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

This last session of the Mining Symposium on Critical Minerals and rare earths. It is a pleasure to host NioCorp. Mark Smith is Executive Chairman, President and CEO. And we also have Jim Sims in the forum. We're going to keep it hopefully very conversational. You can also meet questions via the Zoom app. We will read it once we get it for Mark or Jim to answer. But before we begin, please let me mention some disclaimers. Please note that this webcast is for Morgan Stanley clients and select employees or appropriate employees, I should say. This webcast is not for members of the press. And if you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. All right. So with that out of the way, Mark, the -- we're going to just keep it conversational, as I said, we have some questions, [ Mark ] and I and then as the audience starts to send theirs, we'll also ask them to answer those, please. Maybe just to set the stage and before I pass it on to Mark, would you just present a brief introduction of the company, a little bit of the history, and then we kick it off from there.

Very good, Carlos. And again, thank you -- and [ Mark ] for this wonderful opportunity. I think this will be the only slide that we use for the presentation today, but it's such a great slide in terms of summarizing what our company is and what we're doing. If we take a look at the upper left-hand corner here, this really summarizes it very, very well. We are trying to put together the technical plans, the construction plans and the financing for a $1.2 billion underground mine and surface processing facility located in the very southeast corner of the state of Nebraska. We will be mining and producing products, including niobium, titanium, scandium and the magnetic rare earth oxides. I would like to point out very quickly that the United States imports, 100% of the niobium it needs today. It imports about 85% of the titanium that it needs today. It imports 100% of the scandium that it needs today, and it imports very close to 100% of the magnetic rare earth oxides, although MP Materials is certainly ramping up on the NdPr, the neodymium praseodymium right now, and congratulations to them for that. So these are very, very important strategic elements for the country, and it's time to bring some onshore production of these minerals to the United States. We are traded on the NASDAQ ticker symbol NB. We'll go down to the lower row on the blue box on the lower right -- lower left, sorry, and note that we have 0 debt, 0 outstanding convertible notes. Going to the company highlights section, the green box, lower right, we've raised almost $371 million this year, including a $10 million Pentagon grant that we got that's been very, very useful for the company. We have all of our permits in hand. There is no permitting risk associated with this project. And once the financing is finalized, we've got a 36-month construction time period to get to production. Unbelievable strong state and local support for this project. We hold town halls in the area, 500-plus people come out to these town halls. We have 0 protesters, 0 naysayers. We have really worked hard to earn that trust in the community. That's our social license to operate. We're going to work hard to maintain that social license. All the other things on here, I think we can probably just let the viewers read those on their own. But hopefully, that gives a pretty good high-level view of what this company is about and what we're trying to undertake.

Great. Thank you, Mark. I guess let's double-click a little bit here on the actual site itself and the time line that you guys have outlined for the commercial production here. Let's just break that down a little bit and what you could foresee as being some of the bottlenecks or governors to hitting that target.

Great question, [ Mark ]. And of course, in the United States, we have to ask that question constantly in the mining industry. As we all saw early in the year, there was a report that came out that suggested it takes, on average, 29 years to get a mine into production. So I will tell you that I've been working on this NioCorp project for over 12 years. I'm happy to report that we are very, very close to seeing the finish line and being able to start construction. In terms of items that we're looking to accomplish in the next few months here, as we noted just a moment ago, we've really had some very good success raising equity funds for the project financing. We also have worked for 2 years and 4 months with the Export-Import Bank of the United States. We think that we're probably sometime in 2026, going to see the final results of that effort. It's a very long tenuous effort. But as taxpayers, we, of course, want them to protect U.S. taxpayer money. So we're fine with the level of due diligence, but we have been in this process and XM is talking about a $780 million loan. So we're very, very close to having the full project financing that we need to start construction. The rest of that then goes to how prepared are we for construction itself because once you raise the money, then the hard part really starts. -- you've got a $1.2 billion construction project, you have to be on time and you have to be on budget. So what we've been doing with the $300-plus million we have in treasury is we're advancing the project as we speak today. We're clearing the shrubs, clearing the trees. We've bought all the property, the surface and the mineral rights that we need. We're getting all those little things behind us to make sure they don't cause delays in our schedule or upset our budget in any way. So we're really moving forward. This is based on 44 years of experience in the business. I know exactly what can go wrong. And so we're trying to address those things upfront and just get them behind us. And I'm really, really pleased with the level of effort that our employees have put into advancing this project today. It's really remarkable.

Got you. And do you foresee any constraints, be it on account of labor availability or just general infrastructure in the region? Help me kind of think about the site's location a little bit more.

Yes. Infrastructure in the region, let me start there. There's natural gas pipelines very close to the site. There's electrical power very close to the site. We're working with the local power provider for the community and have meetings with them once a week right now to make sure we get those lines into the site. As is always the case in very big power demand situations, we have to discuss those things. That puts a huge burden on their system. So again, just that open, honest conversation we started very early on and we're meeting once a week with them right now. So infrastructure, I'm very confident that all of that is going to be in place. And the point that we want to make is, again, advancing the project on an early basis like we are because we have cash in the bank, that allows us to start early on those infrastructure efforts and make sure that they're there on time. If something goes wrong, we have plan B and plan C and plan D. So I'm not losing any sleep over infrastructure, but those are big, big power projects to bring on to the site. In terms of -- let's see, the other part that you'd asked about, [ Mark ], I apologize. I got so tied up on infrastructure.

Oh, just labor availability...

Oh, labor, yes. No, great question. First of all, the people in Southeast Nebraska I think, are super supportive of this project because they're looking forward to the very high-paying mining and surface mineral processing jobs that we're going to have out there, probably 450 to 500 full-time positions out there. So we've got a huge interest level already. But I'll also say that our 2 EPC contractors that we're using have capabilities that can add to that and make sure that we bridge ourselves from going from 0 to 500 employees quite easily. So Zachry will be our EPC contractor for the aboveground facility. They keep a workforce of over 22,000 people available for construction projects and you can hire them on a contract basis just to go right into operations while you're bridging that issue if you need to. Same on the underground mining side. We've got Dumas, who will be developing the underground mine for us. We have every intention to just keep them on as the underground mining entity on a contract basis because underground mining is different than surface mining. And the one thing you figure out after being in the mining industry as long as I have, and you've seen both surface in situ, underground, I've seen every type of mining there is. There are certain people in the world that really like underground mining. And there's a lot of people that don't. And there's no in between. I mean you either like it or you don't. And so to make sure that we have that issue addressed, we've already talked to Dumas about providing the contract mining for us. So again, not losing any sleep over either one of those issues, but very, very good question, [ Mark ].

Perfect. Maybe let's shift back to the financing here and address a question from the web. And again, I'd invite everybody on the webcast to please submit your questions. They're all great here. Maybe if you could provide us with an update on your equity raise. Are we finished with the share dilution? And how much additional dilution might be necessary to get where project cash flows start financing the operation?

Yes. I've been really tried for the 12-plus years that I've been running NioCorp to make sure that all of our shareholders from day 1 until now understand that by definition, we are going to have dilution. We have to raise more equity. We are maximizing the amount of debt that the project can deliver here, and XM has done a great job of figuring out what that debt level is. They're going to give us a 65% debt level on this project, a little higher than some normal projects and certainly higher than a lot of projects today. And a lot of that comes from the fact that we have 4 basic product streams coming out of there that can ultimately produce 11 or 12 different products into different markets and the earnings and cash flow from that commercial operation look fantastic, which then bumps the ability to take on the debt. But we still have to raise equity for the project. There is going to be additional fundraising. I've been very forthright about that. We don't know how much because we're in final discussions, so to speak, with XM on what they want for debt service reserve accounts, what they want for cost overrun facilities. All of these add to the necessity for either raising that money and equity finding lines of credit to support those facilities. We're still putting all of those pieces together, but we have to know the amount that XM is wanting to see. We were supposed to meet with them a couple of weeks ago to start those conversations. Obviously, with the government shutdown, that meeting didn't occur. Happy to report we're headed back out there next week. We're not wasting any time. We're going to get right into it with XM. I want a binding something from XM as soon as humanly possible.

And Mark, I would like to bring the conversation back a little bit to the company operations of the company. Can you maybe provide a little bit more color on the characteristics, details of the deposit? What is the distribution of elements? You mentioned that you're going to be able to produce several of the critical minerals and rare earths that the world is so dependent on China. Can you maybe flesh out a little bit the distribution of those elements, the proportion and what is going to be more relevant for the revenue generation?

Yes. Happy to do that, Carlos, and it's a great opportunity to make sure everybody on the call here knows that information. So we're going to be, as I mentioned earlier, we'll be producing niobium titanium, scandium and the magnetic rare earths. So the niobium is really our primary product that we're going after. This is really -- it's a carbonatite deposit that has a very good ore grade for niobium. It's upwards of 0.8%, 0.82% and as we just announced in the results from the #2 drill hole that we put out there to do some infill drilling, we had the best drill results that we'd ever had. Full mineralization in the entire carbonatite section that we drilled, and we saw some of the highest continuous ore grades for niobium that we've seen, well over 1%, which then puts us into potentially a #2 category instead of #3 in terms of some of the best ore for a niobium project that's under development right now. So we're very pleased with the niobium ore grades we're seeing, and we've got the metallurgy figured out just beautifully right now in terms of how to recover that niobium at very high recovery levels, upwards of 90-plus percent for recovering the niobium. Also in the carbonatite deposit, we have titanium, very common to see niobium and titanium in the same resources. We've figured out how to separate the titanium from the niobium. And under the new process flow diagram, we'll be producing 6x the amount of titanium that we note in our 2022 feasibility study. So that will be updated here as we're updating our feasibility study again with the new process flow diagram, but we've got excellent separation between the titanium and niobium now. We're going to be producing scandium as well. And scandium, keep in mind, the scandium titanium and the magnetic rare earths, in our view, are byproducts for the mine. Scandium will be producing at about 100 tonnes per year. That's probably 3x what the market size is in terms of what's produced basically out of China today. But we are very confident about the latent market demand associated with that scandium. And we are working with, as we just announced also companies like Lockheed Martin on uses and ways to sell the scandium oxide. So they've got a new technology that will help our fighter jets be safer and yet more lethal at the same time. That requires scandium to undertake that change in technology. So we're thrilled with that. And we have other OEM programs that we're working on with automobile manufacturers where we'll replace current parts that are made with 100% aluminum with scandium aluminum and potentially scandium recycled aluminum, which has all kinds of win-win attributes associated with it. And then finally, the magnetic rare earths. And we're able to actually selectively produce the rare earths that we want because we start our metallurgical process with a full hydromet. So we're putting everything into solution and then we can selectively remove the rare earths that we want. And having been in the rare earth industry for 38-plus years, I can't tell you how nice this is to be in this position because I've always been in a position where you didn't have the capability of selectively producing what you want. And so you end up producing a lot of cerium and a lot of lanthanum before you ever get to the minerals, the rare earths that have value. 90-plus percent of the value of any rare earth ore body today is associated with these magnetic rare earths. Well, we're in the very luxurious position of being able to put everything in solution and then selectively remove that 90-plus percent of the value of the rare earths in our ore body. And we have the very good fortune with this carbonatite geologic resource of having both bastnaesite and monazite in our ore body, which then allows us to pick up and produce the dysprosium and the terbium all the way to high-purity oxide form. So hopefully, that helps a little bit. And then we -- just to add to that, particularly on the scandium side, there are so many things that we need to bring onshore in the United States here. I mean, first of all, scandium, we don't produce any scandium in the United States today, nor do we produce scandium metal to speak of. We don't produce any of the scandium aluminum alloy of any amount that makes any difference. NioCorp is working on all of those supply chain issues as well, and we hope to have some announcements here in the next near future about efforts that we're undertaking to make sure that, that scandium supply chain is fully onshore in the United States. We're very excited to do that. But a few details we have to work out before we can announce it.

All right. And one more here on the company's operations before I pass it back to [ Mark ]. Can you give us a little bit of information, color on the Elk Creek time line from where you are now to commercial production?

Yes. And remember that I am the Chief Executive Officer. And as I like to tell everybody, I'm also the Chief Cheerleading Officer. And so I'm always going to be very optimistic about what we're doing here. And I also have enough experience in the field to know that sometimes my optimistic views take a little bit longer than what we hope. But I think what I'm about to talk about is pretty realistic because we've been working on so many of these things for so long, and we can actually see the light at the end of the tunnel. So the really big issue that's hanging over us right now is we've got to get the XM loan to be binding and get it to final form. That needs to be fully approved by the XM Board of Directors. And again, we've been working on that loan process for 2 years and 4 months. And I really feel like we're narrowing down on the last few items that we need to agree to with them, and we're narrowing down on the technical work that XM wanted to see enhanced in order for them to issue us the loan. So that process is coming together. I don't see any reason right now why that process can't come to conclusion in the U.S. government's fiscal year 2026. So what that means in layman's terms is on or before September 30, 2026, we should have that XM loan in place. We do need to raise a little more equity or some form of additional financing to support the non-debt piece of the project financing. I don't see that as a particular problem either with as much money as we have in the bank right now, the interest level in this project is extremely high. We'll raise the extra money. And again, that should all be able to happen sometime between now and when the XM loan process is finished. What that means then is project financing should come to a conclusion in 2026. We have a 3-year construction schedule, but don't forget, we're doing a whole bunch of things right now that are part of that construction schedule. But I'll just leave it at 3 years, which means we should start production in 2029. And we've given ourselves about a 6-month period to ramp up from commissioning to full nameplate capacity production at the site. Once we start production, though, so before we hit nameplate capacity, we will be producing minerals. And our offtake contract partners want those minerals sent to them as soon as they're produced and as soon as they meet a reasonable level of product specification. So we'll start generating revenues very quickly at the conclusion of construction. And we have all of our permits in place. So financing is in place, here we go.

So I guess, Mark, if we could, I mean, let's just double-click a little bit more on the XM funding. A question here from the web that as you'd mentioned, you expect sometime in fiscal '26. In the past, I guess, you'd expected the process to likely end by end of '25 due to the parallel XM process moving along simultaneously with the feasibility study and social impact study. So maybe if you could narrow down that time line a little bit more? Should we be thinking more towards the second half of fiscal '26? Or is it closer to the original projection?

Again, let me start by saying, remember, I'm also the Chief Cheerleading Officer. So I continue to push these things and push these things as hard as I can because like everyone else, I'm major shareholder in this company as well. And the sooner we can start construction, the sooner we can start production, the sooner we start revenues for this company. So I want the exact same thing that every shareholder out there wants. Sometimes we don't understand priorities in the government as well as we need to understand them. And there is very little control that we ultimately have over XM in terms of how fast they move in their process. They had pointed out to us in 2024, some technical work items that they wanted to have done to advance their loan evaluation process. We had revised our process flow diagram, unbelievable metallurgical results from that, very well proven out at a full feasibility study level with over 2 weeks of continuous operation at a demonstration plant. I couldn't be happier with the metallurgy. But as we knew would happen, XM wanted to have that metallurgical process put up to FEL 3 or feasibility study level engineering. That work started at the end of April of this year. It will be done by the end of this calendar year. That will be available for XM to do their due diligence on. That will not take very long. Their technical due diligence contractor has already reviewed everything from a 2019 feasibility, everything from a 2022 feasibility study. This will be a very easy technical review for them to get through, but that has to be done. Second item that they wanted was we had all of our geological reserves classified as probable reserves and XM wanted to have proven reserves. And so we did discuss that with them for quite some period of time because that was very extraordinary. Most of the commercial banks in the world are very happy with probable reserves in order to finance projects, but XM wanted proven reserves. So we agreed and we undertook an infill drilling program, which we started late April of this year as well. All the holes have been drilled. The rigs are demobed and off-site. All we're doing now is waiting for the analytical results to come back in from that effort. Remember that there were 7,700 samples taken from the 13 holes that we put in the ground, and all of those have to be analyzed. So we've got 2 of the 13 holes done already. We anticipate all of the analytical work to be back in by about mid-December. Then we give the geologists about 30 days to run through all of their models. And the goal that we're trying to achieve on behalf of XM to make their final decision is they want at least 10 years of proven reserves. I have absolutely 0 worries about us not hitting that 10 years. And I have reason to believe because the geologists that are doing the work actually have offices about 25 feet away from my office. I might be over in their office quite often every day. And I have reason to believe that we're going to hit that target with absolute flying colors. So that is ongoing. And this next week, when we meet with XM, we'll update them with the specifics on that, but that issue is not going to be an issue going forward either. So then it boils down to 2 final things that we have to undertake for XM. Offtake agreements, which we're working on, and we're working on both individual company offtake agreements, we're also looking at a much larger general offtake agreement with a single party. And it's going to be whoever comes first in time is going to get this contract for offtake because we don't have a whole lot of time to finish discussions on this anymore. XM is ready to act as soon as we have those offtake agreements in place. So we're very focused on that. And then the final issue, which we've already talked about a lot, is they just want to make sure that all the equity is going to be there before they finalize the loan. But needless to say, with the $370-plus million we've raised in 2025, they've verbally indicated to us their confidence level in our ability to meet the full amount is as high as it's going to be. So we're very good in every category. I think the market is going to like when they hear more on the offtake side because that means XM advances that much faster. But I don't see any reason at all why this cannot be completed in 2026. And certainly, when we talk to all of our advisers, when we talk to XM themselves, there's an awful lot of head nodding as we talk about these dates. So I'm confident we're going to hit that.

Got you. Maybe just a follow-up to that. Let's double-click a little bit on the offtake agreements themselves. What do you expect them to look like? And what should investors look out for by the end of this year, end of '26? And then a follow-up question from the web. respecting a lot of the progress here, we're looking to make sort of still hinges on XM, is there any sort of a backup or contingency plan there if it's denied or deferred any further?

Let me start with the second question first, [ Mark ], because I think it's a great question. And one of the things that we've made -- tried to establish a very good reputation for is to have plan A through how many plans we can. And one of those sub plans for the debt side has been we started talking to commercial debt providers 5, 6 years ago. Once we became eligible for the XM process, it became evident to us and the commercial lenders that we were talking to that it was going to be very hard for the commercial lenders to compete with that cost of capital. And so we've kept them on the sidelines, very warm. We give them updates to our project whenever anything significant happens. And so we've kind of got 3 commercial banks sitting out there still very interested in the project, but they know they can't really compete with the XM cost of capital. So yes, we have other plans sitting out there. I'd also add that there are multiple government agencies in the U.S., which can also provide additional funding here either in concert with XM or separately. All of those have really become fully funded. And for the most part, they're becoming operational now. The Office of Strategic Capital, DFC, those are 2 that I can point to that are very, very directed by the White House to get this critical strategic minerals effort onshore into the United States. So those would also be considered back up. Jim and I have had multiple meetings with those agencies as well to make sure they know who we are, what we're doing. They obviously want to be very careful that they don't cross over into the XM area unnecessarily. So we're trying to hold all of those conversations very carefully, but very strategically. There's also the market that we can go to. I've been watching the convertible debt market in particular right now. And it's something like I've never seen in 20-plus years of doing financing. I've never seen a convertible market that is this attractive right now. So our goal is to make sure that we put together the best financing package at the lowest cost capital possible because that's what makes a difference to our shareholders and their ultimate value in this company. So we're being very open-minded about it, but we have gone a long ways down the road with XM. I have no intentions of throwing that away and starting fresh again with other folks.

Got you. I guess let's take it back up now a little bit more towards the operations itself and some of the opportunities. But do you anticipate any future partnerships with other parts of the midstream or downstream processes to really kind of help vertically integrate and secure that domestic supply chain?

Yes. Great question, [ Mark ]. And it allows us to once again kind of talk about our culture. There are some entities out there, very small entities sometimes and a little larger entities other times that can do some of these onshore supply chain pieces. And we are not an aggressive company that goes in and takes over companies and does hostile M&A, we do things cooperatively. And so we're -- what we want to make sure that we do for the United States is to put together the whole supply chain where it needs to be put together because other people are not working on it. We want to put that together, but we'll do that in partnership. We'll do that in a JV. We'll do that in an acquisition. I mean it's whatever makes the best sense for us and the other company that we're working for. But we're not going to do anything hostile. We're doing this for purpose, and that's to onshore these supply chain activities. So the United States government is assured that we can do these things and not have to worry about export licenses or decisions on whether things can be sent to the United States or not.

Got you. And then maybe also while we're on it, let's double-click again on the Lockheed deal there and kind of help me understand a little bit more the scandium alloy market and respective to its current size, where do you see the opportunity set? And what are the advantages this alloy kind of brings to market?

Thank you for that question. This is one where hopefully, we'll get finished here in the next 45 minutes or so, [ Mark ]. This is one I'm going to go on. So scandium aluminum alloy and just looking at it by itself compared to aluminum, and that's kind of what you want to look at it for. And the way I kind of like to look at scandium with aluminum is just to kind of think about what niobium does for steel. It's a grain refiner, you end up with something that weighs less. It's significantly stronger, much more corrosion resistant, much more heat resistant on both cold and hot. And then scandium does almost the exact same thing to aluminum. It makes it ultimately lighter, makes it significantly stronger, makes it weldable. It has much better corrosion resistance to it and a much wider temperature span that it can operate under. So it does a lot of very good things. It just -- there's just never been enough supply there. And so all the technologies that people have that can utilize scandium have basically just been put on a shelf because there wasn't enough supply there. NioCorp can change that to a very large degree. And the part that you always interests me when we're talking to potential scandium offtake partners is they come to realize, and maybe we help them a little bit on this, but they come to realize that we're not a primary scandium producer. We're there for niobium. And as long as we're producing niobium, we necessarily produce scandium. They like that extra advantage that they have, that extra surety that they have that scandium will actually be produced. And because it is a byproduct, our economics with scandium are going to be very different than a primary producer. So it really creates many advantages for us. But in terms of other applications because I think the big issue with scandium has been it's such an opaque market. There's only 20 to maybe 30 tons produced in the world today. You can Google scandium. And when I did it 7 or 8 years ago, you would find prices that ranged anywhere from $3,500 a kilogram to $12,000 a kilogram. If you Google it today, you'll find prices that are kind of right around $700 a kilogram to $3,500 a kilogram. And what you're seeing there is that this is the basic China MO again where they see the advantages of scandium. They understand that they are the major producer of scandium today. They're trying to capture that market share. I've seen this go through at least 3 cycles on the rare earth space, and we're just seeing it again on scandium. So what they've been doing is dropping the prices of scandium to keep all the other producers out, capturing more and more market. That's not something that bothers us. I mean, don't get me wrong. I want to make sure we get the right value for our scandium. But our price to produce that doesn't create a problem like it does for a primary scandium producer. So we can hang in there pretty good with the Chinese for a long period of time, and we plan to do so. And in the meantime, we're developing -- we're working with the people who will actually use scandium and developing those applications to make sure that people know that we are going to produce 100 tons per year. You can move forward with these efforts that include the scandium or scandium aluminum alloys. One of the -- we've talked about Lockheed a little bit. That's a very exciting opportunity for us and unbelievable what it will do for our pilots. We're also working on another project over in the U.K. called Project PIVOT. And we have Aston Martin, Jaguar Land Rover, Boeing U.K. as kind of the end users in this Project PIVOT group. But we have NioCorp as a future scandium supplier. We have the extruders. We have the casting companies. We have the aluminum companies. And what we're looking at over there is taking recycled aluminum adding a little bit of scandium to it. And what you end up with is an alloy that is equal to or better than the aluminum that you would use if you used fresh or green aluminum in that application. Well, these car companies are ecstatic about this because you do end up with an alloy that has equal to or better than the properties of the aluminum. The cost of recycled aluminum is 70%, 7-0 percent less than buying fresh aluminum, so they get a lower cost part. And then one of the best things that the U.K. manufacturers like is that when you use recycled aluminum in this process, you get a 96% reduction in your CO2 emission profile associated with that part. And that means that converting the aluminum parts in these automobiles to scandium recycled aluminum parts, that will be their largest single reduction in CO2 emissions corporate-wide, and they are still committed to their CO2 emission targets that they've put out publicly. So this is a win-win-win for the OEMs over in the U.K. And our -- we can't wait to finalize all those project efforts and get all the final data and enter into offtake agreements with those parties. Our biggest concern is we're only producing 100 tons. If we start talking about the likes of Ford or GM that might want to do this down the road, we're going to have to produce a lot more scandium. That's a good problem to have. So we're looking forward to that.

All right. Great. Very comprehensive response, Mark. You have 5 minutes left, 4 minutes left, and there's 2 questions that I would like to ask you. Hopefully, we can get those in those 4 minutes. First is beyond the Lockheed Martin offtake agreement that you discussed, are there any other offtakes agreements? Maybe to the extent that you can comment or provide some broad color would be great. Particularly, is there -- is it a possibility that you get upfront payments as some of other rare earth companies out there have been able to get? And then the second question is just a brief take on the current flurry of announcements that we have seen between the U.S. and China regarding rare earths in the last couple of weeks.

Yes. I'll start with offtake because that will be very, very quick. I've probably said as much as I can say, given the confidentiality agreements that we obviously have to enter into to have these discussions. But we are in discussions with individual users of our materials, and we're also in discussions with one party in particular, that would be more of a general overall offtake agreement with one party. And I want to do that, again, I think I've said it already, but it's all a matter of timing with the XM process right now. The XM process is coming down to the final steps. They have to have offtake, I will make sure they have offtake. So we're going to take whoever comes to the finish line first, and we're going to make sure we get that XM loan. In terms of what's going on in China, it's an unbelievably good question, Carlos, because we've had reports coming out of the White House in terms of what they think was agreed to with China. Now we're starting to get some feedback from China on what they think they agreed to. And needless to say, there's mass confusion again. There are suggestions that what China agreed to was to loosen the restrictions on the list of heavy rare earths that they put out in October for export restrictions, but not the ones that they put out in April. I will be the first to tell you that in terms of rare earth permanent magnets, it's the April list that matters, not so much the October list. Notwithstanding whether it's the October list or the April list, we know that China is also still requiring export licenses. And they're going to require those export licenses because they are going to do everything in their power, and they're very verbal about this. They're going to do everything in our power to make sure that none of these heavy rare earths, which they are the sole producer of in the world today, none of these heavy rare earths can be used in U.S. military applications. So there will continue to be a licensing process. And then I -- because I've done enough business with China over the years, particularly in the rare earth space, I actually view the Chinese approval process as 2 steps. First thing to do is to get the actual paper license. And remember that if you answer a question wrong, they send it back and then you have to fill out the whole thing again and send it back again. And don't forget that the People's Liberation Army is now one of the reviewing entities for these paper licenses that you have to get. So that's your first step. But then once you get the license, there are decisions that can be made, and I don't know how they're made, but sometimes exports are allowed and sometimes exports aren't allowed. So there's kind of this paper license and then there's this subjective decision as to whether or not you're going to get those materials or not. I'm very hopeful that we can get around this issue and that we can continue to produce the vehicles that our companies want to produce. We don't have to shut down automobile production. I mean what a huge problem that would create for labor in this country. But there are still issues there that need to be resolved. We're hoping they get resolved. Having said all of that, and as negative as that sounds, I also want to say thank you, President Trump. He understands the issue. He's putting that issue front and center with China. No other leader that I know of in the United States has ever done that. So my compliments to our President for understanding we have a serious issue here. It needs to be addressed. He's also doing some absolutely courageous things in the marketplace. The floor price for MP Materials, unbelievable courage to do that as an elected official. That's really not something that's done in our country. We're a capitalist society, but he did that, and it takes away the Chinese MO that I talked about just a minute ago with scandium. So he's bringing these activities onshore. He's bringing the production and the supply chains for these critical minerals onshore and he's trying to work out trade deals to make sure they continue to come onshore while we're building up our capabilities. My compliments.

Yes. Well, and we want to say thank you to you for joining us. It has been a great session. We'll see you shortly. But thank you very much. Thank you, [ Mark ], for cohosting these fantastic discussions. Thank you very much.

Thank you, Carlos. Thank you, [ Mark ]. It was a pleasure.