NioCorp Developments Ltd to combine with GX Acquisition Corp II to gain funds for Elk Creek project; aims for Nasdaq listing

NioCorp Developments Ltd. (TSX:NB, OTCQX:NIOBF) and GX Acquisition Corp II (GXII) announced the signing of a proposed business combination between the two companies to raise funds for high-grade niobium mining in Nebraska.

As part of the business combination agreement, NioCorp announced that it will acquire GXII, a US-based special purpose acquisition vehicle, and intends to list on the Nasdaq Stock Exchange soon after closing of the acquisition, which is expected in the first quarter of 2023 to be noted. NioCorp stock will continue to trade on the Toronto Stock Exchange.

The proposed transaction values ​​the combined company at an estimated enterprise value of $313.5 million, according to NioCorp, adding that GXII will survive the merger as a subsidiary of NioCorp. GXII shareholders will receive shares of NioCorp at closing based on a conversion ratio that reflects this post-merger enterprise value.

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When the transaction is complete, the combined company could have access to up to $285 million in net cash, after transaction costs, from the GXII escrow account to advance the critical Elk Creek mineral project. Final proceeds will depend on redemption rates held by current GXII shareholders at the time the proposed transaction is consummated, NioCorp said.

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In addition, the Company announced that it has signed letters of intent (LOI) for two separate financing packages with Yorkville Advisors Global LP. Subject to the completion of definitive agreements, the finances could give the Company access to up to an additional $81 million for the Elk Creek project.

The company said the financing packages would include $16 million in convertible debentures, which it expects to be funded upon closing of the business combination and may be redeemed by it in either cash or its common stock. The LOI also included a standby equity purchase facility, under which NioCorp will have the option to require Yorkville to purchase up to $65 million of its common stock.

Mark A. Smith, CEO of NioCorp, said the business combination with GXII and the two additional financing packages have the potential to significantly accelerate the Company’s efforts to obtain the necessary project financing and eventually move the Elk Creek project to construction and eventually bring to commercial operation.

“Our goal is to rapidly build secure and reliable U.S. supply chains for the critical minerals that multiple industries need to help us build a more sustainable and less carbon-intensive future and for other important domestic uses. Upon completion, these transactions have the potential to put NioCorp on the fast track to obtaining the project financing needed to deliver on that promise, and to do so in an environmentally friendly manner,” Smith said in a statement.

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Dean C. Kehler, CEO of GXII, said NioCorp’s Elk Creek project is the highest grade niobium deposit being developed in North America and the second largest indicated rare earth element resource in the United States.

“Critical minerals such as niobium and scandium, as well as rare earth magnetic elements, can accelerate the global transition to a lower-carbon economy. We believe NioCorp is well positioned to be a reliable US-based supplier that will produce these products sustainably,” Kehler said, adding that GXII shareholders will have the opportunity to invest in the Elk Creek Invest project and accelerate the transition to a greener world.

Niobium is used to make specialty alloys as well as high-strength, low-alloy steel, which is a lighter, stronger steel used in automotive, construction, and pipeline applications.

Located in southeastern Nebraska, the Elk Creek Project could become a significant producer of niobium, scandium and titanium, as well as the potential for several magnetic rare earth oxides, according to NioCorp.

The project sits on private land that NioCorp says it either owns or has an option to purchase through contracts with landowners. NioCorp said it has received all federal, state and local permits needed to proceed with construction once sufficient project funding is secured.

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In June, NioCorp announced that it had completed a feasibility study and reported a net present value of $2.8 billion and an internal rate of return of 29.2%, both on a pre-tax basis, and an estimated compound annual EBITDA of $403 million indicates. This does not include the potential addition of rare earth oxide magnetic products to NioCorp’s planned product line.

According to NioCorp, the project has strong local support in Nebraska and is expected to create approximately 450 permanent, full-time jobs, more than 1,200 contract construction jobs during its more than three-year construction period, and an estimated 2,100 indirect jobs.

The Colorado-based company said that over the life of the mine, Elk Creek is expected to generate $1.1 billion in employee payroll, $298 million in new tax revenue for state and local governments, and $148 million in royalties local landowners will generate. NioCorp said it has a deal with the state of Nebraska for tax benefits in the first 10 years of operation that are potentially worth over $200 million.

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