Nio Strategic Metals Inc. ($NIO)

Welcome, everyone. I'm Campbell McCray from Amvest Capital coming to you live from New York City. We're glad to have you here for today's webinar featuring Nio Strategic Metals. Replay will be available shortly after we wrap up. So you can refer back to it at your convenience. A couple of quick notes before we dive in. We want this to be interactive. So please submit your questions using the panel on the right side of your screen. And when you're done, we'd love to have a few seconds of your time to share feedback, which goes directly to the company's management team. Now let's get started. Amvest Capital New York-based specialist asset management and corporate finance firm group dedicated to the natural resources sector. This webinar is for informational purposes only. It does not constitute an offer to sell or the solicitation of an offer to sell or buy any security nor should it be relied upon at the basis for investment decisions. Following the presentation, we'll open up the floor to Q&A. So please keep those questions coming in the panel on the right. Nio Strategic Metals is listed on Toronto Venture as NIO and on the OTT as NIOCF. With us today to walk us through the company's story are several members of NIO's team, you'll see throughout the presentation. Kicking off things is President and COO, Bruno Dumais. Welcome and Bruno, and I'll hand it over to you.

Thanks, Campbell. We're excited to present our project to everyone here, and thanks for being here. First of all, let me start with the corporate members, because this is key. As far as making sure we've got the foundation to execute, it also starts with having the right individuals at the Board level and also sitting on to the executive team. So basically, management Board directors consider various versus key individuals. Julie Lemieux has been involved with First Nation discussions over the last years, very, very key to this project. Hubert Vallee has been those mining operations, opening new mines and all of that at his fingertip since we've done it before. Alexandrias knows the Oka region fairly well. Major General Sylvain Menard has been involved with -- was it a former General and also knows the NATO projects very, very well as well as defense national defense programs and all that. And last and foremost, Christoph Ebeling, who has been involved with the sales and marketing aspects of the niobium. So let me get through the project as it stands. I'll be more than happy answering questions by the end. Yes, now we are strategic. It is ranked as the second most critical by the U.S. government and recognized as critical by Canada and DEE. Since there is no scalable substitute. Our project is in Canada. Drilling has been realized in the past and demonstrated a high-grade deposit. The project brings benefit to the local community, show solid returns, but most importantly, the geopolitical aspects make it even more needed to NATO countries, and I will have it all explained. Niobium applications are increasing by the day. Since it is the secret ingredient to transform steel into alloy and make it stronger, tougher, lighter, resistant to corrosion resistant to eat. Military applications consider still use to build jets, motors, armored vehicles, navy ships amongst others. Here is the perfect example -- it is the perfect example, but special steel is also used to build every single craft we fly in. Here is a view of current users of niobium, pipelines, medical equipment, bridges, electrical cars but also the technologies of tomorrow, EV batteries, data centers, semiconductors. Major problem, though, is the supply sources. 98% is beyond NATO control and it's controlled by Brex nations. Canada is producing but exports directly to China, most of its production. The Oka project would provide about 4% of the worldwide product. There is a last event customers from Brazil producer, Airbus, Boeing, Bombardier, BMW, General Motors, Tesla Caterpillar, Panasonic. But the Oka project is a key nanogram project since close to metallurgy sites. . What have we done over the last 6 months has been to derisk the project from an operational standpoint in entertain discussions with both government. Our project brings our green mining approach, underground design, improved water management. Metallurgy conducted in a second location, and minimal trends are the key aspects of our approach. Now is the time to get the word out with the community, the municipality, the farmers, the Mohawk and communities nearby. And that phase is important. The community first concept is how we'll get this project underway, safe mining design, ESG-aligned communication, trust partnership, innovation are the foundation for the next steps. The niobium project is not just a different mine. It's a different mindset with Canadian leadership. And now I'll let Jean-Sebastien explaining the macro components.

Great. Thank you. Thank you, Bruno. Thanks for your time, everyone. So I recently joined the company, I worked before in finance in New York. And I thought I'd share with you at this part of the project, why join, why I think it's so interesting and it's very rare kind of deposits. Obviously, the team is great. And here, what we have is in the past, the mine produced was open pit what was left behind was a very high-grade zone at around 0.7% niobium grade. And this is here, obviously, it's not a 43-101 resource, it's a historical resources. So -- and here, I -- we presented some slides to show how we compare with other niobium deposits in the world. And the red blue dot in the middle would be our Oka deposit -- and you will see the dotted line in the bottom of the quartile is the actual median. So here already on this chart, we're presenting only really the some of the most well-known discoveries. And then what you see here is at 0.7%, it's kind of -- it fares kind of not bad. And then there's further upper tier deposit above. And then the yellow 1 would be the Brazilian ones and then once you look in detail, some of the brown ones are in more difficult jurisdictions of Africa. So again, here is if you rank all the projects -- the grade is really strong. So -- and it's a very well-known metallurgy that was developed in the past. So ferroniobium was produced from the same deposit. So -- we have less risk on that side of things. And here is basically a list of what are some of the projects in the previous chart and how they rank and how also the rank in terms of political jurisdiction as ranked by the Fraser Institute -- and you would see the Oka project ranks obviously, very well in Quebec with the metallurgy. Obviously, the issue we have is a social acceptance problem here. But then when you look at some of the higher-grade projects, they have a lot of other issues, which are metallurgical or they're just in the areas which can be developed because of AR, which would be the case of the 2 highest grade deposit after the Brazilians are in the Congo. And here, I just showed a quick map to show the area where it is -- they're both different deposit in the DRC, but these are not areas that are easily exploitable, -- there's another one. It's secret for us. So they all have a lot of issues. So then we kind of redrew our own our old map to show basically the only -- after the Brazilian deposits, we have the great -- obviously, the Australian discovery at Luni, which many of you have heard of, of that ranks really well. And then you have the U.S. deposit at Elk Creek, which ranks similar to Oka in terms of grade, but they have historically have encountered a metallurgy that's a little more difficult, we believe than at Oka. So that's what makes for us. We think it's a great proposal in terms of Rock value, again, it's a similar slide to the grade, but it ranks very competitively. And then this was done by 1/3 -- again, this is the idea of the value of the rock to show how the small underground mine can be very profitable. And this was done by a third-party firm in Northern Quebec -- and it's interesting that some of the other dots are gold mines, and we rank higher than some gold mines, underground gold mines in Canada. And some other base metal projects. So in terms of CapEx, we think that CapEx will be very manageable given the location near the infrastructure the workforce and the minimal footprint of of the deposits. So we have strong economics here. Again, we're talking about in PV of over CAD 400 million, IRRs after tax, of course, of above 30%, and this would be including everything from royalties to the communities, the First Nations and other fees. So this is numbers that obviously, again, they are not 43-101 because the original resource -- we are right now going to redrill it to produce 43-101 numbers. And then -- but the whole engineer, a lot of the background engineering is done. And again, for this slide, -- we used $45 niobium per ton, which is a great gateway to our next speaker, which is Christoph Ebeling, -- he is on the board of the company, and he joins us from Europe. His group has been involved in the marketing of niobium from Western companies, which is something very rare, not many other trading houses have had the opportunity to trade niobium. So I will pass it on to Christoph. Thank you.

Yes. Hello. Thanks, Sebastien. So the situation is we are basically not a trading house. We were -- our company was installed and founded to bring Nio back, the third biggest niobium producer out of Canada to the market, so made that it is in '19. And then we are so to speak to second generation. We are no longer together with Niobec but now with Nio Strategic. And that being said, I know personally the Nio Strategic or former Nia projects since many, many years. And this, from my perspective, and that is why I also joined this company and support this is the only project from my perspective, that makes sense. Why is that? The point is we have -- of course, we have lots of projects in all the world niobium, you find it. But that is not what the industry wants. Always see the situation from the view from the industry. The industry wants a safe and secure supply of this material because we don't have -- we are not having only NATO and arms and all this basically every steel that you find around you when you now take a look around you, you find niobium in it. And it is only produced by 2 Brazilian companies and 1 Canadian company. And all these companies have big parts who are totally Chinese Eastern European companies. So Europe, the United States and other countries are a little bit afraid because that's important. When you go into the industry, into the steel industry, where you actually use this material, you cannot sell material from the DRC or something. That is not possible. Of course, you find it there. You find it partly also artisanal mine in Brazil or something. But -- this is not a game that a big company like Arcelormittal or companies like that Tata Steel they don't buy this. It's not possible. So well, from my perspective, what Nio has and why I joined us is now strategically extremely grade has strategically perfect position. Let's put it like that. Montreal is the port to Europe, basically to Rotterdam, where then share the material within all Europe. The most important market regarding steel, high-quality steel and the United States, the area of Pittsburgh, where it goes, it's also not too far away. So it's strategically perfectly positioned. The other thing is also the grade of the ore is also pretty good, to be honest. So some saw the same worldwide. But again, let me find that in the Congo. Of course, you have a product in Australia also there, I don't know. I mean maybe it's good, I don't know if first had some promotion I've heard, but this is orientated to China more because they will not bring it to Europe this easy because it makes no sense actually. So that's the situation. Again, very important for you to understand this, niobium is basically everywhere. If you don't have niobium we don't have a car anymore. Okay? If you don't have niobium don't have a plane anymore, nothing actually. People don't know it, but now today, people more and more understand the importance. And get to know this undervalued product actually or alloy, let's put it like that. So -- what is the goal is do you have to focus the sales and the marketing, of course, to Europe and to North America. And of course, Canada itself. It's also very important because we need to secure let's say, forces. And even if it sounds, it's not the biggest sources in the world, but that is not important. You have to start somewhere and you need this to secure the production for companies in our Western world. Let's put it like that. You are probably also interested about pricing, I can tell you, and that is what I know. It's not what I guess or estimate or something. I know this -- since the very beginning in the '70s, I think CBMM started this, the price is growing. It never came down, actually. I think there was 1 crisis. It went down through a day or something. And then showed up again, but it is constantly but steady growing the price. That means you don't expect a Supernova or something like that. So it explodes and then it comes down like other commodities. It is steady, but it's all the time growing the price. Also, what is also very important is you're always sold. So you don't even need an offtake agreement or something within a month, the production is sold for a year, okay? So that is also something of importance to understand because we are not selling to trading houses or something. We are selling to the steel industry directly with yearly contracts. So that's the most important point. And that's why also Nio and that is, from my perspective, is really smart. It's not going to typical we're working with trading houses. But starting, and that is also part of my job, to be honest, I start already to build up the own sales and marketing for Nio. So everything is in the house. And now you have the full control of our products, over markets and what they want to do. And that is something, all the others, they grow the typical way like we go to trading houses, but that is not working in the niobium business, actually. And that is why from my perspective, the Nio Strategic Metal project is the best project by far. And the other point is also I noticed from former times already, there was already a production. That means -- we don't need to prove there is something. We just have to prove how much it is and pretty sure that's quite a lot. So it's also a very important point. Yes. So that's from my side so far.

All right. Thanks, Christoph -- we -- we're focused on to many initiatives over the next 3 months. Social acceptance is key. We are interacting with local communities, including the Mohawk community in nearby. Derisking phases -- we're connecting through external reviews. We want to come up with a more safe mining concepts regarding the water usage and the environment. We need to be clear with everyone. This project will not deteriorate the environment, but it's an opportunity to improve water supply and secure the tailings near body. We'll also demonstrate the metallurgy concepts to improve recovery ratios. Position the project internationally is also key, assuming transformation in Canada, servicing Europe North America. We also initiated the drilling phase to confirm resources. Our resources are historical since the estimate in the reported has been realized in 2010 and published in 2011. The drilling portion is planned for the year or the end of this year to confirm resources. Throughout the year and next year, we'll be conducting studies, updates to comply with current legislation. I'm referring to updates since feasibility studies, PAT reviews, environmental assessments were conducted in the past. They now need to be updated. In the meantime, engaging with the community remains my #1 priority. This is the main driver for being granted a pyramid in Quebec. And yes, there's a lot of at sticks here since the project is in groteristical area and near Kanasataki. Members of the Oka crisis still lived, but our approach rely it really is to provide benefit to the for the community, improve water management and supply, perform metallurgy at a different location. We'll keep everyone appraised about developments in this regard. Making progress onto these aspects is how we will secure the permit. And now we would be more than happy answering questions from the audience in order to tell you how excited we are about the project and also about the next steps, Campbell back to you.

Very good. If you're ready for some questions. I will dive in a bit. Now that you've assembled team of mining engineers, environmental scientists and nova market participants. Could you dig in a little deeper into some specific milestones? And when and elaborate on a viable plan and what are your expectations of the updated feasibility and resource? And the resource that you inherited. Do you -- what's your confidence level of what you saw? How close do you think it's going to be to meeting a positive feasibility study. Was it in good shape?

Sure. The economics are there. No doubt in our mind. What's really key now is really to entering the demonstration phase in order for everyone to understand the mining concept, the design, the lower impact as far as water management is concerned. Making sure they won't be -- we want to supply water. We don't want to, let's say, making sure we don't want to use all the water from the area in the opposite. We wanted to become a water supply provider because there will be enough quarter for everyone. That is the demonstration of it through external firms is key because I've been saying it ourself is 1 thing, having someone has got the expertise is exactly what everybody needs here in order to make decisions in order to be having discussions between ourselves and the community, because everybody is looking forward to understanding the concept, understanding the benefits, understanding, making sure how we will manage issues. I will make sure there will be no deterioration about the environment, but also how we could secure the existing tailings. Those are all aspects we're working on to as we speak.

Are you doing actual drilling on the ground as we speak? What are you doing physically on-site at point or are you doing right now, technical advancement in the lab in the office.

Okay. The drilling portion calls for specific permits. There's a process to be followed with the Quebec government, and that's something we are executing as we speak. It's -- there is some time needed for the government to assess the situation prior to authorized drilling. This is underway, and that's something we're working on to -- what in said that, initiative discussion, initiating the reviews from the expert, as I said, is also key right now. Most important -- most importantly is to be entertaining discussions wanted to be prepared to having it explain properly to the community in your bid and gain their trust. How are we going to do this? By being credible, by communicating properly using facts as opposed to, let's say, any ideas that may not fly for the long term. So basically, really, really is down on the ground in order to having it explained and gain social acceptance.

Could you highlight your capital structure? key shareholders, cash position and so some of the cash needs that you will need to execute that time line.

Maybe, Jean-Sebastien.

Great. Yes, the current cash position is right under CAD 6 million around $5.8 million. And the plan is to go through the drilling in the next probably 6 months. As Bruno, we were explaining you need the authorization permits from the Quebec government. So that's a process. And then the budget item there would be to have a drilling campaign to convert the resources into 43-101. And right now, earmarked for that was $800,000 for a first drilling campaign and we believe that will achieve a long way of what is needed to then use that information and update the engineering studies as well and the actual 43-101 status for the resource themselves. So right now, we forecast to finished the year just a little under $5 million depending on how much we spend and when we actually get the final approval to do the start of drilling on site. While we're doing that, we've also hired other engineering firms to do as much as not on-site word, but on water, how will the water flows be affected in the area. And that's -- what other am I answering your full question.

Yes, that's good. Okay. Could you talk a little bit about your marketing and offtake efforts that's a long process with corporates and other firms. And I'll also add in maybe the flurry of activity at the provincial and federal level in strategic metals. Mark Carney made a lot of news. They put some a lot of money to work, especially in Quebec. Do you think you'll be able to advance into that phenomenon?

Yes. Great question. Yes, we -- and as a matter of fact, we incited discussions with industrial partners, potential partners as there is geopolitical aspects to be considered. And from a European standpoint, this is key. This is key to them, and they really, really -- that's the reason why we started our initiated discussions as far as support at first and then offtake agreements as well, making sure now we would be a secured supply source, as I said, North America, but also European users. It doesn't -- but by the same token, also entertaining discussions with both governments. Canadian and Quebec levels because this project really, really carries a long way as far as Canadian leadership where Canadian leadership can take us. And also don't forget 1 thing, all the innovation that we could bring to the table as far as value-added products. Products, we don't even now that they can provide us with at this point, but that would be -- that's exactly what the Board needs. And maybe Christoph could be adding some aspects from an international standpoint. Christoph?

And maybe while he logs in, I think would not a pilot plant and an effort and visibility be a key milestone. And what might one cost and what would entail, I say maybe that will give visibility to your future offtake partners that you can deliver spec.

The pilot is only a way for us to demonstrate the new the metallurgy itself because it's been in the past, just made from now would be 2026 from an operational standpoint. But having said that, most importantly is to also assess where the location to be in terms of -- from an operational standpoint, as I said, there would be 2 locations, 1 being Oka in regards to the nonchemical operations, grinding, milling at first and -- but also then the metallurgy would be conducted at a different location. These discussions are underway and that's exactly what we need in order to making sure now everybody understands whether our game plan is and how we plan on executing over the next months.

Could you talk about any royalties or holds or any other shareholders in the small print of Oka?

Sure. That's -- I mean, of course, now this -- we've got to consider the local stakeholders, right now. And of course, there would be -- there might be royalty agreements to be considered between parties here. Discussions are underway. And we'll keep everybody appraised about the developments, as I said. Discussion is there. Right now, there are no royalties. It gives us now all the leeway in order to making sure we'll make it win-win regarding the local stakeholders. But most importantly, isn't exactly the economic aspects. Our #1 focus remains making sure this project from an environmental standpoint will deliver, will meet standards. That's really, really is what is in the back of our mind right now.

Compared to the Brazilian producer that you mentioned, maybe talk a little bit more about what they're supplying and at what cost. And clearly, you would be delivering a premium spec product in North America. How your best estimates, what would be the cost premium? And is that consideration as much as it would be you'll be of interest because you'll be delivering a North American secure supply, but the cost is a consideration. So -- how much more do you think your product will cost what's floating on the world market in cheaper jurisdictions?

Of course, Okay. Go J.B.?

Well, just given the work we've shown, we think the market -- the mine will make money at market prices in our forecast. We're not assuming any premium prices. we're assuming market prices. I mean, we -- everybody can have a view and other mining companies have tried to claim they would get green credits for their material. They haven't. So we're just assuming that the project stands on itself. Some of the other mines have similar cost structure. One of them is in Tanzania. And they have a 1,000-kilometer railroad to do, so let's see how the costs pan out, right? We're right there in terms of infrastructure, and we are capturing a full-in CapEx cost and CapEx. So we think we're very well positioned, and we're not assuming any I mean, obviously, we're government if people are more interested in the premium is market. Well, take it, right?

And is the demand price or is it demand inelastic, meaning, since niobium is just one component in an alloy, whether it's the price is x or 1.2x. Does it make much of a difference? And you would -- your niobium would be more of interest because it's next door.

Yes. Should I answer that Sebastien? I I have problems hearing gearing -- so the point is the following. So price wise, there is no premium. There's a market price, and the market price is pretty much stable, as I said, but you have different crises in different jurisdictions. For example, in former times, Russia was always very cheap. China is also not too high. The United States is the highest market price-wise, why Europe is also close to the United States. So that's why the most important market also for us. I mean by incidence, the high prices is good for us. The other thing is production-wise, the cost will be like the niobium from Niobec, I think, even a little bit cheap because we are in a very good position. That means location. What I mean is close to Montreal. Of course, you cannot, you cannot compare the production in Canada to the production in Brazil because they work with open pit mines while Canada is working underground. On the other hand, we have other advantages like we don't have a problem with rain or something what they have actually because they have a big pool and there's a rainy season. We don't. Here we just get frozen, but that is fine. So -- so then the question price-wise, again, the price is not -- or let's go to offtake agreements. Let's understand it a little bit. Off-take agreements like you imagine a big company like Glencore comes and gives you an offtake agreement for the next 10 years. And actually, as a niobium producer, you don't want that because what they do is then they cut you off from the market because they have the knowledge and they make the money and not no longer you do it. And it is absolutely not necessary because we said directly to the steel industry and the steel industry, they give you yearly contracts. What we currently do is we start entertaining also the biggest steel companies in the United States as well as in Europe introduce ourself carefully, but we do that all step by step, of course, but I know because my partner in business, he comes from the steel industry, there is a lot of interest already, okay? So that is what they clearly told us. And that is a logical thing that there's interest because there are just 3 producers in the world. And again, if it's in Tanzania or wherever it is, this is all not Quebec, that's all not Canada, that's all not a secure jurisdiction that can break down from now to then. Currently, I'll just give you an example. We have a company doing copper in in Zambia. My partner now has to go to Zambia. That's why he's not in the call because if he is not himself there, nothing works actually. And believe me, the big dealers don't want that. You know what I mean. So that's the point. And then why for me that is out of question, only Canada, a jurisdiction like Canada is of interest for the steel industry. So I mean, of course, North America is well and things. But let's call it the safe countries or the countries you can plan with. And again, the price didn't change over the years just grow. It never came down. It was always growing, growing, growing, growing. And everybody said, and now that must be to stop and then a day later, it grew again. So that's the situation with the niobium and that's exactly the market that we will find with Nio Strategic actually. And since we have the team, the team is very important also on that. It always sounds everybody has a good team, but the good team needs also you have to connection to the steel industry because if you have the connection to the steel industry, you are sold before you produced. Believe me, it is exactly what will happen. So -- that's the situation currently.

DRA Global has been engaged to assess the water balance at the Oka area. Have they started their work and what are the preliminary findings in water management issues materially affect the project's feasibility or economics.

Great question. First item really is about the water consumption -- as a concept, we're coming up with considers recycling water over and over, of course, filtering this all, but also making sure we use water instead of always always adding new water into the system, which could drain the water -- the availability of water in the area. So basically right now, this intake remains fairly small has been assessed and remains fairly small as far as that is concerned. But we're going to take it to the next step right now in terms of, let's say, what does it entail the mining operation itself as far from from a water usage standpoint. And that's something we are assessing as we speak, from different angles, and we'll be in a position to report back.

Is the recently launched government support service, felon structured to help us with social acceptance issues.

That's a fantastic question, and that's very, very accurate. Yes, for those of you who don't know about Canada and the provinces are aligned in order to assess mining projects and try getting there to -- getting them to the next steps. It was happening everywhere in Canada, except for Quebec. Quebec was still assessing mining projects using from both federal and Quebec angles. But the final program you just mentioned, came in last week. And that is really really a way to fast forward the process. Not in a sense that it will -- it's going to be accepted tomorrow but it's extremely -- there's exactly the adhesives and probably position the discussions between the corporation and the government making sure mining projects are well assessed, well demonstrated and will carry a positive impact as far as local communities are concerned. As far as Quebec government is concerned and as far as the Canadian leadership is concerned. So basically, yes, we welcomed this new program in order to, let's say, making progress as far as social acceptance as a whole is concerned.

As we move to close, I'd like to bring you back to that closes with the time line and upcoming milestones? What should we expect in the next 18 months, I think, in summary, and move to close.

The -- yes, as I said, focus right now really relates towards social acceptance, making progress with the locals with the Mohawk community as well, which is Nerby,and that needs to be tackled at first to farmers as well. They've got to be -- they got to understand what the project is all about and how we did mitigate the risks as far as their concern. In the meantime, though, making progress as far as updating the studies. Making sure now we get the full picture as far as the mining operation is concerned. So that really really is our focus, combined with the drilling program. It carries lots of external factors. So basically, these are not totally under our control. But we are, let's say, making sure we make progress with government and the local stakeholders. And by the end, what's going to make the difference is all about communication, all about making sure everybody understands what's a sake, but also how we did derisk the project and what's going to be the outside benefits for everyone.

Thank you once again to Nio Strategic Metals and all of you who joined us today. Don't forget to share your feedback before you go. We do value your input. The on-demand replay will be available later today. Be sure to check out our upcoming webinars library replay on our website. Thank you for joining us and look forward to seeing you soon. And Bruno, Ron Jean-Sebastien, Christoph, thank you.

Thank you. Looking forward to speaking to you again.