The crystalline compound is known colloquially as "blamite," which has only been found in mines on a moon orbiting the Elite homeworld. It relies on chemical reactions to trace organic signatures, and when a certain number of needles penetrate a target (usually 7), the chemical reactions have a harmonic effect that exponentially increases the explosive damage.
As for the reload mechanics and whatnot, the temperature of Blamite's never been explained - but it's been theorized that the Needler works like a glorified play-doh spaghetti maker. That is, a large singular crystal is placed in a centralized magazine, said crystal is superheated, at which point it reverts to a semisolid and is forcibly threaded through the visible holes atop the gun. Upon protrusion, the needles immediately cool and retain their shape.
A bit of supplementary material from Reach reveals that most Covenant weapons shouldn't even work, though - triggers aren't even physically connected to their firing mechanisms. It's possible that the guns don't completely exist in dimensions visible to us - since Covenant tech is largely descended from jailbroken Forerunner technology, they might be employing "cloud storage" for weapon components, but in the physical realm.
