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

Good morning, good afternoon, good evening to everyone on the call today. Thank you for joining us. This is a live update webcast from NioCorp Developments discussing the latest on our Elk Creek Critical Minerals project located in Nebraska. We have people kind of scattered all over today. So Mark Smith and I, I'm Jim Sims with NioCorp. We're in Washington, D.C., attending the XM Annual, the Export-Import Bank of the U.S.'s Annual Meeting, and doing a lot of other things here with folks that are interested in the project. There's a lot of interest in the project these days in D.C., which is a very good thing. Scott Honan, who will be presenting today, is located on site near Elk Creek, Nebraska. He's going to talk about the launch of the drilling that we have underway this week. Jake Anderson is in DeRouge's offices in Centeno, Colorado; and Drew Horn, who's with us also works in Washington, D.C. and is joining us from his office there. So with that, let's go ahead and get started. We're a public company. So as you can see, these are our disclaimers and technical disclosures. And here's what we have today. Of course, Mark Smith, our Executive Chairman and CEO of NioCorp; Scott Honan, who is our Chief Operating Officer at NioCorp and is also President of Elk Creek Resources Corp. Jacob Anderson, we go by Jake though. He's a resource geologist and business development lead at De Rouge Geological Consulting, and Drew Horn, who's the Founder and CEO of GreenMet. I thought for a minute, though, before we get started, I wanted to kind of give people some additional background on Jake and Drew. Jake has very significant experience in stratigraphic deposits, gold, the Mississippi Valley deposits, industrial materials. He's also has extensive experience in training and supporting mining software as well as customer engagement. His project experience ranges from resource modeling, permitting, reclamation design, and brownfield exploration of both gold and thermal coal. Thanks for joining us, Jake. We appreciate it. Drew Horn is the former top U.S. official on strategic minerals and energy supply chain development. He's a highly regarded business leader and has served in the highest leadership assignment in the White House that was in the First Trump administration and in the Director of National Intelligence, or ODNI, and in the U.S. Department of Energy and Defense. Prior to his government service, he was a strategic management consultant at one of the Big 4 consulting firms, he served as an officer with distinction in the U.S. Army Special Forces and in the U.S. Marine Corps, where he gained on-the-ground international minerals experience while serving in combat. He earned his MBA from the University of Virginia's Darden School of Business. His expertise, knowledge and contacts are quite literally unmatched in this industry, and we know that firsthand. So Drew, thank you for joining us.

Thanks so much for having me.

Mr. Smith, let's start with you, please take the mic and go ahead.

All right. Thank you, Jim, and welcome to the webcast today, everyone. This is an exciting time for NioCorp, no doubt about it. With our recent success in attracting significant new capital from institutional investors, we're entering into, I'll call it, a new phase in our execution plan for the Elk Creek project. And in many ways, it's a new era here at NioCorp. And I'm very excited to report today on our recent developments, what they mean for the project advancement, and what I see as our next steps forward. But before I do that, let me quantify the word new here. And the word new is because we are in a different place as a company as a result of the fundraising that we just concluded. And what I mean by that is following last week's successful capital raise of just over $20 million, we are now sufficiently funded to complete the work necessary to update our feasibility study as requested by the United States Export-Import Bank. That updated feasibility study is key to securing both the project financing from a debt and equity side and moving us to a construction start. We can actually see the light at the end of the tunnel. We've now started all work streams necessary to complete the feasibility study update. For example, a drill rig is on site in Nebraska right now. And Scott Honan is actually going to be doing his part of this program from the Corshed at our site in Nebraska. So we're very anxious to get his update on that. We've also executed as we press released this morning, the contracts necessary to fully engage the engineering firms to conduct the feasibility study level engineering of our new processing facility. The upgraded process we developed through our demonstration plant in Quebec is expected to allow us to produce separated rare earth oxides, including heavy rare earths as well as higher production levels of titanium and niobium. The details of those improvements will be released publicly once the feasibility study update is completed, which I expect in the next 6 to 9 months. We will provide periodic updates while we're going through the work as well. The geopolitics of critical minerals have created very strong tailwinds for our project. As many of you have likely seen, China's recent moves to begin restricting exports of a number of critical minerals, especially the heavy rare earth minerals, has sent shock waves through many Fortune 500 boardrooms and across senior levels of the United States government. Fortunately, the United States and our allies for the United States, I should say, NioCorp intends to produce oxides of the heavy rare earths dysprosium and terbium, 2 of the most important that now threatens China with their stranglehold on these minerals. The fact that the Up Creek project is fully permitted and shovel-ready, more so than any other project in the United States that intends to produce magnetic rare earth oxides, has put us in a much brighter spotlight in the public. On both Wall Street and in Washington, D.C., the Up Creek project is increasingly seen as key to America's strategic response to the China threat. And let me say that every time Jim and I come to Washington, D.C., which is about every other week right now, we are told by the people we're meeting with that critical strategic minerals, particularly heavy rare earths are the #1 issue being discussed in Washington, D.C. right now. This is an important time. Finally, I wanted to note that our efforts to finalize additional offtake agreements for the project are accelerating. This is, of course, driven in good measure by the Western manufacturers who are interested in having made in the U.S.A. minerals, which is all a result of the geopolitical developments that are encouraging this rapid reshoring of these U.S. critical minerals. On the webcast today, I've asked our other participants, our team members here to focus on 2 things. One is to provide an update and background briefing on our drilling operations in Nebraska, which Scott will do, and then to provide our audience with a top-level review of what the Trump White House is doing to accelerate federal support for critical minerals projects. Scott will kick us off with a report from the drilling campaign in Nebraska. Scott, the floor is yours.

Thanks, Mark. I'm here at our project site in Elk Creek, Nebraska, near Elk Creek, Nebraska. And happy to report that we had our first drill arrived yesterday. That drill has been mobilized in the field and we'll start drilling later today. And I'm joined here at our project site by the drilling company, Boart Longyear as well as our friends from Dahrouge, who are helping us manage the field program. Ultimately, the drilling activity that we're going to start here today and the technical work we're going to do is intended to give us an updated feasibility study, as Mark noted. And the real driver here is to help us get through the U.S. export import loan process. So our objective in this drilling program is to provide the XN Bank with at least 10 years of proven reserves. We'll certainly try and do better than that. We need to take the costs for the different aspects of our project that are in our current technical report, our current feasibility study and get those updated to a 2025 basis. And we want to get all this work done by the end of 2025, if not sooner. So again, as Mark noted, we were able to kick off the technical work here last week on April 22. We've got a drill here at site. And as we go through this process, as we put together a new feasibility study, we are going to incorporate all of the improvements that we've made to the project since our last technical study. So during that time, we completed our demonstration plant, and we looked at making some improvements to the mine in terms of replacing a twin shaft access approach with twin ramps and rail there. The important thing to note here, and it goes to the picture on the right-hand side of the slide here, is that we are doing what's known as an infill drilling program. So if you want to think of it one way, it's we're drilling into gaps that we already know a lot of information about. And right now, if you look at our resources and reserves at the project site, we have an indicated mineral resource and a probable mineral reserve. For the most part, those categories of resources and reserves are sufficient to get project financing. The bank has asked us to upgrade our resources and reserves. So we need to get some quantity of measured resources, which we can then turn into proved or proven reserves. And so the way we do that is we take parts of the ore body that we already know quite a bit about, and we put more holes in them. We increase the drilling density. That increases confidence and gives us a higher category of resources and reserves. Next slide, Jim. We've got a great team here put together to help us through all aspects of this feasibility study. As I mentioned, our friends at Dahrouge are here on site. They've got a team that will be running our field program and completing all the geology and core processing work that needs to happen as drill core comes out of the ground. Drilling is being done by Boart Longyear. Boart Longyear is an absolute first-class company. They've impressed me so far with not only the efficient way and the safe way in which they've got their drill to the site and mobilized and ready to start work, but by the fact that they're very environmentally conscious as well. So everything that's a liquid is on a spill containment pad. They've put plastic underneath their drills. They're really going the extra mile to make sure that they conduct their drilling work in a very responsible way. All of these firms on the slide have a role to play. The biggest pieces we're looking at here are with our friends at Zachry doing the surface plant design. So basically taking what we've learned from the demonstration plant, turning that into an engineered design and a cost estimate. Very similar, our friends at Dumas are going to be taking the improvements that we've talked about in terms of the mine access and the mine design. They're going to be turning that into a new design and a new cost estimate that will go into our final feasibility study report. So very pleased to have a first-class team helping us with all of the work that we have to do here. It never gets old for me to talk about the success we had at our demonstration plant. So what this slide shows you is the results metallurgically in our feasibility study of 2022. And you can see we have 3 products there. We had ferroniobium with a pretty good recovery. The titanium was in the form of a bulk commodity synthetic rutile and the recovery was pretty low at 40%. And we did a decent job on the scandium. What we're able to do in the demonstration plant is 2 things. We were able to incorporate a bunch of improvements to our production process as well as establishing the metallurgical performance and capability to produce a few of these more important rare earth products. So in terms of niobium, we can certainly produce ferroniobium at a higher recovery rate now. We'll also be able to produce a niobium oxide, which can be used in different applications, including making the kind of niobium that goes into super alloys. The titanium will now come out in the form of titanium tetrachloride. Again, the recovery is much higher there. The difference that you see here between niobium and titanium is the result of some very good work that was done in the demonstration plant to get a much better split between the niobium and the titanium in the production process. So now we have more niobium going to niobium product, more titanium going to titanium product that really helps with the revenue side of the project. Scandium comes in about where it was before. And we have listed there 3 rare earth products, neo-praseo oxide, dysprosium oxide, terbium oxide. These are the essential ingredients into rare earth permanent magnets that everybody is putting into their electric vehicles and their wind turbines, but which are also now going into things like eVTOLs, think of flying taxis as well as humanoid robots. So those are very important and quickly growing applications, and we are one of the few projects around that not only has the base material for those magnets, neo-praseo oxide, but we also have the dysprosium and terbium, which when added to the neodymium and praseodymium allow a magnet to operate at high temperature. And that is essential for a lot of applications like the ones I just mentioned. Very pleased with the overall outcome here with the demonstration plant and can't wait to get all this incorporated into new economics for the project. Last thing I wanted to talk about was the Railveyor technology. In terms of how our project has evolved, we started with the twin shafts to access the ore body and to move the ore out of the mine to the surface as well as getting people and materials in and out of the mine. We took a look at this technology. And I'll tell you what, 5 years ago, this was pretty new to the scene, but we were able to go and visit an operating Railveyor installation that had been running for approximately 5 years. And the thing that really struck me about it was its simplicity and versatility. This installation was a retrofit into an existing mine operation, which is not always an easy thing to do. But you can see on the top left there, a very simple control system with a bunch of cameras to make it go. This could be put into any mine quickly and easily. The center picture there is the loading station. So on the right-hand side, you can see a Railveyor that's unloaded. And on the left-hand side, you can see a Railveyor that's loaded and moving down its track. The big orange thing in the back is the machine that loads the rock into the Railveyor system. The Railveyor kind of looks like a train, but really, it's not a train in the sense that it doesn't have an engine or a caboose. In this case, it's really just a long culvert sitting on the rails. And the way the thing moves is that if you can see in the top right picture there, you have a series of these booster stations, which is just a big electric motor and basically a truck tire. And as the Railveyor approaches each booster station, the tires engage with the Railveyor and push it along the track. And so you have a number of these booster stations that eventually push the train to the discharge station that you see in the bottom right-hand picture there. So a very rugged equipment, very simple, very easy to operate. And the thing that I like about this is having seen an operation that has been running for a number of years now, we can say that this is proven technology. We can look at the construction and say, yes, this is something that's simple, easy to operate, but it's also robust. The equipment is not going to break easily. Having retrofitted into an existing mine, we were able to see that you really don't need a lot of specialized preparation here. So the surface can go up and down, back and forth and the Railveyor can accommodate that. And looking at the costing, this really looks like our lowest cost option for both accessing the mine and moving material from the underground to the surface processing plant. The final benefit here, which is really important is during the studies that we've done on Railveyor, it looks like this technology would get us to full production quicker than going down the shaft approach. And that's very critical for us. We do have a long construction time line for this project being a greenfield mine. And the sooner we can get into production, the sooner we can start generating revenue and paying off the loans that we're going to have to build the thing. So very pleased with the Railveyor and again, looking forward to having this fully integrated into the project in this upcoming feasibility study.

Thank you, Scott. Let's move on to our next presenter, Jacob Anderson of Dahrouge.

Thank you, Jim. Thank you, Mark. Thank you, Scott, for inviting me to your call today. I can say at the Dahrouge Geological USA office, we're extremely excited to take part in this drill program and also this feasibility study to see a project that we've been involved with over the years, and we're hoping that this will lead into construction and we can move into the operating phase of this project. So currently, we are in this drill program, as Scott alluded to earlier, we are doing 9 core drill holes. There's a typo below, my apologies. And these core holes are planned to target not only the continuity, but their space close enough to other drill holes to allow for that uplift in the mineral resource from indicated into measured. On the left-hand picture is a screenshot of the NCAR domain, which is that main core of the ore zone. There's also a couple of resource domains on either side of that core, but that's the primary target that we're targeting here in this drill program. On the image on the right, you can see with aerial imagery, those are all the core holes. And due to the complexity of just trying to get and tie into other existing drill holes, the drill hole orientations on Azimuth and Dip are variable. And you can see kind of the directions in that screenshot from a plan view how we are going to be targeting this uplift. As of last week, we had employees on site going ahead and beginning to prep for the drill program. And we are ready to go. And as Scott said earlier, there is currently one rig on site. Next page, Jim. And so that rig is currently set up. So these are photos from the field that our team has taken. As of now, this morning, this rig has pre-collored down, and we are preparing to set the cement around the pre-collar, and that will set over a 12-hour shift, and then we will begin to aggressively drill this first hole, which we are starting in that northwest corner of pocket of the drilling. So everything is ready to roll core shed set up. As we go through this drill program, we are going to proactively and dynamically audit and check all of our drill results. So that way, we can guarantee that each drill hole that we are drilling provides the utmost amount of value because with 9 core holes in a very targeted drill program, we have to ensure that as we're drilling, we're updating and evaluating what type of information we're collecting so that way we can inform and be flexible in case we need to change the plan and target different areas because of the results we're seeing. Next slide, Jim. So from a resource perspective, I'm kind of reusing some of Scott's information here because I just want to allude to that upgrade to the mineral resources from indicated to measured. Building on previous studies from past work and prior work, there's a reasonable understanding within the variance of the deposit. But what we want to do is we want to incorporate the data and especially projects that have been done prior or post the last resource update. And one of those that Scott alluded to that's very important for the resource is that demonstration plant work. That demonstration plant and the metallurgy and processing work and test work goes back to the geologic resource because it's considered a modifying factor. And these modifying factors can be the difference maker between elevating and uplifting a resource classification, which then allows you to update and elevate the mineral reserves upon engineering and costing in those types of studies. So we're really excited. As this program is starting, we're already kind of looking through all the historical drilling that's taking place in the property, and we're evaluating and really trying to look at this resource in the way that what uplift can we do with these modifying factors and then be prepared to when we get more data from this drill program to confirm. We're almost predicting and confirming at the same time within this program. So that way, as we roll into this feasibility study, we're prepared and ready to go for a speedy feasibility study so that way NioCorp can achieve their goals. And then thank you.

Thank you, Jake. Fascinating. I love the work you guys are doing. exciting that you're actually doing it right now as we speak out in the field. Let me turn to our final guest speaker, Drew Horn, our Founder and CEO of Greenmet. And I want to say parenthetically that Drew and his colleagues run a firm in D.C. that's very unique. I think they're all ex-military individuals who have decided to focus in this part of their careers on trying to bring together financing and political support for U.S. and overseas critical minerals projects. It's a very unique business model. I think they're the best in the business, and we've been very, very pleased to be working with their team. So Drew, let me turn it over to you.

Well, thanks so much, Jim, and thanks, Mark and Scott and everyone for allowing me to have a brief moment here to just share some of the good news. I'm going to try and keep this relatively short and kind of to the point because I'm probably the least important person on this call here, but I think I can validate how much of a priority this is with the current White House and how this solves a very almost impossible problem from perception, at least as far as a year or so ago. And also just one final note, apologies for being somewhat less formal than normal and in my home office, I actually have to head to Greenland in about an hour or so. So I'm doing this before going over there to try and get some forward progress on some of the things that the President and others want to do. And I think minerals is obviously one of his top priorities right now. So to state the obvious, Mark, Jim and Scott and team have had the attention of U.S. government leadership for quite some time. It predates me even. Obviously, this is a project that has incredible potential impact, and I think it's perceived as such and has been. It now has the position, I would say, of being the flagship project from a government perspective on how to advance rare earth and critical mineral policy with a project and with a major project that incorporates multiple forms of government funding and support. ' And so I spent most of the last week going back and forth between the Westwing and the Pentagon, just kind of looking at this and some of the other priorities. I think there is a major mandate to move quickly. And the fact that NioCorp has already demonstrated that it meets that strict criteria, even I would say, coming out of the past 2 administrations, it's essentially an easy button for what this White House wants to do. And so looking at the pending disbursement coming out of DPA and then the follow-on advancement as, I would say, the flagship XM project, I anticipate that it's going to be pursued for large amounts of other federal support. There is definitely an appetite, I would say, to try and advance projects like this. One of the things that I talked about with the industrial policy leadership yesterday was the ability to potentially leverage the DLA stockpile as a future customer and purchaser for some of these key elements. I think this is a very I don't want to say easy, but very appropriate project to potentially look at some of that nesting and incorporation. And obviously, what the President is looking to do from my understanding is to try and ensure that defense and the commercial sector are closely aligned on not just advancing and investing and developing these kinds of projects from a capital perspective, but also looking to come in as long-term customers as we try to fix what is a very pivotal problem that everyone is now aware of. And so I would just summarize by saying that this is a project that I think will have much more support coming in, in various means than it already has, which, of course, is substantial. It has front attention of everyone from the President on down. The various councils are all looking at this as a flagship from obviously, the National Security Council, National Economic Council and the new National Energy Dominance Council are seeing this as a way to kind of galvanize it and focus other minerals projects across the industrial policy sector. So lots of exciting things happening and moving right now. Mark and Jim, obviously, are at the front of it with the Exome conference. But I would just say there's much more to come, and I believe it will come very rapidly. And I think it's deserved, but it's also very nice to see the appreciation and prioritization of this project, as I would say, the #1 rare earth project inside what the Trump administration is looking to do very quickly. And that's really that's just all I have.

We really appreciate that. And again, thank you and all the members of your team for your service and your service, your continuing service to the country, and we sure appreciate your support. Let's go ahead and move on to questions from our audience. Those of you who are watching via the webcast on your laptop, you can submit your questions through the questions panel as part of your teams on your laptop or your phone. For those of you that are phoning in, you're more than welcome to send your questions to me either via text at (303) 503-6203, or you can send them via e-mail to [email protected]. We'll try to get to all your questions. But as usual, if we can't get to them in the webcast, I'll get back to people as best I can with answers.

So with that, we have some questions that have come in early. That's always very helpful. So let me go ahead and start with those. I think the first one, Mark, is going to go to you and Scott, and this investor asks the following. I'd like some clarity on the steps, process the steps and the timing, if possible, between the beginning of the drilling program and the submission of the updated FS, including the rare earth economic effects to XM. Mark, why don't you start on that?

I'm going to switch that around on you, Jim a little bit and have Scott talk about the time frame to get the work done. And then Scott, when you're done with that, I'll then combine that timing with the XM process.

Sure, Mark. I think the critical thing about our feasibility study process is that we designed a program here to run in parallel. So there will be one parallel work stream where we'll do drilling over the next approximately 3 months. We'll get all the assays from that drilling. Big and his team at Dahrouge will then update the mineral resource. We'll pass the mineral resource over to Amplify mine planning, who will do the mineral reserve. And that is sort of the key work stream that results from the drilling program. So you've got about 3 months of drilling, a month of resource and then you write a report after that. At the same time, I mentioned the other big work stream here is updating the costing. So we'll have Dumas and Zachary working in parallel to update the designs and then use that information to update the costs, both capital and operating for the revised design here. And we expect that work, again, we will run in parallel with the drilling and everything else, but it will probably take through the end of the year to get that done. As we are preparing a 43-101 report, once we've got all of that information together and we've got an economic model, which my colleague and our CFO, Neil Shaw, will prepare, we'll be able to issue a press release with a high-level economic results and follow that up shortly thereafter with a full written report, documenting all the work that we've done as we've done in the past.

Perfect. Thank you, Scott. I just wanted to add as background and then how that will be incorporated into the XM process is interesting because XM doesn't actually need a feasibility study in its entirety to move along with the loan approval process. So as we're developing this work, as that engineering is being done, as estimates are being done, we can submit that information to XM and their technical consultants. And remember that we announced, I think it was January or February that the contracts have been signed for the technical due diligence that's being done by XM. And that work actually started almost immediately after that contract was signed. So that firm has been looking at this project and actually were familiar with our project from some prior work that Scott had them do. So they are becoming more and more familiar with it, but they're already very, I'd say, a very high level of understanding of what we're doing and how we're doing things. So as Scott and his team get the feasibility study level engineering moving, we can have them just move along with that information as it's being developed. So I just wanted to point that out so that you're not left with the impression that we have to finish all of this work, get a 900-page report compiled and then XM will start to due diligence. We'll be running all of these things in parallel the whole time. So I would expect Scott to have the work done on or before the end of the year. Scott will smile every time I say that because he knows I would like it done before the end of the year. But we'll be submitting things along the way. And once the whole package is put together, we will need those final CapEx numbers. We'll need the construction schedule so that those tie in with the economic model. But what you're going to see is increased revenue streams, a new capital estimate, which I have very high hopes for in terms of being less than what we have in the CapEx pocket right now. And then the time for construction is going to be less as well. You put all those things together and if you've done any type of economic modeling that would strongly suggest that you're going to see some improved economics from this project. So we are extremely excited to get this work done, get it published, get it out to you as shareholders and show you what the real potential of this project is. All this is being done at the same time, though. It's not being done sequenced. It's being all done in parallel work path. So we're going to get to the end of the road here and finalize this loan as soon as we absolutely can. My hopes would be before the end of this year. I can see it potentially going into the first quarter of 2026. Those are the goals that we have internally that we're pushing on to make this project happen. That's that excitement. That's that new feeling that we have. We can see the light at the end of the tunnel here. We're pretty impassionate to get it done.

Thank you, Mark. Here's another question. Would a U.S. strategic reserve involvement be considered on the equity side of the financing? And Mark, I'll start on this one. You can pick up. As a matter of fact, we are in discussions now Corp is with the National Defense Stockpile. They have expressed an interest in potentially entering into offtake agreements with us. We can't give you much more detail at the current time. But the stockpile was given the authority in the FY '24 National Defense Authorization Act to enter for the first time into offtake agreements that are forward contracts with companies like us and others who have not yet entered into production. They've got a 5-year time line. They are interested in that. We are having discussions with them about that. Secondly, President Trump in his March 20 executive order directed both XM and the Development Finance Corporation to put together programs that could finance offtake agreements for critical minerals projects, and we are in discussions with both of those entities on that prospect. So Mark, you can add anything you'd like to.

Well, I'll just add that it's yet another way to enter into an offtake agreement, which you absolutely have to have for the debt side in particular, because that's the collateral that XM will use to support the loan that they ultimately give us. But as everybody can appreciate, having an offtake agreement also helps get the equity side of the project financing more interested as well because it just mitigates risk is what it does. It guarantees the income, the revenue from the project. So offtake agreements are just central to the entire project financing effort.

All right. Here's another question. Could you provide us with the state of the offtake discussions with Stellantis?

Yes. It's a tough one to talk about because it's so dynamic right now. Stellantis has been going through a tremendous amount of turmoil at the highest level of the company. We are on our fourth complete change out on critical strategic procurement teams within that company. So we've had to go through and educate them, each one of them that it comes in new. It's taken a long time to get there. Now in the last 2 to 3 weeks with what China is doing with heavy rare earths and restricting the export of those materials to the world and in particular, the United States, companies like Stellantis are a little bit worried about just getting access to these minerals because if you don't have terbium or dysprosium to add to your magnet recipe, it can't operate in an EV, it can't operate in a robot. These heavies are absolutely essential and necessary for the high-temperature applications for rare earth permanent magnets. China has issued policies that they're going to restrict the exports. I think that's nice. They are restricting the exports. People are feeling it right now. I was just mentioning to Jim earlier today, I talked to a trader in the business and he had bought some materials, some heavy rare earth materials in the market last Monday. He sold those on Friday for double the price that he bought them on Monday. That's another sign when the market is becoming that volatile, it's another sign that this restriction is really happening out of China right now. We're also aware of another situation where China has sent communication to South Korea and told them that none of the heavy rare earths that China exports to South Korea can be shipped on in any form to the United States. That feels pretty targeted to me. So this is a very serious issue, and we're going to start feeling the impacts of this, I think, before the end of May because nobody keeps large inventories of this material. they are available except in China. So this is going to the times are just now starting to become more interesting, and we've got a lot of work to do here.

Appreciate that. Here's a follow-on question, Mark, and that is, is it possible for the U.S. to make heavy rare earths?

Absolutely. And I love being able to tell everybody that we have the team at NioCorp that actually has experience doing just that. And that's not something that almost any company in the United States can say. So yes, we know how to do that. Scott used to run the Mountain Pass plant. We've got Rick Sixberry on our team. He's the Director of Process Control. And Rick has over 40 years of experience doing nothing but making rare earth oxides. So yes, we know how to do it, and we can't wait to start doing it again.

All right. Here's a question. Is it possible that we build first separation plants or separation plant and process oxides from other mines before we mine our own ore?

I'll start there, and then Scott, you can correct anything I say that's wrong. But anything is possible. But that is a very hypothetical question in many ways. Number one, Scott would have to probably have more money and more people on site to build something faster. He's already got a pretty tight construction schedule. So I'm not sure how much faster we could build it. But the other issue you have is it's a great concept, but where you get the ore. And there aren't a whole lot of active rare earth mines in the world today outside of China other than Mountain Pass, California and the Lynas facility in Australia. So you've got limited access where that hypothetical question could actually bear fruit or come through. Scott, do you want to add anything else to that?

Yes. If I could add just a couple of comments. I think first and foremost, as I look at our overall project construction schedule right now, if you look at our previous study, the critical path ran through the mine, and we're able to float the construction of the surface plant to sort of meet the requirement to start processing or when it became available from the mine. With the improvements we've made through the rail or, et cetera, on mine access, the schedule is now such that it's not clear which of those 2 facilities is on the critical path. They're both very close to each other. So I think it would be difficult to accelerate the surface plant construction enough so you could do some meaningful processing before the mine was ready. The other thing that's important to recognize about the surface plant is we are building a plant to do a specific job, and that is to process the ore from Elk Creek. And we can take a little bit of stuff perhaps like some rare earth concentrates or maybe some even containing material. But we have to be careful that the plant is designed for a particular mix of rare earths, niobium and scandium and titanium. And it's designed for the particular mineralogy of the ore that comes out of the Elk Creek mine. So we can take a little bit here and there. But overall, we have to put in the front end, what the plant is designed to take, which is ore from Elk Creek.

Good point, Scott. I appreciate that. Can you talk a little bit about the state of progress at our U.K. subsidiary, the Nalcorp U.K. subsidiary on aluminum scrap recovery and aluminum scandium alloy development.

Yes. Scott, do you want to do that?

Certainly, that project is moving forward quickly. We have a gentleman by the name of Jason Nunn, who is a Director of our U.K. subsidiary, who's on the steering committee for project pivot as it's called over there. And that project is moving ahead quickly. They won an award of distinction for the first presentation that they had to make to the U.K. government a month or 2 ago. And we expect some great things to come out of that project. All 10 work streams associated with that project are moving forward right now. And we don't have a lot to report right at the moment with respect to a particular scandium result. In addition to moving the project forward, we've seen a lot of interest from other companies that are getting very interested in what we're doing with scandium. And the fundamental principle here that I think is important to remember is that many companies around the world are trying to recycle aluminum. And when you recycle aluminum, inevitably, there's some degradation of performance because impurities get introduced into the metal mix. And so companies are trying to solve this problem typically through either very carefully sorting the recycled materials that go into recycled aluminum or trying to do something in the melt or in the processing to improve properties. And really what's revolutionary about the idea behind Project Pivot is that we're using scandium to upcycle aluminum. So that scandium boosts the properties of the alloy, gets it to virgin material or better, and it solves a lot of the problems that come along with using recycled aluminum. So very pleased with the progress there. We have frequent contact with our guy over there, Jason. And Mark and I are excited to go for some in-person briefings here later in the month of May.

One of the reasons why the automobile industry is so interested and excited about this is when you use recycled aluminum, it's about 30% of the cost of that virgin aluminum. So they get to lower their costs and end up with a car that meets or exceeds the standards that they would with virgin aluminum. So this is revolutionary, and I think it's going to be an exciting time for Scandium moving forward.

Mark, here's a question for you. Is the German government loan guarantee still applicable?

Absolutely, it is. As everyone knows, our largest offtake agreement we have, 10-year enforceable offtake agreement with ThyssenKrupp for ferrooniobium. That product will go over to Germany. And as a result of that product being exported to Germany or imported in their view, we are ineligible. We are in principle eligible for that German government guarantee. We checked that a couple of times since, and they have assured us that we remain eligible for that loan. I'm being a little bit how many different banks we want to get involved in the project. Every time you add another debt provider, you have to get intercreditor agreements and the paperwork doubles. So we're being a little bit careful. XM is our primary focus right now, but we look at the German government loan program as a backup or a supplement to XM. And then because of the work we're doing in the U.K. with scandium and recycled aluminum, we're also in discussions with the U.K. version of XM called UCEF. And Vivek, Scott and I will be meeting with them mid-May as well and starting to further those discussions. But these are all as everybody knows, we always like to have plan A and B and C and D. We want to make sure that we have lots of options here. So if anything doesn't go well, we move to the next plan and just keep things running. So lots of alternatives for export credit agency financing.

Here's a question. Can you give us an update on Department of Defense funding for the project? I'll start with that one, Mark. As many of you know, because we press released this, the U.S. Congress enacted in the FY '24, the fiscal year 2024 DoD appropriations bill $10 million aimed at helping the project. We've been going through the process with DoD. Since that bill was enacted, it is a lengthy process. I would say it's fair to say that the department has prioritized our project and our funding above a number of others. It's still sometimes on the outside, probably looks like you're watching paint dry. But that process is proceeding. I think it's fair to say we're getting close to the end. And assuming we do get that funding, we look forward to making that announcement when that happens.

And let me add on to that, Jim. I made a statement during my opening remarks about the $20 million plus capital raise we did. We now have enough money in the treasury to complete this technical work that XM wants. we have enough money to complete that work with or without that DoD funding, and that's why we're moving forward on that. If we get the DoD or I should say when, because actually, I'm participating with Jim on a lot of these discussions recently, and my confidence level has actually increased tremendously about our ability to get that $10 million from the DoD. If we get that $10 million, we will use the 10 extra, so to speak, for furthering and advancing the project, buying property or whatever the case may be. So there's always more uses, and we'll try to get ahead of the game, utility-wise or whatever so that we don't have those types of issues bogging us down when we actually start construction. So we have plenty of good uses for it, and we're still pursuing it.

Thanks, Mark. Drew, here's a question, I think, for you. Can you tell us how the President is looking at balancing his interest in potentially securing ore, what they mean, overseas versus doing development for critical minerals here in the States?

Well, I think the campaign slogan that's not exactly new kind of answer some of this, which is America first, right? I can't speak for the President, but my understanding is pretty consistent with what I think he puts out there publicly very often, which is that we're going to look here to try and develop everything inside the United States we possibly can and then look to support that from abroad when it's good for U.S. industry and U.S. interest. I think NioCorp, once again, in my opinion, it is the top project, right, for obvious reasons. But I think it also represents at least a possibility down the road to add on additional ore sources from abroad, right? I don't want to get off topic or into other subjects, but even the Tanbreeze deposit that we're looking to develop in Greenland, potentially someday could look to try and ship to NioCorp or a NioCorp-backed facility, right? That's just one example of the thinking that I think the President has. I think we want to do everything we can inside of our own borders, employing our own U.S. workers and doing everything that I think NioCorp does so well. But I think it does also represent the ability as we work towards what he would characterize as energy dominance and including mineral dominance in that to try and integrate with friendly feed sources from across the globe, only as they support American solutions. So hopefully, that's not too robust or too political. But I think what it really sums up is that what you're doing here is the quintessential key piece, and it can be added on to, but it can't be replaced or supplanted by anything overseas, in my opinion.

I appreciate that. Thank you. We're getting close to the top of our hour. I've got a number of questions that all relate in one way or another to let's call it, the expected timing on the start of construction. So let me summarize all those by asking the question this way. Mark, if we were to receive all of our project financing necessary to go to construction by December 31 of this year, and we get started, when do we anticipate being able to go into production of our products?

Three years after we start construction. That's a much better answer than before, where it was about 3.5 years. Scott's figured out how to take 6 months off that construction schedule. So we are very happy to talk about that. Okay. And Scott didn't even win what I said that. So...

All right. I think that's it for what I can see. For those of you who first of all, thanks to everyone for joining us today. We appreciate hanging in there for a full hour. There probably are some questions I haven't seen yet, and I'll get back to you with answers on those. So please thank you in advance for your patience. Our webcast today has been recorded. Probably in the next few hours or so, we'll be able to post that recording on the website. We'll send a note out to all of our subscribers and let you know where to go, so you can see a recording of that webcast. Thank you all again for taking time. We love your interest. We love your support, especially from our shareholders who've been with us for a very long period of time. We're looking forward to having a stream of announcements over the coming months. to continue to document the Board progress and the accelerating progress, I would say, of our project. We're all really excited these days. Thank you all, everyone, and we look forward to our next webcast. We'll talk to you soon. Bye-bye.