ELK CREEK PROJECT
Overview of the Elk Creek Project
NioCorp is developing North America’s only niobium / scandium / titanium advanced materials manufacturing facility co-located with an underground mine. Located near Elk Creek, Nebraska, this will be the highest grade niobium project in North America, as well as one of the largest prospective producers of scandium in the world.
Niobium is a relatively scarce metal and there are only three primary Niobium mines in the world today. But growing demand has created a global market value of >$5 billion. Niobium is considered so critical by the U.S. that it is one of a small handful of metals that the National Defense Stockpile purchases, according to DoD Strategic and Critical Materials reports.
What We Intend to Produce
According to NioCorp’s June 2022 Feasibility Study, the Elk Creek Project is expected to produce the following over its 38-year operating life:
Ferroniobium (FeNb): An average of 7,348 tonnes per annum (tpa) of ferroniobium, a crucial component in high strength, low-alloy (HSLA) steel that is increasingly used in bridges and other large infrastructure projects, as well as in high-pressure oil and gas pipelines, steel-chassis vehicles, commercial aviation, aerospace, defense systems, and in many other applications. Niobium also is a component of superalloys used in nearly all jet engines and power generation turbines.
Scandium Trioxide (Sc2O3): An average of 102 tpa of scandium trioxide. Scandium has important uses in environmentally preferred Solid Oxide Fuel Cells, as well as in ultra-high-performance aluminum alloys. Scandium greatly strengthens aluminum alloys and allows them to be reliably welded, which presents revolutionary potential for the commercial airline industry. For example, between $1.0-$1.5 million of scandium oxide in a single airliner offers $21-27 million in net present value fuel savings.
Titanium Dioxide (TiO2): An average of 12,063 tpa of titanium dioxide. Titanium has the highest strength-to-density ratio of any metallic element, and it is used in wide variety of sectors, including aerospace, national defense, chemical processing, desalination, automotive, health care, communications, sporting goods, and many others. Titanium in its oxide form also is used in the manufacture of pigments in paints, plastics and paper, and is a photocatalyst.
Robust Estimated Financial Returns
The June 2022 Feasibility Study projects robust economics and returns for the Project, and substantial improvements over the Project’s 2019 Feasibility Study:
|2022 Elk Creek Feasibility Study Economic Results|
(does not include the addition of rare earth products). (US $millions)
|2019 FS||2022 FS||Change|
|Pre-Tax Net Present Value (NPV) (8% discount)||$2,564||$2,819||9.9%|
|Pre-Tax Internal Rate of Return (IRR)||27.3%||29.2%||6.9%|
|After-Tax Payback Period from Production Onset (years)||2.86||2.69||-5.8%|
|Total Upfront CAPEX||$1,143||$1,141||-0.2%|
|Mine Life (Years)||36||38||5.6%|
|Life of Mine (“LoM”)1 Gross Revenue ($M)||$20,807||$21,900||5.3%|
|Averaged Annual EBITDA over LoM||$369.6||$397.5||7.5%|
|Averaged EBITDA Margin over LoM (EBITDA as % of total revenue)||67%||69%||2.2%|
|Averaged Annual Operating Cash Flow over LoM||$307||$337||9.7%|
|Average Annual Operating Cost, LoM (OPEX) (US$/t)||($196.4)||($195.9)||-0.2%|
|Averaged Annual EBITDA over Run of Mine (“RoM”)2||$379||$403||6.2%|
|Averaged EBITDA Margin over RoM (EBITDA as % of total revenue)||67%||68%||2.2%|
|Averaged Annual Operating Cash Flow over RoM||$314||$340||8.4%|
|Effective Tax Rate||17.5%||16.4%||-6.2%|
1 “Life of Mine,” or LoM, encompasses the entire expected operational life of the mine, including ramp-up and ramp-down production periods.
2 “Run of Mine,” or RoM, is defined as the period of time during which the mine is fully operational and excludes the periods of time when the mine is conducting its initial production ramp or is ramping down to closure.
A Minimized Environmental Footprint
The Elk Creek Project has been designed to minimize the environmental footprint of niobium, scandium and titanium production. For example, the project will recycle a significant portion of its planned waste streams into usable materials, thus reducing both costs and environmental impacts.
See the short video below on the project and the remarkable critical minerals it expects to produce here:
A Highly De-Risked Project
The Elk Creek Project is highly de-risked on multiple levels:
- It features the highest-grade primary Niobium resource in North America, and the only such resource under development in the U.S.
- It offers unique value in that it is expected to emerge as one of the world’s largest Scandium producers.
- The Project has a positive Revised Feasibility Study completed.
- All major local, state, and federal permits required to launch construction have now been obtained.
- The Project enjoys strong local support in Nebraska.
- 75% of the Project’s primary product – Ferroniobium — is already under contract over the first 10 years of production.
- Approximately 10% of the Project’s expected production of Scandium over the first 10 years of production has been placed under a commercial sales contract.
- In-principle eligibility from the German Government loan guarantee program has been secured.
1 This summary includes certain forward-looking non-GAAP financial measures, including EBITDA and Operating Cash Flow. Reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort, due to the uncertainty and inherent difficulty of predicting the occurrence and the financial impact of such items impacting comparability and the periods in which such items may be recognized. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.
Superalloy Blog Posts
As the U.S. looks to repair crumbling infrastructure systems, I expect to see more high-performance steels (HPS) used in structures like bridges because of the many powerful benefits they deliver. HPS steels containing a small amount of ferroniobium – which NioCorp plans to produce in southeast Nebraska at our Elk Creek Superalloy Materials Project once we are funded and in operation – are among the strongest and most durable steels on the market today.
If a $2 trillion U.S. infrastructure package is enacted, it could create a major, long-term demand boom for the critical minerals needed by infrastructure and advanced transportation systems, according to NioCorp’s CEO Mark Smith.
One global macro trend is highly likely to accelerate in the aftermath of COVID-19: increased investment in domestic materials supply chains as a means of reducing the reliance of Western nations on supply chains in developing nations. Asia’s dominance in many strategic supply chains has become painfully obvious since the COVID-19 pandemic erupted.
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