Peter Dickie: Fast-tracking Elk Creek to production stage

Asian Metal: Hello, Peter. Thank you very much for taking the time to participate in an interview with me.

I would like to start off and ask you a little about the history of this project and how it came under your direction.

Peter: The project was originally investigated in the 1970’s. The majority of the work done by then was performed by the owners, Molycorp. They put about 150,000ft of core drilling and did extensive planning on it. It was originally investigated as a rare earth deposit, but when they did, as a part of their grid drilling on the carbonatite, they discovered a high grade niobium zone, so they concentrated there. While this was going on, Molycorp actually acquired 50% of CBMM. At that time, the decision was made and a couple of factors came to play. Molycorp was putting Mountain Pass into production and had extensive exploration projects around the world, which were then walked away from because they were spending money at Mountain Pass. The second factor was substantiating CBMM, while very hopeful and having plans for niobium in Nebraska, they realized that they had the largest and most unique deposit with CBMM.

The project then sat idle for two decades. It was part of private land, and the owners owned the mineral rights, so to look at the entire package of property, you had to have agreements with 50 land owners. With our knowledge, a private group was put together with intention to acquire the project once it was put into a package, and the private group funded amalgamation of the package, and we as NioCorp, purchased it. We have the same terms as Molycorp, including a five year prepaid lease on mineral rights and predetermined lifetime buy-out at end of 10 years. 10,000 acres are under contract, but probably acquire in likelihood of just 10% of that, and we know the fixed costs involved. In the meantime, we are developing this as fast as possible because of the uniqueness of the deposit.

Asian Metal: Why niobium, what growth potential do you see, and why is the US the jurisdiction to do this exploration?

Peter: Niobium is a large worldwide market, but it is a largely under-reported. This is the reality of the situation where the marketplace is supplied by three companies. CBMM is private and supplies 85% of the world’s supply, so you do not see their sales and financial reports, so data is not front and centre like gold or steel or coal. Primarily ferro-niobium is in the low-USD40/kg range right now. Looking at this figure, that is a USD4.0-4.5B/y industry, which is larger than uranium or rare earths, and much larger than other more commonly reported commodities, so there is a financial attraction.

There are only three producers, and they have the greatest pulse on the market, each with announcements to expand production over the next decade, not to knock each other out of business, but to meet demand. The second aspect is other than the three producers, there are only about three projects under development. One is in British Columbia remotely located by Toseco Mines. There is one in Kenya, which has been acquired by another junior, and there is our deposit in Nebraska. As a niobium deposit, it is fairly unique as a deposit in the US. It is extremely unique and the only one that has been discovered to date. As a US market, that alone is a 10,000t/m (worldwide 90% is ferro-niobium, and the remaining 10% is pure niobium). In the US, it is 75% ferro-niobium, which goes into steel used in pipeline and automotive and other uses. The more refined niobium products go into specialty items, which are used in aeronautics, and this has very high melting point. That is the only mineral that can stand temperature of a jet-thruster.

Asian Metal: What are the prospects for this deposit, and what role could it take in the global market place? Should more people and governments be paying attention to this sector?

Peter: We have received a lot of attention from government sources. We have spoken with several different federal departments and a number of state level departments, which have been very encouraging and lending support. Federally, there are many aspects to political support. One is the currently tabled legislation of stockpiling of metals, including niobium and rare earths. Other aspects are the uniqueness of the deposit, military applications with items produced with niobium, and 100% of supply has been imported and has been for half a century and more. One relatively little known fact, that through various agencies, there used to be a lot of minerals stockpiled, and one of the last ones sold off was niobium.

Asian Metal: Can you expand on your plans for the rare earth elements at Elk Creek? How critical are they in the overall development of the project?

Peter: We have recently added Mark Smith to the Advisory Board. We believe that Mark is going to take a fairly active role in the company as it moves forward. When Molycorp owned this, he was President and CEO of Chevron Minerals, and he has almost more knowledge and experience in niobium than rare earths. He is appreciative of the space and very appreciative to be involved, and we speak very often about the development of the deposit.

The rare earths, while we do have a measured rare earth component, the bulk is in a separate deposit on the property. The current focus is almost entirely on the niobium.

Asian Metal: This past several quarters have been difficult for exploration companies across the globe. What has been great for you, and where is NioCorp going in the next three years?

Peter: We have managed to survive. Our market cap is not substantially different than what it was 12 months ago. If you look at other players and their markets, there has been a substantial drop in market caps. We have stayed relatively stable, and we trade now in the low-teens and in the mid-teens a year and a half ago. We had the foresight that capital raising conditions were tightening up. We reduced peripheral, outside costs. We have a lean operation now, so we have a low burn rate on cash. Over the next 36 months, our focus is initially on the very aggressive metallurgical program, and that we hope to start in the next six-to-eight weeks, funding dependent. Following, we will plan an aggressive drilling program and commencement of engineering work toward the Feasibility Study. This is all funding dependent.

Asian Metal: What are your beliefs on short-term and long-term pricing trends for niobium?

Peter: If you look at historic charts on ferro-niobium as the most widely produced and used, the charts are fairly consistent, and parallel in growth in market and price. That is a benefit of a single producer that is so dominant in the industry. They have been successful in marketing and successful in growing the market and maintaining a reasonable pricing level. We did not see huge spikes in pricing like rare earths. Moving forward, growth in market will continue to expand, and the three current producers have announced or are working on expansion to meet supply concerns. We strongly believe that pricing will follow suit up to a point. Sources seem to indicate that price of ferro-niobium still has room to the upside, as much as 50% improvement before hitting substitution [concerns]. Depending upon demand and depending upon market conditions and the world economy, the substitutions may or may not come into play. From our planning point, we use a long-term price that is actually below the current price.

Asian Metal: Thank you, Peter, very much. I am sure that Asian Metal subscribers will be hearing more from you soon in the near future. Best of luck!