Proposed Nebraska mine raises up to $366M of $1.1B it needs

FILE -NioCorp Developments CEO Mark Smith talks to a group of investors during a tour on Oct....
FILE -NioCorp Developments CEO Mark Smith talks to a group of investors during a tour on Oct. 6, 2021, about the prospects for a proposed mine the company hopes to build near Elk Creek in southeast Nebraska, to extract critical minerals NioCorp Developments, the mining company that wants to extract a rare heat-resistant element from the ground under southeast Nebraska says a new report shows the deposit it plans to mine holds a significant amount of other rare elements, Thursday, May 19, 2022..(AP Photo/Josh Funk, File)(Josh Funk | AP)
Published: Sep. 26, 2022 at 7:58 PM CDT
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OMAHA, Neb. (AP) — A mining company that wants to extract an assortment of rare elements from southeast Nebraska has announced an agreement that will provide up to $285 million to help cover the roughly $1.1 billion cost of building the mine.

In addition to the acquisition of a special purpose acquisition company called GX Acquisition Corp. II that NioCorp announced Monday, the Centennial, Colorado, company also signed letters of intent to borrow up to $81 million more from Yorkville Advisors Global. So NioCorp could get as much as $366 million to finance the project.

NioCorp CEO Mark Smith said “these transactions have the potential to put NioCorp on the fast track to obtain the required project financing.”

The main element NioCorp plans to produce at the mine about 80 miles (130 kilometers) south of Omaha near the town of Elk Creek is a heat resistant element called niobium along with scandium and titanium. The company has said analysis of samples from the site shows there is also a significant amount of rare earth elements there like the ones President Joe Biden wants to produce more of domestically. But it’s not yet sure whether it will be economically feasible to also produce some of those elements that are used to create the strong magnets used in a variety of high-tech products such as electric vehicles and cell phones.

Biden has said the United States needs to reduce its dependence on foreign suppliers of critical minerals. China is the world’s biggest producer of rare earth elements.

Dean C. Kehler, Co-Chairman and CEO of GXII said NioCorp should be able to help with Biden’s goal if it can raise the rest of the money it needs to begin producing niobium, scandium and possibly rare earth elements.

“We believe NioCorp is well-positioned to be a reliable, US-based supplier that will produce these products on a sustainable basis,” Kehler said.

It won’t be clear exactly how much money this transaction will give NioCorp until closer to when the deal is expected to close early next year because some investors could pull their money out of the GXII fund before closing.

GXII is a one of the risky shell companies known as SPACs that became popular on Wall Street in recent years before many of them fell out of favor and had to be liquidated without ever completing a transaction. A SPAC is essentially a blank check company created solely to merge with another business to invest in it.

While SPACs are often used to help companies go public, NioCorp is already a publicly traded company, but this deal is expected to give it a listing on the NASDAQ, which would help it attract more investors. NioCorp has been actively exploring the Nebraska site for more than seven years, and since 2013, it has raised more than $80 million to pay for its efforts.

The proposed mine is expected to create over 400 jobs if it is ever built.

The U.S. imports all the niobium and scandium and most of the titanium and rare earths that NioCorp hopes to produce. There is only one American mine that produces rare earths now at a site in California. NioCorp says its deposit of rare earth elements is second only to that Mountain Pass mine that MP Materials runs in California.