New Federal Legislation Could Deliver Powerful New Benefits to NioCorp for its Critical Minerals

Rhea-AI Summary

The Inflation Reduction Act of 2022 introduces significant tax incentives designed to bolster U.S. production of critical minerals, particularly benefiting NioCorp's Elk Creek Project in Nebraska. Key provisions include a 10% Advanced Manufacturing Tax Credit for minerals like niobium, scandium, and titanium, applicable once the project is operational. Additionally, the act revises the $7,500 electric vehicle tax credit, encouraging the use of domestically sourced minerals. The legislation aims to reduce reliance on foreign minerals while extending EV incentives through 2032.

Positive

• NioCorp eligible for a 10% Advanced Manufacturing Tax Credit, enhancing potential revenue once the Elk Creek Project is operational.
• New EV tax credit revisions promote domestic sourcing of critical minerals, boosting market demand for NioCorp's products.
• Legislation allocates $500 million to enhance domestic critical mineral production, potentially benefiting NioCorp's operations.
• $40 billion commitment for the Department of Energy's loan guarantee program supports innovative mineral extraction technologies.

Negative

• None.

Inflation Reduction Act of 2022 Provides a 10% Advanced Manufacturing Tax Credit Applicable to Most of NioCorp's Planned Products

New Electric Vehicle Federal Tax Credit Tied to Increasing use of Critical Minerals That are Produced in the U.S. or Allied Nations

CENTENNIAL, Colo., Aug. 17, 2022 /PRNewswire/ -- The "Inflation Reduction Act of 2022," signed into law by President Biden this week, includes multiple financial and tax incentives designed to encourage greater production of critical minerals in the U.S.  Virtually all of the critical minerals NioCorp Developments Ltd. ("NioCorp" or the "Company") (TSX:NB) (OTCQX:NIOBF) intends to produce as part of its Elk Creek Critical Minerals Project in Nebraska (the "Project") would be eligible for new tax credits once the Project is financed and placed into commercial production.

"President Biden and Congressional leaders deserve credit for 'walking the talk' in this legislation on the need to make more of our own critical minerals in the U.S., and to reduce our reliance on foreign nations that hold the key to our nation's success in transitioning to a less carbon-intensive economy," stated Mark A. Smith, NioCorp's President, CEO and Executive Chairman.

Advanced Manufacturing Tax Credit Includes Critical Minerals Production

The bill creates a new 10% Advanced Manufacturing Tax Credit for a variety of critical minerals produced in the U.S., including niobium, scandium, and titanium.  Should NioCorp find it economic to produce the magnetic rare earths neodymium, praseodymium, dysprosium, and terbium, and once the Project is financed and placed into commercial production, the 10% tax credit would also apply to the cost of producing these products.

"NioCorp could benefit substantially from these new production tax credits in the future," said Smith. "This and other provisions in this bill send a powerful signal to producers, markets, and investors that the U.S. government wants to up its game in terms of encouraging more production of American-made critical minerals."

Electric Vehicle Tax Credit Tied to Domestic Production of Critical Minerals

The legislation revises the existing $7,500 federal electric vehicle (EV) tax credit. The new credit will apply to the purchase of vehicles meeting specific criteria on purchase of vehicles: (1) final assembly of the vehicle must occur in North America; (2) specific percentages of the vehicle battery's critical minerals must originate or be recycled in the U.S. or be produced in a U.S. free trade agreement partner country;¹ and (3) specified percentages of the vehicle battery's components must be manufactured in North America.

The bill specifically excludes application of the EV tax credit for vehicles placed in service after December 31, 2024 that utilize critical minerals in the vehicle's battery that were extracted, processed, or recycled by a "foreign entity of concern," which includes China, Russia, Iran, or North Korea.

The bill extends the EV tax credit through 2032, and mandates escalating levels of critical minerals used in EV batteries to be sourced or recycled in the U.S. or in a country with which the U.S. has a free-trade agreement.  The percentage of the value of the critical minerals extracted or processed in the U.S. or a US free-trade partner or recycled in North America must be:

• 40% for an EV placed in service before January 1, 2024;
• 50% for an EV placed in the service during calendar year 2024;
• 60% for an EV placed in service during calendar year 2025;
• 70% for an EV placed in service during calendar year 2026; and
• 80% for an EV placed in service after December 31, 2026.

Other Bill Provisions That Could Benefit NioCorp

Other provisions of the bill are aimed at encouraging greater production of critical minerals in the U.S.:

• $500 million for "enhanced use" of the Defense Production Act to provide economic incentives to create, maintain, protect, expand, or restore domestic sources for critical components, critical technology items, and industrial resources.
• $40 billion commitment authority for the U.S. Department of Energy's Innovative Technology Loan Guarantee Program (Title XVII), on top of DOE's existing commitment authority of approximately $24 billion.  The Innovative Technologies Loan Guarantee Program authorizes loan guarantees for projects that (1) "avoid, reduce, utilize, or sequester" air pollutants or anthropogenic emissions of greenhouse gases; and (2) employ "new or significantly improved technologies" as compared to commercial technologies in service in the United States at the time the guarantee is issued.

For More Information:

Contact Jim Sims, Corporate Communications Officer, NioCorp Developments Ltd., 720-639-4650, jim.sims@niocorp.com

Source: NioCorp Developments Ltd.

@NioCorp $NB.TO $NIOBF $BR3 #Niobium #Scandium #rareearth #neodymium #dysprosium #terbium #ElkCreek #EV #electricvehicle

About NioCorp

NioCorp is developing a critical minerals project in Southeast Nebraska that will produce niobium, scandium, and titanium.  The Company also is evaluating the potential to produce several rare earths from the Project.  Niobium is used to produce specialty alloys as well as High Strength, Low Alloy ("HSLA") steel, which is a lighter, stronger steel used in automotive, structural, and pipeline applications. Scandium is a specialty metal that can be combined with Aluminum to make alloys with increased strength and improved corrosion resistance. Scandium is also a critical component of advanced solid oxide fuel cells. Titanium is used in various lightweight alloys and is a key component of pigments used in paper, paint and plastics and is also used for aerospace applications, armor, and medical implants.  Magnetic rare earths, such as neodymium, praseodymium, terbium, and dysprosium are critical to the making of Neodymium-Iron-Boron ("NdFeB") magnets, which are used across a wide variety of defense and civilian applications.

Cautionary Note Regarding Forward-Looking Statements

Neither the Toronto Stock Exchange ("TSX") nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this document. Certain statements contained in this document may constitute forward-looking statements, including but not limited to statements related to the Company's expectations regarding the anticipated benefits of the Inflation Reduction Act of 2022, including benefits related to advanced manufacturing tax credits, electric vehicle tax credits and provisions encouraging greater production of critical minerals in the U.S. Such forward-looking statements are based upon NioCorp's reasonable expectations and business plan at the date hereof, which are subject to change depending on economic, political and competitive circumstances and contingencies. Readers are cautioned that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause a change in such assumptions and the actual outcomes and estimates to be materially different from those estimated or anticipated future results, achievements or position expressed or implied by those forward-looking statements. Risks, uncertainties and other factors that could cause NioCorp's plans or prospects to change include risks related to NioCorp's ability to operate as a going concern; risks related to NioCorp's requirement of significant additional capital; changes in demand for and price of commodities (such as fuel and electricity) and currencies; changes or disruptions in the securities markets; legislative, political or economic developments; the need to obtain permits and comply with laws and regulations and other regulatory requirements; the possibility that actual results of work may differ from projections/expectations or may not realize the perceived potential of NioCorp's projects; risks of accidents, equipment breakdowns and labor disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in development programs; operating or technical difficulties in connection with exploration, mining or development activities; the speculative nature of mineral exploration and development, including the risks of diminishing quantities of grades of reserves and resources; the risks involved in the exploration, development and mining business, and the risks set forth in the Company's filings with the SEC at www.sec.gov. NioCorp disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

¹ Nations that have free trade agreements with the U.S. include the following:  Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore.

 

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SOURCE NioCorp Developments Ltd.

FAQ

What is the significance of the Inflation Reduction Act of 2022 for NioCorp (NIOBF)?

The act provides significant tax incentives, including a 10% Advanced Manufacturing Tax Credit for critical minerals, which could enhance NioCorp's financial outlook once its Elk Creek Project is operational.

How does the new EV tax credit affect NioCorp (NIOBF)?

The revised EV tax credit encourages the use of domestically sourced critical minerals, potentially increasing demand for NioCorp's products in the electric vehicle market.

What financial support is included in the Inflation Reduction Act for U.S. minerals?

The act allocates $500 million for the Defense Production Act to support domestic critical mineral production, and $40 billion for the Department of Energy's Innovative Technology Loan Guarantee Program.

When will NioCorp's Elk Creek Project benefit from the new tax incentives?

The tax incentives will apply once the Elk Creek Project is financed and placed into commercial production.

What minerals will NioCorp produce that are eligible for tax credits under the new legislation?

NioCorp plans to produce niobium, scandium, titanium, and potentially several rare earths, all of which qualify for the Advanced Manufacturing Tax Credit.