results of the feasibility study
conducted by the qualified persons, which were also presented in the 2022 NI 43-101 Elk Creek Technical Report.
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 38-year mine life includes 171,140 tonnes of payable niobium,
3,676 tonnes of Sc2O3, and 431,793 tonnes of TiO2. Estimated up-front direct capital costs are
$760 million, in addition to indirect costs of $187 million, pre-production capital costs of $92 million, an overall contingency
of $102 million, and pre-production net revenue credit of $257 million.
Financial
Analysis Included in the 2022 Elk Creek Feasibility Study
The
metrics reported in the S-K 1300 Elk Creek Technical Report Summary are based on the cash flow model results. The metrics are
on both a pre-tax and after-tax basis, on a 100% equity basis with no Elk Creek Project financing inputs and are in first quarter
2019 U.S. constant dollars. Foreign exchange impacts were deemed negligible as most, if not all, costs and revenues are denominated
in U.S. dollars. Key criteria used in the analysis are discussed in detail throughout this section. “US$” refers to
whole U. S. Dollars.
Principal
Project Assumptions Included in the 2022 Elk Creek Feasibility Study
| Description |
Value |
| Pre-Production
Period |
4
years |
| Process
Plant Life |
38
years |
| Mine
Operating Days per Year |
365 |
| Mill
Operating Days per Year |
365 |
| Discount Rate, End of Period |
@
8% |
| Commercial
Production Year |
2025
|
Summary
of Key Evaluation Metrics Included in the 2022 Elk Creek Feasibility Study
| Description | |
Value | |
| Ore Mined (kt) | |
| 36,655 | |
| Ore Mining Rate (t/d) | |
| 2,764 | |
| Niobium Grade | |
| 0.81 | % |
| Scandium Grade (parts per million, “ppm”) | |
| 70.2 | |
| TiO2 Grade | |
| 2.92 | % |
| Contained Nb2O5 (kt) | |
| 297 | |
| Contained Sc (t) | |
| 2,573 | |
| Contained TiO2 (kt) | |
| 1,071 | |
| Total Ore Processed (kt) | |
| 36,655 | |
| Processing Rate (kt/y) | |
| 1,009 | |
| Average Recovery, Nb2O5 | |
| 82.4 | % |
| Average Recovery Sc | |
| 93.1 | % |
| Average Recovery TiO2 | |
| 40.3 | % |
| Recovered Nb2O5 (kt) | |
| 245 | |
| Recovered Sc (t) | |
| 2,395 | |
| Recovered TiO2 (kt) | |
| 432 | |
| Realized Market Prices | |
| | |
| Nb (US$/kg) | |
$ | 46.55 | |
| TiO2 (US$/kg) | |
$ | 0.99 | |
| Sc2O3 (US$/kg) | |
$ | 3,674 | |
| Payable Metal | |
| | |
| Nb (t) | |
| 171,140 | |
| Sc2O3 (t) | |
| 3,676 | |
| TiO2 (t) | |
| 431,793 | |
Summary
Projected Economic Results Included in the 2022 Elk Creek Feasibility Study
| Description | |
Value ($000) | |
| Total Gross Revenue | |
$ | 21,899,726 | |
| Operating Costs: | |
| | |
| Mining Cost | |
| (1,553,325 | ) |
| Process Cost | |
| (3,911,116 | ) |
| Site G&A Cost | |
| (300,400 | ) |
| Concentrate Freight Cost | |
| (10,472 | ) |
| Other Infrastructure Costs | |
| (200,407 | ) |
| Water Management Cost | |
| (609,195 | ) |
| Tailings Management Cost | |
| (73,822 | ) |
| Property Tax | |
| (217,540 | ) |
| Royalties | |
| (300,503 | ) |
| Annual Bond Premium | |
| (5,500 | ) |
| Total Operating Costs | |
| (7,182,280 | ) |
| Operating Margin (EBITDA1) | |
| 14,717,445 | |
| Effective Tax Rate | |
| 16.42 | % |
| Total Taxes | |
| (2,246,186 | ) |
| Working Capital | |
| - | |
| Operating Cash Flow | |
$ | 12,471,258 | |
| Totals
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. |
Operating
Cost Estimates Included in the 2022 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 | |
$ | 42.38 | |
| Process Cost | |
| 106.70 | |
| Water Management Cost | |
| 16.62 | |
| Site G&A Cost | |
| 8.20 | |
| Other Infrastructure | |
| 5.47 | |
| Tailings Management Cost | |
| 2.01 | |
| Other Expenses | |
| 6.22 | |
| Subtotal | |
| 187.59 | |
| Royalties/Annual Bond Premium | |
| 8.35 | |
| Total LoM Operating Costs | |
$ | 195.94 | |
| Totals
may not sum due to rounding. |
Capital
Cost Estimates Included in the 2022 Elk Creek Feasibility Study
The
following table shows the breakout in LoM initial capital and sustaining capital cost estimates (excluding closure and reclamation
of $44 million), which total $1,562 million. This includes a total initial capital cost of $1,141 million, including a 10% contingency.
| |
($000,000) |
| Description |
Initial |
Sustaining |
Total |
| Capitalized
Preproduction Expenses |
$ |
77 |
$ |
- |
$ |
77 |
| Site
Preparation and Infrastructure |
41 |
15 |
56 |
| Processing
Plant |
367 |
96 |
464 |
| Water
Management and Treatment |
74 |
24 |
97 |
| Mining
Infrastructure |
257 |
198 |
455 |
| Tailings
Management |
21 |
79 |
100 |
| Site
Wide Indirects |
7 |
- |
7 |
| Processing
Indirects |
96 |
- |
96 |
| Mining
Indirects |
41 |
- |
41 |
| Commissioning |
15 |
- |
15 |
| Owner’s
Costs |
34 |
- |
34 |
| Mine
Water Management Indirects |
9 |
- |
9 |
| Contingency |
102 |
9 |
111 |
| Total
Capital Costs |
$ |
1,141 |
$ |
422 |
$ |
1,562 |
| Totals
may not sum due to rounding. |
Planned
Mining Operations
The
Elk Creek Project is planned as an 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. 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 (Hydrochloric Acid 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 TiO2 and Sc2O3, with Nb2O5
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 Nb2O5 coming from the Hydromet plant by converting it into a saleable 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 Nb2O5 to produce a saleable ferroniobium metal.
Proposed
Production Plan and Schedule
Based on the 2022 Elk Creek Feasibility Study, the operating mine life is approximately 38 years with
a nominal processing rate of 2,764 tonnes per day. The Elk Creek Project timeline is based on 39 months to mechanical completion
after Authorization to Proceed, plus an additional six months of commissioning and 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 SMC, 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 gallons per minute of operational and processing water,
as the underground mine dewatering is only expected to produce 1,000 gallons per minute. 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 into the SMCs.
Proposed
Source of 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 charges on the electrical usage.
Proposed
Source of 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 kilometer (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 pounds per square inch gauge. Natural gas will be
used for facility heating, water heating, and for gas-fired process equipment.
Markets
Market studies for niobium, TiO2 and Sc2O3 are an important part of the
proposed Elk Creek operation. These commodities, especially niobium and Sc2O3, 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 2022 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. 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 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.
No
formal market study was done for TiO2 as it only represents 2% of overall revenue in the economic analysis. All market
information for titanium and TiO2 is derived from USGS Commodity Market Summaries (Bedinger, 2019).
Taxation
Rates Included in the 2022 Elk Creek Feasibility Study
Taxes
that may be levied on the Elk Creek Project include corporate income tax rates of 21% for federal and 5.84% 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 16.42%.
Design
Considerations for Environmental Performance
The
current mine design 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. |
| ● | 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. |
The
Company has not identified any significant encumbrances to the property it owns or holds under OTP agreements. The Company has
not had any permit violations or fines since the filing of our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.
Permitting
requirements for the project have been identified. The Company holds an Air Construction Permit from the State of Nebraska and
a Special Use Permit from Johnson County, both of which are necessary to allow the start of project construction. In addition,
the Elk Creek Project will be required to obtain a series of permits for operations from federal, state, and local agencies. The
majority of these permits are ministerial in nature and present minimal risk to the Company, and typically involve the completion
of an application and the payment of a nominal fee. Three permits from the state of Nebraska are discretionary in nature, where
an application and fee are provided to the state and the state must make a decision as to whether or not the permit will be granted.
While the risk involved in such permits is low, such discretionary permits require more processing time by the state and do require
the state agency to make a decision in favor of issuance of the permit. These three permits include the following:
| ● | Air
Operating Permit; and |
| ● | Radioactive
Materials License. |
The
cost and schedule for obtaining both the discretionary and ministerial permits is included in the overall execution plan for the
Elk Creek Project. Additional details on the project’s permitting requirements can be found in Section 17 of the S-K 1300
Elk Creek Technical Report Summary.
Mineral
Reserves and Resources
The
mineral reserves and mineral resources disclosed below are based on the S-K 1300 Elk Creek Technical Report Summary. Mineral reserves
and mineral resources at the Elk Creek Project as of June 30, 2022 are summarized in the tables below. Further discussion and
background regarding the approaches used to establish mineral reserves and mineral resources is contained in Chapters 11 and 12
of the S-K 1300 Elk Creek Technical Report Summary.
Elk
Creek Project In Situ Mineral Resource Estimate (niobium, titanium, and scandium) excluding reserves as of June 30,
2022
| Class |
NSR
Cutoff |
Tonnage
(Mt) |
|
|
| Indicated |
US$180 |
151.7 |
Nb2O5
(%) |
Nb2O5
(kt) |
| 0.43 |
649.8 |
| TiO2
(%) |
TiO2
(kt) |
| 2.02 |
3,067 |
| Sc
(ppm) |
Sc
(t) |
| 56.42 |
8,558 |
| Inferred |
US$180 |
108.3 |
Nb2O5
(%) |
Nb2O5
(kt) |
| 0.39 |
426.6 |
| TiO2
(%) |
TiO2
(kt) |
| 1.92 |
2,082 |
| Sc
(ppm) |
Sc
(t) |
| 52.28 |
5,660 |
Elk
Creek Project In Situ Mineral Resource Estimate (rare earth oxides) excluding reserves as of June 30, 2022
| Class |
NSR
Cut-off |
Tonnage
(Mt) |
|
|
|
|
|
|
|
|
| |
|
| Indicated |
US$180 |
151.7 |
La2O3
(%) |
La2O3
(kt) |
Ce2O3
(%) |
Ce2O3
(kt) |
Pr2O3
(%) |
Pr2O3
(kt) |
|
|
| 0.0766 |
116.2 |
0.1320 |
200.2 |
0.0140 |
21.3 |
|
|
| Nd2O3
(%) |
Nd2O3
(kt) |
Sm2O3
(%) |
Sm2O3
(kt) |
Eu2O3
(%) |
Eu2O3
(kt) |
|
|
| 0.0511 |
77.5 |
0.0116 |
17.6 |
0.0040 |
6.0 |
|
|
| Gd2O3
(%) |
Gd2O3
(kt) |
Tb2O3
(%) |
Tb2O3
(kt) |
Dy2O3
(%) |
Dy2O3
(kt) |
|
|
| 0.0096 |
14.6 |
0.0011 |
1.6 |
0.0044 |
6.7 |
|
|
| Ho2O3
(%) |
Ho2O3
(kt) |
Er2O3
(%) |
Er2O3
(kt) |
Tm2O3(%) |
Tm2O3
(kt) |
|
|
| 0.0006 |
1.0 |
0.0015 |
2.2 |
0.0002 |
0.3 |
|
|
| Yb2O3
(%) |
Yb2O3
(kt) |
Lu2O3
(%) |
Lu2O3
(kt) |
Y2O3
(%) |
Y2O3
(kt) |
|
|
| 0.0010 |
1.5 |
0.0001 |
0.2 |
0.0187 |
28.4 |
|
|
| LREO
(%) |
LREO
(kt) |
HREO
(%) |
HREO
(kt) |
TREO
(%) |
TREO
(kt) |
|
|
| 0.2737 |
415.2 |
0.0528 |
80.0 |
0.3265 |
495.2 |
|
|
| Inferred |
US$180 |
108.3 |
La2O3
(%) |
La2O3
(kt) |
Ce2O3
(%) |
Ce2O3
(kt) |
Pr2O3
(%) |
Pr2O3
(kt) |
|
|
| 0.0943 |
102.1 |
0.1576 |
170.6 |
0.0163 |
17.7 |
|
|
| Nd2O3
(%) |
Nd2O3
(kt) |
Sm2O3
(%) |
Sm2O3
(kt) |
Eu2O3
(%) |
Eu2O3
(kt) |
|
|
| 0.0575 |
62.2 |
0.0116 |
12.6 |
0.0038 |
4.1 |
|
|
| Gd2O3
(%) |
Gd2O3
(kt) |
Tb2O3
(%) |
Tb2O3
(kt) |
Dy2O3
(%) |
Dy2O3
(kt) |
|
|
| 0.0090 |
9.8 |
0.0010 |
1.1 |
0.0042 |
4.6 |
|
|
| Ho2O3
(%) |
Ho2O3
(kt) |
Er2O3
(%) |
Er2O3
(kt) |
Tm2O3(%) |
Tm2O3
(kt) |
|
|
| 0.0006 |
0.7 |
0.0014 |
1.5 |
0.0002 |
0.2 |
|
|
| Yb2O3
(%) |
Yb2O3
(kt) |
Lu2O3
(%) |
Lu2O3
(kt) |
Y2O3
(%) |
Y2O3
(kt) |
|
|
| 0.0010 |
1.1 |
0.0001 |
0.1 |
0.0182 |
19.7 |
|
|
| LREO
(%) |
LREO
(kt) |
HREO
(%) |
HREO
(kt) |
TREO
(%) |
TREO
(kt) |
|
|
| 0.3257 |
352.6 |
0.0512 |
55.5 |
0.3769 |
408.1 |
|
|
Notes:
| a. | Classification of mineral resources in the above tables is in accordance with the S-K 1300 classification
system. Mineral resources in this table are reported exclusive of mineral reserves. |
| b. | Mineral
resources that are not mineral reserves do not have demonstrated economic viability. |
| c. | The mineral resources are reported at a Diluted Net Smelter Return (NSR) Cut-off of US$180/tonne. |
| d. | The
diluted NSR is defined as: |
| |
● |
Diluted NSR (US$) = |
Revenue
per block Nb2O5 (diluted) + Revenue per block TiO2 (diluted) + Revenue per
block Sc (diluted) |
| Diluted tonnes per
block |
| ● | The
diluted revenue from Nb2O5, TiO2, and Sc per block used
the following factors: |
| ● | Nb2O5 Revenue: a 94% grade recovery, a 0.696 factor to convert Nb2O5
to Nb, 82.36% assumption for plant recovery, and a US$39.60 selling price per kg of ferroniobium as of June 30, 2022. |
| ● | TiO2
Revenue: a 94% grade recovery, a 40.31% assumption for plant recovery, and an US$0.88
selling price per kg of titanium oxide as of June 30, 2022.
|
| ● | Sc Revenue: a 94% grade recovery, a 1.534 factor to convert Sc to Sc2O3, 93.14%
assumption for plant recovery, and a US$3,675 selling price per kg of scandium oxide as of June 30, 2022. |
| ● | The
diluted tonnes are a 6% increase in the total tonnes of the block. |
| e. | Price
assumptions for FeNb, Sc2O3, and TiO2 as shown in note
d, above, are based upon independent market analyses for each product. |
| f. | Numbers
may not sum due to rounding. The rounding is not considered to be material. |
| g. | Rare
Earth Oxides (REO) were evaluated as a potential by-product to the mining of niobium,
titanium, and scandium; thus, the estimated values of the REOs are reported using the
previously determined diluted NSR as derived from the Nb2O5, TiO2,
and Sc mineral resources and are assigned a price of $0 |
| h. | The
stated Light Rare Earth Oxides (LREO) grade (%) is the summation of La2O3
(%), Ce2O3 (%), Pr2O3 (%), and Nd2O3
(%) estimates. |
| i. | The
stated Heavy Rare Earth Oxides (HREO) grade (%) is the summation of Sm2O3
(%), Eu2O3 (%), Gd2O3 (%), Tb2O3
(%), Dy2O3 (%), Ho2O3 (%), Er2O3
(%), Tm2O3 (%), Yb2O3 (%), Lu2O3
(%), and Y2O3 (%) estimates. |
| j. | The
stated Total Rare Earth Oxide (TREO) grade (%) is the summation of LREO (%) and HREO
(%). |
| k. | The effective date of the mineral resource, including by-products, is June 30, 2022. |
Elk
Creek Project Underground In Situ Mineral Reserves Estimate for Elk Creek as of June 30, 2022
| Classification |
Tonnage
(kt) |
Nb2O5
Grade
(%) |
Contained
Nb2O5
(t) |
Payable
Nb
(t) |
TiO2
Grade
(%) |
Contained
TiO2
(t) |
Payable
TiO2
(t) |
Sc
Grade
(ppm) |
Contained
Sc
(t) |
Payable
Sc2O3
(t) |
| Proven |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
| Probable |
36,656 |
0.81 |
297,278 |
170,409 |
2.92 |
1,071,182 |
431,793 |
70.2 |
2,573 |
3,677 |
| Total |
36,656 |
0.81 |
297,278 |
170,409 |
2.92 |
1,071,182 |
431,793 |
70.2 |
2,573 |
3,677 |
All
figures are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
| ● | The Qualified Person for the mineral reserve estimate is Optimize Group Inc. The estimate has an effective
date of June 30, 2022. |
| ● | The
mineral reserve is based on the mine design, mine plan, and cash-flow model utilizing
an average cut-off grade of 0.679% Nb2O5 with an NSR of US$180/mt. |
| ● | The
estimate of mineral reserves may be materially affected by metal prices, environmental,
permitting, legal, title, taxation, socio-political, marketing, infrastructure development,
or other relevant issues. |
| ● | The
economic assumptions used to define mineral reserve cut-off grade are as follows: |
| ● | Annual
life of mine (LOM) production rate of ~7,450 tonnes of FeNb/annum during the years of
full production. |
| ● | Initial
elevated five-year production rate ~ 7,500 tonnes of FeNb/annum when full production
is reached. |
| ● | Mining
dilution of ~6% was applied to all stopes and development, based on 3% for the primary
stopes, 9% for the secondary stopes, and 5% for ore development. |
| ● | Mining
recoveries of 95% were applied in longhole stopes and 62.5% in sill pillar stopes. |
| Parameter |
Value |
Unit |
| Mining
Cost |
42.38 |
US$/t
mined |
| Processing
|
106.70 |
US$/t
mined |
| Water
Management and Infrastructure |
16.62 |
US$/t
mined |
| Tailings
Management |
2.01 |
US$/t
mined |
| Other
Infrastructure |
5.47 |
US$/t
mined |
| General
and Administrative |
8.91 |
US$/t
mined |
| Royalties/Annual
Bond Premium |
8.34 |
US$/t
mined |
| Other
Costs |
6.29 |
US$/t
mined |
| Total
Cost |
196.72 |
US$/t
mined |
Nb2O5
to Niobium Conversion |
69.60 |
% |
| 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 |
153.40 |
% |
| Sc
Price |
3,675.00 |
US$/kg |
| ● | Price assumptions are as follows: FeNb US$39.60/kg Nb, Sc2O3 US$3,675/kg, and TiO2
US$0.88/kg. Price assumptions are based upon independent market analyses for each product as of June 30, 2022. |
| ● | 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 ferroniobium
(metallic alloy shots consisting of 65%Nb and 35% Fe), a titanium dioxide product in
powder form, and scandium trioxide in powder form. |
| ● | The
mineral reserve has an average LOM NSR of US$563.06/tonne. |
| ● | Optimize
Group has provided detailed estimates of the expected costs based on the knowledge of
the style of mining (underground) and potential processing methods (by 3rd party Qualified
Persons). |
| ● | Mineral
reserve effective date is June 30, 2022. The financial model was run after the estimate
of the NSR above, which reflects a total cost per tonne of US$196.72 versus US$189.91.
This is not considered a material change. |
| ● | Price
variances for commodities are based on independent market studies versus earlier projected
pricing. The independent market studies do not have a negative effect on the reserve. |
Comparison
of Mineral Resources and Mineral Reserves
The
following tables compares the Elk Creek Project mineral reserve estimate as of June 30, 2022, to the Elk Creek Project mineral
reserve estimate as of June 30, 2021.
| |
|
Nb2O5 |
Contained |
Payable |
TiO2 |
Contained |
Payable |
Sc |
Contained |
Payable |
|
| Classification |
Tonnage
(kt) |
Grade
(%) |
Nb2O5
(t) |
Nb
(t) |
Grade
(%) |
TiO2
(t) |
TiO2
(t) |
Grade
(ppm) |
Sc
(t) |
Sc2O3
(t) |
|
| Mineral
Reserve, as of June 30, 2022 |
| Proven |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
| Probable |
36,656 |
0.81 |
297,278 |
170,409 |
2.92 |
1,071,182 |
431,793 |
70.2 |
2,573 |
3,677 |
| Total |
36,656 |
0.81 |
297,278 |
170,409 |
2.92 |
1,071,182 |
431,793 |
70.2 |
2,573 |
3,677 |
| Mineral
Reserve, as of June 30, 2021 |
| Proven |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
| Probable |
36,313 |
0.81 |
293,321 |
168,861 |
2.86 |
1,039,050 |
418,841 |
65.7 |
2,387 |
3,410 |
| Total |
36,313 |
0.81 |
293,321 |
168,861 |
2.86 |
1,039,050 |
418,841 |
65.7 |
2,387 |
3,410 |
| Percentage
Change |
| Proven |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
| Probable |
1% |
0% |
1% |
1% |
2% |
3% |
3% |
7% |
8% |
8% |
| Total |
1% |
0% |
1% |
1% |
2% |
3% |
3% |
7% |
8% |
8% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The minor increases in probable mineral reserves were based on changes
made to the overall mining plan, which impacted the estimation of the grade of ore to be mined and delivered to the surface production
plant.
The
reporting of our mineral resource under S-K 1300 is exclusive of our mineral reserve, whereas in the prior year under NI 43-101
guidelines, our mineral resource was reported inclusive of our mineral reserve. As the mineral resource as of June 30, 2022 and
2021, were calculated and reported under differing methodologies, no meaningful comparison is available.
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 requires the Air Permit from the State of Nebraska, which was issued
to the Company on June 2, 2020. The Air Permit describes all the prospective air emissions
from the facility and required the completion of an air quality model that demonstrates
compliance with the NAAQS. On April 15, 2022, the Company announced that the NDEE advised
the Company that periodic extensions to the Elk Creek Project’s Air Permit are
no longer required because the Company has met the regulatory definition of “construction,
reconstruction, or modification of the source” since the permit was issued. |
| ● | 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. The Company
has been working with NDHHS on this aspect of project permitting since 2014. |
| ● | Documentation
of existing baseline environmental conditions at the Elk Creek Project site was initiated
in 2014 and will continue as needed throughout the permitting process. |
| ● | Surface
water monitoring will continue throughout the permitting process and extend into construction
and operations as part of the Environmental Management System and likely State of Nebraska
permit requirements. |
| ● | 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
major land-use authorization for the project was received from Johnson County, Nebraska,
on December 24, 2019, in the form of a Special Use Permit for the project. This land-use
permit is a necessary precursor to any project-related construction activities. County
zoning permits will be required for individual buildings constructed at the site, and
the County requirement is that such applications must be submitted five days before construction
commences. |
| ● | 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
On
August 9, 2021, the Company announced the completion of the first phase of testing of Elk Creek Project ore samples using HPGR
technology. Testing confirmed that the ore that NioCorp expects to mine from the Elk Creek Project site, subject to receipt of
necessary funding, can be successfully processed using HPGR technology, an energy efficient and low-emission alternative for reducing
the size of the ore to enable the recovery of niobium, scandium, and titanium.
During
the quarter ended September 30, 2021, NioCorp completed an engagement with Cementation US, Inc. (“Cementation”) to
provide a detailed cost estimate for the engineering associated with the temporary and permanent construction associated with
the Elk Creek Project’s underground mine, along with a series of technical reviews and optimization studies around key elements
of the existing mine design. Should project financing be obtained, this work will accelerate Cementation’s ability to mobilize
and commence mine construction and may result in cost savings during project execution should Cementation’s optimization
recommendations be adopted by the Company.
During
the quarter ended December 31, 2021, NioCorp engaged Olsson Associates to assist with the preparation of an Equator Principles
program for the Company, which includes an environmental and social assessment of the Elk Creek Project along with internal procedures
and management systems to formalize the Company’s longstanding commitment to leading Environmental and Social Governance
(“ESG”) practices. The Equator Principles are used by signatory financing entities to assess the ESG practices of
financing opportunities
At
present, the Company is maintaining the property in anticipation of obtaining project financing that will facilitate the construction,
commissioning, and operation of the Elk Creek Project. The property is characterized as a development stage property and is expected
to move to a production stage property should financing be obtained.
Proposed
Activities
Our
long-term financing efforts continued through fiscal year 2022. However, the COVID-19 pandemic and other recent worldwide events
have created general global economic uncertainty as well as uncertainty in capital markets, supply chain disruptions, increased
interest rates, and the potential for geographic recessions. During fiscal year 2022, these events continued to create uncertainty
with respect to overall project funding and timelines. The full extent to these events may continue to impact our business will
depend on future developments, which continue to be highly uncertain and cannot be predicted at this time.
As
funds become available through the Company’s fundraising efforts, we expect to undertake the following activities:
| |
● |
Continuation
of the Company’s efforts to secure federal, state and local permits; |
| |
● |
Continued
evaluation of the potential to produce rare earth products; |
| |
● |
Negotiation
and completion of offtake agreements for the remaining uncommitted production from the project; |
| |
● |
Negotiation
and completion of engineering, procurement and construction agreements; |
| |
● |
Completion
of the final detailed engineering for the underground portion of the Elk Creek Project; |
| |
● |
Initiation
and completion of the final detailed engineering for surface project facilities; |
| |
● |
Construction
of natural gas and electrical infrastructure under existing agreements to serve the Elk Creek Project site; |
| |
● |
Completion
of water supply agreements and related infrastructure to deliver fresh water to the project site; |
| |
● |
Initiation
of revised mine groundwater investigation and control activities; |
|
| |
● |
Initiation
of long-lead equipment procurement activities; and |
|
| |
● |
Construction
and operation of a small-scale demonstration plant to address process recommendations contained in the 2019 NI 43-101 Elk
Creek Technical Report and to quantify REE metallurgical performance. |
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
S-K 1300 Elk Creek Technical Report Summary 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.
As of September 6,
2022, 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, 2022, 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.