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 >$2 billion, according to Roskill. 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 2017 Feasibility Study, the Elk Creek Project is expected to produce the following over its 32-year operating life.
Ferroniobium (FeNb): An average of 7,055 tonnes per annum (tpa) of ferroniobium, which is a crucial component in high strength, low-alloy (HSLA) steel, whichis increasingly used in bridge and other large infrastructure projects, in high pressure oil and gas pipelines, in virtually all steel-chassis vehicles, and in many other applications. Niobium also is a component of superalloys used in nearly all jet engines and power generation turbines.which is used in mega-steel infrastructure projects, oil and gas pipelines, vehicles, commercial aviation, aerospace, and defense systems.
Scandium Trioxide (Sc2O3): An average of 103 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 $10-15 million in net present value fuel savings.
Titanium Dioxide (TiO2): An average of 11,445 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 forecast economics1 for the Project are robust, as outlined in the Company’s 2017 Feasibility Study:
- Financial Returns: Pre-tax net present value (“NPV”) of $2.3 billion, at an 8% discount rate, with an internal rate of return (“IRR”) of 24.3%, and after-tax NPV of $1.7 billion, at an 8% discount rate, with an IRR of 21.7%, and an effective tax rate of 24.1%.
- Revenue: $17.6 billion in revenue over the facility’s operational life, with operating margin of $12.2 billion.
- CAPEX: Up-front direct capital costs of $705 million, in addition to indirect costs of $189 million, pre-production capital costs of $85 million, contingency of $109 million, and pre-production net revenue credit of $79 million.
- EBITDA: Averaged Earnings Before Interest, Taxes, Depreciation, and Interest (“EBITDA”) of $389.6 million per year over its operational life. The averaged EBITDA margin (EBITDA as a percent of total revenue) for the project over LOM is 69.5%.[i]
- Pre-Tax Payback Period 4 years from production onset (3.7 years after-tax).
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 superalloy metals 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 federal permits 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 Free 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.
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