Corporate perspectives: ‘Mine baby, mine’ (responsibly) with NioCorp’s CEO

TXF: You’re advocating for the new administration to adopt a ‘mine baby mine’ strategy. Why?

Mark A Smith (MAS): China has invested hundreds of billions of dollars into critical and strategic minerals across the entire global supply chain for decades, so they largely control most of the critical strategic minerals globally. We’ve been advocating for the need to develop critical strategic minerals supply chains, the entire supply chain, in country or in conjunction with our friendly allied countries, for a long while. That’s what we mean by ‘mine baby mine’. 

The previous administration had various levels of support for this, but it tended to stop at the processing side of these minerals, and was focused less on mineral mining and extraction. I’ve been in the business for 44 plus years and I know that you can have as many processing facilities as you want, but if you don't have a source, in other words, a mine to feed those processing facilities, you haven't done much to help your situation. We have the minerals in the ground in the US, and it’s time for us to get them out. 

We can do it in environmentally responsible ways. Mining today isn't like it was in the 1800s, after all. It is very high-tech and truly minimises environmental and other impacts.

‘Mine baby mine’ is a rhetorical play on ‘drill, baby drill’, which is a big deal with President Trump. This administration intends to go aggressively toward mineral extraction of all types domestically, and the president has also talked about potentially developing or purchasing or controlling mineral resources in other countries. This all stems from their commitment to making these supply chains from the mine to the showroom as US domestic as possible, and secondarily, at least, among our allies. 

We’re likely to see some aggressive moves, both on the regulatory and Congressional side, to try to help companies like ours and others do that mining and mineral extraction and processing on US soil as much as possible. The Department of Defence is already engaged in helping us do that, and most importantly, the Export-Import Bank of the United States [US Exim] is lining itself up to help get us into construction. 

 

TXF: We’re talking about Elk Creek Critical Minerals Project in Nebraska, which has been tagged North America’s only niobium/scandium/titanium critical minerals mine and processing facility. On 4 February, US Exim advanced the application for potential project financing to an independent Technical Review (TCR2), its second level of due diligence. Where now in terms of US Exim involvement?
 
MAS: In terms of the Exim process, they have three levels of TRC (Transaction Review Committee) before going to the board of directors. Once they approve the project and the funding associated with it, it is sent to Congress for 35 days where objections can be raised. We're not aware of any situation where Congress said no to anything that Exim has put through that whole process. We have passed TRC-1, a threshold analysis by Exim of project information, the financials, the economic model.

 

TXF: Exim has not historically offered significant financing in the metals and mining industry. But a recent change in strategy for projects with offtake agreements in place under January’s Supply Chain Resiliency Initiative must have had an impact. Why is Exim supporting a US-based project?
 
MAS: Fortunately, and this occurred during the Biden administration, they put into place a ‘Make More in America’ initiative, and for the first time in 92 years, Exim now has the authority to provide loans and financial support to American companies with projects on US soil. Before, everything was limited to American companies pursuing projects and business outside of the US. 

This opened a door for us. As part of that initiative, there has to be an export component to it. Fortunately, we have a definitive, enforceable offtake agreement for half of our planned ferroniobium to a German company, Thyssenkrupp, so we check that minimum export box nicely. Exim was thrilled to find us and the Elk Creek Project, and we were certainly thrilled to find them. They are very professional and very experienced in pursuing their mission.

 

TXF: What offtake agreements do you have in place? 

MAS: Stellantis is interested in our rare earth production. ThyssenKrupp is interested in our ferroniobium production and will take about 50% of the production in an enforceable 10-year offtake agreement. They add a small amount of it to their steel production, and it doubles the yield strength of the steel, making it usable for any high strength, low alloy requirements such as in cars, rebar, I-beams and H-beams for architecture where you need seismic capabilities. Niobium is hugely important for construction and automobiles where you need extra strength.

The requirements under the agreement start when we meet certain threshold requirements for commissioning and production. The ThyssenKrupp agreement, signed in 2014, meets the US Exim minimum export requirements, and also made us, in principle, eligible for a German UFK loan guarantee for up to and around $200 million. 

We also have another 25% of our ferroniobium tied up in an enforceable offtake agreement with CMC Cometals in the US. They have steel mills here in the US and they want to get that niobium from a US source if possible. 

Niobium is an interesting mineral where over 90% of what's produced and sold in the world today comes out of Brazil, and the remainder comes out of Canada. China is the world’s largest consumer of niobium, but it not an appreciable producer of it.  I've done business in Brazil for over 20 years, and I've always found it a suitable place to do business, but it’s always better for companies that consume niobium to have multiple suppliers of any of the feedstocks they need.

In terms of our history with this project, when we first became familiar the very large resource in southeast Nebraska, we were very interested. It had been investigated and researched by Molycorp, formerly the largest rare earth producer in the world. I ran MolyCorp as CEO from 1998 to 2012.

Our Elk Creek Project has an outstanding metallurgical process with exceptionally high recoveries and very low environmental impacts, both as a result of how we process the minerals. I couldn't be more pleased. When we first came in, we knew we needed to figure out the metallurgy and continue to de-risk the project so that it could be financeable. We worked hard on drilling, metallurgy, environmental permitting. That’s all behind us now and we have our government permits in hand to start construction of this project. The only thing remaining is to get the financing in place. And we're on some very good foundational routes to get us to the financing, including with Exim.

 

TXF: To what extent is ECA support vital for financing this project? 

MAS: Exim is looking for the right offtake agreements to support the debt. They want to make sure that the resource is well defined, that the engineering associated with the metallurgy is at a certain level. At the end of the day, they're no different than a commercial bank. The commercial aptitude of the people that work at Exim is as good, if not better, than anybody I've ever worked with in the commercial space.
 
[Euler Hermes] in Germany has the same reputation, as does UKEF in the UK. UKEF can now finance based on imports or exports of critical and strategic minerals.

 

TXF: Are you working with multiple ECAs?

MAS: We are. JP Morgan is our advisor with Exim, and they are guiding us through this process. We've got about a $1.2 billion capital expenditure estimate, which includes a bit extra for working capital because when you get to the end of a project – and I've been there many times – you don’t want to be short of cash.
 
Exim has indicated their comfort with a 65-35% debt-to-equity ratio on this project, so they're willing to provide about $780 million of credit for this project. That’s a pretty big number for any agency that hasn't done a lot of mining and mineral projects. They're trying to minimise their risk associated with the project, so if they can spread that credit requirement out over two or three ECAs, that may make them all feel a little more comfortable. I’ve been impressed by how well they all work together. 

 

TXF: That $1.2 billion financing estimate, has that been in the market for long, and what’s the status of the financing plans now? 

MAS: It’s part of our feasibility study published in 2022, and its available on our website. We are going through an update of that feasibility study as we speak, as our process engineers have developed an even better way to extract and purify our products from Elk Creek ore. Our demonstration plant testing of this new process, which is complete now, shows that we can get 4-5% more recovery on niobium than before, and we can properly incorporate the production of rare earths into the project, which will create a big addition to the revenue stream for us. The engineers were able to figure out how to produce six times more titanium than what we estimated in 2022, and in a higher-purity form that commands higher margins. 

We have several things that we know are going to be pluses and minuses on that $1.2 billion number for capex. Number one is a slightly different mining system where we will access the ore using spiral ramps instead of large vertical shafts. It's better from a geotechnical side, and it allows us to go faster and completely electrify the mine. That delivers a positive impact for our customers in that electrification reduces overall emissions. It could also save us an estimated $180 million on construction, although we will need to take into account inflation from the past several years.

 

TXF: And you’ve got 40 years of experience in fundraising and have helped raise more than $3 billion for previous mining and manufacturing projects.

MAS: I've raised a lot of money in my day. There's nothing here that is surprising or seems overwhelming, but fundraising is not an easy task. I have a good feel for when a project is financeable and I’m 100% confident that this project is financeable. 

We will still need to provide $300-400 million in equity as well, and the ECA assistance and debt support is the absolute cornerstone for the equity investors coming in. 

 

TXF: ESG is becoming a loaded topic of discussion. Many European ECAs, and US Exim, have strict guidelines on the extractive sector (mainly on the ‘e’ of ESG, though increasingly on the ‘s’, and governance risks). Have the risk management goalposts moved, and if I had asked you this question a year ago, would any of your answers on ESG be different about the Elk Creek Project?

 MAS: The goalposts are being shifted slightly by the current administration, mostly in terms of government regulatory processes, but I don't anticipate that this will impact how we manage these issues in the Elk Creek Project. We have been successful in minimising the environmental externalities of this project to an enormous degree. That is largely why we have all necessary government permits in hand today. Our track record shows we really believe in doing things the right way. 

I am going to seek to have the lowest emissions possible, given the constraints of our project. Most of the mines in the US have permitting issues because they need an Army Corps of Engineers permit. The point of that permitting programme is to minimise impacts to navigable/jurisdictional waters of the US. 

We have zero permanent impacts to navigable or jurisdictional waters of the US, and we don't need an Army Corps of Engineers permit. Regardless, we decided to take a deeper look at what are these environmental laws are trying to address. We looked over the life of the operation and tried to design it with those themes in mind. And it's amazing what it's done for us on the permitting side. Agencies like to deal with us because we're trying to do the right thing.

We asked environmental groups to participate and made sure we address their concerns to the maximum extent possible. That desire for input goes for everyday citizens as well, not just the environmental groups or the state agencies. It's a consensus building process.

Another factor that really differentiates this project is that, absent the receipt of federal dollars and Exim debt, we would not have to go through a National Environmental Policy Act, NEPA, level federal permitting process. That is because we don’t have the environmental impacts that would trigger such a process, and we’re on private land. Almost all developments of our size, mineral or construction developments have environmental impacts that require them to go through this NEPA process. It can be an infamous one here in the US, as it can take from five to 20 years. We don’t have that risk.

Now, going through the Exim process, we will go through an environmental review and our major equity and financing people are going to want us to do that too. We welcome that because of our low environmental impacts. 

 

TXF: Where next for the project, and for you? 

MAS: We are updating the feasibility study and some of our resource estimates, which requires a little bit more drilling. We anticipate having those two technical work programmes done third quarter 2025. 

 While we’re undertaking those technical work programmes, we are negotiating term sheets and the loan documents with Exim simultaneously in our sincere hope that in fourth quarter of 2025 or the first of 2026 we would hope to be finished with the Exim process, including board approval and the Congressional waiting period. 

 It’s very exciting as this is an important project personally. I’ve been with it from the beginning in 2012 with the team – Scott Honan (COO), Neal Shah (CFO), Jim Sims (CCO). All of us are about as passionate and committed to seeing this project financed, built and operational as any senior team you'll ever find.

 

TXF: So, mine baby mine?

 MAS: Right. Mine, baby. Mine. We’re just borrowing from the president what we would like to hear him say. Hopefully he is on the cusp of doing that.

 

TXF: Do you have other irons in the fire?

 MAS: We’ve opened up a conversation with UKEF, facilitated by JP Morgan. And they are going through due diligence on our project as well, largely driven by scandium, one of our four major product streams. 

 We've got a project called Project Pivot [Performance Integrated Vehicle Optimisation Technology] in the UK partially funded by the UK government. We're working with various UK entities and ourselves, including Aston Martin and Jaguar Land Rover looking at using recycled aluminium and adding just a little bit of scandium. Scandium does for aluminium what niobium does for steel. It strengthens it and makes it more corrosion resistant and lighter. 

 For example, Aston Martin has different parts in their cars that are made with standard aluminium alloys, and they’d love to use recycled aluminium combined with scandium as part of their emission reduction and cost savings programme, as opposed to using primary aluminium. They will end up producing a stronger, lighter part that can be welded and could save up to 70% in costs. As part of Project Pivot, we're planning to make prototype parts for the Aston Martin DBX. And all that should happen in 2025 as well. 

We anticipate offtake agreements for scandium going to those OEMs, and once those are in place, UKEF becomes very interested in our project and becomes a potential debt funder as well. This will work together nicely. We’re excited about all these ECA possibilities right now.