Niocorp Developments Ltd (NB)

[superalloys]

Hi, everyone. This is Jim Sims, Vice President of External Affairs for Niocorp. First of all, let me wish everyone a Merry Christmas and Happy Holidays from all of us at NioCorp. Please accept our warm wishes for a safe and prosperous 2016. We very much look forward to progressing our Elk Creek Niobium/Scandium/Titanium project as rapidly as possible in 2016, and we appreciate the support and confidence that our long-term investors have placed in us and in what we believe will be a successful and historic project.

As our press release yesterday noted, we recently secured conditional approval from the TSX for our financing arrangement with The Lind Partners. Additionally, we have received an initial US$3.0 million in First Tranche funding from Lind. That capital has allowed us to re-accelerate our work toward completing a Feasibility Study for the Elk Creek project. Our team is working virtually around the clock in this effort, and our goal is to issue our Feasibility Study and raise sufficient project financing to begin construction at Elk Creek in 2016.

As Lind’s Founder and Managing Director Jeff Easton noted yesterday:

“The fact that we were able to complete this transaction, in the midst of the holiday season, is a testament to the excellent working relationship developing with the NioCorp management team. We are off to a great start in helping to move this project to reality, and we look forward to a long and prosperous relationship with the Company and its owners.”

With regard to some of the questions that have been raised recently on this board regarding the Lind financing package, let me shed some light on several things that may be helpful to investors.

1. The fact that this project has been able to attract institutional investment prior to releasing a Feasibility Study should speak volumes in and of itself, in my view. Few other junior mining projects are raising much capital these days, and fewer have even successfully reached the feasibility study stage. In these difficult capital markets, the Elk Creek project is distinguishing itself by achieving success with sophisticated institutional investors.

2. Lind Partners’ business model is to identify and invest in small-to-medium cap companies with significant upside potential. They believe that this is a unique time to invest in the junior mining and exploration sector. That approach is somewhat contrarian to the direction of many institutional investment houses these days. We are very pleased that Niocorp’s unique value proposition stood out to the highly experienced team at Lind among many such investment opportunities.

3. Lind’s best opportunity to maximize its return on investment with NioCorp is through appreciation in the price of NioCorp’s stock. Any examination of the financing arrangement shows this. So, please allow me to repeat this very important point: Lind will earn greater returns from its investment in Niocorp if NioCorp’s share price appreciates.

4. Does Lind have downside protection in this package? Of course they do. Does NioCorp have protections as well? Yes, of course we do. For example:

-----> Lind has agreed not to engage in short selling of NioCorp stock, or any similar transaction, and it is liable if any of its affiliates engage in such transactions. This is a critical provision that prevents any manipulation by Lind of NioCorp’s stock, both in respect of securities acquired on conversion of loan principle and in market transactions.

-----> Lind is restricted on the volume of what it can convert in any particular month, and any shares acquired upon conversion cannot be tradable through the TSX until completion of a four-month-and-one-day hold from the time of funding the convertible note. A similar proportionate limit restricts conversion of the second tranche (if any) to 1/12 of the value of the second tranche per month, subject to increase only upon significant increases in NioCorp’s total trading volume. This mechanism both limits month-to-month dilution as well as restricts the proportional impact of Lind conversions on NioCorp’s trading.

-----> NioCorp can, at any time, buy back up to 100% of the principal amount of the loan outstanding at a small premium, subject to Lind’s ability to immediately convert 30% on receipt of notice from NioCorp that it intends to exercise its buy back right. This grants NioCorp the unilateral right to end this loan if it obtains financing on more favorable terms. It also acts as an incentive for Lind to encourage NioCorp to keep the amount of the loan outstanding through its conduct.

-----> So long as NioCorp does not have a default event –- events that are largely under the Company’s control -- the Company can pay Lind back with stock.


5. With regard to allegations about Lind’s investment in Western Lithium, I would suggest examining Western Lithium’s share price during the lock-up period of its deal with Lind, where Lind was not able to sell any shares. Here is a chart that shows what happened. During that lock-up period, you will see that Western Lithium raised additional proceeds at a price below $0.70 cents, and then announced a merger that appears to have contributed to a pronounced negative impact on the share price. Following the expiration of Lind’s lock-up period, Western Lithium’s trading volume strengthened and the share price largely arrested its previous decline.

All in all, we are very pleased and proud that The Lind Partners chose to invest in Niocorp and in our future success. As Lind reinforced yesterday, they are looking forward to “a long and prosperous relationship with the Company and its owners.”

I hope this information provides some insights that may have been missing in the discussions to date.

Again, Merry Christmas and Happy Holidays to all!

Jim Sims
VP of External Affairs
NioCorp Developments Ltd.
[e-mail]