Nicorp Developments (TSX: V.NB, Stock Forum) had reason to celebrate today as the company announced its had entered into an offtake agreement with ThyssenKrupp Metallurgical Products regarding the company's Elk Creek deposit located in the southeast corner of Nebraska.
According to the news release, the agreement calls for ThyssenKrupp to purchase 3,750 metric tons or approximately 50% of the company's planned Ferro-Niobium production at Elk Creek over an initial ten-year term.
The contract presupposes the company obtaining project financing, securing all necessary approvals and completing the construction of a mine at Elk Creek.
The company has also named ThyssenKrupp as its exclusive sales agent in Europe with a stated amount to be sold in Germany. Both companies will work together to support the project financing which explicitly includes not only debt, but also possibilities of equity financing and potential government loans.
As a result of the deal, ThyssenKrupp has been issued a non-transferable warrant for 8.57 million common shares of the company at an exercise price of $0.67 per share until December 12, 2015.
Company CEO, Mark Smith, commented on the landmark agreement, “We are extremely pleased to have one of the world's leading commodity trading company as a significant customer. Our team looks forward to building a long-term, mutually beneficial relationship with ThyssenKrupp Metallurgical Products.”
He went on to explain, “This Agreement is obviously conditional on the Company obtaining project financing to build a mine at Elk Creek. However, having the Agreement in place and discussing debt and equity financing possibilities with ThyssenKrupp Metallurgical Products, clearly enhances NioCorp's prospects of achieving those milestones.”
Then he concluded, “We caution that achieving this is not assured at this time, as we have not concluded the feasibility stage; the process commenced in the spring of this year and is expected to conclude in the first half of 2015. However, entering into this Agreement provides us with confidence that we are pursuing the right strategic plan and lends credibility to the Company.”
Niocorp Developments was in the news recently when the Vancouver-based company released final Phase II drilling results at Elk Creek four days ago.
Investors were happy as shares climbed 8.57% on the news to $0.76 per share.
Currently there are 125.0m outstanding shares with a market cap of $95.0 million.