NioCorp Developments (NB.TO) is developing the Elk Creek Critical Minerals Project in Southeast Nebraska. This mine will produce strategic/critical minerals such as niobium, scandium and titanium. Several rare earths will also be produced from this mine. In fact, Elk Creek is the second largest indicated-or-better rare earth resource in the US.
The future of this project and NioCorp looks bright given the geopolitical setup and the supply and demand fundamentals for these critical minerals. The US actually imports many of these minerals from China and elsewhere. As the world heads to de-globalization, the US will find it paramount to develop domestic supplies. Investment will look for shovel ready, de-risked projects. NioCorp’s Elk Creek Project is at the top of that list.
Recently, NioCorp announced that its demonstration processing plant in Quebec, has completed demonstrating its planned process for removing calcium and magnesium ore from the Elk Creek Critical Minerals Project.
This achieved a key milestone and was part of the phat 1 operations of the demonstration plant. Here is what follows next:
- Phase 1 is designed to demonstrate a new approach to the initial processing of the ore that NioCorp expects to mine from the Project site, subject to receipt of necessary project funding, including calcination, initial leaching, and rare earth extraction.
- Phase 2 is designed to demonstrate an improved process for the second stage of leaching along with Niobium and Titanium separation.
- Phase 3 is designed to demonstrate the technical viability of separating high-purity versions of several target magnetic rare earth products from Elk Creek ore samples, as well as confirming previously achieved high recovery rates for high-purity Scandium trioxide. The potential magnetic rare earth products include Neodymium-Praseodymium (“NdPr”) oxide, Dysprosium oxide, and Terbium oxide. NioCorp will utilize conventional solvent extraction (“SX”) technology to test a rare earth separation approach developed by NioCorp and L3. NioCorp and L3 have years of collective experience in SX technology.
Perhaps the most exciting news is the impending acquisition of a SPAC which will see NioCorp listed on the NASDAQ exchange in the US. This will give NioCorp access to as much as $285 million in net cash from the GXII (SPAC) trust account which can be deployed to advance the Elk Creek Critical Minerals Project.
Recent news announced that NioCorp took a step closer to a US listing by filing a Form S-4 Registration Statement (S-4) with the US Securities and Exchange Commission (SEC) regarding the company’s proposed business combination agreement with GX Acquisition Corp II (GXII).
The deal is expected to close in the first quarter of 2023, subject to effectiveness of the registration statement on Form S-4 that NioCorp filed today, the satisfaction of customary closing conditions, including certain governmental approvals, the approval of the TSX, and the approval of certain elements of the proposed Transaction by a majority of shareholders of GXII and a majority of NioCorp shareholders voting to approve such elements.
And yes investors, this will be a HUGE catalyst for the stock. Access to US markets and investors AND having significant cash to advance the Elk Creek Project.
Here at Equity Guru, I explained the great bottoming set up when the stock was ranging below $0.93. Once the stock broke out, the new uptrend was triggered. We have had multiple higher lows (waves) to the upside ever since.
In a recent NioCorp article, I highlighted the flag pattern. NioCorp was approaching a trendline resistance but broke through it with ease with a HUGE candle on September 30th 2022. This has to do with the SPAC news announcement. A major catalyst. The stock rallied up to $1.71, which remains the 2022 highs.
The stock then closed below the broken trendline and began to range. A range is generally a sign of exhaustion. In this case, a sign that the downtrend was over. However, I think we should put this move into perspective. The stock rallied over 50% in two weeks. It would make sense for some people to take profits from such a move. Profit taking is what brought the stock down. All the fundamentals remain.
Recently, the stock broke above the trendline once more, and broke above the range. Really good signs for bulls. We were setting up for a move back to 2022 highs. But the breakout has been nullified. Instead of momentum carrying us higher, we reversed and closed back below the breakout zone. Not bullish, and we have a fakeout.
Now we watch to see if the stock can range before breaking out once more. Bulls DO NOT want to see the stock close below $1.05 which would take out the lows and the lower portion of the range.
2023 is setting up to be a big year for NioCorp, and commodity investors really need to pay attention to this company. They possess a de-risked strategic metal asset which the US will need to develop domestic sources of. For more information on the fundamentals and the investment opportunity, check out my deep dive here.