Niocorp is developing North America’s only niobium-scandium-titanium project at Elk Creek in Nebraska.Niocorp (CVE:NB) is developing North America’s only niobium-scandium-titanium project at Elk Creek in Nebraska.
Once it goes into production Elk Creek will make Niocorp the only producer of niobium and scandium in the USA. Elk Creek will also be the highest grade niobium project in North America and the largest potential producer of scandium in the world.
By any standards, Elk Creek is a big project. On the most recent preliminary economic assessment, filed in September of 2015, the company and its consultants estimated the net present value of the project at US$3.07bn before tax and US$2.3bn after tax.
For a project this size, it’s perhaps not surprising that the total up-front capital costs are likely to be pretty substantial, currently estimated at US$979 million.
But the returns will also be substantial.
Over a 32-year mine life Elk Creek is expected to generate an average pre-tax cash-flow of US$438 mln per year. The post-tax internal rate of return rings in at 27.6%.
If all of this looks pretty good to investors, it looks good to the locals too. Nebraska is not a major mining destination either in global or local terms, and indeed once built Elk Creek looks set to become the state’s major mining project.
As such it will be a major employer and has received much support accordingly. But Niocorp is also mindful the community and environmental issues that surround mining, and has gone out of its way extensively to engage with the local population.
Chief executive Mark Smith reports that this approach is paying off, and evidence can be found in the plethora of updates on community dialogue that appear on the company’s website.
And while that dialogue is going on, development work is continuing apace. The plan for 2016 is to complete pilot plants, to complete feasibility-level plant design, then to complete a feasibility study and to secure the finance to begin construction.
Work on all of these aspects of the development of Elk Creek is already underway, and assuming that they can all be completed in 2016, as is the aim, then the plan is also to commence construction by the end of the year.
But will Niocorp manage to find the finance in a market that’s not exactly favouring mining companies at the moment, and especially not marginally more obscure commodities like niobium and scandium?
Mark Smith is confident that it can. Company literature highlights that Niocorp has “powerful external project support.” This includes an off-take agreement with German industrial titan ThyssenKrupp (ETR:TKA) for 50% of the project’s planned ferroniobium production for an initial 10 year term.
Elk Creek has also received in-principle eligibility approval for a loan guarantee from the German government, and has received broad bipartisan support from local politicians, including the governor of Nebraska, who visited the project in 2014.
What’s more, Smith says that the current capital cost estimates could well be pared back when engineering estimates are refined after more detailed work is done.
There ought to be plenty of news on all that out in the next few months.