Niocorp publishes encouraging results for the United States’ only primary niobium deposit
NioCorp Developments Ltd. (“Niocorp”, TSXV: NB | OTCQX: NIOBF) announced the final assay results from the third phase of its drilling program at Elk Creek, Nebraska. Elk Creek is rich in barium, rare earth element mineralization and especially high grade concentrations of niobium (formerly known as columbium), a rare metal that is the focus of the project. On January 19, Niocorp published the final results from the third and final phase III of the 2014 drilling program at its Elk Creek project in Nebraska, in preparation for the release of its feasibility study toward the spring of this year. Niocorp is pleased with the high-grade assay results, which add to the already successful drilling campaign of 2014. The recent results concern drillholes NEC14-020, NEC14-021, NEC14-022 and NEC14-023, showing that niobium mineralization continues both within the defined resource zone and at depth.
The drilling campaign have allowed Niocorp to gain insights into the ore body ahead of an updated resource report to be issued, perhaps, as early as the end of January. Some of the most encouraging niobium interceptions were noted at holes NEC14-021 (304 metres @ 0.98% Nb – 88 metres of which @ 1.28% Nb) and at Hole NEC14-020 (351 metres @ 0.71% Nb). Niocorp advised that “due to the angle of the drilling and other factors”, these results have not revealed the full scope of the Niobium resource.
Niocorp had a very productive year in 2014 but was not the first to realize the potential for niobium mining at Elk Creek. In the 1960’s, Molycorp (NYSE: MCP) was the first to explore Elk Creek, which has the third largest niobium deposit in the world and the only primary niobium deposit in the United States. This is especially important because all the niobium used in the United States has to be imported; most of it is produced at a mine in Brazil. While it is crucial for the electric car industry, niobium’s appeal stretches across most sectors and countries.
In the last weeks of 2014, Niocorp secured an offtake agreement with ThyssenKrupp Metallurgical Products in Germany, one of the largest steel makers in the world. As part of a ten-year purchase contract, ThyssenKrupp shall acquire 3,750 tons of ferro-niobium per year, as much as 50% of Niocorp’s total projected production. ThyssenKrupp Metallurgical Products GmbH is both a producer of advanced alloys and one of the leading trading houses for raw materials worldwide. The contract period is expected to begin after the start of production in 2017. NioCorp has virtually no competitors in the United States and niobium demand is only increasing but most is now produced at a mine in Brazil and the total world market is in the 80,000 to 100,000 ton range.
Niobium is mainly used in the form of Ferro-Niobium to produce HSLA (High Strength, Low Alloy) steel and mostly used in the construction sector, especially in such things as bridges and roads because it adds strength to steel while reducing weight. The automotive sector is the second largest user and any steel bodied car (the vast majority, only a handful are made using aluminium or carbon fiber) made in the world today has niobium in it, because it helps reduce fuel consumption and add safety. Niocorp has filed an NI 43-101 compliant resource report with Indicated resources of 28.2 Million Tonnes @ 0.63% Niobium pentoxide (Nb2O5), containing 177 Million Kg’s of Nb2O5, and an Inferred resource of 132.8 Million Tonnes grading 0.55% Nb2O5, containing 733.7 Million Kg’s of Nb2O5, (at a 0.3% Nb2O5 cut-off grade)., to produce lighter, stronger steel for use in automotive, structural and pipeline industries. Niocorp’s project enjoys strong local support because the eventual niobium mine could employ a few hundred people and benefit the community at a larger scale.
Niobium is one of fourteen metals or groups of metals that the Council of Europe has identified as critical. The United States National Research Council considers it even more important, listing it as one of the five “most critical” metals. Niobium carries great economic importance, made all the more so by its high level of supply risk. As has been the case for rare earths, niobium is one of the metals needed to produce ‘new technology’ items. It is needed to develop a wide range of super-alloys, which have applications in aerospace, nuclear energy (associated with zirconium for their resistance to the flow of neutrons) or in powder form to make micro-capacitors. However, niobium’s demand continues to derive from ‘ferroniobium’ thanks to the former metal’s ability to improve steel’s mechanical properties. This is because alloys used in steel must add strength and reduce brittleness while also reducing weight and malleability. Just a few grams of niobium added to a ton of steel can help raise the resulting alloy’s strength by 40%.
A fractional amount of niobium can add enough strength to steel, that it can help engineers reduce weight of any steel based product by as much as 10%. In automobiles, niobium enhanced steel can contribute to significant fuel consumption reductions. China is the largest consumer of niobium in the world, because of the booming infrastructure in place in the country. Even the most recent earthquakes, with dramatic damage in terms of loss of life, have highlighted the consequences of the use of inferior materials in construction, but China needs to import niobium, because unlike the rare earths, graphite, zinc and iron ore, it cannot produce even a gram of niobium. The Brazilian CBMM (Companhia Brasileira de Metalurgia and Mineração) singlehandedly addresses 85% of global niobium demand. Such is the context in which, Niocorp is developing Elk Creek, the only primary niobium deposit in the United States and it may soon become one of the most important production sites of niobium outside of Brazil. Not surprisingly, Niocorp’s shares have grown by over 300% in 2014, going from $ 0.14 to $ 0.80. And there is no reason why that race cannot continue moving up.
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