NioCorp Announces Results of Positive Feasibility Study for its Elk Creek Superalloy Materials Project
GlobeNewswire•June 30, 2017
CENTENNIAL, Colo., June 30, 2017 (GLOBE NEWSWIRE) -- NioCorp Developments Ltd. (“NioCorp” or the “Company”) ( NB.TO) ( NIOBF) and ( BR3.F) is pleased to announce the results of a positive CIM-compliant National Instrument 43-101 Feasibility Study (“FS”) for the Company’s 100% owned Elk Creek Superalloy Materials Project (the “Project”) in Nebraska. The FS work was performed by SRK Consulting (US) Inc., with assistance from Tetra Tech, SMH Process Innovation, MineFill Services, Inc., and Olsson Associates.
Highlights of the Elk Creek Feasibility Study
(All currency figures are in US $ unless otherwise noted)
At A Glance
(US $) | Pre-tax NPV: $2.3 billion,
with an IRR of 24.3%. | After-tax NPV: $1.7 billion,
with an IRR of 21.7%. | | Gross LOM revenue of $17.6 billion and operating margin of $12.2 billion. | | Averaged EBITDA is $389.6 million over LOM. Averaged LOM EBITDA margin of 69.5%. | | Mine Life: 32 years. | | Payback period production onset: 3.4 years. | | 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. |
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: Gross Life Of Mine (“LOM”) revenue of $17.6 billion, 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”) is $389.6 million per year over LOM. The averaged EBITDA margin (EBITDA as a percent of total revenue) for the project over LOM is 69.5%.i
Pre-Tax Payback Period Production Onset: 3.4 years (3.7 years after-tax).
Production: On an annual averaged basis, estimated production and revenues are as follows:
- Ferroniobium (“FeNb”): annualized production rate of 7,055 tonnes at an averaged realized price of $39.60 per kilogram (“kg”) for contained niobium (65%), yielding annual gross revenue of $183.4 million.
- Scandium Trioxide (“Sc2O3”): annualized production rate of 103 tonnes at an averaged realized price of $3,675/kg of Sc2O3, yielding annual gross revenue of $378.3 million.
- Titanium Dioxide (“TiO2”): annualized production rate of 11,445 tonnes per year at an averaged realized price of $0.88/kg TiO2, yielding annual gross revenue of $10.1 million.
Production Costs (net of TiO2 byproduct credit):
- $12.14/kg of niobium on a niobium-equivalent basis.
- $1,127/kg of Sc2O3 on a Sc2O3-equivalent basis.
Mine Life: 32 years, producing over the LOM approximately 143,824 tonnes of payable niobium, 3,237 tonnes of Sc2O3, and 359,128 tonnes of TiO2.
Mineral Resources and Reserves: Probable reserves of 31.7 million tonnes of ore at 0.79% niobium (Nb2O5), 71.6 grams per tonne (g/t) scandium (Sc), and 2.81% TiO2. Total indicated mineral resources are 90.9 million tonnes at 0.66% Nb2O5, 70 g/t Sc, and 2.59% TiO2, with inferred resources of 133.6 million tonnes at 0.48% Nb2O5, 59 g/t Sc, and 2.23% TiO2.ii Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources and Mineral Reserves have an effective date of May 15, 2017.“After a little more than three years of intense work and detailed independent analysis by dozens of technical experts, the Elk Creek Project feasibility study significantly de-risks this project and positions us to advance to the next stages – project financing and eventual construction start,” said NioCorp Executive Chair and CEO, Mark A. Smith, P.E., Esq.
“The primary goal of any project feasibility study is to de-risk the proposed project such that financing can be obtained,” said Mr. Smith. “This feasibility study accomplishes that core goal. Coupled with the fact that we have commitments for 75% of our ferroniobium over the first 10 years – 50% going to ThyssenKrupp Metallurgical Products and 25% going to CMC Cometals of New Jersey – and that we have in hand a major federal government permit, this project is significantly de-risked at this stage. In particular, it will allow us to continue ongoing discussions with potential institutional investors in Europe and elsewhere, including with the German Government’s loan guarantee program, for which the Elk Creek Project has already received in-principle eligibility.”
“I’m also very proud of the fact that Scott Honan and his team were able to complete this feasibility study in a little over three years,” Mr. Smith said. “This is particularly impressive given that it typically takes 8-10 years for most other companies in this industry to achieve feasibility status on similar-scaled projects.”
| SUMMARY OF ECONOMIC RESULTS i | | Indicator | Amount | | Before-Tax | | Free Cash Flow | $10.7 billion | | NPV @ 8% | $2.3 billion | | IRR | 24.3 | % | | After-Tax | | Free Cash Flow | $7.9 billion | | NPV @ 8% | $1.7 billion | | IRR | 21.7 | % |
FEASIBILITY STUDY DETAILS
| Description | Value | | Ore Mined (kt) | | 31,661 | | | Waste Mined (kt) | | 1,484 | | | Total Material Mined (kt) | | 33,145 | | | Mining Rate (t/d) | | 2,762 | | | Nb2O5 Grade | | 0.79 | % | | TiO2 Grade | | 2.81 | % | | Scandium Grade (g/t) | | 71.6 | | | Contained Nb2O5 (kt) | | 250 | | | Contained TiO2 (kt) | | 891 | | | Contained Sc (kt) | | 2,266 | | | Total Ore Processed (kt) | | 31,661 | | | Processing Rate (kt/y) | | 1,009 | | | Average Recovery, Nb2O5 | | 82.4 | % | | Average Recovery TiO2 | | 40.3 | % | | Average Recovery Sc | | 93.1 | % | | Recovered Nb2O5 (kt) | | 214 | | | Recovered TiO2 (kt) | | 359 | | | Recovered Sc (t) | | 2,111 | | | Realized Product Prices | | | Nb | $ | 39.60 | | | TiO2 | $ | 0.88 | | | Sc2O3 | $ | 3,675 | | | Payable Metal | | | Nb (t) | | 143,824 | | | TiO2 (t) | | 359,128 | | | Sc2O3 (t) | | 3,237 | | | Total Gross Revenue | $17.9 billion |
PRODUCTION PLAN
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm" content="The FS assumes that the facility will produce 7,055 tonnes per year of ferroniobium, 103 tonnes of Sc2O3, and 11,445 tonnes of TiO2, all on an annualized basis. The following graphs show estimated annual production by commercial product.
" type="text" data-reactid="37">The FS assumes that the facility will produce 7,055 tonnes per year of ferroniobium, 103 tonnes of Sc2O3, and 11,445 tonnes of TiO2, all on an annualized basis. The following graphs show estimated annual production by commercial product.
Graphs accompanying this announcement are available at http://www.globenewswire.com/NewsRoom/AttachmentNg/a52f6441-2315-4acc-8bb4-22b6c70011e0
OPERATIONS AND FINANCIAL PROFILE
The following table summarizes assumptions and estimated results from the FS economic model:
A table accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/cce401fa-13c4-49b0-970d-bbca779b53bd
The following shows the cumulative LOM pre-tax free cash flow:
A graph accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/da811d61-1c5c-42a8-a447-4328fab09551
ECONOMIC SENSITIVITY ANALYSIS
The following pre-tax economic sensitivity analyses show potential impacts to NPV and IRR from changes in the pricing of niobium, scandium, and titanium, as well as changes in CAPEX and OPEX.
Graphs accompanying this announcement are available at http://www.globenewswire.com/NewsRoom/AttachmentNg/36b59b76-e146-4629-87f5-d9eb262a7c8b
SUPERALLOY PRODUCTION
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm" content="The Project is planned as a high-grade underground mining operation using a long-hole stoping mining method and paste backfill. The Elk Creek mine is planned to operate with a processing rate of 2,762 tonnes per day, for a total of 31.7 million tonnes of ore processed over 32 years of mine life, producing in that period 143,824 tonnes of payable niobium, 3,237 tonnes of scandium (Sc2O3), and 359,128 tonnes of titanium (TiO2)." type="text" data-reactid="51">The Project is planned as a high-grade underground mining operation using a long-hole stoping mining method and paste backfill. The Elk Creek mine is planned to operate with a processing rate of 2,762 tonnes per day, for a total of 31.7 million tonnes of ore processed over 32 years of mine life, producing in that period 143,824 tonnes of payable niobium, 3,237 tonnes of scandium (Sc2O3), and 359,128 tonnes of titanium (TiO2).
The process flow sheet at right illustrates a high-level summary of how the facility will convert ore to finished product.
The Process Flow Sheet accompanying this announcement is available at http://niocorp.com/images/Elk_Creek_Process_Flow_Sheet_2017.jpg
UPFRONT FINANCING REQUIREMENTS
Up-front direct capital costs, indirect costs, pre-production capital costs, contingency, and pre-production net revenue credit are detailed below.
| Total Estimated CAPEX by Major Areas | | Description | Initial CAPEX
(US$ millions) | | Capitalized Pre-Production Expense | $ | 71 | | | Process Commissioning | | 14 | | | Subtotal Preproduction Costs | | 85 | | | Site Preparation and Infrastructure | | 40 | | | Processing Plant | | 367 | | | Mine Water Management | | 100 | | | Mining Infrastructure | | 179 | | | Tailings Management | | 20 | | | Subtotal Direct Costs | | 705 | | | Site Wide | | 7 | | | Processing | | 99 | | | Mining | | 34 | | | Owner's Costs | | 38 | | | Mine Water Management | | 11 | | | Subtotal Indirect Costs | | 189 | | | Project Total Before Contingency | | 979 | | | Contingency of 11.1% | | 109 | | | Preproduction Net Revenue Credit* | | (79 | ) | | Project Total** | $ | 1,008 | |
*Revenue from sales occurring during commissioning and ramp-up phases.
**Does not include Initial Working Capital (A/R, A/P, & Inv) of $30 million in Yrs. -1 and +1.
MINERAL RESERVES
(Effective date of May 15, 2017)
| Description | Tonnes
(kt) | Nb2O5
(%) | TiO2
(%) | Sc
(Sc g/t) | | Proven | - | - | - | - | | Probable | 31,661 | 0.79 | 2.81 | 71.58 | | P+P | 31,661 | 0.79 | 2.81 | 71.58 |
Source: SRK, 2017. All ?gures rounded to re?ect the relative accuracy of the estimates. Totals may not sum due to rounding.
SRK has determined that the Project is amenable to a Underground Mining using longhole stoping. Using results from metallurgical test work, suitable underground mining and processing costs, and forecast product pricing SRK has reported the Mineral Reserve at a NSR cut-off of US$180/tNSR uses the following factors:Nb2O5: 0.699 is conversion from Nb2O5 to Nb, 1000 is kg conversion, 85.79% is plant recovery, 96% accounts for the loss in the plant, 100% payability, assuming a US$ 38.50/kg selling price.TiO2: 1000 is kg conversion, 59.9% Ti in TiO2, 40.31% is met recovery, assuming 100% payability, assuming a US$ 0.88/kg is selling price.Sc: 93.14% is met recovery, 100% payability, US$ 3,500 kg is selling price per kg of scandium oxide, with a conversion of 0.652 for the amount of Sc in Sc2O3Ore reserves have been stated on the basis of a mine design, mine plan, and cash-flow model.Mining recovery applied ranges from 94% to 100%.Mining dilution (internal and external). External stope dilution is 6%, and a portion of the external stope dilution is applied using grade values based on average surrounding block information. A development dilution of 5% is used at a 0% ore grade.
MINERAL RESOURCES
(Effective date of May 15, 2017)
| Classification | Cut-off
NSR
(US$/t) | Tonnage
(kt) | Grade
(Nb2O5%) | Contained
Nb2O5
(t) | Grade
(TiO2%) | Contained
TiO2
(t) | Grade
(Sc g/t) | Contained
Sc
(t) | | Indicated | 180 | 90,900 | 0.66 | 598,400 | 2.59 | 2,353,300 | 70 | 6,300 | | Inferred | 180 | 133,600 | 0.48 | 643,800 | 2.23 | 2,985,300 | 59 | 7,800 |
Source: SRK, 2017. All ?gures rounded to re?ect the relative accuracy of the estimates. Totals may not sum due to rounding.
Mineral Resources are reported inclusive of the Mineral Reserve. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, SRK does not consider them to be material. All composites have been capped where appropriate. Historical samples have been validated via re-assay programs, and all drilling completed by Niocorp has been subjected to QA/QC. All composites have been capped where appropriate, and estimates completed using Ordinary Kriging. The Concession is wholly owned by and exploration is operated by NioCorp Developments Ltd.The reporting standard adopted for the reporting of the MRE uses the terminology, definitions and guidelines given in the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves (May 10, 2014) as required by NI 43-101.SRK has determined that the Project is amenable to a variety of Underground Mining methods. Using results from metallurgical test work, suitable underground mining and processing costs, and forecast product pricing SRK has reported the Mineral Resource at a NSR cut-off of US$ 180/t.NSR uses the following factors:Nb2O5: 0.699 is conversion from Nb2O5 to Nb, 1000 is kg conversion, 85.5% is plant recovery, 0.96 is the loss in the plant, 100% payability, assuming a US$ 38.5 kg selling price.TiO2: 1000 is kg conversion, 59.8% is metallurgical recovery, assuming 100% payability, assuming a US$ 0.88/kg is selling price.Sc: 90% is metallurgical recovery, 100% payability, US$ 3,500 kg is selling price per kg of scandium oxide, with a conversion of 0.652 for the amount of Sc in Sc2O3.Price assumptions for FeNb, Sc2O3, and TiO2 are based upon independent market analyses for each product.
SRK Completed a site inspection of the deposit by Mr. Martin Pittuck, MSc, CEng, MIMMM, an appropriate “independent qualified person” as this term is defined in NI 43-101.
NEXT STEPS
The NI-43-101 Technical Report for the Project is expected to be filed on SEDAR within the next 45 days, and also will be available at www.niocorp.com.
Acceleration of ongoing Project finance efforts, including on the Company’s application for a loan guarantee from the German Government.
Continue conducting due diligence and technical review by the Independent Technical Engineer.
Ongoing efforts to secure necessary government permits for the Project will continue. Major permits needed prior to the onset of construction start include these:
- SECURED: U.S. Army Corp of Engineers’ (USACE) Section 404 permit for the Project Waterline (except the outfall section).
- USACE Sections 408 and 404 permits for the Project Waterline outfall section.
- Air construction permit from the State of Nebraska.
- NPDES discharge permit from the State of Nebraska.
- Industrial waste permit from the State of Nebraska for tailings disposal.
- Other permits will be needed for completion of construction.
Continuation of detailed engineering with current firms.
Selection of firms for next phases of Project (e.g., engineering, procurement, construction, and other activities).
NOTES ON THE MINERAL RESOURCE, MINERAL RESERVE AND FEASIBILITY STUDY
The Mineral Resource and Mineral Reserve estimates in this news release have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum's "CIM Definition Standards for Mineral Resources and Mineral Reserves" 2014.
QUALIFIED PERSONS
The following qualified persons have read and approved the technical information and verified the data contained in those portions of this news release specific to their area of responsibility:
| Qualified Person | Area of Responsibility | Jeff Osborn, BSc Mining, MMSAQP
SRK Consulting | Elk Creek SRK Project Manager and mining infrastructure operating and capital cost | Grant Malensek, MEng, PEng/PGeo
SRK Consulting | Elk Creek capital and operating costs and economic analysis | Ben Parsons, MSc, MAusIMM (CP)
SRK Consulting | Elk Creek resource estimate | Joanna Poeck, B.Eng., SME-RM, MMSA-QP
SRK Consulting | Elk Creek mine plan and reserves | John Tinucci, PhD, PE
SRK Consulting | Elk Creek geotechnical program | Mark Willow, M.Sc., C.E.M., SME-RM
SRK Consulting | Environmental studies, permitting and social or community impact portions of the Elk Creek project | Paul Williams, PG, CPH, SME-RM
SRK Consulting | Elk Creek hydrogeology program | Clara Balasko, P.E,
SRK Consulting | Elk Creek tailings design | Martin Pittuck, CEng, FGS, MIMMM
SRK Consulting | Elk Creek resource estimate | David Stone, PE
MineFill Services, Inc. | Elk Creek project mine backfill system | Eric Larochelle, B.Eng
SMH Process | Elk Creek hydrometallurgical design | Arun Vathavooran, PhD CEng MIMMM SME
Tetra Tech | Elk Creek mineral processing design | Sylvain Harton, Eng.
Tetra Tech | Elk Creek pyrometallurgical design | David Winters, SE, PE, MBA
Tetra Tech | Elk Creek infrastructure design | Joe Baxter, P.E
Olsson Associates | Elk Creek offsite infrastructure design |
Source: NioCorp Developments Ltd.
@NioCorp $NB $NIOBF #Niobium #Scandium #ElkCreek
On Behalf of the Board of Directors,
"Mark Smith”
Mark Smith
Executive Chairman, CEO, and Director
For More Information:
Contact Jim Sims, VP of External Affairs, NioCorp Developments Ltd., 720-639-4650, jim.sims@niocorp.com |
