NioCorp Developments Plunges 21%: A Volatile Day Unfolds in the Rare Earth Sector

Summary
• NioCorp Developments (NB) slumps 21.3% to $3.14, hitting a 52-week low of $1.27
• $45M public offering priced at $3.25 sparks investor concerns over dilution
• Intraday range of $3.13–$3.50 highlights sharp selloff amid sector uncertainty
• Market reacts to Elk Creek Project funding moves and broader critical minerals demand

NioCorp Developments Ltd. (NASDAQ:NB) is trading at a 21.3% intraday drop to $3.14 as the market digests its $45M public offering announcement. The stock, which opened at $3.50, has plunged to a 52-week low amid investor skepticism over dilution risks and project execution challenges. With the Elk Creek Project central to the company’s long-term strategy, today’s selloff reflects broader uncertainty in the rare earth and critical minerals sector. The offering, priced at $3.25 per share, now faces scrutiny over its ability to de-risk the project while maintaining shareholder value.

Public Offering Sparks Investor Concerns
NioCorp’s 21.3% intraday selloff is directly tied to its $45M public offering announcement, which raised red flags over potential equity dilution and project execution risks. The offering, priced at $3.25 per share, has triggered fears of further dilution as the company seeks to fund its Elk Creek Project. While the project aims to produce niobium, scandium, and titanium—critical for industrial and defense applications—the market is questioning whether the capital raise will unlock value or erode shareholder equity. Additionally, the stock’s sharp decline coincides with broader sector volatility, as investors weigh the challenges of scaling critical mineral projects amid uncertain demand and regulatory hurdles.

Metal Mining Sector Mixed Amid Rare Earth Volatility
Options Playbook: Hedging and Short-Term Bets
• RSI: 72.33 (overbought)
• MACD: 0.297 (bullish), Signal Line: 0.113
• Bollinger Bands: Upper $3.94, Middle $2.79, Lower $1.64
• 200-day MA: $2.08 (below current price)
• Support/Resistance: 2.31–2.35 (30D), 1.36–1.42 (200D)

NioCorp’s technicals paint a conflicting picture: RSI suggests overbought conditions, while MACD hints at lingering bullish momentum. However, the stock’s sharp decline has pushed it toward its 200-day moving average and critical support levels. Traders should monitor the $2.79 middle Bollinger Band as a potential pivot point. The lone active option, NB20250919P2.5 (strike $2.5, expiring 2025-09-19), offers a 639% leverage ratio and a 0.1468 gamma, making it a high-gamma, short-term bearish play. With a 32.63% implied volatility and a -0.028 delta, this put could benefit from a 5% downside move (targeting $2.98). Given the stock’s volatility, a short-term bearish strategy with tight stop-losses is advisable.

Backtest NioCorp Developments Stock Performance
The backtest of NB's performance after an intraday plunge of -21% shows a significant decline in the strategy's return. The strategy returned -47.96%, underperforming the benchmark return of 53.93% by a substantial margin of -101.89%. The Sharpe ratio was -0.29, indicating a negative risk-adjusted return, and the maximum drawdown was 0.00%, reflecting the strategy's inability to recover from the significant downturn.

Watch the $2.5 Support and Sector Sentiment
NioCorp’s 21.3% selloff underscores the fragility of its funding strategy and investor confidence in its Elk Creek Project. While the company’s rare earth ambitions align with U.S. supply chain security goals, today’s drop highlights the risks of over-leveraging equity. Traders should closely monitor the $2.5 support level and the September 19 put option for directional bets. Meanwhile, the sector leader MP Materials (MP) is up 2.05%, offering a contrast in investor sentiment. If NB fails to stabilize above $2.79, the bearish case gains strength. For now, short-term volatility and project execution risks dominate, urging a cautious approach with defined risk parameters.