Niocorp Development (TSX.V:NB) President Peter Dickie Interview

Midas Letter
Midas Letter
Niocorp Development (TSX.V:NB) President Peter Dickie Interview

Niocorp Development (TSX.V:NB) President Peter Dickie is on the line talking about Niocorp’s trading volumes lately, which he speculates are directly associated with the increasingly active management style of Mark Smith, former CEO of Molycorp (NYSE:MCP), the $1.5 billion monolith who is the largest integrated rare earths miner, processor, and vendor in the world outside of China.

James West:           Peter why don’t you give us some idea of why all the sudden interest in Niocorp’s shares?

Peter Dickie:        Well, there are several factors in play here. First and foremost just over a year ago, we brought an individual onto our advisory board that I’m sure people are familiar with. His name is Mark Smith. He used to run a small company by the name Molycorp where he was the president and CEO. He took it from a pre-IPO stage through IPO, up to a fully producing and certainly, in my opinion and I’m sure other people share, one of the most integrated from top to bottom rare earth producing companies in the world outside of China.

Mark became available and we leapt on the opportunity, met with him, have formed a very strong relationship with him. On his initial involvement, while he was familiar with the project, he had to reacquaint himself with our project in Southeast Nebraska.

As result, he sort of fell more and more in love with the project and we were able to convince him without a lot of arm twisting to become more involved aside from our advisory board. And in the fall of 2013, he actually joined our board of directors and took over the role of CEO.

As part of that, we did a decent-sized capital raise at above 15 cents US in which Mark participated, and we’ve done a subsequent raise at 20 cents Canadian in January and February of 2014 in which Mark was also a participant. As a matter of fact, between that and shares that he bought out of the open market prior to joining the board of directors, Mark now owns approximately 9.7% of the issued and outstanding capital of NioCorp.

James West:        So he is convinced?

Peter Dickie:        He is convinced. He has put his money where his mouth is. He is definitely interested in seeing the development of this project. He can tell you firsthand that in all of his years of experience, he has never seen a project that has seen the level of community support that this project has. Aside from the merits of the actual deposit itself, it’s ticking off all the boxes, as he would put it.

I think the recent increase in the value in the market cap of the company has resulted from a couple of things. First off, cumulatively between the two financings that I mentioned, we were able to wind up at the end of the day with in excess of four million dollars in the bank and no debt, which was sufficient funding for us to do some very meaningful planning as far as development on this project is concerned. We have enrolled the services of SRK out of Denver, and they’ve done a complete review of our project.

They’re coming up with a drilling plan that is necessary to move enough material into a proposed mining plan that would enable us to produce a feasibility study on this project. We’re going directly to feasibility on it.

To give you an idea what the requirements are for that is essentially, you need in excess of 30 years of material in the measured and indicated category. The drilling, while there still is some drilling to be done and this won’t be the final drilling.

This will be sufficient drilling to move enough material into that category. Let’s say, there has been approximately 30 drill holes put into the deposit to date. Certainly, the consistency of the deposit is starting to ring a familiar bell with people that look at these types of projects and we’re starting to attract a lot bigger capital to the forefront in light of a combination of factors: Mark’s participation and his faith in the project is one; the involvement of significant firms such as SRK being another; the extensive work that we have ongoing right now with respect to metallurgy, we’ve hired both SGS Lakefield and Hazen Research and they’re both doing work on the metallurgical aspects of this.

Our stated goals as far as our drilling plan include all of the aspects necessary to produce that feasibility study. So people are realizing that while there is still a significant amount of data, information that we cannot disclose because it hasn’t been produced in 43-101 standards at this point in time, obviously, we have enough faith internally that we’re moving forward very quickly on this project. And with our increasing share price of late, we’ve also reached a market cap level that is attracting much bigger eyes.

In fact, we suspect that we’re attracting capital from sources that Mark has accessed in the past where he was instrumental in raising literally billions of dollars with Molycorp.

James West:        Right. Wow! Okay, so you guys have done 53,000 meters of drilling, you, NioCorp, as well as former owners, so what kind of grades are you seeing in that deposit? What are some of the best examples in the drill core?

Peter Dickie:        Well, our resource report at the moment is calculated with an indicated resource at 0.67% Niobium Pentoxide which is the niobium content that is measured in these deposits, the inferred deposit is at 0.63%, but I can suggest to you that if you were to look at some of the drill results that we have encountered individually and that were encountered in the past, it certainly suggests that the deposit may in fact be higher grade than that.

James West:        Sure.

Peter Dickie:        As an example of that, and just for accuracy purposes, I’m just pulling up a little presentation here. We had our very first hole that we put into the deposit had 235 meters grading 0.73% including 54 meters at 1.17%. Our second hole had close to 180 meters of 0.87% including 131 meters of 1.02%. Our third hole had 34 meters of 0.94%. Obviously, we believe that while the resource estimate that was put together by Tetra Tech a couple of years ago, we have no reason to doubt their findings whatsoever. In fact, they have always done very high quality work but we also think that they may have been a little on the conservative side but that will be proven up when we release another 43-101 likely in the fall.

James West:        Okay, sure. So what is a ton of rock with 1% niobium pentoxide worth?

Peter Dickie:        Well, that’s the million-dollar question. I can tell you that the processing on niobium deposits is always a question that people come up with.

James West:        So it’s not the easiest stuff in the world to extract?

Peter Dickie:        Separation is always a concern; I’ll put it that way. This is not similar to a gold or copper deposit where you might recover 90%, 95%, 98% of the material in the ground.

World-class standards and those are the recoveries that are done by companies such as CBMM, the largest producer in the world, Niobec in Quebec, their recoveries are in the mid-50% range. So while it doesn’t seem like a massive target, that’s the reality of the commodity.

We have historical results from Molycorp and these are pre-43-101 days so it’s certainly not something that we can rely upon so we have to do our own testing, but they encountered recoveries actually in excess of those numbers that I mentioned. So what we are doing is we are spending a significant amount of time and effort utilizing two firms as I mentioned because we’d like to establish a proper flow sheet with recoveries certainly in the 50+% but hopefully in the sort of 55% to 58% range.

James West:        Great. What is the price of niobium pentoxide right now on the market?

Peter Dickie:        Well, the price niobium is primarily traded in the form of ferro niobium. That’s about 90% of the world market. The current price for ferro niobium is approximately $42 a kilogram so it’s not a small market by any means. The world market is about 80,000 to 100,000 tonne s per year so it’s a very significant market in the neighborhood of four billion dollars a year, but it’s one of the most markets that very few people know about.

There is one simple reason for that; 85% of the world’s supply comes from one mine in Brazil which is owned by a company called CBMM. And CBMM is a private company, so they do not report publicly, they do not report their sales, they do not report sale prices. The price that I mentioned to you is the price that is paid on the sort of spot market if you want to call it or on individual contracts that do get reported. That’s also the reason why the overall market size is not something that you can easily pin a number on

James West:        Sure.

Peter Dickie:        A fair amount of research has to go into finding out what the market is.

James West:        Yeah. Okay, well, that’s great. So I guess it’s all the enthusiasm around Mark Smith and everybody pretty much assumes that he’s the guy with the expertise in terms of extracting and putting a good mining project or a good drilling program together with SRK.

Peter Dickie:        Yes.

James West:        Let’s leave it at that, Peter, and I will come back to you guys in about 60 to 90 days and we’ll see how you’re making out. Thank you for taking the time.

Peter Dickie:        Sounds perfect. We will have a drilling very much underway and hopefully have some preliminary metallurgical results to announce at that time.




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