NioCorp's (CVE:NB)(OTCQX:NIOBF) shares rose to a new 52-week high after announcing a sharp increase in the indicated resources at its Elk Creek niobium project in Nebraska, setting up the stage for the release of the company's feasibility study later this year.
The updated resource estimate is comprised of 578.2 million kilograms of contained niobium in the indicated category --- more than triple the previous amount of 177 million --- within 81.2 million tonnes grading 0.71%, up from a grade of 0.63% in the prior estimate published in September 2014. The report also shows 557.5 million kilograms of inferred niobium resources, contained within 99.8 million tonnes grading 0.56% niobium.
The niobium grade cut-off is 0.3%, according to the Vancouver, BC-based company's statement released earlier today.
The newest estimate is on the back of a three phase infill drilling program completed last year, made up of more than 15,000 metres, or 18 holes, of drilling. The company said the data supported the updated report, as well as provided important information on hydrology, metallurgy, geochemistry and geotechnical properties of the resource.
The drilling is also being used to advance the design of an underground mine and production plant at the project, with a feasibility study to be released in the second or third quarter of this year.
The promise of a high grade niobium supply in North America has already managed to secure NioCorp confidentiality agreements with top investment banks Morgan Stanley and Credit Suisse. The preliminary arrangement puts NioCorp in a leading position as the bankers are able to conduct their due diligence on the project while the company is busy finishing up the feasibility study.
Typically, a feasibility study has to be completed before companies can even sit down to have preliminary discussions with banks, only then beginning a due diligence process which can last up to nine months.
Indeed, the ore grades at the deposit are among the top three in the world, and the recovery rates promise to “reset the standard for what world class niobium recovery is going to be,” according to CEO Mark Smith. The average grade NioCorp is looking at is 0.7% or above, placing it solidly as the third richest niobium ore deposit in the world, behind CBMM and Anglo American, which both operate in Brazil.
The Elk Creek deposit also remains open at depth, as well as to the northwest and southeast, suggesting further upside for NioCorp.
"We are very pleased to deliver such a substantial increase in the indicated Mineral Resources for the project along with a significantly higher Niobium grade," said chief executive officer Smith in a statement Monday.
"Our team designed an efficient, cost-effective in-fill drilling program which exceeded even our own internal expectations.
"We remain focused in our quest to rapidly develop this truly world class Niobium resource into the fourth producing Niobium asset in the world. Our technical work programs will continue to be performed expeditiously and with precision in our effort to maximize shareholder value."
The development of the Elk Creek mine comes amid a solid backdrop, with a strong compound annual growth rate of 10 percent for global niobium demand from 2000 to 2010, and even more robust growth forecast in the near and longer term.
The U.S. currently imports 100 percent of its niobium needs, and NioCorp, with its mine in Nebraska, plans to become the first US supplier, taking up about 5 to 7 percent of the global market with targeted production of 7,500 metric tonnes per year.
Its stock surged over 400 percent in 2014, with its shares reaching a new 52-week high of 85 cents on Monday, up almost 9 percent year-to-date.
The formal NI 43-101 compliant resource estimate, which was performed by SRK Consulting, will be published shortly, NioCorp said.