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

All right. Let's get started, everyone. Good day to all of our participants today, and welcome to this NioCorp management webcast and update on our Elk Creek project. I'm Jim Sims, Vice President of External Affairs for NioCorp. Before we begin the live webcast, just a couple of reminders. The slides from today's presentation and the audio of this call are being broadcast live over the web and video reporting the broadcast will be made, and a replay is going to be available on the NioCorp website later today. That's at www.niocorp.com. After the formal presentation, you'll be able to ask questions of the company using the questions pane on your computer or your handheld device. Simply type in your question and click send. Those connected via the listen-only phone line, you can post questions by e-mailing those to me at [email protected]. We may not be able to get to all of your questions today during the webcast, but we will try to get back to everyone who poses a question. So let's get started. We will be making forward-looking statements into the presentation. Viewers are cautioned not to place undue reliance on such forward-looking information and statements. Investors are urged to read carefully all the risks set forward in the public company's filings on SEDAR at sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov. Joining us today for our presentation is Mark Smith, CEO and Executive Chair of NioCorp. We'll also have Scott Honan, who is Chief Operating Officer of NioCorp and President of Elk Creek Resources Corporation. We have 2 special guests, Matthew Batty, owner of Understood Mineral Resources Limited; and Richard Londis (sic) [ Richard Jundis ], who's Director of Mining for Optimized Group Inc. Gentlemen, thank you all for joining us today. Mark, let's start with you and our CEO update.

All right. Thank you. And before I start, I just wanted to pay special attention to our 2 QP guests that we have with us. That's all part of our commitment to integrity and technical confidence that I feel very strongly about, and I know Scott feels just as strongly about. And we -- as we have done in all of our previous feasibility study work, we have used outside independent arms length parties to put that work together for us. We believe that strongly sends messages about the credibility of the study and the independence of the work. And so I want to thank our 2 extra presenters today, and I hope you enjoy their portion of the program as well. So let's start out with just a couple of points here on the CEO update. First of all, let's talk about the importance of our recent feasibility study update. And I think that, that boils down to we can now talk about our rare earth components as being part of the resource of this orebody, and that is a very important milestone for us. We knew that the rarest were out there the entire time. That's what this orebody was initially looked at for. So we have taken the steps necessary to bring it up to an NI 43-101 resource estimate, and that is the first step. The next step then will be to continue to do the technical work, demonstrate the metallurgy capabilities. In other words, the recoverability of the rare earth out of the orebody and into products that we can sell, and then we can include the rare earth components as part of our economic model and reissue the feasibility study. Again, we've already got very robust economics in this feasibility study, and I think my gut tells me that we're going to be even happier when we're done with the technical work to bring the entire rare earth slate into the reserve, into the economic model and offer that as additional information for the finance efforts that we're undertaking and for our shareholders. So it's very important to go through these steps and do them correctly, and we are taking the right amount of time to do this, trying to do things on parallel path so we can minimize the time. But we are going to be absolutely committed to integrity, honesty and technical competence the entire way. The strategic implications of broadening this product offering to include rare earth elements, and one key note for us, I know Scott will cover this as well, but remember that our goal here is to produce the magnetic rare earth in their high-purity oxide form. This is not going to be a project where we produce just a mix of these materials, concentrate. We're going to actually make the oxides of these materials. That allows NioCorp to receive the top value for those rare earth elements. And that really takes me then to why is this so important. Well, why it's so important is in my 42 years of being in this business, I've always heard about things like the green world and EVs and wind turbines and solar panels, but there seems to be a momentum and a push by not just government entities anymore but the public themselves saying, "This is what we want as we move forward with our brighter future." And I think that, that's absolutely phenomenal. I support that myself. But in the process, we are going to have to make sure we have the minerals necessary in order to provide those products for the customers and the public out there. So this is very important for the United States to have yet another rare earth element source of production and allow us to have a domestic, or certainly including our friendly allies, supply chain that supports the things that we want here in the United States. That's been one of our larger goals from the beginning. And offering the rare earth elements, I think, is extremely timely right now given this huge push, especially in the EV world. As I mentioned on an earlier interview, China has now said that they want to be producing 15 million electric vehicles per year in their country. Well, I'm not sure China makes enough rare earth -- magnetic rare earth to support that much EV production. So we are going to need every ounce of rare earth production we can get, and NioCorp is in a very good position to undertake that and add this to the product offering. Project financing strategies. I think the important part here is that by adding rare earth to our product offering, this provides a very sound, well-established market when we make these products and offer them to the customers. This market for rare earth has been around for 40, 50 years. It's continually grown year after year, particularly the magnetic rare earth demand, and it really solidifies the revenue side of the project and makes it more attractive for all of the financing options that we're looking at right now. So that's -- it's a very, very important part of our project financing strategy as well. And then finally, let me just welcome Peter Oliver. We announced this morning that we had appointed our newest Board member, Peter Oliver. He's out of Australia. Peter and I have known each other for many, many years. I have the deepest respect for his operating capabilities. His technical capabilities is finance and other money-raising or fundraising capabilities. He's had an outstanding career along those lines. I had the pleasure of serving as a Board member for him when he was the CEO of Talison Lithium. So we know each other well. We trust each other to the extreme. And I can tell you that he will be a wonderful, wonderful addition to the Board. His culture is much the same as the rest of our Board members, where we focus on honesty and truth and integrity. Peter fits into that category just perfectly. So thank you for giving him a warm welcome, and we look forward to everything that Peter will be able to bring to the company. Scott, I think you're up.

Thank you, Mark. I wanted to speak just a little bit about the journey that got us to last week's announcement of the rare earth resource, and it all started with the graph on the right-hand side of the screen there. Mark and I started talking about this last year in the spring, and I clouded up all of the data that we had on rare earths in the Elk Creek carbonatite. And at the time, there were certainly some interesting things happening with rare earth pricing. Those things have continued. There was a public interest in rare earths and their supply chains and a lot of investor interest as well. Once we took a look at the data, though, we've made a recognition, which is shown in the figure on the right, and that is when you look at all of these different drill holes, this is kind of a cross section of the area of the resource showing our different drill holes, we understood that some of these drill holes were missing, the rare earth assays that we need to construct a rare with resorts. So all of those segments that you see in blue on that figure are sections of holes where assays were missing. And it turns out that most of these were older holes drilled in the 1980s, and those materials were kept by the Conservation and Survey division of the University of Nebraska Lincoln. So there was an effort last year to work with that organization to get access to these samples. That was successful. We were able to sample the intervals that we're missing, get those over to the lab. And by December of last year, we had a complete assay database. And that's important because we wanted to have the rare earths on the same level in terms of assays as our niobium, scandium and titanium. It's important to recognize that there's something of a linear process here in constructing a resource in the reserve. It starts with the assays from the assays, you build a resource model. Once the resource model is complete, you can do a reserve study and build a mine plan, and then the mine plan is used as an input into the economic model. So it's important to recognize that it's somewhat linear and you have to go through all those steps. At the same time that we were looking at assays and resources, we had to give some serious thought as to how we would produce the rare earths. And as Mark said, our emphasis has always been on 2 things. One is producing the magnetic rare earths because that's where the value is, neodymium, praseodymium, terbium and dysprosium. And the second thing is to produce them in a high purity, fully-separated form that the market demands and for which pricing is advantageous. We recognized and looking at our existing flow sheet that the existing flow sheet put all of the rare earths in the solution. And so our initial thought was, well, let's just bolt on, add to our existing flow sheet some rare earths recovery operations. And the figure that you see here on the screen is a reflection of that approach. Now bolting on rare earth recovery operations is certainly feasible. It will produce the products that the market demands, but we still need to have all of this other equipment. And I will admit, it's not the most elegant solution to the rare earth processing question. And I got together with the team and we told ourselves we think we can do better here, and we really set an aspirational goal for the team. And that is let's see if we can do this, let's see if we can integrate rare earths into our flow sheet, and let's see if we can do that without incrementally increasing CapEx or OpEx. That's a tough goal to achieve, a stretch goal for the team. But we really had a good team for the job between our internal capabilities around rare earth processing as well as our capabilities through L3 process development, which is a great firm with a really good process engineers. The outcome of that work is this flow sheet that you see here. And I don't want to go through all of the different unit operations here, but I think you can appreciate compared to the previous picture how much simpler this flow sheet looks. This is integrating rare earths into our production, producing high-purity fully separated rare earths products along with niobium, scandium, titanium. And some of the notable differences are the fact that we're able to reduce acid consumption and thus eliminate the need for an acid plant to a company to flow sheet. We've taken the very large thermal units that were on the tail end of the process, moved those to the front and made them much smaller. And we've integrated carbonation to the front end of the process. Carbonation and ammonium chloride leaching, our way to get rid of magnesium and calcium in the ore, which are the 2 elements that make up the vast majority of the mass of the ore. And by getting rid of those elements upfront, it allows all the follow-on unit operations to be smaller and more efficient. So this is what we have developed and done some testing on. This is the flow sheet that we will test in our demonstration plant, and that demonstration plant is very important because the data from that demonstration plant will allow us to reestimate the costs for the production plant to the Elk Creek project. It will establish the rare earth metallurgical performance, and it allows us then to integrate rare earth economics into our existing economic model. The demonstration plant is coming right along. It's being constructed right now, and it's almost complete. Here are some pictures just showing some of the progress that's being made. The picture on the left is a carbonation test in progress using some of the demonstration plant equipment. In the center there, you can see the reactor train assembly for the ammonium chloride leach step. And one of the interesting things that we're doing is that for some of the smaller process equipment, in particular for the solvent extraction cells that we need to use for rare earth recovery, we're actually 3D printing those. It's a very quick and efficient way to make small-scale process equipment. We need many of these cells to build the circuits that we need at the demonstration plant scale. And we can do that, as I say, very efficiently and cost effectively with 3D printing. This demonstration plant, when complete, will run at about a rate of 10 kilograms an hour of feed, and we hope to make some further announcements on that demonstration plant here in the near future. So just to kind of sum up where we're at here in terms of this 2022 feasibility study that we've announced. We've got our assay database complete. We've got rare earths on the same level of detail as our niobium, scandium and titanium. We've got rare earths integrated into the resource now, and we've updated the reserve and mine plan and economics for niobium, scandium and titanium. The things that we have left to do: complete the demonstration plant, confirm rare earth metallurgical performance and the performance of our flow sheet optimization and then go ahead and update our costing, focusing in particular on costing for the new rare earths operations. I would be remiss if I didn't recognize our partners in the effort that led to last week's announcement, 3 firms in particular, Dahrouge Geologic Consulting. We have a long working relationship with them. Brad Ulry, their COO; and Trevor Mills, who runs their U.S. operations have been absolutely essential to getting us to this point. These folks are great geologists. They're experts in carbonatite. And certainly, they're experts on the Elk Creek project. Just about a year ago, we started engaging with Understood Mineral Resources. And Matt Batty, the principal there. Matt is just an excellent resource geologist, resource modeler and has done a very thorough job at interpreting a lot of geologic data and putting it into a very nice package for us. And finally, Optimize Group is a firm we've just been working with for a few months here. They are really excellent mine engineers. They're excellent project managers as well, and they just give us exceptional turnaround on their work product. We're very pleased to be working with these firms. This is really a great team that will take our projects forward. They've delivered great results as well, and that's reflected in the generally larger tonnages we see in the results we announced last week, better grades and longer mine life.

Thank you, Scott. Our next guest is Matt Batty, who is the owner of Understood Mineral Resources. Matt, please proceed.

Excellent. Thanks, Jim. So yes, I'm Matt Batty, QP for the 2022 Elk Creek Mineral resource estimate in order of Understood Mineral Resources. So in my part of the presentation, I'll just give an update on the mineral resource, starting with primary variables, niobium, titanium, scandium. Then the addition of rare earths and then how I went about my estimation, including domains, the estimation itself, validation and then the classifications of inferred and indicated. And then at the very end, I'll touch on the changes from the previous estimate. Next slide. Okay. So here is the 2019 mineral resource on the left, the 2022 mineral resource of just the primary variables and then a percent change between the 2. So in both inferred and indicated, you can see there's a small increase in tonnage in both categories, and there's a decrease in niobium and an increase of titanium and scandium. Both of these resources are reported using the same assumptions and the same diluted net smelter return cutoff of $180 per ton. We go to the next slide. So the biggest change here is the addition of rare earths presented as oxides here. So the rare earths are reported as a [ bi prec ] to the mining of the primary variables. So the coincident blocks of the diluted NSR above $180 as derived from niobium, titanium and scandium is the report of rare earth. The total rare earth oxide kilotons is about 632.9 million and indicated and 408.1 inferred. Okay. Next slide, please, Jim. Okay. So the big thing that I started out with first was domains. Niobium, titanium and scandium are observed in elevated concentrations along the log magnetic dolomite carbonatite unit. It appears to be quite continuous northeast -- sorry, northwest to southeast with an average stakes of 200 meters. So I modeled that and then clipped it to the overlying sediments. This is what I locally called just MCarb domain. It was a particular interest because it was 71% of the reported indicated mineral resources in most of the reserves. Next slide. So the MCarb really captured the primary variables well. And then when we started looking at rare earths, I could notice that increase of conservations from southwest to the northeast, across the trended MCarb domain. So then the data was subdivided to create stationary data sets to reflect the gradual change in rare earth concentrations. The first one being the already established MCarb domain and then a domain to the southwest and a domain to the northeast. The northeast demand is primarily carbonatite with localizations of [indiscernible], and the southwest is chiefly carbonatite. Next slide, please. Okay. So here is a long section of mostly the MCarb domain with the niobium, titanium, scandium and total rare earth at the end. You could also notice there is an outline of inferred and indicated on each long section. We'll get to that more. But for the estimation, I compensated all these samples to 1 meter lengths with into the domains, leads and the cap to high-grade outliers. Independently estimated each variable, when there's quite a bit, there's 23, including density. On top of that was light, medium, heavy and total rare earths. So those were sound and then estimated and then checked against the individual estimates. So the blocks were populated through the use of ordinary [ Cree ] as informed by an omnidirectional diagram. I completed the estimate into single run using a nice topic search of 20 meters between 4 to 50 composites were used for estimate, and I didn't restrict the number of holes per estimate. There is no need for that. If we go to the next slide. So the validation, this -- I do the same multiple tests to make sure we get the best outcome. The biggest one I started with was mean comparison. So I took the composite average declustered and then compared it against the block average. And you can see the percentages of the MCarb around 0, minus 1. It's really close. And then as far as drilled areas, southwest away and northeast have a little more variance. But it's really close, all of them within 10%. Then we did, as you see in the lower left, was plots, and mine is the comparison of correlation coefficients. They're matured well between the blocks and the composites, so the blocks are reflecting what we see in the data. And then histogram checks, which is -- this test is more for making sure the variance is captured in the estimate. And you can see the dark line on the bottom right figure closely matches the red line, which is the blocks. So good data replication there. Excellent. And then classification. So I've assigned inferred or indicated based on my knowledge and used it in an average trouble spacing. So for indicated mineral resources that drills between 50 to 75 meters was classified as indicated. And then outside the drills, where it extends about 35 to 50 meters beyond the last intercepts, that's what I called indicated as well. I also went through the model and noted any strapping, which are like parallel banding of grades were avoided in the declaration of indicated mineral resources. Inferred captures were more sparser drilled areas, average spacing of 75 to 125 meters and extending 50 to 75 years past the last intercept. Okay. So the biggest changes from the previous estimate. On the left-hand side, you can see the 2019 and 2022 inferred and indicated wire frames. You can see they're quite different, but they came out with the same numbers. That shows the density of drilling really. The biggest change was how we went about estimating. The 2019 model used a lot of explicit domain, so you can see it in the figure in the middle of the slide. There's a high-grade scandium wire frames and then the high-grade niobium and titanium wire frames and then a low-grade halo around that. Understood is of the opinion that these hard batteries could introduce artifacts in the model and a degree of subjectivity. So we believe that the variability and nature of the mineralization is more appropriately controlled with ordinary treating, which uses local varying mean and will capture these differences in trends as we move through the model. Next slide. Thank you, Jim.

Thank you, Matt. I appreciate that. Our next and final guest speaker is Rich Jundis, who is with Optimized Group is Chief of Mining. Rich, go ahead.

Thanks, Jim. Hi, everyone. I'm the QP for the mineral reserve update for this exciting project. Today, I will be going through the mining methods and extraction of this deposit. Looking at mine design infrastructure, looking at some of the mining factors we applied, cutoff grades for the project. And then I'll show a quick sequence and scheduling of the mine plan and then get into a little bit of the cost capital and operating costs for the project and then concluding. Next slide, please. So this is a very good long life underground mine. It has 38 years planned. And this plan is based on the niobium, titanium, scandium grades. But even with the -- without the addition of rare earths at this moment, it shows a very good size of reserves. We have about 36.7 million tons of material, and initial capital roughly $330 million with an average mining of $42.40. So with the same plan, we found with higher grades, we have better revenues and better overall economics. Next slide, please. So the mining of this deposit. Now it's quite in working with Matt on the updated resource model, we stayed with the transverse long-haul stoping, which is a very traditional efficient mining approach to this deposit. We'll see in the next few slides in a little bit more detail. But essentially, we're accessing the orebody from the top bottom of the stopes. Drilling and blasting primary stopes and secondary stopes so that there's efficient extraction of the deposit while keeping stability in the underground mines. And then basically, we're -- when we mine -- we're mining in primary stopes and secondary stopes and then moving upwards in 2 main areas of the mine, an upper block and the mining block. Next slide. So this is a nice long section of the mine. You can see we access the orebody through 2 vertical shafts. One is a production shaft, which will service all the people and equipment and services to the mine but also hoisting ore out of the mine. We also have a ventilation shaft, which provides us an exhaust for ventilation for the mine. But essentially, as you can see in this figure, we have several over 600 to 700 stopes underground with stope sizes that are 40 meters high on average, 50 meters wide and typically 10 to 15 meters in length. So many of this, you can see that there's quite a bit of mineable ore that provides that 38 years of mine life. And you can see here on the right-hand side, the mine is broken up into 2 different areas, what we call the upper mining block and the mining block -- lower mining block. And the reason why we did that approach is to be able to access the orebody at its highest rates while minimizing the capital to access while minimizing the initial capital to access the lower part of the mine. So this helps us to balance the mine plan to provide roughly 1 million tons a year to the mill and helps us to reach the high-grade material early in the mine life. Next slide. This is just showing a quick diagram of all the key infrastructure to help support the mine. You can see the production shafts, ventilation shafts at the top. We have a main ramp, which is the purple that's accessed through the main production shaft, and it goes all the way to the bottom line. We have maintenance shops, system of return and fresh areas to provide pressure to the people and equipment. And the system of ore and waste passes that helps us to move the material from the stopes to the grizzly and crusher systems and move the material of the production shaft to the mill. Next slide. In our mine plan, we also included the mining factors such as still dilution recovery. The diagram on the right just shows how we apply dilution on the side walls, the floor and the top of the stopes. It's averaging roughly around 6% of dilution in our material. Mainly, it's in the secondary stopes where we're mining. We get a bit of backfill dilution from the primary stopes. And in general, we use a 95% recovery in the main stopes in development, except for the sill pillar, which is the sill pillars out of the stopes between the upper mining block and the lower mine block and we use a lower recovery in those stopes because the way we extract it is a little bit different, and we can't get the 95% of that stope. So we have a lower recovery of 62.5%. Next slide. Now in terms of taking the resource model for Matt. We ran a program called the Stope Optimizer in Deswik. It was a 2-step approach that we used for the cutoff. Firstly, around the MSO or Stope Optimizer at $180 a ton. So that captured a lot of the resources upfront. And the NSR is the net smelter of churn. So it takes all the revenues of the blocks and giving us unit cost per ton. And so when we did that, we also then went on the second step we took on a level-by-level basis. We took the niobium grades and used an average cutoff of about 0.68%, and that gave us the final set of stopes used for production. Overall, our average niobium grades were at 0.811, which helps us to maximize the amount of ferroniobium produced in the mine plan. Next slide. So this is just a quick animation of the mine plan as you can see the production shafts are sunk, infrastructure is put in place. There's roughly 22 months from sinking shaft to getting to first ore. And then once we're into first lower, we have about 11 months of ramp-up to get up to full production, which I mentioned earlier, it's about 1 million tons per year of 2,760 ton per day. And then once we're into the ore, we're in steady-state production for 38 years, which gives us a very good long mine life. And as you can see, we mine both the upper mining block. We start with the upper mining block and then we access the lower mining block and start mining bottom up in both cases. And then we finish the mine life by mining sill pillar, which is between the upper and lower mining blocks, as you can see in animation. We mine those stopes at the end of the life of mine. Next slide. So some of the production highlights here, like as mentioned, there's about 36.7 million ton of ore that we mined over the life. Those are the average grades for niobium, titanium and scandium. They're both diluted and recovered. As you can see there with the 38-year mine life, the preproduction time to get first ore and ramp up the full production. Next slide. So in general, we -- with the updated geological models from 2019, we were able -- with [ MECS ] models, we were able to increase the tonnage -- overall tonnage slightly. There's a bit of the new resource model we had the lower part of the mine, and we increased the size of the mine vertically, and then we lost a bit of ton near the top of the mine. But overall, the tonnage stayed roughly the same. We had roughly higher scandium and titanium grades in this new resource model and mine plan. And again, we have 38 years of mine life, 33 of which are at full production at over 1 million tons per year. And then in the plan, we also targeted higher ferroniobium grades in the first 5 years of production to tell what the cash flow and to really help the mine plan. And in general, the initial capital cost is around USD 330 million, and the sustaining capital is about $200 million. And over the life of mine, our unit operating costs are roughly around $42.46 per ton. So that's the mine plan as it is. Thank you.

Thank you, Rich. Great presentation. Let's turn to questions now from our audience. To post your questions, please submit that via the webcast to on your screen and click send. Alternatively, you can send your question to me at [email protected]. We'll try to get to everyone's questions on the webcast. But if we run out of time today, we will get back to you with answers following the webcast. So let's go to questions. Our first question, Mark, it's for you. And it's a question from Jason, and Jason asks, how much financing do you have to have in the bank before you can start doing some construction on site?

It's a very good question and one that unfortunately is not necessarily based on a lot of science, it's based a little bit more on gut feel and experience. And I think Scott and I feel pretty strongly that what we'd like to do is to start out with that initial tranche at about $25 million, which gives us the resources we need to really get to the point where we purchase additional land, we get the detailed engineering started and way ahead of construction and then start construction at that point. So a direct answer would be about $25 million to get several portions of the project started. But obviously, we need a lot more than that before we undertake the next steps outside of purchasing property and doing detailed engineering.

Okay. Our second question comes from Steve who asks the following: Adding rare earths would seem to be a very good addition to the economics of the project. How hard will it be to sell rare earths? And are you already talking with potential customers?

I'll take that one, Jim, because that's one that I like to answer. We have multiple decades of experience in the rare earths world, including selling these products to the customers. We know who the customers are. And yes, we are in discussions with the customers as we speak. So we are -- sorry, I lost the -- there we go. We are in discussions and obviously want to use a very well-established market and pricing information to further derisk this project and improve its financeability tremendously. So we're very excited. We have a lot of experience in this area, and we're talking to all the key players already.

Thanks, Mark. Our next question comes from Julie. And Scott, I'm going to toss it your way. Julie asked, what are the environmental implications of building this mine, particularly with regard to climate change?

Yes, that's a great question. And I think one of the things we look at in terms of the climate change implications of the project is the benefits that we'll have in terms of how the products we make will be used downstream. So as an example, we plan to produce magnetic rare earths oxides that will be used to produce rare earth permanent magnets. And the electric vehicle on the road today needs about 1 kilogram of rare earths magnets or in the rare earths of magnets to make it go. The strongest magnets available that makes for the most efficient-acted vehicle. And so when you think about that, we would produce enough rare earths to realize something like [ 375 million ] electric vehicles a year. It goes to the point that Mark made earlier when you hear China talking about making 15 million electric vehicles a year, where all the rare earths going to come from? So we're going to have those kind of downstream benefits. The same can be said for niobium and scandium, and that you see scandium going into lightweight aluminum alloys, making things lighter. It's going to make them more fuel efficient and reduce carbon footprints. Niobium is used to strengthen enlighten steel and automotive platforms, but it also has now burgeoning uses in the formulation of solid-state lithium ion battery. So again, I think you look at our product portfolio in total, and we're going to play a big part in the electrification and decarbonization of the economy.

Thanks, Scott. Our next question is from Victor. And Victor asks, are U.S. government programs focused on stockpiling, supporting domestic production, loans, et cetera, of the product suite the company will supply? Is this something you can comment on? Are these opportunities that are being actively pursued? Scott, do you want to start or Mark?

Go ahead, Scott, and then I'll follow up.

Certainly, I think we follow developments in that area very closely, and those programs have certainly turned in recent times to a focus on supply chains and with an emphasis on critical minerals. Those government programs, we have some familiarity with them, they generally require that prospective applicants not disclose their activities and the programs themselves don't talk about who's applying. So I know there's not much in the public domain about that. But certainly, it's something we would keep a close eye on. And in the event that there's a program there that could help us, we would take full advantage of it.

Yes. And just to follow up on that, I think that what we're seeing with the U.S. government and the EU in particular right now is that both of these government bodies, the policies and the laws that they are adopting and enforcing right now really lend themselves almost hand-in-hand with the products that we have at this mine. So Scott is absolutely correct. We're not allowed to really say anything about what we're doing in that regard, and the departments aren't allowed to talk about anything either, but this is something that we are on pretty heavily right now and very interested in.

All right. Thanks, Mark. Victor has a follow-on question. Do you anticipate there to be a change to the time required to construct the updated mine and processing facilities compared with the 2019 feasibility study? Scott?

Yes. Another good question. I think in the work that Optimize has done, we didn't specifically ask them to test the schedule implications or critical path items. I think the overall schedule still flows very similar to what we saw in the 2019 study. And that, in general, the critical path for the project goes through the establishment of the underground mine, and we schedule the construction of the surface facilities to really match when that underground mine is finished and ready to deliver ore to the service plan.

Okay. Thanks, Scott. Our next question comes from David who asks, I've invested in a number of rare earth firms that have developed innovative separation technologies. Using solvent extraction seems a bit old school to me. Are you considering the possibility of licensing an advanced process? Now both Mark and Scott are engineers, and they both have actually done separation of rare earths. But Scott, I'm going to give this one to you to start. And Mark, you may have some further comments.

Yes. Thanks, Jim. I think it's fair to say that solvent extraction is old school, perhaps as old school as my haircut. But let's not dismiss old-school approaches. Most of the vast majority of the world's rare earths today are produced using solvent extraction. It's proven technology. It's been in operation for decades. And my team and I have a lot of experience producing rare earths, thousands of tons of rare earths using that particular technology. But I think the more important thing here is that as a company that is trying to finance a project, we think about risk all the time. And going into a discussion in a financing context with a new and unproven technology that doesn't have a commercial track record, that's a very difficult conversation to have. And so when I sit down in a financing discussion and people ask me about the technology and the flow sheet and rare earths, I can say, look, we know this works. We've -- my team and I have done it for a long time. And you can be fairly certain that when this plan gets up and running, we're going to be producing rare earths at the prescribed rates.

Yes. The only thing that I would add to that because Scott covered the derisking side of it in finance discussions, when you're using known and commercially available technology. But Scott, I'm going to ask you to also just explain a little bit about how that old school technology has actually been advanced quite significantly in the last few years, and it's improved over what it historically has done, and maybe you could just talk to that a little bit because that was pretty exciting for me.

Yes, certainly, Mark. And without getting too deep into technical details, I think solvent extraction as an approach has shown some advances just in the recent times in terms of some of the chemistries that can be used. People are always looking at different ways to formulate combinations of diluents and extractants in a solvent extraction system to efficiently recover rare earths. And I think in particular, one of the advances that has kind of caught our attention is the ability to extract rare earths at high acidities. Typically, in our flow sheet the rare earths are dissolved and exist in high acidities. And if you have to neutralize that asset with a base, that can add significantly to the costs. If you're able to do it at the highest acidity level, you really minimize your costs and make for a very efficient rare earths recovery operation.

Thanks, Scott. I thought that was pretty exciting.

Our next question comes from Adam who asks, relative to other projects seeking financing, can you talk about how the rare earth project differs from fully separated versus mixed oxides and the team's ability to move up the value chain towards direct supply chain integration?

Let me start on that one, Scott. I try to think how I want to answer this one as thoroughly as possible. It's a very in-depth question at the end of the day. But we will differentiate ourselves in terms of producing high-purity oxides, whereas most of the other projects that are talked about in the public right now are making mixed rare earths concentrates. Our experience and the difference between those 2 is that the mixed rare earths concentrates are going to get you probably 10% of what we call the basket value of the rare earths in that concentrate, and you get very low values from it because really the capital and the operating cost to achieve the products that customers actually want to purchase are in the processing and separation of the rare earths from each other and then producing a high-purity oxide. We know that because we've got decades of experience in that area. And immediately, as we looked at rare earths for this project, immediately knew our goal was to produce oxides. So hopefully, that helps with that understanding a little bit. And then in terms of who we sell those oxides to, we've sold oxides to all the people that buy them in the world today, all the magnetic producers, all the magnet producers out there. They know us personally, and they will remember us from the Molycorp days as well. So we've got a great head start on all of that, a good reputation in the world with those customers. And I think our -- differentiating ourselves by producing high-purity oxides is going to be a huge win for NioCorp. Scott, I don't know if you wanted to add anything else.

Yes. Maybe just a couple of points, Mark. In producing a rare earths concentrate, you're going to be producing the material that's has a purity of something like 45% to maybe 70% total rare earths oxides. The rest is nonrare earth material. And in many cases, these concentrates contain those impurities elements that are problematic. They're problematic from the perspective of shipping the materials, they're problematic from the perspective of downstream processing that. Uranium and thorium are typical examples. Those exist naturally in rare earth deposits and end up in the concentrates. Phosphorus and fluorine or a couple of other elements that are a challenge. And in producing those materials, Mark already covered the value proposition. But if you do that in the United States right now, really, the only thing you can do with them economically is to sell them to a Chinese processor, and that's not really something that we're interested in. We're interested in supporting western supply chains. And to get into those western supply chains, you got to produce fully-separated, high-purity materials. And the kind that we're going to produce can go directly into the rare earths permanent magnet value chain in terms of making rare earth metal, making alloys and eventually making finished rare earths permanent magnets.

Good. Thanks, Scott. There are a number of questions on financing. So Mark, I'm going to toss this your way, and I'm going to combine a couple of these questions because they sort of flow from one another. First question is, is financing still ongoing with the initial financing entity or entities? Question, have -- has financing taken a different direction since COVID? And then I'll add as a follow-on another question, do you need to have rare earths added to the project to obtain financing? Or can you obtain some financing prior to receiving the final results from the rare earth processing?

Well, somebody has been doing some very good thinking, and you would almost think that they listen into our meetings here at NioCorp. Those are the things we talk about every day. First of all, let me say that I don't view -- well, let's start with the very first part of the question, which is, are we still working with the initial entity? And the answer is absolutely yes. I still have yet to find ultimately better terms than what we can get out of that party, but that party continues to have troubles getting all of their efforts finalized so that they're in a position to actually undertake the deal that we have been discussing for quite some time. And yes, COVID absolutely impacted things. So on the front end of COVID, my common answer to that was no, it's not impacting anything. We're still talking to them by phone, but you can only do so much by phone. And we have to get in front of people so they can see the passion in our eyes and the passion in our heart for this project, and it sells it even better. So yes, we are still working with the original party. Yes, COVID has impacted almost everything. But we are also -- although we haven't given up on that first party, we're also a little bit tired of waiting for that first party, and so we are in the process of talking to multiple additional firms about the potential for financing this project. I think so far, we've got about 5 different options just on the debt side, and these would be major debt providers. We have 3 different options of what I would call a mezzanine debt products that we can utilize to supplement the project, if necessary at the end. And of course, we're working with some of the largest investment banks in the world on the equity side of the equation. And we're kind of to that point now where we're -- the equity side may go up an inch, and then we can get the debt side to go up an inch. And it's a long, hard, arduous process but one that we've done before, we'll get through it again. And what I really like about all the different options that we have on the table right now is that you don't have to use any one of those options. You could actually combine one or more of those options. And at the end of the day, I think that, that gives us a lot more flexibility and allows the major debt providers to look at this at a different risk level as well if they're sharing the debt risk with 3 or 4 other parties. So I would have to say I'm very pleased with where we have come in the last probably 6 months on this effort, and I do expect for this process to just keep inching forward day after day. The rare earths do derisk the project significantly. I don't think that we have to have rare earths to make it financeable, but it does derisk the project significantly. And I think once all the technical work is done and the metallurgy has proven out and the economic model is adjusted to include the rare earth and the revenue that will come in from there, I think everyone will understand some of the management analysis work that we've done, which suggests this is a very good thing for us to go after. It significantly derisks the different revenue streams. It allows for a bank to take even a more serious look at NioCorp going forward. And we're in constant conversations with the banks right now. We try to update them literally every 2 to 4 weeks on developments within the company. They're anxious to see the rare earth numbers just like we are.

Thanks, Mark. Here's a follow-on question that Mark -- I'll have -- I'll hand to you first. And Scott, I think you may have some add-ons. But the question comes from Peter and he asks, do you have any updates on the scandium market and what your project means for the overall industry?

We welcome questions like that, and let me provide the first, and what I think is most important update concerning the scandium market, and that is that the second or third largest mining company in the world is now producing and selling scandium into that market. And I think that, that's a tremendous validation of what a very, very large mining company thinks about the scandium market and what its potential is. We're really excited to have Rio Tinto now producing and selling. So to me, it's an affirmation of what we already believe is going to be a very good market. We still, to this day, believe that there's just a tremendous amount of latent demand out there, and the demand doesn't matter at this point because there isn't supply to feed it. So yes, those things take time to develop. The good news here is that Rio Tinto is already developing those markets ahead of our ability to produce those materials. So I think we're in an outstanding position going forward. And I also think that with the real green world and the momentum around that green world and the reduction of greenhouse gas emissions and ESG starting to come into play stronger and stronger in investment decisions, these are the minerals that people are going to want to support. So I'm very excited about it, and I'm very anxious to make sure that we market the scandium in a way that we get to participate in the value that it creates because it's quite significant. Scott, I don't know if you had anything you wanted to add.

Yes. Maybe just a couple of comments on the demand side here. We certainly see demand continue to increase in the solid oxide fuel cell arena. In particular, those fuel cells are now being deployed on ocean-going ships, not just for stationary power generation. That's going to increase the size of that market, certainly. There's been discussion about -- and technical papers around scandium's application in terms of components of lithium-ion batteries. So that could be potentially very interesting. We see developments using scandium aluminum alloys and cooling systems for the automotive sector and certainly continued applications in things like cell phones and other communications devices for the filters that are essential to those things operation. So there's just, in general, a lot of good things happening on the demand side, and I think that's certainly kept our excitement up and bodes well for our ability to sell our production in the future.

Okay. Thanks, Scott. We're almost at the top of the hour. We're about the top of the hour, so I'm going to squeeze in one last question though, Scott. So I'm going to give you 60 seconds on this last question. This was asked by 8 or 9 people, so I'm going to take an example here. When is it expected that the demonstration plant will be completed? How long does that take to show results? Are we talking weeks or months?

Yes. We've been working very hard on that demonstration plant with L3 to get it up and running. And the good news here is that the technical part of this is going very, very well. If we've had issues on the schedule side, it's all due to nontechnical reasons, things like insurance, the ability to get certain key pieces of equipment manufactured and across the border into Canada where the plant is being constructed. We've certainly had some COVID issues in the jurisdiction where the plant is being built and some COVID outbreaks among the staff there. Those have been the kind of things that have been a drag on the schedule. But I think at this point, we're waiting for a couple of key pieces of equipment to be delivered that will allow the plant to become mechanically complete. The time frame for that is on the order of weeks. And in terms of the operational schedule, we're planning for a fairly aggressive operational schedule. We have enough material to run that plant for 2 weeks without stopping. The plant has been designed to integrate the analytical capability. We need to monitor the plant's performance with the plant itself. So we'll get results very close to real time. So we plan to run that for about 2 weeks straight, presuming there's no problems or issues. And after that, we'll have the results we'll be seeking.

All right. Thanks, Scott. We'll run along, so thank you all today. And a number of questions we didn't get to, I apologize for that, but we will get back to everyone who's asked the question later today, certainly be e-mail. I appreciate that. Mark and Scott, thank you for taking time today. And Matt and Rich, thank you especially for being our special guest today. I hope this webcast was informative to everybody went online. We have taped this, and so we will issue later today a video replay of this for those who are able to miss -- who missed the broadcast. Thanks, everyone, for joining us today. I hope this was helpful, and we look forward to seeing you on the next webcast. Have a great day and be safe. Bye-bye.

Thanks, everybody.

Thank you.