NioCorp cuts critical metals finance deal
Metal Tech News - September 26, 2022
Last updated 4/16/2023 at 7:03am
Proposed merger with GXII would provide Nasdaq listing, access to cash for Elk Creek.
To fund the development of a mine at its Elk Creek project in Nebraska that produces niobium, rare earths, and other metals critical to American industry, NioCorp Developments Ltd. is merging with GX Acquisition Corp. II, a blank check corporation with nearly US$300 million in the bank and a Nasdaq stock exchange listing that will make access to additional capital possible.
In fact, NioCorp has already lined up an additional US$81 million in potential funding through two tentative financing packages with Yorkville Advisors Global, LP.
"This business combination with GXII, and the two additional financing packages, have the potential to significantly accelerate our efforts to obtain the required project financing and to ultimately bring the Elk Creek Project to construction and eventual commercial operation," said NioCorp Developments Chairman and CEO Mark Smith.
Elk Creek Mine project
NioCorp's Elk Creek project was originally known as a rich domestic source of niobium, scandium, and titanium. In addition to this trio of critical metals, however, the southeastern Nebraska mine project also contains significant quantities of the rare earths that are in high demand due to their electric vehicle, clean energy, and high-tech applications.
A feasibility study outlines an underground mine at Elk Creek that would produce an estimated 170,409 metric tons of niobium, 431,793 metric tons of titanium, and 3,677 metric tons of scandium over 38 years of mining.
This operation is calculated to generate an after-tax net present value of US$2.35 billion and internal rate of return of 27.6%.
It is expected it will take roughly 2.7 years to pay back the estimated US$1.14 billion in upfront capital needed to develop the Elk Creek Mine.
These robust economic figures do not consider the potential recovery of the 632,900 metric tons of total rare earth oxides found in the same rocks that carry the niobium, titanium, and scandium.
The technical and economic analysis of also producing a suite of magnetic rare earth oxides, while also optimizing the production of the three other critical metals in the deposit, is underway.
More information on the rare earths recovery studies can be read at NioCorp testing Elk Creek REE recovery in the September 7, 2022 edition of Metal Tech News.
Adding to the value of Elk Creek, NioCorp has already secured the needed permits and the proposed mine enjoys strong local support in Nebraska.
"NioCorp's Elk Creek project is the highest-grade niobium deposit under development in North America, and the second largest indicated rare earth resource in the U.S.," said Dean Kehler, co-chairman and CEO of GX Acquisition Corp. II. "Critical minerals such as niobium and scandium, and magnetic rare earth elements, can accelerate the world's transition to a lower carbon economy. We believe NioCorp is well-positioned to be a reliable, US-based supplier that will produce these products on a sustainable basis."
Up to $366M in capital
With NioCorp looking for access to the capital needed to develop the Elk Creek Mine and GXII established as a vehicle to merge with a promising company that needs such access to the top tiers of U.S. financial markets, the two companies have entered into a definitive business combination agreement.
Under this agreement, NioCorp will acquire GXII and place it in a subsidiary where it will continue as a Nasdaq-listed company.
In addition to this new listing in the U.S., NioCorp will continue to trade on the Toronto Stock Exchange.
Assuming no redemptions by GXII public shareholders, upon completion of the merger, NioCorp would have access to as much as US$285 million in net cash, after paying transaction expenses, to continue advancing Elk Creek.
In conjunction with the deal with GXII, NioCorp signed non-binding letters of intent for two separate financing packages with Yorkville Advisors Global that could provide access to up to an additional US$81 million.
These financings include a US$16 million long-term loan that, subject to certain limitations, can be repaid with cash or NioCorp shares; and an equity purchase facility under which Yorkville, subject to the conditions set out in the definitive agreements, would purchase up to $65 million worth of NioCorp shares.
"Our goal is to rapidly build secure and reliable U.S. supply chains of the critical minerals that multiple industries need to help us build a more sustainable and less carbon-intensive future and for other critical domestic uses," said Smith. "Once completed, these transactions have the potential to put NioCorp on the fast track to obtain the required project financing to deliver on that promise, and to do so in an environmentally smart manner."