NioCorp Developments Ltd. (NB) Earnings Call Transcript & Summary

Good day, everyone, and welcome to this NioCorp Management Update Webcast and Conference Call. I'm Jim Sims. I'm Vice President of External Affairs with NioCorp. But before we begin today's webcast, just a few reminders. Slides from today's presentation and the audio of this call are being broadcast live over the web. A video recording of the broadcast is being made, and a replay will be available on the NioCorp website later today that's located at www.niocorp.com. Today's broadcast is slated to go about an hour, including time for questions and answers after the presentation. [Operator Instructions] And while we may not be able to get to all the questions posed during the webcast today, make sure you contact me with your questions, and I'll try to get back to everyone who poses a question. As you'll see on the screen, in our presentation today, we will be making forward-looking statements. Viewers are cautioned not to place undue reliance on such forward-looking statements and to read carefully the risks outlined in the company's public filings, both on SEDAR at sedar.com and with the U.S. Securities and Exchange Commission at sec.gov. Leading our presentation today is Mark Smith, CEO and Executive Chair of NioCorp; and Scott Honan, Chief Operating Officer at NioCorp. Mark, why don't you start this?

Thanks, Jim, and welcome, everyone, to the webcast today. We just finished our Annual General Meeting, and I think we're feeling very positive about our efforts here to move the project forward, and I'm very anxious for everyone to hear Scott's very detailed presentation that will go through the steps of moving this project forward. So I think it'll be a very good day for everyone. Let me first convey my hope that everyone is staying safe and healthy during this continuing COVID pandemic. Follow the precautions and recommendations of health authorities as a NioCorp team does and do everything you can to keep yourself and your loved ones safe as our society progresses through this global challenge. I'm very happy to report that the NioCorp team remains safe and remains healthy, and we're very pleased with that. In spite of impacts and additional delays that the pandemic has forced upon our company and the Elk Creek project, a great deal of progress was made in 2020. I'm extremely proud of what this team has accomplished and continues to accomplish in moving this extraordinary project to an eventual commercial success. In fact, in my nearly 40 years in this business, I've never seen a large mining and mineral processing project that is more shovel-ready as it awaits financing. Of course, years of work goes into making a massive project like this shovel-ready. In 2020, we made significant progress on multiple fronts. Probably one of the largest accomplishments in 2020 was securing in June our final construction air permit from Nebraska. This was a multiyear effort by Scott's team, and they did an outstanding job in securing this vital permit. In conjunction with the special use permit that Johnson County issued to the project in December of 2019, this means that we are now positioned to launch construction activities at the project site as soon as possible after project financing is obtained. We also secured a nonbinding letter of intent from a major U.S. integrated steel producer for up to 25% of our planned ferroniobium production over 10 years. If a binding commercial sales agreement is ultimately achieved, as I expect it will be the case, the Elk Creek project will effectively be sold out on ferroniobium, at least for the first 10 years of production. That would be a remarkable achievement for a mine that has not yet been placed into production and I think speaks loudly to the continuing demand and demand growth for niobium. As we recently announced, we continue to make progress on what I see as a potentially groundbreaking approach to niobium extraction. If our current R&D efforts shows that this process is technically and economically feasible at scale, and if we elect to integrate this new process approach into the plant, it could lead to some very significant operational and economic improvements, both at the CapEx and OpEx level. A lot of work remains to be done on this initiative, but it also underscores the dedication of our highly skilled technical team to continually look for ways to improve efficiencies and outcomes every step of the way as we move this project forward. We secured extensions in 2019/'20 on all key land option to purchase agreements for the project, which positions us to move quickly once financing is obtained. The Elk Creek Project recently received an Infrastructure Project of the Year award from CG/LA Infrastructure, a global leader in infrastructure strategy and project development. And finally, we continue to make progress toward project financing of the Elk Creek Project. As we noted in our shareholder update earlier this week, our primary focus has been to fashion a financing package with private investment groups that is weighted heavily on debt financing. We continue to engage in discussions with a number of potential financing parties. Project financing packages of the size required for this project can be quite complex and often involve a high degree of coordination among many different parties in many different geographical areas. Delays are commonplace and always highly frustrating. Since the start of 2020, however, the COVID-19 pandemic has added significant delays to NioCorp's project financing activities. While there can be no guarantees of success in any of these efforts, and while there are no definitive time lines for any proposed financing, NioCorp remains optimistic that it will ultimately be successful in its efforts to secure financing for the project, and the company will announce any definitive accomplishments as they occur. With that, let me turn the presentation over to Scott who will walk us through how NioCorp will execute on the project once financing is obtained. Scott?

Thank you, Mark, and I'm excited to speak to the group today about project executions. When you look at Elk Creek, what we have here is a true greenfield opportunity. And the challenge in front of us is to take that patch of farmland on the right-hand side of the screen and turn it into a modern industrial enterprise that we've got on the left. We want to do this quickly, and we want to do it in a way that maintains the good relationship with the local community that we've worked very hard to build over these past 4, 5 years. I'll start out talking about project execution. We start with this graph, which shows the project spending by month over the construction period. And the underlying assumption here, and it's important to understand this, is that the spending presumes that we have 100% of the cash we need on day 1. The reality is that actual financing will be different than this assumption and the assumptions that we use in things like feasibility studies and economic markets. Funding may come in tranches, and some of those tranches may be bigger, some of them may be smaller. And there'll likely be some kind of mix of debt and equity. So let's just take a look at this graph and understand what it tells us. The first few months of the project, say, the first 8 or 9 months, are really an engineering effort. We need to advance detailed engineering to get to the point where we can start constructing things on the ground. In the middle of that time period, you see a big green bar, that's at month 5. And that's the assumption that we purchase all of the land in that month. And again, this is a good reflection of how we put together the economics for the project where we think about when is the latest time that we can spend the money to get the land that we need to execute on the project. So you can think about when you would actually want to do that depending on the financing scenarios that you're looking at. The next 24 months of the projects are really the key construction phase. That's when everything is built. The mine is developed. The surface plant is constructed. And then after that, in the final few months, you get into a period where you get 2 months of commissioning and then 6 months of ramp-up where you're really turning the project from a construction activity into an operating entity. Now I think the point I want to make here is that when we think about execution planning, we really are adaptable to the ultimate financing mix and when the financing arise. So as an example, if we were to consider a situation where we had hypothetically an initial equity investment of modest size, we might do a few things. For instance, we might work very quickly to acquire the land [ immediately ] so instead of doing the land acquisition in month 5, we might -- we do it right at the beginning. We probably prioritize work on permitting and the utilities that we need to run the operation. We certainly want to spend some money on advancing the detailed engineering, and we want to make probably keep a little bit of money aside to cover our operating expenses while we pursue subsequent tranches of funding. So I just wanted to lay that example out for the folks on the phone just to understand that we spent time in scenario planning, and that's really our focus on moving very quickly to execution once financing comes in the door. And we're ready to move forward however that financing package ultimately works out. Acquiring the land, of course, is an important strategic element of our ability to execute on the project. And the land that we currently hold for the project is held as a series of option to purchase agreements. So that gives us the right to acquire the surface, the minerals or sometimes both elements of the land at any time during the term of the agreement. And the pricing for the land is contained in a formula in the agreement usually based on that land's agricultural value. Now it's also important to understand that when we talk to the local folks and come to these agreements, there is a specific prohibition in the agreements against doing mining while the option is in place and before the land is acquired by the company. So we get a lot from those agreements. We get some time. We get exclusive rights. We're allowed to do a whole bunch of exploration work, but we have to actually acquire the land to build the operation. Now this figure does not show all of the land that we currently hold under these agreements. These are just the key pieces we need for project execution. And you can see a purple box there. Those are -- that's the land that we refer to as the main property. That's the land we need for initial construction, in particular. That's where all the facilities, the mine and the surface plants are going to go. It's also where the construction companies that come and build this thing are going to put their temporary facilities and offices and lay down areas and storage and all that stuff. That's actually a substantial portion of a land package during the construction phase. The yellow box is the land that we need for the future. So that could support future operations. It could also support future tailings impoundments. And we're talking decades down the road here. As Mark mentioned, we recently extended most of these agreements just to give us some additional time to see the financing through the completion. And I want to point out that this is a very cost-effective way to approach the land question when you think about project development and execution because we can spend a little bit of money to hold this land in an exclusive way, and that allows us to use the bulk of our funds on project advancement. And then when we get a financing package together, we can then move forward on acquiring the land when it makes sense. Project organization is pretty important, and it's really a reflection of how we want to execute on the project. And this little graph really shows how we're organized right now and it really breaks things down into 3 major groups. There's a surface scope, the underground scope and the owner's team. In the surface scope, our main contractor is going to be Zachry. And then we brought 2 contractors in -- subcontractors to Zachry with Veolia handling the water treatment scope and then DuPont MECS covering the acid recycling scope. There's a deliberate reason we organize this way, and I'll get to that in a minute. There'll also be a few more subs on the surface side. Generally speaking, when you hire a big construction company, things like painting and insulating, those are not core capabilities of the big construction company, and they'll sub that out to smaller firms. On the underground side of the project, we have Cementation, and they're going to do it all for us. They're going to do the engineering. They're going to do the procurement. They're going to build the underground mine for us. And then the last thing we have here is the owner's team. And there's a few key firms listed here, and we'll probably add a couple more to that as we get closer to execution. But we need those firms to help us through the construction period, and we also need their help in overseeing the big EPC contracts for the surface and the underground. So this is important to understand because as a small company, we don't have the time or the internal capability right now to oversee a project or the scope. So we'll bring in some temporary help to do that and allow us to get through the construction phase. If you look at that owner's team, there's some very specialized capabilities here. So we bring Olsson on as our permitting lead. Obviously, they've done a lot of work on permitting in Nebraska and have helped us out considerably already. We're going to use SGS as our metallurgical testing lab. Part of project execution is to optimize some of our metallurgical work, and they'll help us with that. SMH and Process Engineering Associates are firms that will help us with process engineering. And I think it's important to recognize that the development of this project, the process -- the fundamental skill set around how you extract niobium, titanium and scandium from the ore is something that we hold in-house here at NioCorp with our technical team. And so as we advance the engineering of the process, we need to keep that in-house with these contractors. Nordmin will help us on the underground side of things with some engineering and some oversight of cementation. Andritz is a firm that's going to construct a process model for us. And that's important because we can construct this process model, we can run it electronically, and that'll allow us to both optimize the process, and it'll also allow us to identify any problems or issues before we actually put equipment in the plant. So that's a really cost-effective way to do some value engineering while you're in the project execution phase. Finally, we have Dahrouge, and we worked with Dahrouge for a long time. When we start out the project, we're going to be doing a lot of drilling, particularly around the shafts to look at geotechnical issues and hydrogeologic issues. We need a bunch of geologists to help us with that, and Dahrouge can provide a bunch of good people to help us out in that regard. So the principle here is we want to keep the number of entities, we have to watch manageable. And I think organizing in this way lets us do that. Just as an example of how this cannot work very well. I previously worked on a big capital project. And at one point in that capital project, there were 70 different contractors on the site. And when you think about trying to manage that, that's a big task. We have 70 different entities. You have to provide folks to watch all those activities and make sure everything is coordinated. That can be difficult. So this is really a good model for us. It keeps the number of entities that we have to watch directly, pretty small, and we think we can do that very effectively. So now you kind of understand how we're organized, I wanted to talk a little bit about how we contract with these different groups. And I'm going to start just talking about the surface scope. So when you think about these contracts, really, the contracts that we sign with the firms that do the work, it's really an attempt to optimize schedule and cost, ultimately. And I just want to give an example of maybe 2 extremes before I talk about the surface scope. So 1 extreme in terms of contracting and project execution would be to start building stuff right away as soon as we get a bunch of money. And that looks great, right? You have a bunch of yellow iron at the site, concrete being poor, steel going up. But if the engineering has not really caught up to that activity on the ground, there's really a high risk of doing a bunch of rework, and we don't want to get in that kind of situation. The other extreme is we could get financing and we can decide to execute in a way where we just do all the engineering and procurement upfront until everything is completely done, and then we start building stuff on the ground. And doing it in that way is not a bad way to do it because you're not going to have much rework to do. But at the same time, it's going to really drag the schedule up. So what our task is here is really to find the sweet spot between those 2 extremes. We want to run the engineering and procurement in parallel with the construction work as much as we can. So in terms of the surface scope, the way we do that is through an initial time and materials contract that converts to a lump sum. So what we're going to do there is the construction firm is going to do a bunch of engineering work over the course of several months. And they're going to do enough work that they're going to give us a fairly accurate cost to build the facility. And then that cost gets turned into a lump sum contract. So they're going to say they're going to build this facility for X dollars. That's important for us because it gives us a lot of certainty around what that ultimate cost is going to be. And it gives us certainty around the very biggest part of the capital spend here, which is the surface scope. The other important thing here is that we've organized this so that the asset plan, the asset recycling operation and the water treatment scope are sub elements to the surface scope. And so all of that work gets wrapped into one big contract, and it's all going to be lump sum. And as I say, that gives us a lot of certainty going forward. On the underground scope, the approach is a little bit different. And it's important to recognize that when you're developing an underground mine, despite all the drilling and preparation that's done, there's some unknowns and there's some risk there. So you're going to be thinking the shaft. You're going to be developing underground drifts and facilities. You really don't know exactly what you're going to get until you get down there. If we were to go to our underground contractor and say, "Hey, can you guys give us a lump sum bid for this," they'd be happy to do that, and we'd all be shocked by the number. So a more traditional way or a better way to do this is to do kind of cost reimbursable, time and materials approach. So it's going to be a phased approach. There's going to be a number of steps to it. But really, the idea is to get to some kind of a cost estimate and then to get an agreement with the contractor where they're incentivized to help us improve on the cost and improve on the schedule. So we share in that, and we come in earlier. There's some benefit to the contractor. I think that's a really good way to approach the underground scope. The owner's team is a little bit simpler. But there, we're just going to have time and materials contracts with the contractors compared to the other 2 parts of the project. This is really a very small part of the expenditures. So having said that, I just want to say a few more words about the contracting model. So there's really 2 general models to approaching a project of this size. One is the EPC model or engineering, procurement and construction. And that's where you hire a firm that will not only do the engineering and procurement of the thing you want to build, but they'll also self-perform the construction. And that's what we have in Zachry and Cementation. The competing model is the EPCM model where you hire a firm to do engineering, procurement, construction and management. It's a different approach. And what you do there is you do some engineering and procurement through a firm and then you hire other firms to actually execute on the construction. Now we've adopted EPC because we think it's more manageable for the size of the company we are, and it gives us some cost certainty. EPCM requires a much bigger organization to execute because there's many more entities that require oversight. And you can talk to firms that like both models will both tell you that they'll give you the best price at the end of the day. But our feeling is that EPC is the way we should go, and I think it's going to lead to success on this particular project. One of the things I wanted to cover was early works. And these are things that you're going to see happen in the very first part of project execution, say, the first year of activity once we have financing in place. Some of these things are going to be very apparent, and other things are kind of things that's happening in the background. But they're all important. And I want to give this group a sense of what those things are going to be. So obviously, we need to finalize our EPC contracts. We take notes pretty far to this point. But once we get financing in place, and we know when and how much money is coming in, we can put the final structures in place and get those contracts in final form. As I mentioned earlier, we have some metallurgical testing to do that will run in parallel with design work, really intended to optimize the metallurgical performance of the plant, see if we can get some improvements there. Permitting is something that I feel you can never start too early. We're going to continue to advance that. We have what we need right now to start, but it's never too early to tackle the rest of it and make sure that, that's all well in hand and doesn't pose any problems for schedule. We're going to do a bunch of drilling upfront. Really, that drilling is to very firmly establish the properties of the rock, where the shafts are going to go, and that's the most important thing, and also to answer some final questions on the hydrogeology and look at the issue of freezing and exactly how all that's going to work. We're going to do detailed engineering and some procurement of long lead time items, and I'm going to talk about that a bit more in a minute. We're going to get our utilities to the site, our natural gas supply and our electric power supply. Those 2 utility supplies are critical for the operation. And the way we get those to the site is a payment-driven process. So we need to get some money in the hands of utilities to get that going. And the sooner we get those to the site, the better because we can save some costs during the construction period. We have discussions and agreements in principle for water supply. We do need to bring in a little bit of water to supplement what we recycle. And that water supply needs to be formalized, and we need to get contracts in place with that. As I mentioned, we want to acquire the land, take it from option to purchase agreements to land that we actually own. And then that picture on the right shows kind of what the project site looks like today. It's very beautiful, but we need to clear it and grade it so we can actually construct process buildings and put in the mine. We need to put in temporary office space at the project site. I know I've had a lot of discussions with folks in the local area over the past few years about various buildings in the towns that we can rent or lease. But my feeling as a project guy is that I want to be as close to the action as possible. So we'll have offices and trailers on site. And not only will we have those, but the contractors will have those as well. We'll undertake process modeling. As I said, Andritz will do that for us. And there's a lot of value to that in the early phases of project execution. We'll get the contractors moved out. We'll get the ground freezing going, and we'll bring in generators to provide temporary power to the site. This is pretty typical for a mine development of this type where we need a lot of power right away, and it's just not available from the local grid. So we'll run generators for a period of time. Eventually, line power will arrive, and we'll probably sell most of those generators. We'll keep a couple of generators as emergency backup power, and that'll be sort of a nice way to round up the generator situation. So again, this is just some highlights of things that we're going to see in the first year. If you're driving by the site and you're hearing us talk, this is the kind of thing that's going to be happening. I want to talk as well about the long lead time items, which is really the key procurement section of the project schedule. And a lot of times, this is something that kind of gets buried in the details, but we have to pay attention to this because it can have an impact on project schedule and project execution. So I just want you to imagine that you need some for the house, and you can probably go down to Home Depot and buy it. I'm thinking of buying a paint sprayer myself. Those are commercially available. But if I want to buy a 3-megawatt electrical furnace, I can't get that at Home Depot. And in fact, there's a few steps I got to go through before I can get something of that size, magnitude and cost to my project site. At the front end, there's a bunch of engineering that needs to be done. Big pieces of capital equipment are not off the shelf. There's a lot of customization that usually goes into the design. We want to go out and get multiple bids to get the best price we can get for the equipment. And then that's usually followed by a significant contract exercise as well as some payment to get the manufacturing of the item in question started. Once that process starts, then the entity you're buying it from has to fabricate the thing. That can take some time, especially depending on how busy the fabrication shop is at the time you place your order. And then once it's built, you got to get it to the site. You got to get it installed and connected to your control system and upstream and downstream process equipment. So that's the kind of steps you go through to get some of these big pieces of equipment. And I just want to highlight some of the time frames here for some of these things. So when we talk about electric power, it's not necessarily a piece of equipment, but it is a big capital item and something that requires time. It's about a 24-month process to get line power to the site. And similarly, to get natural gas to the site, that's about 18 months. And those time frames are reflection of the fact that those 2 things are actually big EPC projects in their own regard. We want to get that going as soon as we can because as soon as we can get line power and gas supplied to the site and start saving some costs on energy consumption. High-pressure grinding rules are a key piece of equipment in our mineral processing operation. It's 17 months to get one of those. Secondary crusher, which is also going to be in the mineral processing area, is 12 months. Our solvent extraction mix or similars, which is the key piece of equipment that allows us to separate and recover scandium. That's 16 months to get those to the site. Rotary kilns, and we have a number of these, are typically 18 months to get to the site. Those are key for asset recycling as well as for product finishing. The arc furnace that I talked about earlier, we need to order that from an overseas supplier most likely. It's 24 months to get one of those in. And then because it's a huge electrical consumer, again, its rated power is about 3 megawatts. We need some fancy electrical switchgear to make that run, and it's 13 months to get that switchgear. A couple of items from the mine, the mine electrical substation. Again, a fairly specialized piece of electrical equipment is about 15 months. And then the hoists that allow things to go up and down in the mine shaft, those are about 12 months to get. So keep in mind, we've got our eye on all of these things. But to get any of this procurement going, we have to put some money down. And so of course, there's a tie here to financing as to how quickly we can make all this stuff happen. And I guess the point here is we have a need to manage a whole series of these procurement tasks simultaneously, and that if we don't keep our eye in these things, problems arise, that can impact schedule for the entire project. So we're going to pay a lot of attention to this. We're going to make sure this run smoothly, and we're going to ensure that we don't have any issues with schedule as a result. Another aspect of project schedule that's important to understand is what is known as the critical path. And if you look at the appendix to our feasibility study, you'll see one of the appendices is the project schedule. And it just goes on for pages and pages of all the tasks that have to be done to build the project and how those different tasks are interrelated. So there's one sequence of tasks that really defines the overall schedule, and I've got the formal definition up there. But if you look at the critical path, it really follows 5 steps. The first thing is an early works activity, which is the hydrogeology and the geotechnical drilling. And we really need to do that upfront because of shafts. Mineshafts are very expensive to put in. You want to get that right the first time. You don't want to run into some kind of problem and say, oops, I got to move over 100 feet and start again. So you want to get that right. After we get that drilling done, we move on the ground freezing. That takes some time before the ground is frozen. Once the ground is frozen, we can move on to shaft sinking. And then once the shafts are sunk, we can develop the underground mine and get to the part we're actually mining some ore. Now I'm going to show some pictures and go into detail on all of these things that are on the critical path. So when we look at the critical path, the way we structure the schedule for the project, we haven't tried to build everything around the critical path. So what we will do is we will construct the surface facilities and supporting infrastructure. So all of that stuff is mechanically complete, but 2 to 3 months ahead of the first ore. So that means that when the mine is finally ready to go and starts producing ore, the surface plant is ready to accept it. The other thing we're going to do to try and optimize things on the critical path here is we're going to start commissioning the plant with waste rock and low-grade material. That will let us keep going sooner. It's unlikely that, that will generate any revenue, but it will get the plant up, ready to go and running as soon as we can. And that's important because as our CFO always reminds me, when this plant is up and running, we're generating $30 million a month in EBITDA, and we want to get to that point as quick as we can. So let's look at some of the different elements of the critical path. I want to start with shaft freezing. So we have to get into the areas where we're going to put the shafts, and we have to drill a series of boreholes around the perimeter of those excavations. And you can see in the center of this figure, a schematic of what an individual freeze borehole looks like. So you've got a kind of pipe-in-pipe arrangement. You inject a chilled calcium chloride brine solution down the center of the pipe that's also the annulus. And that freezes the ground. Now if you look at the picture there on the top right, that kind of shows you how this ground freezing progresses. Can you start on the top right-hand side where you start generating a zone of freezing around each individual borehole. As you go to the bottom of the figure, eventually, those things kind of merge together. And then once you're ready to start sinking the shaft, you have this nice frozen zone that has a substantial thickness around your excavation. So that will prevent any water from coming in, and that will allow you to proceed efficiently with shaft sinking. The picture on the bottom right shows an early stage of shaft freezing. You can see how around each hole, you've got this frozen zone. And eventually, all those zones go together to provide a nice completely frozen area for you to work with. Just in terms of timing, the upfront drilling here is probably 6 to 7 months, which includes the hydrogeology and the geotech drilling that needs to be done. And then it takes about 5 or 6 months to actually freeze the ground. So we're going to take advantage of that time as much as we can. And while we're working on the ground freezing, there's a bunch of preparatory work that's built into the schedule. So as an example, while the ground is freezing, we are going to set up a temporary shaft-sinking headframe at both the production shaft and the ventilation shaft. So that once the ground is frozen, we can get started with shaft sinking right away. This is pictures of shaft sinking, which is really a unique activity. There's a few firms that do that. And of course, these jobs are really only done at the front end of greenfields mines and sometimes the key mines that are expanding their operations. The picture there on the left-hand side of the screen is a thing called a galloway. And a galloway is the main piece of shaft-sinking equipment. It's really a multi-level working platform that sits in the shaft during shaft sinking, and it's a platform that the miners work off of when they're doing shaft sinking work. As the shaft progresses deeper, the galloway is lowered with the shaft. And it's important to recognize that this is a very big heavy piece of equipment. So it's a working platform, and it's not a conveyance. It really just sits in the shaft and moves down slowly. What it does have, though, is it has series of circuit or holes that go through all the platforms. And that allows us to put conveyances, which are fairly small, down through the galloway and down to the bottom of the shaft. So we can move personnel, we can move materials and equipment in and out of the shaft. If you look at the picture in the center there, there's 2 pieces of equipment shown which fit into the holes into the galloway. The one on the left is a muck bucket. That's how we get broken rock out of the shaft and lower it down through the holes and the galloway to the bottom, loaded up and hoisted out. And then the thing on the right is called the bullet. That's how we get personnel in and out of the shaft-sinking operation. So you can probably fit maybe 3 or 6 people, and you're building like that. You can lower them down through the galloway and get them to the shaft bar. The other thing that's important to recognize here is that these are, again, custom pieces of equipment. The galloway specific to the shaft sinking job is very specific to the diameter of the shaft that's being sunk. And again, just looking at the picture on the right-hand side, this is a picture of someone standing at the bottom of the shaft, looking up at the bottom of the galloway. And you can see the big circular holes where the muck bucket and the bullet and everything else goes up and down through the galloway. So by showing these pictures, I hope you start to appreciate some of the constraints in shaft sinking. Everything has to go in and out of the shaft. It's very tight quarters. And you also have to be very conscious of safety considerations here because you've got to get air into the shaft, you go to get water out of the shaft, if there's any water there, and you have to protect the people working in the shaft from falling debris. At the bottom of the shaft, as we break rock, that rock has to be removed. And we usually use this clamshell-type device to dig that broken rock up, put it in the bucket and hoist it to surface. Typically, at the bottom of the shaft, there's only room for one of these things to operate at a given time. You might be able to use 2 muck buckets to be a little bit more efficient, but you're really constrained by the productivity of that device as to how fast you can go. The picture on the right there is a picture showing a very nice temporary shaft sinking setup in Northern Nevada, project that I [ assisted ] some time ago. And I just want to highlight some of the features here because these are the kind of things that you'll see at the Elk Creek site when shaft sinking is underway. So that tall vertical structure is the temporary sinking head frame. It's just in sort of a open steel frame construction. That's again designed to be temporary and allow shaft sinking to proceed. Just to the right of that head frame, you see a little blue thing. That's the fan that's blowing air into the mine to keep the air fresh with people working there. The big pan building is the hoist house. So that's where the hoists that moved the galloway up and down and the conveyances up and down sit. And behind that, there are some white generators. Again, it's typical to run this kind of operation of generators because line power is typically not available. And then you have a series of buildings going off to the left side of the figure. Those are maintenance shop, offices, change room and lay down storage areas. So this is a nice self-contained unit operation. Everything is very close to each other for efficiency. And before we made a decision to pick a particular mine contractor, we visited some underground development operations. And we're really pleased with Cementation's setup. They run a very efficient shop. They're cost conscious. They work safely, and they're experienced in this kind of work. And we're very happy with the choice of them to do our shaft sinking for us. The activity at the bottom of the shaft to make the shaft go deeper is really tied to the cycle, and that cycle is drilling, followed by blasting, followed by mucking or removing the broken rock. And then you'll do some ground support and utilities work, and you repeat. And you just repeat and repeat that cycle until you get to the bottom of the shaft. Looking at the pictures here. The picture on the left shows drilling activity at the bottom of a very large shaft in South Africa. And what you have here is 6 individual drills, all drilling holes into the bottom of the shaft. That's a very big shaft. I think the shaft that we have will probably have 1 or 2 drills just because we're going to be operating in smaller circumstances. The figure on the right shows a series of blast holes being loaded with explosives. So you drill the holes and load them with explosives, blast them and then you take the broken rock out. Keep in mind that in the shafts that we're going to have, the contingent of people actually doing the work is actually pretty small. You're going to have 3 or 4 miners working either at the shaft bottom or on the galloway, on the drilling and the blasting and the mucking. You'll have an individual known as deckman on surface. A deckman is the person who's responsible for loading conveyances and coordinating the movement of people in and out of the shaft. There'll be someone called hoistman in the hoist house who's charged with operating conveyances that move the galloway and the buckets up and down in the shaft, and then there'll be a supervisor. So again, the productivity, the whole endeavor here is reliant on really a very small number of people working efficiently at the bottom of the shaft. And if you look at what we've done on the Elk Creek project, we did quite a bit of work to figure out how quickly shafts would advance. And really, our productivity rate is forecast to be about 2.3 meters per day. That's about 7.5 feet. And obviously, when you start at the top, you're moving a little bit faster because you don't have very far to go. When you get to the bottom, that productivity drops a little bit because then every bucket of muck has to go that much farther to get to the top of the shaft. I hope the other thing you appreciate, just looking at these few slides on shaft sinking is the importance of having an experienced crew to ensure that this work is done safely, and it's done productively. A couple of other items here on project execution. Once everything is built, you have to commission it. And commissioning is -- we have a definition here that says the integrated application of a set of engineering techniques and procedures to check inspector test every operational component of the project, from individual functions up to complex aggregations. So as an example, you might commission an individual pump, which would be a simple exercise. If you're commissioning, say, the entire mineral processing circuit, that's a bigger undertaking. So this is a little bit different again from my example of buying a paint sprayer from Home Depot. I bought that paint sprayer. I get it out of the box, plug it in, and I'm ready to go. When I build a mineral processing plant, I can't just go when it's ready. It takes some time to get all the equipment working, and all the control is functional. So just a few activities there in commissioning. There's a paper exercise really to check that what you've built is actually what you engineered, make sure there aren't any construction errors in what was constructed. Another thing that's done is something that I've done a lot of, which is a pre-start-up safety review. So you get a crew of people from different disciplines. And as you actually walk through the whole thing, you're trying to commission. And you look for any problems or issues to make sure those are addressed before we fire it out. Then you'll have a couple of testing sequences. One is a control systems test, sometimes called dry commissioning, to make sure all the control systems are functioning the way they should. And then in a lot of cases, we have process that'll eventually be wet. So you typically will run a bunch of water through that process to make sure that everything is water tight and nothing is leaking. Once you're satisfied with those steps, you do an initial production run. That sometimes will generate what's known as a punch list or a series of items that need to be fixed before the thing can run continuously. And then once all that's done, the commissioning team will turn over that item of the operation to the ramp-up team and the operations team so that they can start to operate it and get it up to commercial production. So really, what you see in commissioning is it's really the start of the move from construction project to a commercial operation. And I'm pleased to report that the team we have here in NioCorp has a lot of experience in commissioning process operations. After we get the equipment commission, then we're going to ramp it up, and that really takes the commission plant from an initial production run to commercial production, which is where we want to get to. And what I would like to do is I would like to put a big green button on Mark's desk. And once we're done and presses that button and everything goes, and we're spitting out fair and nicely like no tomorrow, but that's not how it's going to work. It takes a little bit longer than that. So we're transitioning from construction to operations. And during this time, we're going to demobilize the construction workforce for the most part. And if we look at what we have in our economic model for the project, we've scheduled about 6 months for ramp up. At the end of that 6-month period, we're in commercial operations, commercial production. This is a good graph to really understand some of the issues with commissioning and ramp-up. And this is kind of what that period looks like for our project. So I'm going to start just by talking about the blue line. That blue line represents underground production. That's the tonnage of ore that's coming out of the mine. And you can see, it starts very small, and it kind of goes up and down. And eventually, we reach the red line, which is our production target. But having ore come out of it, the mine at that rate is not really conducive to an orderly commissioning and ramp-up of the plant. So the green line represents how much ore will actually feed to the plant by month. And you kind of smooth out that blue line just to make it a little bit more orderly. Now the way we do that in practice is we have actually engineered a stockpile into the design of the project. So the mine will produce -- we can put material into the stockpile and then take it out of the stockpile and feed it to the plant as we ramp up. And that's actually a pretty good way to do things because when you think about it, if there's a problem in the mine during this early time period, you can keep the plant running with material from the stockpiles. Vice versa, if there's a problem in the plant, the mine continue unabated while we get those things sorted out and the material can go into the stockpile. Just a couple of things to understand about what happens during these periods. We have assumed that we don't generate any revenue during commissioning period, although that's always a possibility. And we do assume that we'll be producing revenue during the ramp-up period. And once we get the ramp-up period complete, the capital spending period for the project is over with, and we move into the operating period of commercial production that's shown on this chart. So I think here, we have a good commissioning plan. We've got a good ramp-up plan. We've got something that's based on the reality of developing a big complex underground mine and surface plant. And it's realistic for the scale and the complexity of what we're going to undertake here. Just to wrap up then, as Mark said, we've got a project here in Elk Creek that's shovel-ready. And we've moved as far as we can down the path of project execution in advance of getting project off of the financing in place. We've got a detailed execution plan for the project, and we're ready to transition from project development to project execution right now. And again, we're going to be able to adapt to whatever the financing looks like and get the project built as quick as we can. We're going to emphasis -- we're going to have a lot of emphasis, I should say, on controlling costs, maintaining schedule and staying within the project scope while ensuring that all the work is done safely. I just want to say that I feel like we're poised for success, and we're ready to start.

Thank you, Scott. Great presentation.

We now have some time for questions. [Operator Instructions] We may not be able to get all your questions, but I will get back to everyone who asked a question after our webcast. A number of members of the public and our shareholders have posed questions in advance, which is very helpful. Thank you for that. So let me go to those questions that we received so far. And Scott, I think this first one maybe to you, but Mark, chime in as much as you want. The question is this, "What qualifies as beginning construction for purposes of meeting the 18-month deadline contained in the Nebraska Construction Air Permit if they were to do preliminary site layout survey was stacking and some leveling of the side prep? Would that constitute sufficient action to meet the 18-month requirements? If yes, would NioCorp take this action to preserve the air from it?" Scott?

Yes. I think if you take a look at the Air Permit Section [ 2A 2 ], if memory serves, there's a 2-part test there that describes what exactly you have to do to satisfy the state in this regard. So one part of the test is that you've started doing some construction work. And one thing I love about Nebraska is that you don't put a bunch of flowery language into the regulations. It's pretty plain English. And it seems to me that if we were to start some grading, some leveling, some mobilization, that would probably all qualify and satisfy that first part of the test. The second part of the test is even easier to satisfy. It reflects the signing of a contract that has something like determination cause in it. So if we go out and we sign contracts with Zachry or Cementation for the construction of the facility, that can satisfy the requirement of starting construction. The other thing I want to point out, though, is that the 18 months is not an inflexible deadline. You can go back to the state and say, hey, look, we're ready to go. We're waiting for these other pieces to fall into place. Can we have another 18 months? And they will probably say yes. Nebraska is pretty easy to work with in that regard.

Okay. There's another question, Scott, probably for you. "What additional work has NioCorp and the state of Nebraska or Johnson County, Nebraska achieved since the release of the air permit, such as additional permits, infrastructure development, trailers, et cetera, power, water, roads or anything else that has been done infrastructure-wise there at the site?"

Yes. And to answer that question, I want to go back to something I said earlier on the land agreements. We're allowed to do a lot of things before we buy the land, but we can't start construction. So I can't start putting trailers into the site or anything like that until the land is actually owned. I think what we're doing with the local folks there is we are working very closely with them. We're keeping them informed of our progress, and as much as we can, letting them know that we still want to do the project, and we want to do it very soon. But I think the thing that you have to consider with, particularly in permitting, which is something I've done a lot of in my career, is that once you start a permitting process, it is really not something that you can easily stop. So if I go and I apply for, say, a solid waste permit from the state of Nebraska, that's a 12- to 18-month undertaking. And if I have to go back into the state of Nebraska and stop that halfway, it's going to be hard to get their attention when I want to restart. So when I want to get into those permitting processes, I want to make sure that I can see it through to completion as we did with the air permit. The other thing that's important to understand in terms of permitting work and what remains is that while the costs of the actual permitting exercise may be fairly modest, the engineering that goes into those permitting exercises is considerable. So again, if we take a look at the solid waste permit, maybe my cost to obtain that permit in terms of consulting to prepare the application and guiding it through the processes on the order of a few hundred thousand dollars, I might have to do $3 million worth of engineering to get the information I need to put into the application. And that's pretty typical. So I want to be very careful about when we start new permitting processes to make sure that we have the funding and the backup engineering to see them through the completion.

Okay. Scott, probably another one for you. "What is the CapEx for the mine and the production of a niobium, scandium, titanium or concentrate that would normally be shipped out to an ore concentrate processing facility versus the CapEx for an ore concentrate processing facility that we are building?" And as a follow-up, "Also, could you separate the CapEx cost of the ore concentrate processing facility into what is required to get product to the scandium and titanium commodity markets and what is required to get into the specialty chemical markets for scandium and titanium?"

There's a lot of insightful questions in there, and I'll try to be concise in my response. I think the first thing to understand is if you look at how the project is constructed, if you look at the flow sheet, there's no point in the process that we make a clear concentrate. As an example, as a counterpoint, if I was building a copper mine, a simple sulfide copper mine, I would have a mine and a flotation plant, I would make a copper concentrate at the mine site, and I would sell that to a smelter. In this case, we don't make a concentrate at any point in the process. And to complicate matters further, there is no facility out there that could take a concentrate that we might make that contains both niobium, scandium and titanium and be able to separate those. There's just no commercial facility out there that I'm aware of. That's not to say we haven't put considerable thought into what we make and why we make it. And I'm going to take each of the products in turn and just give a brief overview. With niobium, we've been very successful in getting offtakes for ferroniobium, which is fairly simple process. A lot of people use it, and something we can easily make in our plant. If we were to look at different niobium products, like, for instance, high-purity niobium metal, we'd look at really significant increases in capital costs. Now the margin might be very nice, but to make niobium metal, I would need additional solvent extraction capacity, a lot of additional material handling steps, and then I would need a bunch of electron beam furnaces. So that's not something that's squarely in our wheelhouse. And certainly, it's not something that we will undertake right now before the operation is up and running and capital costs are really at a premium. In terms of scandium, we've taken a very careful look at the scandium market, and we decided very early on to make a product that the purity of [ 3 9 ] to 99.9%. And that could be sold into any of the current significant applications for scandium consumption. So to the fuel cell folks, also the alloy folks, it's easier for us to make just a single grade of material to be able to sell it into whatever application is out there. Now you might say, well, if you made [ 4 9s ] or [ 5 9 ] scandium, you might be able to sell something with a higher price margin, and that will be true. But as you get into those very high-purity regimes, you find that the quantity of material you can sell drops dramatically. So we think we're in a very good place in terms of what we're making for scandium. And we think we can sell what we can make, and it's going to satisfy all the major consumers. Titanium is another question, and there's 2 ways you can think about that. We're going to make a fairly low-grade titanium product. We think we can sell that to people who make titanium metal. We think we can sell that to people that make pigments. If you were to take that material that we're going to make and say, well, I want to sell that titanium pigment higher grade material, maybe you consider about the specialty chemical application of titanium dioxide. I just want to give you an overview of the process steps you have to go through to turn what we have into that higher-purity material. And I'm not going to include all of the filtering stuff. So just by everything I say, there's going to be a filtering stuff in between. So we'd have to take our product, and we'd have to wash it, we'd have to leach it. There's another wash, and we have to calcine it, high temperature. There's a dry milling step, a wet milling step, a coating step, another washing step, and the drying step and then a micronizing step. Now although those are fairly simple enough, but in aggregate, that adds considerable complexity to what we're trying to do and considerable capital cost. And when we take a look at that economically, to do all of that extra capital work to get maybe another dollar per kilo on the final product, it's probably not worth it right now. We got to keep things simple. We've got to get the thing up and running and making money before we start thinking about making higher-purity titanium products. The other thing I want to say about titanium is that you can consider putting a titanium metal-making facility at Elk Creek. Now you need a lot of power to run that, and it has its own set of complexity. So the thing I think that's really telling there, and this gets into bigger strategic materials conversation that I'm sure Jim would want to have with our investors. But if you look at the landscape in the United States, there are 4 primary titanium metal manufacturing plants. All 4 of those are not operating right now. The last one just shut down in September. So if those existing plants can't make a go of it making titanium metal, it's hard to imagine a case where we could do it so much better that we would be very successful in that regard.