Letter to NioCorp Shareholders
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From The Desk Of
Mark A. Smith, Executive Chairman & CEO
NioCorp Developments Ltd.
Fellow Shareholders –
As summer in North America winds to a close, I thought I would provide an update on the tremendous progress we are making on moving our Elk Creek Superalloy Materials Project to construction and commercial operation. I could not be more excited about our prospects for bringing this history-making project to reality!
U.S. Army Corps Of Engineers Decision Moves Elk Creek To The Next Stage
After nearly two years of work and diligent effort with the U.S. Army Corps of Engineers (Corps), we announced on Thursday that we have successfully completed the Jurisdictional Determination (JD) process with the Corps for the Elk Creek Project. This JD clears the path for the Project to proceed to the next phase of planning and permitting.
The JD identifies wetlands and streams within the Elk Creek Project’s footprint that are considered Waters of the U.S. (WOTUS) and therefore subject to regulation under the Clean Water Act. Fortunately, our project has been designed to minimize impacts on WOTUS wetlands and streams. That is why I was pleased to see the JD reinforce our view that there are no WOTUS wetlands and streams in the immediate footprint of the Project’s mine mouth and product processing facilities. Those facilities are expected to be our initial focus for project construction.
Other areas of our Project's larger footprint, including infrastructure needed to manage the water produced by mine dewatering activities, were determined to impact WOTUS wetlands or streams, as we expected, and those areas will require a Section 404 individual permit from the Corps. However, Scott Honan and his team have already begun work to devise mitigation measures that will be incorporated into our permit application in order to address those impacts and secure a permit as expeditiously as possible.
In essence, this decision will likely streamline the permitting process for the facility and facilitate a more rapid onset of construction. That's very good news for the Project. You can see our full press release on this news here.
Successful Completion of Five More Metallurgical Pilot Plant Runs
We also announced last week the successful completion of five metallurgical pilot plant runs as part of our Elk Creek Feasibility Study work. These pilot plant runs successfully tested our Niobium, Scandium, and Titanium production operations under continuous conditions. Two of the pilots involved separate one-week runs of a Scandium Solvent Extraction Circuit, a conventional technology we plan to use to produce Scandium. Averaged over these two pilot runs, Scandium losses were less than 1%, which points to excellent performance for an SX operation. Additional work will allow us to prove out the purity levels we expect to attain in our Scandium commercial product.
We also completed two pilot runs of the Acid Baking process in August and September, as well as a pilot of our Niobium and Titanium production operations. The former pilot involved dissolving Niobium and Titanium for later recovery in our Niobium and Titanium production circuits. The latter pilot successfully produced kilogram quantities of Niobium, which will be used in the final testing of our Ferroniobium production process. Finally, we also produced kilogram quantities of a Titanium product that we will evaluate for prospective sales.
Both Scott and I were extremely pleased with the results of these pilots, and with the overall metallurgical development program. We have made very rapid progress in the past two months, and the data generated is allowing our engineering design team to complete design work for those portions of the facility.
Feasibility Study Work Nearing Completion
With five more Elk Creek Feasibility Study pilot plant runs now under our belt, we are closing in on completing the technical work needed for the Feasibility Study. We will soon launch a reagent regeneration pilot, followed by a reagent recovery pilot. Concurrently with these pilots, we will finish the bench testing required for our secondary Scandium recovery circuit, as well as testing of the unit that will purify the Scandium product to commercial specifications. The secondary Scandium recovery circuit will then be piloted. Also concurrent with the work listed above, we will be completing final testing of the Ferroniobium production process, which will allow for final design of our ferroniobium production unit.
The pilots will produce sufficient quantities of the final waste streams that we will need to characterize for environmental, permitting, and geotechnical purposes, and they will provide the final data needed to complete the design of the mine backfill system that will incorporate much of these waste streams.
While all of this work is ongoing, our engineering design teams are working through the engineering design of the overall project. As you know, the design required for a Feasibility Study (FS) is much more definitive than for a Preliminary Economic Assessment. Our FS-level cost estimate, sometimes referred to as a Class 3 cost estimate, requires 10% to 40% of the engineering to be completed with a cost estimate accuracy in the -10% to +30% range. We are honing our analyses to this level of precision.
I realize that this is a lot of detail, but I thought you would appreciate knowing what we are doing to complete our Feasibility Study. We are getting close!
I simply cannot say enough about the extraordinary work that Scott Honan and his team have been doing on all of these fronts. In addition to advancing us to the conclusion of the Feasibility Study, their work is helping to identify areas where we potentially can improve the total cash flow of our project by optimizing the CAPEX and OPEX as assumed in the PEA. This is one reason why I support spending more time, attention, and resources on getting the metallurgy right on a project like this. Scott’s team is moving as fast as possible toward completion of the Feasibility Study, and we are all anxious to complete this analysis and move quickly to raising construction capital and breaking ground as soon as possible!
NioCorp’s Recent Filing with the SEC
There was some confusion over the past week regarding NioCorp’s recent filing of an S-1 Resale Registration Statement with the U.S. Securities and Exchange Commission (SEC). Some holders were concerned that this filing indicated an intent by some of our shareholders – including me – to sell their shares. This is not the case. Let me explain why we filed this registration statement and why we believe it is good for our shareholders and the Company.
In calendar Q4 of 2015, we learned that the majority of our shares are now held in the U.S. This means that, beginning July 1, 2016, NioCorp is no longer considered a "Foreign Private Issuer,” and is instead a "Domestic Issuer" under certain U.S. securities laws. Our Foreign Private Issuer status previously allowed our U.S. shareholders to remove legends on the share certificates issued by the Company from exercises of warrants and options immediately after issuance under U.S. securities laws (although a four-month-and-a-day hold period may have applied under Canadian law). That was allowed under the SEC's Rule 904 exemption. Now, under Domestic Issuer status, the Rule 904 exemption is no longer available to shareholders to de-legend these shares upon resale. Instead, unless the shares are registered for resale, shareholders must rely on Rule 144, which due to the Company’s current reporting status in the United States could result in indefinite hold periods for such shareholders. Filing this S-1, and registering the resale of shares that underlie existing warrants, takes care of this issue for these shareholders.
The registration doesn't necessarily signal anyone's intent to sell any shares they acquire as a result of exercising their warrants. As the Company’s largest single shareholder, I can tell you that I have no intent to sell my shares in this Company anytime soon. I began purchasing shares in NioCorp in 2013, and I remain steadfastly committed to this enterprise for the long term.
Filing the S-1 and becoming a reporting issuer in the U.S. also has the advantage of potentially making it more efficient for any future NioCorp securities offerings under U.S. securities laws.
Finally, loss of “Foreign Private Issuer” status required us to transition to U.S. GAAP for financial reporting. This transition took a good bit of work. But now that we have completed that task, it will allow us to meet our U.S. domestic reporting entity requirements. That, in turn, will make any move to a major U.S. exchange more efficient, should the Company elect to do this in the future.
November 10, 2016 Warrant Expiration is Coming Up
Just a reminder to those who hold NioCorp C$0.65 warrants that expire on November 10, 2016: you may not want to wait until the last minute to exercise these warrants. Because of issues we have experienced in the past with warrant exercises -- which can involve sending documents through multiple postal systems -- these warrant exercises can sometimes take longer than any of us would like. If you need any assistance or have any questions about this process, please don’t hesitate to contact Jim Sims at 303-503-6203 (jim.sims@niocorp.com) and he and the staff will assist you as appropriate.
Upcoming Presentations to Investors
We continue to hit the road in telling our story to investors around the world. The Company will be making several presentations to institutional and other investors in the coming weeks, and I thought you would like to know where we will be and when:
I will host a live presentation and investor Q/A on our Elk Creek Superalloy Materials Project as part of a Nasdaq OTCQX Virtual Investor Conference on October 4, starting at 1:30 PM Eastern. Following my 20-minute presentation, there will be an opportunity for investors to ask questions in real-time. You will want to register in advance for this webinar so you can run the online system check and receive event updates. You you can do that here: http://tinyurl.com/10otcpre.
Our VP of External Affairs, Jim Sims, will present to investors on our Elk Creek Project at the Rodman & Renshaw conference at the Lott New York Palace Hotel on Tuesday, September 13 at 2:10 pm Eastern. This presentation will be webcast live to investors around the world. Those wishing to tune in can pre-register here: http://www.wsw.com/webcast/rrshq26/niobf.
Jim also will present to investors at the Mines and Money Americas Conference at the Ritz Carlton in Toronto on September 26-28.
New NioCorp Investor Kit Available
We have developed a new electronic "Investor Kit" loaded with all kinds of information for current and prospective investors. You can see that here. Please feel free to forward this link to others whom you feel may be interested in learning more our Company and the powerful investment thesis it represents.
As always, feel free to reach out to us with any questions or comments. We love to hear from our shareholders and supporters. And, stay tuned for reports of our continuing progress!
Respectfully,
Mark A. Smith
Executive Chairman and CEO
NioCorp Developments Ltd.
ceo@niocorp.com
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