Niocorp Developments (TSE:NB) has formally signed the previously-announced US$10.5mln convertible security financing agreement with New York-based asset management firm, The Lind Partners.
The funding will become available in two tranches, with the first being for US$4.5mln.
Each convertible security will have a two-year term and carry a coupon of 10%. The notes will be secured against the assets of the company.
Lind will be entitled to convert the securities in monthly installments over the term at a price per share that is 85% of the five-day trailing volume-weighted average price of the shares prior to the notice of conversion being provided by Lind.
The agreement contains restrictions on how much of the convertible securities may be converted in any particular month; meanwhile, Niocorp has the option to buy back up to 70% of the convertible securities in cash at any time for a nominal premium.
Phillip Valliere, a managing director at The Lind Partners, commented: "We have been impressed with the Niocorp management team and the progress they have made on the Elk Creek niobium-scandium-titanium project. Lind's funding will help them complete the bankable feasibility study, the results of which will be key to unlocking the value of this project. We look forward to seeing the results of the BFS soon."
Mark Smith, Niocorp's executive chairman, was understandably pleased to have finalized a funding facility with such a highly regarded group of institutional investors.
"This funding will move us further along toward completion of a bankable feasibility study for our Elk Creek project, which will then help to set the stage for us to acquire project financing and begin construction of our mine and processing facility in Nebraska," Smith said.
Elk Creek, a niobium-scandium-titanium project in Nebraska, was given a net present value of just over US$3bn in a October 2015 preliminary economic assessment, with the pre-tax internal rate of return seen at 31.7%,
The mine was predicted to have an upfront capital cost of US$979mln, and would generate some US$438mln of annual pre-tax cash flow. It was anticipated to be a 7,490 tonne per year operation, and was estimated to have a 32 year operating lifespan.
Niocorp said in October it could complete the bankable feasibility within four to six months, once it secured funding.