Niocan expands niobium portfolio

Montreal-based Niocan (NIO-T) has struck a deal to acquire a second niobium property in the James Bay Lowlands from three vendors.

Under the deal, Niocan would issue 2 million shares and 600,000 share purchase warrants to Barrick Gold (ABX-T) for its 60% stake in the property. One warrant is good for one Niocan share at $1 apiece for three years.

In return for James Bay Columbium’s 31% stake, Niocan would surrender just more than a million shares plus 344,444 like-priced warrants. James Bay would also receive another 250,000 $1 warrants for its operating management rights.

Niocan can acqurie Exall Resources‘s (EXL-T) 9% interest in the 26-sq-km property by issuing 300,000 shares and 100,000 like-priced warrants.

All the shares would remain in escrow for a year, and the deal is subject to regulatory approval.

Niocan has also committed to spending $1.5 million on the property over four years.

Situated in northeastern Ontario, the deposit was originally discovered in the 1960s. A previous owner completed a feasibility study envisaging an open-pit operation.

Previously, 85 drill holes totalling 14,500 metres outlined a deposit to a depth of 275 metres. A high-grade portion of the deposit reportedly grades 0.82% Nb2O5. The deposit remains open at depth.

Niocan says the deposit’s coarse-grained pyrochlore is high purity and essentially non-radioactive, and hosted by a carbonatite, enabling simple, ecological processing. A 250-tonne sample yielded a recovery rate in excess of 80%. The product was a clean concentrate running more than 64% Nb2O5.

The company says the pyrochlore is similar to that found at its S-60 deposit at Oka property, 40 km northwest of Montreal. Niocan figures it can modify its mill process flow sheet at Oka to handle ore from the new property.

A 1999 feasibility study at the Oka project proposed mining 892,000 tonnes from underground annually, from which would be produced 4,500 tonnes of ferro-niobium. The capital cost of doing so was pegged at $90 million, with an internal rate of return of 15-20%. The study was based on 22,606 metres of drilling in 59 holes between 1995 and 1997.

In early April, Niocan reported that the Administrative Tribunal of Quebec had extended its review of a decision by the Quebec Agricultural Land Commission granting Niocan 9.4 hectares of farmland in the Oka region until May 10. At presstime, a decision had not been announced.